Exhibit 10.13
EROL'S INTERNET, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT is entered into December 28, 1996, by and among EROL'S
INTERNET, INC., a Delaware corporation, (the "Company"), XXXX XXXXXX (the
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"Majority Shareholder"),and XXXXXX X. XXXXX (the "Holder").
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WHEREAS, pursuant to the Employment Agreement of even date herewith
(the "Employment Agreement") and attached hereto as Exhibit B, the Holder has
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agreed to become the Chief Executive Officer and President of the Company; and
WHEREAS, pursuant to the Employment Agreement the Company has agreed
to grant to the Holder, in partial consideration for his agreement to enter into
the Employment Agreement and the Employee Proprietary Information and Inventions
Agreement (the "Proprietary Rights Agreement"), the right to purchase 775,000
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shares of voting common stock of the Company, par value one mil ($.001) per
share (the "Shares").
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NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants set forth herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Recitals. The foregoing recitals are hereby made a part of this
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Agreement.
2. Grant. The Company hereby grants to the Holder, subject to
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the terms and conditions of this Option, the right (the "Purchase Rights") to
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purchase from the Company in accordance with Section 2 hereof, up to Seven
Hundred Seventy-Five Thousand (775,000) Shares, as such Shares may be adjusted
in accordance with Section 7 hereof, at a per share price of Fifty Cents ($0.50)
(the "Exercise Price") (the "Options").
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3. Option Vesting.
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(a) Subject to the termination provisions of this Section 3(a),
Options shall vest as follows. Options to acquire Shares shall vest in two (2)
equal installments of Two Hundred Fifty-Eight Thousand, Three Hundred Thirty-
Three (258,333) on the thirteenth day of August, 1997, and August, 1998, and a
third annual installment of Two Hundred Fifty-Eight Thousand, Three Hundred
Thirty-Four (258,334) on the thirteenth day of August, 1999; or, if earlier, all
non-vested Options shall vest (i) upon the occurrence of a Change in Control (as
defined herein) or (ii) upon the termination of the Holder's employment with the
Company either by the Company for any reason other than for "cause," as defined
herein or by the Holder by resignation with "good reason," as defined herein. If
the Holder's employment is terminated (i) by the
Company for "cause," (ii) by the Holder by resignation without "good reason," or
(iii) upon the death or due to the "total disability," as defined herein, of the
Holder, then all Options that, as of the effective date of such termination,
have not vested shall terminate and be of no further force or effect, and only
the Options as vested immediately prior to such event shall be deemed to be
exerciseable hereunder. All vested Options shall terminate if not exercised
within 180 days after the date of termination of the Holder's employment with
the Company for any reason.
(b) For purposes of this Agreement the term "cause" means: (A) the
Holder's failure to perform his employment duties as determined by the Board of
Directors of the Company (the "Board") in the exercise of its sole discretion
after reasonable notice to the Holder by the Company specifying such failure and
providing the Holder with a reasonable opportunity, as determined by the Board
in the exercise of its sole discretion, to cure such failure given the context
of the circumstances; (B) the Holder's breach of the covenants or agreements
contained in the Employment Agreement, the Proprietary Rights Agreement, or of
any other material agreement or undertaking of the Holder; (C) the Holder's
commission of a felony or any crime involving moral turpitude, fraud or
misrepresentation, whether or not related to the business or property of the
Company; (D) any act of the Holder against the Company which enriches the Holder
in derogation of his duties to the Company; (E) any willful or purposeful act or
omission (or any act or omission taken in bad faith) of the Holder having the
effect of injuring the business or business relationships of the Company as
determined by the Board in the exercise of its sole discretion.
