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EXHIBIT 10.34
▇▇▇▇▇ SYSTEMS CORPORATION
1991 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
NON-QUALIFIED STOCK OPTION GRANT
THIS STOCK OPTION AGREEMENT IS NOT VALID UNTIL A PROPERLY EXECUTED ORIGINAL
COPY IS RETURNED TO ▇▇▇▇▇ SYSTEMS. IF YOU DO NOT RETURN A PROPERLY EXECUTED
ORIGINAL COPY WITHIN 60 DAYS AFTER THE EFFECTIVE DATE SET FORTH BELOW, YOU
WILL BE DEEMED TO HAVE REJECTED THE AGREEMENT UNLESS ▇▇▇▇▇ SYSTEMS, IN ITS SOLE
DISCRETION, DETERMINES OTHERWISE.
Participant: <> <>
Effective Date: July 20, 1998
Option Shares: <>
Exercise Price: The Exercise Price will be the price at which shares
of Common Stock are offered to the public in an
initial public offering, provided that if the Company
does not complete an initial public offering of
Common Stock within six months after the Effective
Date, the Exercise Price will be a price established
by the Board not later than January 20, 1999.
Vesting Schedule: 100% of the Option Shares on the third anniversary of
the Effective Date
Expiration Date: Five years after the Effective Date, unless
terminated earlier under the Agreement or the Plan.
BY SIGNING THIS AGREEMENT, THE PARTICIPANT:
o Agrees to be bound by the terms of this Agreement and the Plan;
o Acknowledges receiving an electronic or paper copy of (1) the Plan, (2)
the Prospectus for the Plan, and (3) ▇▇▇▇▇ Systems' most recent Annual
Report on Form 10-K; and
o Consents to receiving delivery of the all future communications and
required documents relating to the Plan or this Agreement via TRAIN or
other electronic transmission.
<> <> ▇▇▇▇▇ SYSTEMS CORPORATION
Signature: By:
----------------- -----------------------------------
Date: Chairman of the Board
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[The remainder of this page is intentionally blank.]
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1. Certain Definitions. As used in this Agreement, the following terms
have the meanings indicated:
(a) "Agreement" means this Stock Option Agreement between ▇▇▇▇▇
Systems and Participant.
(b) "Committee" means the Board of Directors of ▇▇▇▇▇ Systems or
the committee of the Board, Chief Executive Officer or other
officer of ▇▇▇▇▇ Systems appointed to administer the Plan.
(c) "Common Stock" means the Class A Common Stock, $.01 par value
per share, of ▇▇▇▇▇ Systems.
(d) "Company" means ▇▇▇▇▇ Systems and its majority-owned
subsidiaries.
(e) "Confidential Information" means all written, machine
reproducible, oral and visual data, information and material,
including but not limited to the terms of this Agreement and
the Plan, business, financial and technical information,
computer programs, documents and records (including those that
Participant develops in the scope of his or her employment)
that (i) the Company or any of its customers or suppliers
treats as proprietary or confidential through markings or
otherwise, (ii) relates to the Company or any of its customers
or suppliers or any of their business activities, products or
services (including software programs and techniques) and is
competitively sensitive or not generally known in the relevant
trade or industry, or (iii) derives independent economic value
from not being generally known to, and is not readily
ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use. Confidential
Information does not include any information or material that
is approved by ▇▇▇▇▇ Systems for unrestricted public
disclosure.
(f) "Effective Date" means the date set forth on the first page of
this Agreement on which the term of this Agreement commenced.
(g) "Expiration Date" means the date and time as of which the
Option expires, which is the earlier of (i) the close of
business on the date one year (two years if the Vesting Period
is three years or less) after the entire Option has Vested or
(ii) the date and time as of which all rights to exercise the
Option are terminated under Section 2(d).
