EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of September 27, 1996, by and
among VIDEOLAN TECHNOLOGIES, INC., a Delaware corporation (the "Company"), and
JACK SHIRMAN (the "Executive").
W I T N E S S E T H:
WHEREAS the Company desires to induce the Executive to enter the
employ of the Company for the period provided in this Agreement in accordance
with the terms and conditions set forth below; and
WHEREAS, the Executive is willing to accept such employment with the
Company on a full-time basis in accordance with such terms and conditions;
NOW, THEREFORE, for and in consideration of the premises hereof and
the mutual covenants contained herein, the parties hereto hereby covenant and
agree as follows:
1. Employment.
(a) The Company hereby employs the Executive as Chief
Executive Officer of the Company, and the Executive hereby accepts such
employment with the Company, for the period set forth in Section 2 hereof, all
upon the terms and conditions hereinafter set forth.
(b) The Company shall use its best efforts to cause the
Executive to be nominated to the Company's Board of Directors and, in addition,
the Executive shall be entitled to nominate one individual to the Company's
Board of Directors, subject to approval by the Nominating Committee of the
Board of Directors.
(c) The Executive affirms and represents that he is under no
obligation to any former employer or other party which is in any way
inconsistent with, or which imposes any restriction upon, the Executive's
acceptance of employment hereunder with the Company, the employment of the
Executive by the Company, or the Executive's undertakings under this Agreement.
2. Term of Employment. Unless earlier terminated as
hereinafter provided, the term of the Executive's employment under this
Agreement shall be for a period beginning on the date September 27, 1996 (the
"Employment Date") and ending on September 26, 1998 (such period referred to as
the "Initial Term"). Unless earlier terminated as hereinafter provided, the
term of the Executive's employment under this Agreement shall be automatically
extended on a year-to-year basis (September 30 through September 29 of each
successive year) (such one-year periods referred to as "Additional Terms") upon
the expiration of the Initial Term or any Additional Term, unless prior to the
commencement of a 90-day period expiring at the end of such Initial Term or any
Additional Term, the Company or the Executive shall have given written notice
to the other stating that the term of this Agreement shall not be extended. For
purposes of this Agreement, the term "Employment Term" shall mean the Initial
Term plus all Additional Terms.
3. Duties. The Executive shall be employed as Chief Executive
Officer of the Company and shall faithfully and competently perform such
employment duties and responsibilities as the Board of Directors of the Company
may from time to time prescribe. The Executive shall perform his duties at such
places and times as the Board of Directors of the Company may reasonably
prescribe. Except as may otherwise be approved in advance by the Board of
Directors of the Company, and except during vacation periods and reasonable
periods of absence due to sickness, personal injury or other disability, the
Executive shall devote his full time throughout the Employment Term to the
services required of him hereunder. The Executive shall render his services
exclusively to the Company during the Employment Term. The Executive agrees to
perform his duties hereunder to the best of his ability and at a level of
competency consistent with the position occupied, to act on all matters in a
manner he reasonably believes to be in and not opposed to the best interests of
the Company, and to use his best efforts, skill and ability to promote the
profitable growth of the Company. The Executive and the Company agree that the
Executive shall perform his duties primarily at the Company's corporate office
and that he shall travel as necessary to perform his duties. The Executive
agrees to locate in the Louisville, Kentucky area on or before September 29,
1997.
4. Compensation.
(a) Salary. As compensation for the complete
and satisfactory performance by the Executive of the services to be performed
by the Executive hereunder during the Employment Term, the Company shall pay the
Executive a base salary ("Base Salary") at the annual rate of not less than Two
Hundred Thousand Dollars ($200,000). Any Base Salary payable hereunder shall be
paid in regular intervals in accordance with the Company's payroll practices.
(b) Stock Option. Upon the execution of this Agreement and
approval by the Company's Board of Directors, the Company shall grant the
Executive stock options for an aggregate of 300,000 shares of the Company's
common stock subject to the terms and conditions of a Stock Option Agreement of
even date hereof between the Company and the Executive (the "Stock Option
Agreement"), a copy of which is attached hereto.
(c) Annual Bonuses. The Executive shall be entitled to
receive annual bonuses under an annual executive bonus plan to be developed by
the Executive, if such plan is approved by the Company's Board of Directors.