(c) For purposes of this Agreement, the term "Change in Control"
shall mean that subsequent to the effectiveness of a registration statement
under the Securities Act of 1933 (the "Securities Act") filed on behalf of the
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Company:
(1) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "Exchange Act") is or becomes
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the beneficial owner, directly or indirectly, of securities of the Company
representing thirty percent (30%) or more of the combined voting power of the
then outstanding securities of the Company; or
(2) a change of control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of the Regulation 14A
promulgated under the Exchange Act as in effect on the date of this Agreement;
or
(3) there shall be consummated:
(A) any consolidation or merger or share exchange of the
Company in which the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company's common stock would be converted into
cash, securities or other property, other than a merger of the Company in which
the holders of the Company's common stock immediately prior to the merger have
the same
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proportionate ownership of common stock of the surviving corporation immediately
after the merger, or
(B) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or a substantial
portion, of the assets of the Company; or
(4) the stockholders of the Company approve a plan or proposal
for the complete or partial liquidation, dissolution or divisive reorganization
of the Company.
For purposes of this Section 3(c), the term "person" shall not be deemed to
include any officer or director of the Company as of the date hereof or any such
person's transferee if such transferee is related to such person by blood or
marriage, or is affiliated with or controlled by such person.
(d) For purposes of this Agreement the term "total disability"
("Total Disability") means total disability as defined in the Company's group
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and individual disability plans, if any. If the Company does not have in
existence such plans, then Total Disability shall mean:
(1) The inability to perform the duties required under the
Employment Agreement for a continuous period of six (6) months during the
Employment Period, as defined in the Employment Agreement, due to "mental
incompetence" or "physical disability" as hereinafter defined. The Holder shall
be considered to be mentally incompetent and/or physically disabled: (i) if he
is under a legal decree of incompetency (the date of such decree being deemed
the date on which such mental incompetence occurred for purposes of this Section
3(d)); or (ii) because of a "Medical Determination of Mental and/or Physical
Disability." A Medical Determination of Mental and/or Physical Disability shall
mean the written determination by: (i) the physician regularly attending the
Holder, and (ii) a physician selected by the Company, that because of a
medically determinable mental and/or physical disability the Holder is unable to
perform each of the material duties of the Holder, and such mental and/or
physical disability is determined or reasonably expected to last twelve (12)
months or longer after the date of determination, based on medically available
information. If the two physicians do not agree, they shall jointly choose a
third consulting physician and the written opinion of the majority of these
three (3) physicians shall be conclusive as to such mental and/or physical
disability and shall be binding on the parties. The date of any written opinion
which is conclusive as to the mental and/or physical disability shall be deemed
the date on which such mental and/or physical disability commenced for purposes
of this Section 3(d), if the written opinion concludes that the Holder is
mentally and/or physically disabled. In conjunction with determining mental
and/or physical disability for purposes of this Agreement, the Holder consents
to any such examinations which are relevant to a determination of whether he is
mentally and/or physically disabled, and which is required by any two (2) of the
aforesaid physicians, and to furnish
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such medical information as may be reasonably requested, and to waive any
applicable physician patient privilege that may arise because of such
examination. All physicians selected hereunder shall be board-certified in the
specialty most closely related to the nature of the mental and/or physical
disability alleged to exist.
(2) For purposes of determining whether the Holder is
mentally incompetent or physically disabled for the continuous six (6) month
period specified in this Section 3(d), such disability shall be deemed to
continue from the date of any legal decree of incompetency, or written opinion
which is conclusive as to the mental and/or physical disability, through the
date the legal decree expires or is otherwise revoked or removed, or the date on
which the mental and/or physical disability has ceased, as the case may be, as
set forth in a written opinion prepared by the physicians described in this
Section 3(d) pursuant to the procedures provided herein.
(e) For purposes of this Agreement the term "resignation for
good reason" or "good reason" means the following:
(1) the failure of the Company within ten (10) days written
notice by the Holder to the Board to make any payment due to the Holder
hereunder;
(2) without the express written consent of the Holder, any
change by the Company in the Holder's function, duties, or responsibilities not
generally consistent with those contemplated in Section 2 of the Employment
Agreement, which is not rescinded within thirty (30) days after the Holder has
given the Board written notice of such change which notice specifies in detail
the change;
(3) any decrease in the Holder's base salary, life or
disability insurance coverage or benefits payable to the Holder or to which he
is entitled other than a decrease in benefits which is part of a general
decrease in benefits payable to officers and other salaried employees of the
Company;
(4) any material failure (other than a failure to make
payments) by the Company to comply with any of the provisions of the Employment
Agreement, which change or failure, as the case may be, continues unremedied for
thirty (30) days after Holder has given the Board written notice of such change
or failure which notice specifies in detail the change or failure, as the case
may be;
(5) any failure by the Company to obtain the assumption of
the Employment Agreement by any successor or assign of the Company.
