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EXHIBIT 10.18
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THE SHARES ISSUABLE PURSUANT TO THIS AGREEMENT ARE SUBJECT TO AN OPTION
TO REPURCHASE PROVIDED UNDER THE PROVISIONS OF THE COMPANY'S 1998 STOCK
OPTION PLAN FOR KEY EMPLOYEES AND THIS AGREEMENT ENTERED INTO PURSUANT
THERETO. A COPY OF SUCH PLAN IS AVAILABLE UPON WRITTEN REQUEST TO THE
COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.
CUSTOMERONE HOLDING CORPORATION
1998 STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
FOR KEY EMPLOYEES
The Board of Directors of CustomerONE Holding Corporation (the
"Company") has adopted the Company's 1998 Stock Option Plan (the "Plan") for
certain individuals, directors and key employees of the Company and its Related
Entities. A copy of the Plan is being furnished to you concurrently with the
execution of this Option Agreement and shall be deemed a part of this Option
Agreement as if fully set forth herein. Unless the context otherwise requires,
all terms defined in the Plan shall have the same meaning when used herein.
1. The Grant.
Subject to the conditions set forth below, the Company hereby
grants to you, effective as of October 1, 1998 (the "Grant Date"), as a matter
of separate inducement and not in lieu of any salary or other compensation for
your services, the right and option to purchase (the "Option"), in accordance
with the terms and conditions set forth herein and in the Plan, an aggregate of
1,300,000 shares of Common Stock of the Company (the "Option Shares"), at the
Exercise Price (as hereinafter defined). The Option is granted in full
satisfaction of the Company's obligation under Sections 7(a) and (b) of that
certain Employment Agreement (the "Employment Agreement"), dated as of September
30, 1998, by and between CustomerONE Corporation ("CustomerONE"), a Delaware
corporation, and you. As used herein, the term "Exercise Price" shall mean a
price equal to $1.00 per share, subject to the adjustments and limitations set
forth herein and in the Plan. The Option granted hereunder is intended to
constitute a Non-Qualified Option within the meaning of the Plan; however, you
should consult with your tax advisor concerning the proper reporting of any
federal, state or foreign tax liability that may arise as a result of the grant
or exercise of the Option.
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2. Exercise.
(a) For purposes of this Option Agreement, the Option Shares
shall be deemed "Nonvested Shares" unless and until they have become "Vested
Shares" as described below. Twenty-five percent (25%) of the Option Shares shall
become "Vested Shares" on the second anniversary of the Grant Date and
seventy-five percent (75%) of the Option Shares shall become "Vested Shares" on
the third anniversary of the Grant Date in accordance with the terms of the
Plan. In the event of your death or Permanent Disability, as that term is
defined in the Employment Agreement, or if CustomerONE terminates your
employment without Cause, as that term is defined in the Employment Agreement,
on or after the second anniversary of the Grant Date, Option Shares that have
not become "Vested Shares" shall accelerate and become "Vested Shares" at the
rate of 5% of the Option Shares granted hereunder per month, such amount to be
in addition to scheduled vesting hereunder, beginning in the twenty-fifth month
following the Grant Date with the balance becoming "Vested Shares" on the third
anniversary of the Grant Date. Only upon the occurrence of a Liquidity Event (as
hereinafter defined) that results in Onex CustomerONE Holdings LLC ("LLC2")
achieving an overall compounded IRR (as hereinafter defined) of 15% on its
investment in the Portfolio Company (as hereinafter defined) as at such time,
will "Vested Shares" become "Exercisable Shares." Until such time, you will not
have the right to exercise all or any portion of your Option, whether or not
vested. In addition, upon the occurrence of a Liquidity Event that results in
LLC2 achieving an overall compounded IRR of 15% on its investment in the
Portfolio Company as at such time, any Option Shares that have not become
"Vested Shares" will accelerate and immediately become both "Vested Shares" and
"Exercisable Shares."
(b) Subject to the relevant provisions and limitations
contained herein and in the Plan, you may exercise the Option to purchase all or
a portion of the applicable number of Exercisable Shares at any time prior to
the termination of the Option pursuant to this Option Agreement. In no event
shall you be entitled to exercise the Option for any Nonvested Shares, Vested
Shares that are not Exercisable Shares or for a fraction of an Exercisable
Share.
(c) The unexercised portion of the Option, if any, will
automatically, and without notice, terminate and become null and void upon the
expiration of ten (10) years from the Grant Date.
(d) Any exercise by you of the Option must be in writing
addressed to the Secretary of the Company at its principal place of business (a
copy of the form of exercise to be used will be available upon written request
to the Secretary), and must be accompanied by a certified or bank check payable
to the order of the Company in the full amount of the Exercise Price of the
shares so purchased, or in such other manner as described in the Plan and
approved by the Committee.