(d) Withholding, etc. The payment of any Base Salary and
bonuses hereunder shall be subject to applicable withholding and payroll taxes,
and such other deductions as may be required under the Company's employee
benefit plans.
5. Benefits. During the Employment Term, the Executive shall:
(a) be eligible to participate in all employee fringe
benefits and any pension and/or profit sharing plans that may be provided by
the Company for its key executive employees in accordance with the provisions
of any such plans, as the same may be in effect on and after the date hereof,
excluding equity or bonus plans unless specifically granted by the Board of
Directors of the Company;
(b) be entitled to the same period of paid vacation
provided by the Company for its key executive employees;
(c) be entitled to sick leave, sick pay and disability
benefits in accordance with any Company policy that may be applicable on
and after the date hereof to key executive employees;
(d) be entitled to reimbursement for all reasonable and
necessary itemized out-of-pocket business expenses incurred by the Executive in
the performance of his duties hereunder in accordance with the Company's
policies applicable (on and after the date hereof) thereto;
(e) be entitled to reimbursement of the Executive's reasonable
expenses incurred in connection with his relocation to Louisville, Kentucky in
an aggregate amount not to exceed $40,000, including reasonable moving and
travel expenses for the Executive and his family, reasonable temporary
furnished dwelling costs in Louisville, Kentucky, and reasonable costs
associated with purchasing a permanent residence;
(f) be entitled to reimbursement of the Executive's reasonable
interim expenses incurred prior to his relocation to Louisville, Kentucky,
including weekly business class round-trip airfare between the Executive's
current residence and Louisville, Kentucky, local housing in Louisville,
Kentucky (i.e., apartment or hotel) and local transportation in Louisville,
Kentucky.
(g) be entitled to reimbursement of the costs incurred in
connection with the preparation of the Executive's income tax return in an
amount not to exceed $2,000 annually.
6. Termination.
(a) The Executive's employment hereunder shall be terminated
upon the occurrence of any of the following:
(i) death of the Executive;
(ii) termination of the Executive's employment hereunder by
the Executive at any time for any reason whatsoever (including, without
limitation, resignation or retirement);
(iii) termination of the Executive's employment hereunder by
the Company because of the Executive's inability to perform his duties on
account of disability or incapacity for a period of 90 or more days or for
shorter periods aggregating a period of ninety or more days, whether or not
consecutive, occurring within any period of 12 consecutive months;
(iv) termination of the Executive's employment hereunder by
the Company at any time "for cause," such termination to take effect
immediately upon written notice from the Company to the Executive; and
(v) termination of the Executive's employment hereunder by
the Company at any time, other than termination by reason of disability or
incapacity as contemplated by clause (iii) above or termination by the Company
"for cause" as contemplated by clause (iv) above.
The following actions, failures or events by or affecting the
Executive shall constitute "cause" for termination within the meaning of clause
(iv) above: (1) conviction of having committed a felony, (2) acts of dishonesty
or moral turpitude that are materially detrimental to the Company and/or its
Affiliates, (3) acts or omissions which the Executive knew or should have
reasonably known were likely to materially damage the business of the Company
and/or any Affiliate of the Company, (4) failure by the Executive to obey the
reasonable and lawful directions of the Board of Directors of the Company, (5)
gross negligence by the Executive in the performance of, or continuing failure
by the Executive to perform, his obligations hereunder, or (6) the Executive's
willful breach of any material agreement or covenant of this Agreement or any
fiduciary duty owed to the Company.
(b) In the event that the Executive's employment is terminated
pursuant to clause (i), (iii) or (v) of paragraph (a) above at any time, then
the Company shall continue to pay to the Executive, as severance pay or
liquidated damages or both, the amount of his Base Salary and bonus, if any,
which the Executive would have otherwise been entitled to receive pursuant to
Section 4(a) and (c) hereof had the Executive's employment not been so
terminated, from the date of termination through the later of (i) the date that
is twelve months after the date of such termination and (ii) September 26, 1998
(such amount being herein referred to as the "Severance Payments" and such
period being herein referred to as the "Severance Period"); provided, however,
that the Severance Payments payable pursuant to this paragraph (b) shall be
reduced by any amounts earned by the Executive as a result of his employment by
any business (whether as a director, officer, employee, manager, owner,
consultant, independent contractor, advisor or otherwise) during the Severance
Period; provided, further, however, that nothing in this paragraph (b) shall be
construed to require the Executive to seek employment or otherwise mitigate or
reduce the Severance Payments to be made hereunder. The Severance Payments
shall be made at the same intervals as the Base Salary and bonuses were payable
immediately prior to termination.