4. Exercise Period.
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(a) Options may be exercised in whole or in part, at any time or
from time to time, from the date upon which they vest until the termination of
such options. Except as otherwise provided in this Agreement, to the extent not
exercised, any Options which have become exerciseable under Section 3 shall
accumulate and be exerciseable by the Holder, in whole or in part, in any
subsequent period but not later than ten (10) years from the date such Options
are granted. After such date, such Options shall expire automatically and
without further action.
(b) The "Exercise Date" shall mean the date or dates during the
Exercise Period on which the Purchase Rights represented by the Option are
exercised by the Holder.
5. Covenants as to Common Stock. The Company has taken all action
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necessary and appropriate to properly authorize to the Holder the Shares
pursuant to this Option, and to reflect such Option on its books and records.
The Company covenants and agrees that the Shares issuable on the exercise of the
Options shall, at delivery, be fully paid, validly issued and non-assessable,
free from taxes, liens and charges with respect to their purchase. The Company
shall at all times reserve and hold available sufficient shares of its Common
Stock to satisfy the Options outstanding hereunder.
6. Method of Exercise.
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(a) All or any portion of vested Options are exerciseable at the
option of the Holder at any time during the Exercise Period, upon the delivery
of a notice of exercise, in the form attached as EXHIBIT A, to the Company, with
such notice duly executed and upon payment of the Exercise Price for the shares
purchased in accordance with this Section. Options shall be deemed to have been
exercised, and the Company agrees that the Holder shall be deemed to be a
stockholder of record of the Company for the purposes of receiving dividends and
for all other purposes whatsoever, as of the date of delivery of such notice
accompanied by payment in full of the Exercise Price.
(b) The Exercise Price may be paid (i) in cash (including
certified or cashier's check), (ii) with the consent of the Company, in Shares
(including Shares acquired upon exercise of the Option) or a combination of cash
and Shares, or (iii) by such other means as the Company may approve. The Fair
Market Value, as defined in Section 15, of Shares delivered on exercise of the
Option shall be determined as of the Exercise Date.
(c) The Holder shall also pay to the Company, as a condition to
the exercise of all or any portion of the Purchase Rights, all amounts which the
Company is required to withhold under federal, state or local law in connection
with the exercise of the Option.
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(d) Until the Shares become publicly traded, as a condition to
the exercise of all or any portion of the Purchase Rights, the Holder shall be,
or shall execute and become, a party to the Stockholders' Agreement attached
hereto as EXHIBIT B, unless such agreement has previously terminated.
7. Adjustment of Purchase Rights; Registration Rights.
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(a) In case prior to the expiration of all of the Options by
exercise or by the terms of the Options, the Company shall undertake any
reclassification, stock split, reverse stock split, stock dividend or any
similar proportionately applied change (collectively, a "Reclassification") of
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outstanding shares of Common Stock (other than a change in, of, or from par
value), the Holder shall thereafter be entitled, upon exercise of an Option, to
purchase the kind and amount of validly issued shares of stock and other
securities and property receivable upon such Reclassification by a holder of the
number of shares of Common Stock which the Options entitle the Holder to
purchase immediately prior to such Reclassification.