(h) "Market Value" of a share of Purchased Stock on a given date
means (i) if the Purchased Stock is Publicly Traded, the
closing sale price for Purchased Stock, as determined in good
faith by the Board of Directors, on such date or, if no
closing sale price is available for such date, on the most
recent prior date for which a closing sale price is available
or, if no closing sale price is available, the closing bid
price, as so determined, on such date or, if no closing bid
price is available for such date, the closing bid price on the
most recent prior date for which a closing bid price is
available, or (ii) if the Purchased Stock is not Publicly
Traded, its fair market value, as determined in good faith by
the Board of Directors, as of the most recent Valuation Date
on or before such date.
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(i) "Net Investment Proceeds," with respect to any share of
Purchased Stock sold or otherwise transferred by Participant
or Participant's successor in interest, means the greater of
the value of the gross proceeds received for such share or the
Market Value of such share on the date of sale or transfer
less, in either case, (i) the exercise price of the Option for
such share plus simple interest on such amount at the rate of
8% per annum to the date of the sale or transfer, (ii) any
reasonable and customary commission paid for the sale or
transfer, and (iii) the verified amount of any income taxes
paid or payable on the sale or transfer.
(j) "Option" means the right and option evidenced by this
Agreement.
(k) "Participant" means the individual named on the first page of
this Agreement.
(l) "▇▇▇▇▇ Systems" means ▇▇▇▇▇ Systems Corporation, a Delaware
corporation.
(m) "Plan" means ▇▇▇▇▇ Systems' 1991 Stock Option Plan, as amended
and restated as of July 17, 1998, as amended from time to
time.
(n) "Publicly Traded" means Purchased Stock has been listed on a
registered national securities exchange or approved for
quotation in the National Association of Securities Dealers
Automated Quotation ("NASDAQ") system.
(o) "Purchased Stock" means any Common Stock purchased upon the
exercise of this Option, together with any successor security,
property or cash issued or distributed by ▇▇▇▇▇ Systems or any
successor entity, whether by way of merger, consolidation,
share exchange, reorganization, liquidation, recapitalization
or otherwise.
(p) "Termination for Substantial Misconduct" means termination of
employment for conduct resulting in a felony conviction of the
Participant; actions involving moral turpitude, theft, or
dishonesty in a material matter; breach of any obligation
under Section 5 of this Agreement; or failure by Participant
to carry out the directions, instructions, policies, rules,
regulations, or decisions of the Board of Directors of ▇▇▇▇▇
Systems including, without limitation, those relating to
business ethics and the ethical conduct of the business of the
Company.
(q) "Transfer" or "transfer" or derivations thereof includes any
sale, assignment, gift, pledge, encumbrance, hypothecation,
mortgage, exchange or any other disposition.
(r) "Valuation Date" means each date as of which the Board of
Directors determines the Market Value of Purchased Stock.
(s) "Vesting," or "vesting" or derivations thereof with respect to
any Option issued under this Agreement, means receiving the
right to exercise the Option.
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(t) "Vesting Period" means the period of time commencing on the
Effective Date of this Agreement and ending on the date on
which the entire Option has Vested.
2. Grant of Option; Exercise of Option; Purchase of Stock.
(a) Subject to the terms, conditions, and restrictions set forth
in the Plan (which is incorporated herein by reference) and
this Agreement, ▇▇▇▇▇ Systems hereby grants to Participant,
and Participant hereby accepts from ▇▇▇▇▇ Systems, the option
to purchase from ▇▇▇▇▇ Systems
(i) the number of shares of Common Stock specified as
the "Option Shares" on the first page of this Agreement,
(ii) at the purchase price per share of Common Stock
specified as the "Exercise Price" on the first page of this
Agreement,
(iii) which option will Vest in Participant in accordance
with the Vesting Schedule specified on the first page of this
Agreement.
The Option shall only continue to Vest only for as long as
Participant is an employee of Company, unless the Committee,
in its sole discretion, agrees in writing otherwise.
Participant will have the right to exercise the Vested Option
and purchase Common Stock after the Option Vests as provided
in Section 2(d) below.