(c) Notwithstanding anything to the contrary expressed or
implied herein, except as required by applicable law, in the event that:
(i) any person other than the Company shall acquire
more than 50% of the Company's then outstanding Common Stock through a tender
offer, exchange offer or otherwise; or there shall be a sale of all or
substantially all of the assets of the Company (either such event being
referred to as the "Change in Control"); and
(ii) within one year from the date of the Change in
Control: (A) the Executive's employment is terminated by the Company pursuant
to clause (v) of paragraph (a) above; or (B) the Executive resigns his
employment with the Company after there is a material reduction in his title,
duties and responsibilities with the Company following such Change in Control
(other than the failure of the Executive to assume responsibilities over new
operations acquired by the Company as a result of the Change in Control);
then the Executive shall be entitled to receive as severance pay or liquidated
damages or both, the amount of Base Salary and bonus, if any, which the
Executive would have otherwise been entitled to receive pursuant to Section
4(a) and (c) hereof had the Executive's employment not been so terminated, from
the date of termination until the end of the Initial Term or the date that is
twelve months after the date of such termination, whichever is later.
(d) Notwithstanding anything to the contrary expressed or
implied herein, except as required by applicable law and except as set forth in
paragraphs (b) and (c) above, the Company (and its Affiliates) shall not be
obligated to make any payments to the Executive or an his behalf of whatever
kind or nature by reason of the Executive's cessation of employment (including,
without limitation, by reason of termination of the Executive's employment by
the Company for "cause"), other than (i) such amounts, if any, of his Base
Salary and bonus, if any, as shall have accrued and remained unpaid as of the
date of said cessation and (ii) such other amounts which may be then otherwise
payable to the Executive from the Company's benefits plans or reimbursement
policies, if any.
(e) No interest shall accrue on or be paid with respect to any
portion of any payments due under this Section 6.
(f) Amounts payable pursuant to this Section 6 are in lieu of
any severance pay that would otherwise be payable to the Executive upon
termination of his employment with the Company under the Company's severance
pay policies, if any.
7. Confidentiality. The Executive hereby covenants, agrees and
acknowledges as follows:
(a) The Executive's employment hereunder creates a
relationship of confidence and trust between the Executive and the Company with
respect to certain information pertaining to the business of the Company and
its Affiliates (as hereinafter defined) or pertaining to the business of any
client or customer of, or supplier to, the Company or its Affiliates which may
be made known to the Executive by the Company or any of its Affiliates or by
any client or customer of, or supplier to, the Company or any of its Affiliates
or learned by the Executive during the period of his employment by the Company.
(b) The Executive agrees that he will not without the prior
written consent of the Board of Directors of the Company use for his benefit or
disclose at any time during his employment by the Company, or thereafter,
except to the extent required by the performance by him of his duties as an
employee of the Company, any information obtained or developed by him while in
the employ of the Company with respect to any actual or potential customers,
clients, suppliers, products, services, employees, financial affairs,
technologies, applications, patents, patent application processes, or methods
of marketing, service or procurement of the Company or any of its Affiliates,
or any confidential matter regarding the business of the Company or any of its
Affiliates that, except information that at the time is generally known to the
public other than as a result of disclosure by him not permitted hereunder
(collectively, "Confidential Information").
(c) Upon written request of the Executive, the Company will
provide, from time to time, written notice stating whether or not it considers
any particular item of information to be Confidential Information. In any
event, the Executive agrees to contact the Company prior to any disclosure of
any information acquired during the term of his employment by the Company, to
determine whether the Company considers the information subject to the
continuing obligations hereunder.
(d) The Executive agrees that upon termination of his
employment by the Company for any reason, the Executive shall forthwith return
to the Company all documents and papers relating to Confidential Information
and other physical property in his possession belonging to the Company or any
of its Affiliates.
(e) Without limiting the generality of Section 12 hereof, the
Executive hereby expressly agrees that the foregoing provisions of this Section
7 shall be binding upon the Executive's heirs, successors and legal
representatives.