(b) In case prior to the expiration of the Options by exercise
or by the terms hereof, the Company shall consolidate or merge with any other
entity where the Company is not the surviving entity, or convey all, or
substantially all, of its property or assets to, any other entity then, at the
Company's sole option (i) it may automatically convert a nominal number of the
Options hereunder to the number of validly issued shares of Common Stock of the
Company theretofore purchasable upon exercise of the Options; (ii) as a
condition precedent to such consolidation, merger, or conveyance, undertake
lawful and adequate provision whereby the Holder shall thereafter have the right
to receive from the Company or the successor entity, as the case may be, upon
the basis and upon the terms and conditions specified in this Option, in lieu of
the Shares theretofore purchasable upon the exercise of the Option, such shares
of validly issued stock, securities, or assets as may be issued or payable with
respect to, or in exchange for, the number of Shares theretofore purchasable
upon the exercise of the Option had such consolidation, merger, or conveyance
not taken place, and in any such event the rights of the Holder to an adjustment
of the number of Shares purchasable upon the exercise of the Option as herein
provided, shall continue and be preserved in respect of any stock or securities
which the Holder becomes entitled to purchase, or (iii) it may make arrangements
with the Holder for the payment of appropriate consideration for the
cancellation and surrender of the Option.
(c) If at any time or from time to time, the Company shall
determine to register any of its securities through the filing of a registration
statement pursuant to the Securities Act (a "Registration"), then the Holder
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shall enjoy the same rights to include in any such registration any shares of
the Company's Common Stock as enjoyed by the Majority Shareholder, and the
Company promptly will give the Holder written notice thereof; and include in
such registration all Shares held by the Holder as specified in a written
request or requests made by the Holder within thirty (30) days after receipt of
such written notice from the Company. Notwithstanding the foregoing, if the
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Company imposes a limitation on the aggregate number of shares of the Company's
Common Stock held by the Majority Shareholder and the Holder that may be
included in such registration, then the number of shares of the Company's Common
Stock to be included in such registration by the Majority Shareholder and the
Holder, respectively, shall be allocated between the Majority Shareholder and
the Holder in proportion, as nearly as practicable, to the respective amounts of
shares of the Company's Common Stock held by the Holder and the Majority
Shareholder at the time filing of such registration statement.
(1) The Company shall have the right to terminate or
withdraw any Registration initiated by the Company under this Section 7(c) prior
to the effectiveness of such registration whether or not the Holder has elected
to include any of the Shares in such registration.
(d) Upon each determination of the number of Shares deliverable
upon the exercise of the Option, the number of Shares so deliverable shall be
only a round sum obtained by rounding up to the nearest whole number any
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fractions resulting from the calculation of the number of shares to be
delivered. No fractional shares shall be issued upon the exercise of the Option.
8. No Transfers. The Holder, by acceptance of the benefits granted
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hereunder, covenants and agrees not to sell, gift, endorse, assign, transfer,
pledge, mortgage, hypothecate, grant a security interest in, lien, encumber or
otherwise absolutely or collaterally dispose of, voluntarily or involuntarily
(collectively, "Transfer"), this Option or the Shares issuable upon exercise
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hereof, except in strict accordance with the provisions of this Section. The
Option shall not, without the express prior written approval of the Company
(which may be withheld or granted in its sole discretion), be Transferred by the
Holder, and any attempted Transfer shall be void. Any Shares acquired by
exercise of this Option may only be Transferred in accordance with the terms of
the Stockholders Agreement unless such agreement has been previously terminated.
9. Exchange For Other Denominations. If the Company approves a
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Transfer of this Option pursuant to the provisions of Section 8, then this
Option shall be exchangeable for new instruments of like tenor and date
representing in the aggregate the right to exercise Shares hereunder in
denominations designated by the Holder at the time of surrender.
10. Stock Transfer Records. The Option shall be registered on the
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books of the Company, which shall be kept by it at its principal office for that
purpose. The Company agrees that while the Option shall remain valid and
outstanding, the Company's stock transfer books shall not be closed for any
purpose whatsoever except under arrangements which shall insure to the Holder
when exercising this Option all rights and privileges which it might have had or
received if the stock transfer books had not been closed and it had exercised
its Option at any time during which such transfer book shall have been closed.