(e) For purposes hereof, a "Liquidity Event" shall mean the
first to occur of any of the following:
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(i) any sale of all or substantially all of the
assets of the Company or its operating subsidiaries taken as a
whole (for purposes hereof, the "Portfolio Company") in an
arm's-length transaction;
(ii) the liquidation or winding up of the Portfolio
Company;
(iii) an initial public offering of the common shares
or other equity securities of the Portfolio Company by way of
prospectus, registration statement or similar document where,
or in connection with which, such shares or securities are to
become listed and posted for trading or quoted on at least one
of (1) the Toronto Stock Exchange, (2) the Montreal Exchange,
(3) the New York Stock Exchange, (4) the American Stock
Exchange or (5) the National Market of the National
Association of Securities Dealers Automated Quotation System,
together with any such other stock exchange or exchanges as
may be approved by the Board; or
(iv) a sale of all or substantially all of the shares
of the Portfolio Company owned, directly or indirectly, by
LLC2 (including any affiliate of LLC2) in an arm's-length
transaction.
(f) For purposes hereof, "IRR" shall mean, as of any date, the
compounded annual pre-tax rate of return earned by LLC2 on its direct and
indirect investment in the Portfolio Company for the period from the date of
investment to such date; provided that, for the purposes of determining the IRR,
the return earned by LLC2 shall take into account the net proceeds of any
disposition of the investment (in whole or in part), dividends, returns of
capital and other distributions, whether received directly or indirectly by
LLC2, but shall specifically exclude any management fees or remuneration
payments.
3. Termination of Employment.
In the case of termination of your employment with the Company
or any Related Entity for Cause, as that term is defined in the Employment
Agreement, pursuant to Section 8(d) of the Employment Agreement, then you shall
immediately forfeit your rights under the Option, including rights in any Vested
Shares and/or Exercisable Shares, except as to those Option Shares already
purchased.
4. Transferability.
Except as provided in Section 7 hereof, the Option and any
rights or interests therein are not assignable or transferable by you except by
will or the laws of descent and distribution, and during your lifetime, the
Option shall be exercisable only by you or, in the event that a legal
representative has been appointed in connection with your Disability, such legal
representative.
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5. Registration.
The Company shall not in any event be obligated to file any
registration statement under the Securities Act or any applicable securities
laws of any other jurisdiction to permit exercise of the Option or to issue any
Common Stock in violation of the Securities Act or any applicable securities
laws of any other jurisdiction. You (or in the event of your death or, in the
event a legal representative has been appointed in connection with your
Disability, the Person exercising the Option) must, as a condition to your right
to exercise the Option, deliver to the Company an agreement or certificate
containing such representations, warranties and covenants as the Company may
deem necessary or appropriate to ensure that the issuance of the Option Shares
pursuant to such exercise is not required to be registered under the Securities
Act or any applicable securities laws of any other jurisdiction.
Certificates for Option Shares, when issued, will have
substantially the following legend, or statements of other applicable
restrictions, endorsed thereon (or any other legend that may be required for
issuance to a Person outside the United States), and may not be immediately
transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY SECURITIES LAWS OF ANY OTHER JURISDICTION. THE SHARES
MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, TRANSFERRED OR
OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF PROVIDES
EVIDENCE SATISFACTORY TO THE ISSUER (WHICH, IN THE DISCRETION
OF THE ISSUER, MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY
TO THE ISSUER) THAT SUCH OFFER, SALE, PLEDGE, TRANSFER OR
OTHER DISPOSITION WILL NOT VIOLATE APPLICABLE FEDERAL, STATE
OR OTHER LAWS.
The foregoing legend will not be required for Option Shares
issued pursuant to an effective registration statement under the Securities Act
and in accordance with applicable state securities laws.
6. Withholding Taxes.
By acceptance hereof, you hereby (i) agree to reimburse the
Company or any Related Entity by which you are employed for any Canadian or U.S.
federal, provincial, state, local or foreign taxes required by any government to
be withheld or otherwise deducted by such corporation in respect of your
exercise of all or a portion of the Option; (ii) authorize the Company or any
Related Entity by which you are employed to withhold from any cash compensation
paid to you or on your behalf, an amount sufficient to discharge any Canadian or
U.S. federal, provincial, state, local or foreign taxes imposed on the Company,
or the Related Entity by which you are employed, and which otherwise has not
been reimbursed by you, in respect of your exercise of all or a portion of the
Option; and (iii) agree that the Company may, in its discretion, hold the
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stock certificate to which you are entitled upon exercise of the Option as
security for the payment of the aforementioned withholding tax liability, until
cash sufficient to pay that liability has been accumulated, and may, in its
discretion, effect such withholding by retaining shares issuable upon the
exercise of the Option having a Fair Market Value on the date of exercise which
is equal to the amount to be withheld.