(b) The purchase price of shares as to which the Option is
exercised must be paid to ▇▇▇▇▇ Systems at the time of the
exercise either in cash or in such other consideration as the
Committee may approve having a total fair market value, as
determined by the Committee, equal to the purchase price, or a
combination of cash and such other consideration.
(c) The Committee may elect to assist Participant in satisfying an
obligation to pay or withhold taxes required as a result of
the exercise of this Option by accepting shares of Purchased
Stock at Market Value to satisfy the tax obligation. The
shares of Purchased Stock accepted may be either shares
withheld upon the exercise of this Option or other shares
already owned by Participant. In determining whether to
approve acceptance of Purchased Stock to satisfy such a tax
obligation, the Committee may consider whether the shares
proposed to be delivered are subject to any holding period or
other restrictions on transfer and may waive or arrange for
the waiver of any such restrictions.
(d) The Option is only exercisable as to Vested Options. Once
Vested, the Option may be exercised until the Expiration Date,
provided, however, (i) if the Participant ceases to be an
employee for any reason other than death, the Option may be
exercised only for sixty days after the date of cessation of
employment, and in any case no later than the Expiration Date,
and (ii) if the Participant ceases to be an Employee because
of death of the Participant, the Option may be exercised by
the Participant's estate only for two years after the
Participant's Death and in any case no later than the
Expiration Date.
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(e) The Option is exercisable by delivery of an exercise notice,
in the form and format and by the method approved by ▇▇▇▇▇
Systems stock administrator, which form and format may be
electronic and solely available by access through ▇▇▇▇▇
Systems internal computer network, which notice will state the
election to exercise the Option, the number of Vested shares
of Common Stock with respect to which the Option is being
exercised, and such other representations and agreements as
may be required by the Company in accordance with the terms of
the Plan. The Option will be deemed to be exercised upon
receipt by the Company of such exercise notice and the
purchase price of the Vested shares of Common Stock as to
which the Option is exercised, provided that Participant has
concurrently made adequate provision for fulfilling all
applicable tax withholding requirements and other tax
obligations.
3. Restrictions on Transfer. The following restrictions on transfer apply
unless the Committee otherwise agrees in writing or unless the transfer
is by will or the laws of descent and distribution upon Participant's
death:
(a) The Option may not be sold or otherwise transferred and is
exercisable only by Participant during Participant's lifetime.
(b) Shares of Purchased Stock may not be sold or otherwise
transferred unless the holder has given ▇▇▇▇▇ Systems any
notice required under Section 4(a) and ▇▇▇▇▇ Systems has
waived in writing any right it has to buy back the shares
under Section 4(a).
(c) Shares of Purchased Stock may not be sold or otherwise
transferred for six months after the Purchased Stock (or stock
of the same class as the Purchased Stock) is Publicly Traded.
▇▇▇▇▇ Systems is not obligated to recognize any purported sale or other
transfer of the Option or any Purchased Stock in violation of this
Section 3 and, unless it elects to do otherwise, may treat any such
purported sale or transfer as null, void, and of no effect.
4. Rights to Buy Back Purchased Stock and to Require Payback of Certain
Profits.
(a) At any time before the Purchased Stock is Publicly Traded, if
Participant or any subsequent holder of shares of Purchased
Stock desires or is obligated to sell or otherwise transfer
any such shares (including any distribution to heirs or other
beneficiaries of Participant's estate), the holder is required
to give ▇▇▇▇▇ Systems written notice of the proposed sale or
transfer, including notice of the proposed purchaser or
transferee, and, for a period of 30 days after receipt of such
notice, ▇▇▇▇▇ Systems will have the right to buy back such
shares for cash at a purchase price equal to the Market Value.