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11. Charges, Taxes and Expenses. Issuance of certificates for Shares
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issuable upon the exercise of the Option or any portion thereof shall be made
without charge to the Holder for any issue taxes or any other incidental
expenses in respect of the issuance of such certificates to and in the name of
the Holder, all of which taxes and expenses shall be paid by the Company, and
such certificates shall be issued in the name of the Holder. Certificates will
be issued in a name other than that of the Holder upon the request of a Holder
and payment by the Holder of any applicable transfer taxes and compliance with
all applicable securities laws and the terms of this Option. If required by
applicable law, the Company shall have the right to deduct from any payment or
compensation made to the Holder any federal, state or local income or other
taxes required by such law to be withheld with respect to the issuance of Shares
upon exercise of the Option. If required by applicable law, it shall be a
condition to the obligation of the Company to deliver Shares upon exercise of
the Option that the Holder pay to the Company such amount as may be requested by
the Company for the purpose of satisfying any liability for such withholding
taxes. The Holder may request, in accordance with any applicable regulations, to
pay a portion or all of the amount of such minimum required or additional
permitted withholding taxes in shares of Common Stock subject to the
exerciseable Option hereunder. If the Company, in its sole discretion, accepts
the Holder's request, the Holder shall exercise such Option, then immediately
surrender back to the Company Shares having a "fair market value", as defined
herein, equal to the amount of such required or permitted withholding taxes.
12. Loss, Theft, Destruction or Mutilation of Option. Upon receipt by
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the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Option, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Option, if mutilated, the Company will
make and deliver a new option of like tenor and date, in lieu of this Option.
13. Remedies. The Company acknowledges and agrees that the remedies
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at law of the Holder in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this Option
are not and will not be adequate, and that such terms may be specifically
enforced by a decree for the specific performance of any agreement contained
herein or by an injunction against a violation of any of the terms hereof or
otherwise.
14. Compliance with Securities Laws. The Holder acknowledges that the
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stock issuable upon exercising this Option has not been registered with the
Securities and Exchange Commission for public sale and that, until so registered
and until all other federal and state laws regulating public sale have been
complied with, federal and state securities laws restrict the manner in which
such stock may be sold. As a result, such stock may not be readily transferable
or convertible into cash. To ensure that the stock issuable upon exercise of
this Option by the Holder is not purchased or sold in
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violation of such securities laws, the Company may impose the following
requirements in connection with exercise of this Option:
(a) The Company may require that the Holder deliver for the
benefit of the Company and any successor to the Company at the time of each
exercise of this Option and as a condition to exercise of this Option: (i) a
written representation and agreement that the shares of stock being acquired
upon exercise are being acquired by the Holder solely for investment; (ii) an
agreement that the stock will not be sold or transferred without registration or
the availability of an exemption from registration under the Securities Act of
1933 and applicable state securities laws; (iii) a representation as to the
knowledge and experience in financial and business matters of the Holder and its
ability to bear the economic risk of its investment; (iv) an agreement to
provide prior to any transfer of the stock (or any stock of the Company
subsequently acquired as a result of a stock dividend, stock split, merger
consolidation, or other similar action), at the Holder's expense, an opinion of
counsel acceptable to the Company to the effect that the transfer of such stock
will not violate the applicable requirements of the Securities Act of 1933 and
applicable state securities laws; and (v) such other representations and
agreements which the Company may deem necessary or desirable to ensure
compliance with applicable federal and state securities laws.
(b) The Company may also require that the Holder obtain a
"purchaser representative" as that term is defined in applicable federal and
state securities laws and/or provide, at Holder's expense, an opinion of counsel
acceptable to the Company to the effect that the exercise of this Option will
not violate the applicable requirements of the Securities Act of 1933 and
applicable state securities laws.
(c) The stock certificates for any shares of stock issued
pursuant to exercise of this Option may bear legends restricting transferability
of the shares unless the shares are registered or an exemption from registration
is available under the Securities Act of 1933 and applicable state securities
laws and unless the transfer complies with the terms of any applicable
Stockholder's Agreement. The Company may notify its transfer agent to stop any
transfer of the shares not made in compliance with the restrictions.