8. Ownership of Certain Works Created by the Executive. The Executive
will promptly disclose and describe to the Company all inventions,
improvements, discoveries, technical developments and works of authorship,
whether or not patentable or copyrightable, made or conceived by him either
alone or with others during the Employment Term. All such works, made, devised
or discovered by the Executive, whether by himself or jointly with others,
which relate or pertain in any way to the business of the Company or any of its
Affiliates ("Work Products") shall inure to the benefit of the Company or such
Affiliate and become and remain the Company's or such Affiliate's sole and
exclusive property. Work Products may be created within or without the
facilities of the Company or its Affiliates and before, during or after normal
business hours. Work Products are specifically intended to be works made for
hire by the Executive, but in any event, the Executive agrees to execute an
assignment (and does hereby assign) to the Company, the Executive's entire
right, title and interest in and to Work Products, and to execute any other
instruments and documents that may be requested by the Company for the purpose
of applying for and obtaining patents or registration of copyright with respect
thereto in the United States and in all foreign countries. The Executive
further agrees, whether or not in the employ of the Company, to cooperate to
the extent and in the manner reasonably requested by the Company in the
prosecution or defense of any litigation or other proceedings involving any
Work Products, but all of the Executive's reasonable expenses in connection
therewith shall be paid by the Company. If a patent application or copyright
registration is filed by the Executive, or on the Executive's behalf, within
one year after leaving the Company's employ, describing a work within the scope
of the Executive's work for the Company or any of its Affiliates or which
otherwise relates to the business of the Company or any of its Affiliates, it
is to be conclusively presumed that such work was conceived by the Executive
during the period of his employment hereunder and that the work is to be
treated as a Work Product for all purposes hereunder.
9. Non-Assignability.
(a) Neither this Agreement nor any right or interest hereunder
shall be assignable by the Executive, his beneficiaries, or legal
representatives without the prior written consent of the Company, provided,
however, that nothing in this Section 9(a) shall preclude the Executive from
designating a beneficiary to receive any benefit payable hereunder upon his
death or incapacity.
(b) Except as required by law, no right to receive payments
under this Agreement shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge, or hypothecation or to
exclusion, attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.
10. Competition, etc. Until the termination of the Executive's
employment hereunder and during the two-year period following the termination
of the Executive's employment hereunder for any reason whatsoever:
(a) The Executive will not make any statement or perform any
act intended to advance an interest of any existing or prospective competitor
of the Company or any of its Affiliates in any way that will or may injure an
interest of the Company or any of its Affiliates in its relationship and
dealings with existing or potential suppliers, customers or clients, or solicit
or encourage any other employee of the Company or any of its Affiliates to do
any act that is disloyal to the Company or any of its Affiliates, inconsistent
with the interest of the Company or any of its Affiliate's interests or in
violation of any provision of this Agreement;
(b) The Executive will not make any statement or perform any
act intended to cause any existing or potential customers or clients of the
Company or any of its Affiliates to make use of the services or purchase the
products of any existing or future business in which the Executive has or
expects to acquire a proprietary interest or in which the Executive is or
expects to be made an employee, officer, director, manager, consultant,
independent contractor, advisor or otherwise, if such services or products in
any way compete with the services or products sold or provided or expected to
be sold or provided by the Company or any of its Affiliates to any existing or
potential customer or client;
(c) The Executive will not directly or indirectly (as an
employee, officer, director, manager, consultant, independent contractor,
advisor or otherwise) engage in competition with, or acquire any proprietary
interest in, perform any services for, lend his name to, participate in or be
connected with any business involved in the research, development,
commercialization, manufacture, assembly, sale, licensing, sublicensing,
distribution, supplying or marketing of any service or product which in any way
compete with the services or products sold or provided or expected to be sold
or provided by the Company to any existing or potential customer or client, as
such services or products currently exist or are developed in the future,
including, without limitation, desktop video conferencing and video on demand
products, from any location in the United States of America or elsewhere where
the Company conducts business during the term of this Agreement;
(d) The Executive agrees that, when the Executive has or
expects to acquire a proprietary interest in, or is or expects to be made an
employee, officer, director, manager, consultant, independent contractor,
advisor or otherwise of, any existing or future business that provides or may
provide services or products which in any way compete with the services or
products sold or provided or expected to be sold or provided by the Company or
any of its Affiliates to any existing or potential customer or client, the
Executive will immediately furnish to the Company all information that may
reasonably be of assistance to the Company in acting promptly to protect its
relationships with any existing or potential suppliers, customers or clients
with whom the Executive has had any dealings as a result of his employment by
the Company or any of its Affiliates;
(e) The Executive will not directly or indirectly solicit for
employment, or advise or recommend to any other person that they employ or
solicit for employment, any employee of the Company or any of its Affiliates;
and
(f) The Executive will not directly or indirectly hire,
engage, send any work to, place orders with, or in any manner be associated
with any supplier, contractor, subcontractor or other person or firm which
rendered manufacturing or other services, or sold any products, to the Company
or any of its Affiliates if such action by him would have a material adverse
effect on the business, assets or financial condition of the Company or any of
its Affiliates.