(b) If the Committee discovers that Participant has engaged in any
conduct prohibited by Section 5 or if Participant ceases to be
employed by the Company and the Committee, in its sole
discretion, determines that Participant's cessation of
employment resulted from a Termination for Substantial
Misconduct or would have resulted in a Termination for
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Substantial Misconduct had the relevant facts been known at
the time of Participant's cessation of employment, ▇▇▇▇▇
Systems will have the right for 150 days after the Committee
discovers the relevant facts to cancel any unexercised Option,
whether or not Vested, and to buy back from Participant any
shares of Purchased Stock then owned by Participant, at a
purchase price equal to the price per share paid by
Participant for the shares plus simple interest on such amount
at the rate of 8% per annum from the date of payment by
Participant to the date of tender of payment by ▇▇▇▇▇ Systems
as set forth in Section 4(c) below, and the right to require
Participant to pay back to ▇▇▇▇▇ Systems in cash the Net
Investment Proceeds with respect to any shares of Purchased
Stock that have been sold or otherwise transferred by
Participant.
(c) Whenever ▇▇▇▇▇ Systems has a right to buy back shares of
Purchased Stock or to require Participant to pay back to ▇▇▇▇▇
Systems Participant's Net Investment Proceeds with respect to
any shares of Purchased Stock under this Section 4, ▇▇▇▇▇
Systems may exercise its right by notifying Participant or the
subsequent holder of ▇▇▇▇▇ Systems' election to exercise its
right within the designated exercise period. In the case of a
buyback under Section 4(a) or Section 4(b), the giving of such
notice will give rise to an obligation on the part of
Participant or the subsequent holder to tender to ▇▇▇▇▇
Systems, within 10 days, any previously issued certificate
representing shares of Purchased Stock to be bought back, duly
endorsed in blank or having a duly executed stock power
attached in proper form for transfer. If any such certificate
is not tendered within 10 days, ▇▇▇▇▇ Systems may cancel any
outstanding certificate representing shares to be bought back.
▇▇▇▇▇ Systems is required to tender the purchase price for
shares to be bought back under this Section 4 within 20 days
of giving notice of its election to exercise its right to buy
back shares. If the person from whom the shares are to be
bought back has not complied with an obligation to return a
certificate representing shares to be bought back, however,
▇▇▇▇▇ Systems is not required to tender the purchase price
until 20 days after the certificate is returned or 20 days
after it cancels the certificate, whichever occurs first.
5. Non-Competition and Non-Disclosure. Participant acknowledges that: (i)
in the course and as a result of employment with the Company,
Participant will obtain special training and knowledge and will come in
contact with the Company's current and potential customers, which
training, knowledge, and contacts would provide invaluable benefits to
competitors of the Company; (ii) the Company is continuously developing
or receiving Confidential Information, and that during Participant's
employment he or she will receive Confidential Information from the
Company, its customers and suppliers and special training related to
the Company's business methodologies; and (iii) Participant's
employment by Company creates a relationship of trust that extends to
all Confidential Information that becomes known to Participant.
Accordingly, and in consideration of ▇▇▇▇▇ Systems' granting this
Option to Participant, Participant agrees that ▇▇▇▇▇ Systems will be
entitled to terminate all rights to exercise the Option and to exercise
the rights specified in Section 4 above if Participant does any of the
following without the prior written consent of the Company:
(a) while employed by the Company or within one year thereafter:
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(i) competes with, or engages in any business that is
competitive with, the Company within 250 miles of any
location at which Participant was employed by or
provided services to the Company;
(ii) solicits or performs services, as an employee,
independent contractor, or otherwise, for any person
(including any affiliates or subsidiaries of that
person) that is or was a customer or prospect of the
Company during the two years before Participant's
employment with the Company ended if Participant
solicited business from or performed services for
that customer or prospect while employed by Company;
or
(iii) recruits, hires, or helps anyone to recruit or hire
anyone who was an employee of ▇▇▇▇▇ Systems, or of
any of its customers for whom Participant performed
services of from whom Participant solicited business,
within the six months before Participant's employment
with the Company ended; or
(b) discloses or uses any Confidential Information, except in
connection with the good faith performance of Participant's
duties as an employee or, solely with respect to the terms of
this Agreement or the Plan, to Participant's spouse; or fails
to take reasonable precautions against the unauthorized
disclosure or use of Confidential Information; or fails, upon
▇▇▇▇▇ Systems' request, to execute and comply with a third
party's agreement to protect its confidential and proprietary
information; or solicits or induces the unauthorized
disclosure or use of Confidential Information.