15. Call Rights. Upon the termination of the Holder's employment with
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the Company with cause, or the resignation of the Holder's employment with the
Company (other than as the result of the expiration of the Employment Period, as
defined in the Employment Agreement), the Company shall have the option to
purchase, and the Holder shall be obligated to sell, the Shares issued upon all
previous exercises of the Options. The Company shall be entitled to exercise the
rights provided in this Section 15 by providing written notice by certified
mail, return receipt requested or delivered by hand with a written receipt to
the Holder of its election no later than 120 days after such termination or
resignation at the address of the Holder set forth in the stock records of the
Company (or if no such address is set forth in such stock records, in the
personnel records of the Company). The purchase price of the Shares shall be the
Fair Market Value of the
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Shares, as defined below, as of the date the Company mails or otherwise delivers
such written notice to the Holder. Closing with respect to such purchase by the
Company shall occur not later than ten (10) days after the date of such notice
at the principal offices of the Company or as the parties may otherwise mutually
agree. At such closing the Holder shall deliver the certificate or certificates
evidencing such Shares, appropriately endorsed in blank for transfer, and the
Company shall deliver in cash the purchase price for such Shares.
If the Shares are not publicly traded, "Fair Market Value" of a Share
shall be the price per share agreed upon between Company and the Holder. If such
agreement cannot be reached within thirty (30) days after a written request by
one party to the other party that a Fair Market Value be established, the Holder
and Company shall each select, within ten (10) days thereafter, one (1)
nationally recognized independent investment banking firm to determine the Fair
Market Value. If a party fails to select an independent investment banking firm,
the investment banking firm selected by the other party shall itself make the
determination contemplated herein. If within thirty (30) days after their
selection, such firms cannot agree as to the Fair Market Value, within ten (10)
days thereafter, they shall mutually select a third nationally recognized
independent investment banking firm which shall be engaged to make the
determination as to Fair Market Value. Such third (3rd) investment banking firm
shall make such determination within thirty (30) days of its engagement. The
determination of Fair Market Value under this Agreement shall be final and
binding upon the parties. Each party shall bear the fees and expenses of the
independent investment banking firm it selects, and the fees and expenses of the
third (3rd) independent investment banking firm shall be borne equally by the
parties. In determining Fair Market Value of a Share, the independent investment
banking firms or firm shall determine the fair market value of all of the
Company's common equity, including the common stock and any other classes of
common stock. The Fair Market Value of a Share shall be the amount determined by
dividing the aggregate fair market value of all of the Company's common equity
by the sum of (a) the number of then issued and outstanding shares of all
classes of common stock of the Company, and (b) the number of shares of Common
Stock which could be purchased upon exercise of all stock options and other
stock awards then granted. The independent investment banking firm or firms
shall take into account Company's financial leverage and its capital structure
and shall consider whatever factors it or they deem relevant, including the
price to earnings ratio, the debt to equity ratio, the market value to book
value ratio, and the market value to cash flow ratio of the common stock of
publicly traded companies in the same industry that are deemed reasonably
comparable for this purpose.
If the Shares are publicly traded, then "Fair Market Value" shall mean
the last reported sale price per Share, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
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trading on a national securities exchange or included for quotation on the
Nasdaq-National Market, or if the Shares are not so listed or admitted to
trading or included for quotation, the last quoted price, or if the Shares are
not so quoted, the average of the high bid and low asked prices, regular way, in
the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or, if such system is no
longer in use, the principal other automated quotations system that may then be
in use or, if the Shares are not quoted by any such organization, the average of
the closing bid and asked prices, regular way, as furnished by a professional
market maker making a market in the Shares as selected in good faith by the
Company or by such other source or sources as shall be selected in good faith by
the Company. If, as the case may be, the relevant date is not a trading day, the
determination shall be made as of the next preceding trading day. As used
herein, the term "trading day" shall mean a day on which public trading of
securities occurs and is reported in the principal consolidated reporting system
referred to above, or if the Shares are not listed or admitted to trading on a
national securities exchange or included for quotation on the Nasdaq-National
Market, any day other than a Saturday, a Sunday or a day in which banking
institutions in the State of New York are closed.