In connection with the foregoing provisions of this Section 10, the
Executive represents that his experience, capabilities and circumstances are
such that such provisions will not prevent him from earning a livelihood. The
Executive further agrees that the limitations set forth in this Section 10
(including, without limitation, any time or territorial limitations) are
reasonable and properly required for the adequate protection of the businesses
of the Company and its Affiliates. It is understood and agreed that the
covenants made by the Executive in this Section 10 (and in Sections 7 and 8
hereof) shall survive the expiration or termination of this Agreement.
For purposes of this Section 10, proprietary interest in a business is
ownership, whether through direct or indirect stock holdings or otherwise, of
one percent (1%) or more of such business. The Executive shall be deemed to
expect to acquire a proprietary interest in a business or to be made an
employee, officer, director, manager, consultant, independent contractor,
advisor or otherwise of such business if such possibility has been discussed
with any officer, director, employee, agent, or promoter of such business.
11. Injunctive Relief. The Executive acknowledges and agrees that a
remedy at law for any breach or threatened breach of the provisions of Sections
7, 8, or 10 hereof would be inadequate and, therefore, agrees that the Company
and any of its Affiliates shall be entitled to injunctive relief in addition to
any other available rights and remedies in cases of any such breach or
threatened breach; provided, however, that nothing contained herein shall be
construed as prohibiting the Company or any of its Affiliates from pursuing any
other rights and remedies available for any such breach or threatened breach.
12. Binding Effect. Without limiting or diminishing the effect of
Section 9 hereof, this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, successors, legal
representatives and assigns.
13. Affiliate. For the purposes of this Agreement, the term
"Affiliate" or "Affiliates" shall mean any entity which (i) directly or
indirectly, controls the Company, (ii) is controlled, directly or indirectly,
by the Company or (iii) is under common control, directly or indirectly, with
the Company.
14. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and either delivered in person or
sent by first class certified or registered mail, postage prepaid, if to the
Company, at the Company's principal place of business, and if to the Executive,
at his home address most recently filed with the Company, or to such other
address or addresses as either party shall have designated in writing to the
other party hereto.
15. Law Governing. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Kentucky.
16. Severability. The Executive agrees that in the event that any
court of competent jurisdiction shall finally hold that any provision of
Sections 7, 8 or 10 hereof is void or constitutes an unreasonable restriction
against the Executive, the provisions of such Sections 7, 8 or 10 hereof shall
not be rendered void but shall apply with respect to such extent as such court
may judicially determine constitutes a reasonable restriction under the
circumstances. If any part of this Agreement other than Sections 7, 8 or 10
hereof is held by a court of competent jurisdiction to be invalid, illegal or
incapable of being enforced in whole or in part by reason of any rule of law or
public policy, such part shall be deemed to be severed from the remainder of
this Agreement for the purpose only of the particular legal proceedings in
question and such part and all other covenants and provisions of this Agreement
shall in every other respect continue in full force and effect and no covenant
or provision shall be deemed dependent upon any other covenant or provision.
17. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such
term, covenant or condition, nor shall any waiver or relinquishment of any
right or power hereunder at any one or more times be deemed a waiver or
relinquishment of such right or power at any other time or times.