7. Purchase Option.
(a) If (i) your employment with the Company or a Related
Entity terminates for any reason at any time or (ii) a Change of Control occurs,
the Company and/or its designee(s) shall have the option (the "Purchase Option")
to purchase, and if the Purchase Option is exercised, you (or your executor or
the administrator of your estate or the Person who acquired the right to
exercise the Option by bequest or inheritance in the event of your death, or
your legal representative in the event of your incapacity (hereinafter,
collectively with such optionee, the "Grantor")) shall sell to the Company
and/or its assignee(s), all or any portion (at the Company's option) of the
Option Shares and/or the Option held by the Grantor (such Option Shares and
Option collectively being referred to as the "Purchasable Shares").
(b) The Company shall give notice in writing to the Grantor of
the exercise of the Purchase Option within one (1) year from the date of the
termination of your employment or engagement or such Change of Control. Such
notice shall state the number of Purchasable Shares to be purchased and the
determination of the Board of Directors of the Fair Market Value per share of
such Purchasable Shares. If no notice is given within the time limit specified
above, the Purchase Option shall terminate.
(c) The purchase price to be paid for the Purchasable Shares
purchased pursuant to the Purchase Option shall be, in the case of any Option
Shares, the Fair Market Value per share as of the date of notice of exercise of
the Purchase Option times the number of shares being purchased, and in the case
of the Option, the Fair Market Value per share less the applicable per share
Exercise Price, times the number of Exercisable Shares subject to such Option
which are being purchased. The purchase price shall be paid in cash. The closing
of such purchase shall take place at the Company's principal executive offices
within ten (10) days after the purchase price has been determined. At such
closing, the Grantor shall deliver to the purchaser(s) the certificates or
instruments evidencing the Purchasable Shares being purchased, duly endorsed (or
accompanied by duly executed stock powers) and otherwise in good form for
delivery, against payment of the purchase price by check of the purchaser(s). In
the event that, notwithstanding the foregoing, the Grantor shall have failed to
obtain the release of any pledge or other encumbrance on any Purchasable Shares
by the scheduled closing date, at the option of the purchaser(s) the closing
shall nevertheless occur on such scheduled closing date, with the cash purchase
price being reduced to the extent of all unpaid indebtedness for which such
Purchasable Shares are then pledged or encumbered.
(d) To assure the enforceability of the Company's rights under
this Section 7, each certificate or instrument representing Option Shares
subject to this Option Agreement shall bear a conspicuous legend in
substantially the following form:
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"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN OPTION TO
REPURCHASE PROVIDED UNDER THE PROVISIONS OF THE COMPANY'S 1998 STOCK
OPTION PLAN AND A STOCK OPTION AGREEMENT ENTERED INTO PURSUANT THERETO.
A COPY OF SUCH OPTION PLAN AND OPTION AGREEMENT ARE AVAILABLE UPON
WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES."
8. Stockholders Agreement. You acknowledge and agree that upon exercise
of your Option you will enter into and become bound by the Stockholders
Agreement among the Company and the other parties thereto, substantially in the
form made available to you concurrently herewith, as such Stockholders Agreement
may be subsequently modified or amended.
To the extent required by the Stockholders Agreement,
certificates for Option Shares, when issued, will have substantially the
following legend:
THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFER, VOTING
AND OTHER TERMS AND CONDITIONS SET FORTH IN THE STOCKHOLDERS
AGREEMENT DATED AS OF OCTOBER 1, 1998, A COPY OF WHICH MAY BE
OBTAINED FROM CUSTOMERONE HOLDING CORPORATION AT ITS PRINCIPAL
EXECUTIVE OFFICES.
9. Multiple Classes and Series of Stock. Certificates for Option
Shares, when issued, will have substantially the following legend:
THE ISSUER IS AUTHORIZED TO ISSUE SHARES OF MORE THAN ONE
CLASS AND TO ISSUE SHARES IN MORE THAN ONE SERIES OF AT LEAST
ONE CLASS. THE ISSUER WILL FURNISH WITHOUT CHARGE TO EACH
STOCKHOLDER WHO SO REQUESTS A STATEMENT OF THE POWERS,
DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR
SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS.
10. Miscellaneous.
(a) This Option Agreement is subject to all the terms,
conditions, limitations and restrictions contained in the Plan. In the event of
any conflict or inconsistency between the terms hereof and the terms of the
Plan, the terms of the Plan shall be controlling.
(b) This Option Agreement is not a contract of employment and
the terms of your employment shall not be affected by, or construed to be
affected by, this Option Agreement, except to the extent specifically provided
herein. Nothing herein shall impose, or be construed as imposing, any obligation
(i) on the part of the Company
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or any Related Entity to continue your employment, or (ii) on your part to
remain in the employ of the Company or any Related Entity.
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Please indicate your acceptance of all the terms and
conditions of the Option and the Plan by signing and returning a copy of this
Option Agreement.
Very truly yours,
CUSTOMERONE HOLDING CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Its: CEO
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ACCEPTED:
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Signature of Optionee
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Name of Optionee (Please Print)
Date:
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