16. Miscellaneous.
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(a) In case any provision of this Option shall be invalid,
illegal or unenforceable, or partially invalid, illegal or unenforceable, the
provision shall be enforced to the extent, if any, that it may legally be
enforced and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
(b) This Option and any term hereof may be changed, waived,
discharged or terminated only by a statement in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
(c) The headings in this Option are for purposes of reference
only, and shall not limit or otherwise affect any of the terms hereof.
(d) Any covenants, representations, warranties and agreements
made by the parties shall be deemed to have been relied upon by the parties,
shall survive the exercise, expiration and other termination of this Option,
shall continue until the applicable statute of limitations bars any claim
thereon, and shall be effective regardless of any investigation which may have
been made at any time by or on behalf of a party.
(e) This Option shall be binding upon the heirs, personal
representatives, and permitted successors and assigns, as the case may be, of
the parties hereto.
(f) This Option is made, is entered into, and is to be performed
in, and shall be governed by the laws of the Commonwealth of Virginia, without
giving effect to its conflicts of laws provisions, and without regard to its
place of execution or its place of performance. The parties irrevocably consent
and agree to the exclusive
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jurisdiction of the Circuit Court for Fairfax County or the United States
District Court for the Eastern District of Virginia Each party waives all rights
to a trial by jury in any suit, action or proceeding hereunder.
(g) The Company and the Holder mutually covenant and agree that
if any controversy or dispute relating to this Agreement arises between them
that cannot be resolved by negotiation, either party may, after providing
written notice to the other party, submit such dispute to arbitration in Fairfax
County, Virginia in accordance with the rules of the American Arbitration
Association then in effect unless the rules of another association are mutually
agreeable to the parties. The arbitrator appointed must be an attorney or
retired judge who has experience with the principle issues to be arbitrated. Any
reward or finding made pursuant to such arbitration shall in all respects be
well and fairly kept and observed and may be imposed by judgment of the
appropriate court in the Commonwealth of Virginia pursuant to the applicable
laws relating thereto. Each party shall bear his or its own costs in connection
with the arbitration, except that the cost of the arbitrator shall be borne by
the party that the arbitrator, in his sole discretion, determines has not
prevailed on a majority of the issues submitted to arbitration.
(h) This Option shall constitute and contain the entire
agreement and understanding of the parties, and shall supersede any and all
prior negotiations, correspondence, understandings and agreements between the
parties respecting the subject matter hereof.
(i) The provisions of Section 15 hereof shall survive the
exercise of all or any portion of the Option hereunder and the expiration of the
exercise period pursuant to Section 2 hereof or other termination of this
Agreement.
12
IN WITNESS WHEREOF, the Company has duly executed and delivered the
Option as of the twelfth day of August, 1996.
ATTEST/WITNESS: EROL'S INTERNET, INC.
/s/ Xxxxxxxx X. Xxxxxxx By: /s/ Xxxx Xxxxxx
----------------------- -------------------------
/s/ Xxxxxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxx
----------------------- ----------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxxxxx X. Xxxxxxx /s/ Xxxx Xxxxxx
----------------------- ----------------------------
Xxxx Xxxxxx
13
Exhibit A
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EXERCISE OF OPTION TO PURCHASE PURSUANT TO ATTACHED OPTION
_________, 19__
To Erol's Internet, Inc.
The undersigned, the Holder of record of the attached Option granted
by Erol's Internet, Inc., a Delaware corporation (the "Company") of shares of
-------
Common Stock, hereby exercises the attached Option, upon the terms set forth in
such Option, to purchase ______ shares of Common Stock of the Company, and
hereby makes payment of the Exercise Price to the Company as determined by the
Option.
------------------------------
14
Exhibit B
---------
Employment Agreement
See Exhibit 10.9
15