18. Entire Agreement; Modifications. This Agreement and the Stock
Option Agreement constitute the entire and final expression of the agreement of
the parties with respect to the subject matter hereof and thereof and supersede
all prior agreements, oral and written, between the parties hereto with respect
to the subject matter hereof and thereof, including without limitation, the
Employment Offer Term Sheet. This Agreement may be modified or amended only by
an instrument in writing signed by both parties hereto.
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Executive have duly executed
and delivered this Agreement as of the day and year first above written.
VIDEOLAN TECHNOLOGIES, INC.
By: /s/ PETER S. BECK
Peter S. Beck, Vice President of
Strategic Market Development
/s/ JACK SHIRMAN
JACK SHIRMAN
EXHIBIT A
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered
into as of this 27th day of September, 1996 (the "Effective Date"), by and
between VIDEOLAN TECHNOLOGIES, INC., a Delaware corporation (the "Company") and
JACK SHIRMAN, an employee of the Company (the "Optionee").
RECITALS:
WHEREAS, the Company and the Optionee have entered into an Employment
Agreement of even date herewith (the "Employment Agreement") pursuant to which
the Optionee will become Chief Executive Officer of the Company;
WHEREAS, under the Employment Agreement, the Board of Directors of the
Company has agreed to grant to the Optionee an option to purchase shares of the
common stock, $.01 par value (the "Common Stock"), of the Company;
NOW, THEREFORE, in consideration of the premises, mutual covenants
hereinafter set forth, and other good and valuable consideration, the Company
and the Optionee agree as follows:
1. Grant of the Option. The Company hereby grants to the Optionee, as
a matter of separate inducement and agreement in connection with the Optionee's
employment by the Company and the Employment Agreement, and not in lieu of any
salary or other compensation for the Optionee's services, the right and option
to purchase (the "Option") all or any part of an aggregate of 300,000 Shares
(the "Shares"), on the terms and conditions set forth herein, subject to
adjustment as provided in Section 8 hereof, at a purchase price as established
under Section 2. The Option shall constitute an "Incentive Stock Option" within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended.
2. Option Exercise Price. The exercise price of the Option (the
"Exercise Price") shall be $6.12 per Share, subject to adjustment in accordance
with Section 8 hereof.
3. Duration of Option. Unless earlier terminated, pursuant to Section
7 hereof, the Option shall expire on September 26, 2001 (the "Termination
Date").
4. Exercise of Option.
(a) The Option shall vest and become exercisable with respect
to 100,000 Shares on September 27, 1997.
(b) The Option shall vest and become exercisable with respect
to an additional 100,000 Shares on September 27, 1998.
(c) The Option shall vest and become exercisable with respect
to an additional 50,000 Shares on September 27, 1999.
(d) The Option shall vest and become exercisable with respect
to the remaining 50,000 Shares on September 27, 2000.
(e) If the Optionee ceases to be employed by the Company for
any reason, the Optionee shall have no rights with respect to that portion of
the Option which is not then exercisable.
5. Conditions to Exercise of the Option.
(a) Exercise of the Option. Subject to the provisions of
Section 4 hereof, the Optionee may exercise the Option by delivering written
notice ("Notice") of exercise to the Company in the form of Annex A hereto
specifying the number of Shares to be purchased accompanied by payment in full
of the Exercise Price in accordance with Section 5(b) hereof.
(b) Payment of Exercise Price. The Company shall accept as
payment for the Exercise Price either a check payable to the order of the
Company in the amount of the Exercise Price multiplied by the number of Shares
for which the Option is being exercised or any other form of payment acceptable
to the Board of Directors of the Company.
(c) Partial Exercise. Subject to the limitations expressed
herein, the Option may be exercised with respect to all or a part of the Shares
that are currently exercisable; provided, however, that no partial exercise of
the Option shall result in the issuance of less than 100 Shares.
(d) Delivery of Shares on Exercise. As soon as practicable
after receipt of the Notice and payment of the Exercise Price, the Company
shall deliver to the Optionee, without transfer or issuance tax or other
incidental expense to the Optionee, at the office of the Company, or at such
other place as may be mutually acceptable, or, at the election of the Company,
by certified mail addressed to the Optionee at the Optionee's address shown in
the employment records of the Company, a certificate or certificates for the
number of Shares set forth in the Notice and for which the Company has received
payment in the manner prescribed herein.