If any court of competent jurisdiction finds any provision of this
Section 5 to be unreasonable, then that provision shall be considered
to be amended to provide the broadest scope of protection to the
Company that such court would find reasonable and enforceable.
6. Compliance with Securities Laws. Participant hereby agrees that, upon
demand by ▇▇▇▇▇ Systems, any person exercising this Option, at the time
of such exercise, will deliver to ▇▇▇▇▇ Systems a written
representation to the effect that the shares of Purchased Stock being
acquired are being acquired for investment and not with a view to any
resale or distribution thereof. Participant further agrees that neither
Participant nor any successor in interest of Participant will sell or
otherwise transfer the Option or any shares of Purchased Stock in any
way that might result in a violation of any federal or state securities
laws or regulations. Participant further acknowledges and agrees that
▇▇▇▇▇ Systems may require Participant or any subsequent holder of the
Option or of any shares of Purchased Stock to provide ▇▇▇▇▇ Systems,
prior to any sale or other transfer, with such other representations,
commitments, and opinions regarding compliance with applicable
securities laws and regulations as ▇▇▇▇▇ Systems may deem necessary or
advisable.
7. Stock Certificates; Rights as Shareholder. ▇▇▇▇▇ Systems or its
designee may retain for safekeeping all certificates representing
shares of Purchased Stock. Each such certificate will bear such legends
as the Committee determines are necessary or appropriate. Whether or
not certificates representing shares of Purchased Stock have been
issued or delivered, Participant will have all the rights of a
shareholder of Purchased Stock, including voting, dividend and
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distribution rights, with respect to shares of Purchased Stock owned by
Participant. Participant will not have any rights as a shareholder with
respect to any shares of Purchased Stock subject to the Option before
the date of issuance to Participant of shares upon exercise of the
Option.
8. Income Tax Withholding. Participant shall, upon request by the Company,
reimburse the Company for, or the Company may withhold from sums or
property otherwise due or payable to Participant, any amounts the
Company is required to remit to applicable taxing authorities as income
tax withholding with respect to the Option or any Purchased Stock. If
shares of Purchased Stock are withheld for such purpose, they will be
withheld at Market Value. If Participant fails to reimburse the Company
for any such amount when requested, the Company has the right to
recover that amount by selling or canceling sufficient shares of any
Purchased Stock held by Participant.
9. Compliance with Plan. If the provisions of the Plan are inconsistent
with the provisions of this Agreement, the provisions of the Plan
supersede the provisions of this Agreement.
10. Notices.
(a) All notices or other communications relating to this Plan or
any other matter relating to this Agreement given to the
Committee, ▇▇▇▇▇ Systems, or any Company will be deemed
delivered on the day the notice or other communication is
received in tangible written form by the Stock Administrator
at ▇▇▇▇▇ Systems' corporate headquarters address, provided
that such notice is in the form specified by ▇▇▇▇▇ Systems.
(b) All notices or other communications relating to this Plan or
any other matter relating to this Agreement given to a
Participant by the Committee, ▇▇▇▇▇ Systems, or any Company
will be deemed delivered on the first day the notice or other
communication is (1) personally delivered to that person, (2)
electronically transmitted to a person who on the date of that
transmission either is an employee of any Company or has
consented to receiving notices by electronic transmission to
the last known electronic transmission address of that person,
provided that an acknowledgement of receipt is returned, or
(3) placed in the official government mail of the country of
the sender in an envelope with proper postage paid addressed
to the last known address of that person as reflected in ▇▇▇▇▇
Systems' personnel or stock records.
(c) Either party may at any time change its address for
notification purposes by giving the other written notice of
the new address and the date upon which it will become
effective.
(d) CONSENT TO ELECTRONIC DELIVERY OF NOTICES, PLAN DOCUMENTS AND
PROSPECTUSES. BY EXECUTING THIS AGREEMENT, THE PARTICIPANT
WILL BE DEEMED TO CONSENT TO RECEIVING COPIES OF ALL NOTICES
AND OTHER COMMUNICATIONS RELATING TO THE PLAN AND THIS
AGREEMENT BY ELECTRONIC TRANSMISSION, INCLUDING BUT NOT
LIMITED TO THE PROSPECTUS RELATING TO THE PLAN, ALL
PARTICIPATION MATERIALS, AND ALL OTHER DOCUMENTS REQUIRED TO
BE DELIVERED IN CONNECTION WITH THE PLAN. UPON REQUEST, ▇▇▇▇▇
SYSTEMS WILL PROVIDE ANY SUCH DOCUMENTS TO ANY ELIGIBLE
ASSOCIATE IN TANGIBLE WRITTEN FORM.
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11. Remedies. ▇▇▇▇▇ Systems is entitled, in addition to any other remedies
it may have at law or in equity, to temporary and permanent injunctive
and otherwise equitable relief to enforce the provisions of this
Agreement. ANY ACTION TO ENFORCE THE PROVISIONS OF, OR OTHER RELATING
TO, THIS AGREEMENT MAY BE BROUGHT IN THE STATE OR FEDERAL COURTS HAVING
JURISDICTION IN DALLAS, DALLAS COUNTY, TEXAS. BY SIGNING THIS
AGREEMENT, PARTICIPANT CONSENTS TO THE PERSONAL JURISDICTION OF SUCH
COURTS IN ANY SUCH ACTION.
12. Assignment. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, personal
representatives, successors, and assigns. However, Participant does not
have the power or right to assign this Agreement without the prior
written consent of ▇▇▇▇▇ Systems.
13. Attorneys' Fees. If any legal proceeding is brought to enforce or
interpret the terms of this Agreement, the prevailing party will be
entitled to reasonable attorneys' fees, costs, and necessary
disbursements in addition to any other relief to which that party may
be entitled.
14. Severability. If any provision of this Agreement is held invalid or
unenforceable for any reason, the validity and enforceability of all
other provisions of this Agreement will not be affected.
15. Headings. The section headings used herein are for reference and
convenience only and do not affect the interpretation of this
Agreement.
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of Texas, without regard to the
choice of law rules in such law.
17. Entire Agreement. This Agreement, together with the Plan and any
procedure adopted by the Committee thereunder, constitutes the entire
agreement between the parties with respect to its subject matter and
may be waived or modified only in writing.
18. Changes in Capitalization. If any change is made in the Common Stock
(including, but not limited to, changes resulting from a stock
dividend, stock split, merger, consolidation, reorganization,
recapitalization, exchange of shares, change in corporate structure or
other transaction not involving the receipt of consideration by ▇▇▇▇▇
Systems), the Committee will equitably adjust the number of shares of
Common Stock and the Exercise Price for those shares that are subject
to outstanding rights under this Agreement to preserve the rights of
Participant under this Agreement. The determination of the Committee
with respect to any such adjustments shall be final, binding and
conclusive.
19. No Guarantee of Continued Employment. Participant acknowledges and
agrees that the Vesting of shares of Common Stock under this Agreement
is earned only while continuing service to the Company as an employee
at the will of the Company (and not through the act of being hired,
being granted an Option or purchasing shares under this Agreement).
Participant further acknowledges and agrees that this Agreement, the
transactions contemplated hereunder and the Vesting schedule set forth
herein do not constitute an express or implied promise of continued
employment by the Company for the Vesting Period, for any period, or at
all, and shall not
1991 Stock Option Plan Page 9 of 10 Stock Option Agreement
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interfere with Participant's right or the Company's right to terminate
Participant's employment relationship with the Company at any time,
with or without cause.
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