6. Option Not Transferable Except in Event of Death. During the
Optionee's lifetime, the Option shall be exercisable only by the Optionee or
his duly appointed guardian or personal representative, and neither the Option
nor any right hereunder shall be transferable other than by will or the laws of
decent and distribution. The Option may not be subject to execution or other
similar process. If the Optionee attempts to alienate, assign, pledge,
hypothecate or otherwise dispose of the Option or any of the Optionee's rights
hereunder, except as provided herein, or in the event of any levy or any
attachment, execution or similar process upon the rights or interests hereby
conferred, the Company may terminate the Option by notice to the Optionee and
it shall thereupon become null and void.
7. Exercise of the Option upon Termination of Employment. In the
event the Optionee shall cease to be employed by the Company, the Option shall
expire at the earlier of the expiration of the Termination Date or the
following:
(i) three months after termination due to normal
retirement, or earlier retirement with consent of the Board of Directors of the
Company, under a formal plan or policy of the Company;
(ii) three months after the Optionee's termination
pursuant to Section 6(a)(v) of the Employment Agreement;
(iii) one year after termination due to disability
within the meaning of section 105(d)(4) of the Internal Revenue Code of 1986,
as amended (the "Code"), as determined by the Board of Directors of the
Company;
(iv) one year after the Optionee's death; or
(v) coincident with the date of termination if due to
any other reason.
8. Adjustments in Authorized Shares and the Option. In the event of a
merger, reorganization, consolidation, recapitalization, reclassification,
split-up, spin-off, separation, liquidation, share dividend, share split,
reverse share split, share combination, share exchange or other change in the
capital structure of the Company affecting the Common Stock, the Board of
Directors of the Company may substitute or adjust the total number and class of
Shares or other securities that may be issued hereunder, and the Exercise
Price, as it determines to be appropriate and equitable to prevent dilution or
enlargement of the rights of the Optionee and to preserve, without diluting or
exceeding, the value of the Option.
9. Cancellation of Option. The Company shall have the right to
terminate the right of the Optionee to exercise the Option, effective thirty
(30) days after receipt by the Optionee of a written notice from the Company
informing the Optionee that this Option is to be cancelled (the "Cancellation
Notice"). The Company may issue a Cancellation Notice only in connection with
(i) the sale of substantially all of the Company's assets, or (ii) a merger,
consolidation or other corporate transaction in which the Company would not be
the surviving entity. Following receipt of a Cancellation Notice and during the
period prior to the effective date of the termination, the Optionee shall have
the right to exercise the Option (to the extent not previously exercised) with
respect to all Shares, if any, which were immediately exercisable by the
Optionee hereunder during the period following receipt of a Cancellation Notice
until the effective date of the termination.
10. Agreement Does Not Grant Employment Rights. The grant of the
Option shall not be construed as giving the Optionee the right to be retained
in the employ by the Company. Further, the Company expressly reserves the
right, at any time, to dismiss the Optionee with or without cause, free from
any liability, or any claim, except as provided herein or in the Employment
Agreement.
11. Limitation of Company's Liability for Nonissuance. The inability
of the Company to obtain, from any regulatory body having jurisdiction,
authority reasonably deemed by the Company's counsel to be necessary for the
lawful issuance and sale of any Shares under this Agreement shall relieve the
Company of any liability in respect of the nonissuance or sale of such Shares
as to which such requisite authority shall not have been obtained.
12. 1995 Option Plan. The Option has been granted pursuant to the
Amended and Restated 1995 Stock Option Plan of the Company, as amended from
time to time, and is subject to all of the provisions thereof.
13. Miscellaneous.
(a) No Rights as Shareholder. The Optionee shall have no
rights to dividends (other than the adjustment rights described in Section 8 of
this Agreement) or other rights of a shareholder with respect to Shares unless
and until the Optionee has given the Notice and paid in full for such Shares.
(b) Captions. The captions and section headings used herein
are for convenience only, shall not be deemed part of this Agreement and shall
not in any way restrict or modify the context and substance of any section or
paragraph of this Agreement.
(c) Governing Law; Construction. This Agreement shall be
governed by, and construed in accordance with, the laws of the Commonwealth of
Kentucky.
(d) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and both of which
together shall be deemed an Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
VIDEOLAN TECHNOLOGIES, INC.
By:
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Peter S. Beck, Vice President of
Strategic Market Development
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JACK SHIRMAN