EXHIBIT 2.2(h)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated effective as of June __, 1999, by and between
VideoLabs, Inc., a Delaware corporation (the "Company") and Xxxxx Xxxxxxx, a
Minnesota resident ("Employee").
WHEREAS, Employee is the sole shareholder of Acoustic Communication
Systems, Inc., which is being acquired by the Company pursuant to a Plan and
Agreement of Merger dated May __, 1999 (the "Merger Agreement"), which is
Closing on the date of this Agreement; and
WHEREAS, as a condition to Closing under the Merger Agreement, Employee
and the Company are entering into this Agreement to provide for the employment
of Employee by the Company upon and subject to the terms and conditions set
forth in this agreement.
NOW, THEREFORE, in consideration of the premises and the respective
undertakings of the Company and Employee set forth below, the Company and
Employee agree as follows:
1. EMPLOYMENT. The Company hereby employs Employee, and appoints
Employee to the position of Chief Technical Officer, and such other positions as
may be assigned by the Board of Directors or any executive officer of the
Company, and Employee accepts such employment and appointment and agrees to
perform services for the Company, for the period and upon the other terms and
conditions set forth in this agreement.
2. TERM OF EMPLOYMENT. The term of Employee's employment hereunder
shall commence on the effective date hereof and shall continue for an initial
term of three (3) years thereafter ("Term of Employment"). The Term of
Employment shall automatically renew for additional one year terms thereafter
unless prior written notice of nonrenewal is given by either Employee or the
Company at least sixty (60) days prior to the end of the Term of Employment.
Notwithstanding the foregoing, the Employee may terminate the Term of Employment
at any time upon ninety (90) days prior written notice to the Company.
3. POSITION AND DUTIES.
3.01 Service with Company. During the Term of Employment, Employee
agrees to perform such reasonable employment duties, consistent with the terms
of this agreement and the position held by Employee as provided in section 1
above, as the Board of Directors or any executive officer of the Company shall
assign to Employee from time to time. Such duties and employment
responsibilities shall be performed in accordance with the Company's rules,
regulations and instructions now in force or which may be adopted by the Company
in the future. In addition, during the Term of Employment the Company shall
nominate, and recommend to its shareholders, the election of Employee to the
Board of Directors of the Company at each annual meeting of the shareholders.
3.02 Performance of Duties. During the Term of Employment, the
Employee agrees to serve the Company to the best of Employee's ability. The
Employee shall have active involvement and be fully committed to the business
and affairs of the Company, and shall devote Employee's full attention and time
to the affairs of the Company. Employee hereby confirms that Employee is under
no contractual commitments inconsistent with Employee's obligations set forth in
this agreement. During his Term of Employment, however, Employee shall not
render or perform services for any other corporation, firm, entity or person,
nor will Employee become involved in the operations or management of any other
commercial corporation, firm, entity or person, which is in competition with the
business of the Company.
3.03 Noncompetition. In addition to (and not in lieu of) any
noncompetition covenants given by Employee in connection with the Merger
Agreement, the Employee hereby covenants and agrees that during the Term of
Employment, and for a period of twelve (12) months following the termination of
Employee's employment for any reason (the "Restricted Term"), the Employee shall
not, for any person or entity other than the Company or its affiliates, directly
or indirectly, own, manage, operate, control, act as an advisor or consultant
to, or participate in, the ownership, management, operation, or control of any
business involving the manufacture or sale, whether at wholesale or retail, of
image capture, transmission or manipulation devices or the provision of
equipment, software or design, installation or maintenance services with regard
to the data, voice or video conferencing or presentation systems for customers
in any geographic market served by the Company or any of its subsidiaries during
the Restricted Term; provided, however, that the foregoing shall not prevent the
Employee from owning not more than a one percent (1%) interest in any entity
engaged in such a competing business whose securities are traded on any
securities exchange or in the over-the-counter markets.
4. COMPENSATION.
4.01 Base Salary. As base compensation for all services to be
rendered by the Employee under this agreement during the Term of Employment ,
the Company shall pay to Employee a minimum monthly base salary of $10,833 per
month beginning with the effective date of this agreement, which salary shall be
paid in accordance with the Company's normal payroll procedures and policies.
The board of directors may hereafter increase, but not decrease, such monthly
base salary.
4.02 Stock Options. Employee shall be granted as of the date hereof
an option to purchase shares of the Company's common stock, par value $.01 per
share, pursuant to the Company's NonQualified Stock Option Plan, as follows:
30,000 shares on the date of agreement vesting 10,000 shares per year on the
annual anniversary of this agreement.
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All options shall be granted at an exercise price equal to the closing
bid price for such common stock on the date of this agreement. All such stock
options shall be granted under, and pursuant to all terms and conditions of, the
Company's NonQualified Stock Option Plan.
4.03 Benefits. Employee shall be entitled to such company-sponsored
benefits as are provided to employees of the Company, subject to the terms and
conditions of the applicable policies and/or plans.
4.04 Expenses. The Company will pay or reimburse Employee for all
reasonable and necessary out-of-pocket expenses incurred by Employee in the
performance of Employee's duties under this agreement, subject to the
presentment of appropriate vouchers in accordance with the Company's normal
polices for expense verification.
4.05 Bonuses. Employee shall be entitled to participation in the
Company's management bonus pool. During the Term of Employment, Employee shall
be entitled receive, annually, a bonus of up to 100% of base salary based upon
agreed upon objectives and the Company's results for the year. The Employee
shall also be eligible for Company wide profit sharing pursuant to the Company's
employment policies from time to time in effect.
4.06 Vacation. Employee shall be entitled to paid vacation
consistent with the Company's normal vacation policy.
5. CONFIDENTIAL INFORMATION. Except as permitted or directed by the
Company's Board of Directors, during the Term of Employment or at any time
thereafter Employee shall not divulge, furnish or make accessible to anyone or
use in any way (other than in the ordinary course of the business of the
Company) any confidential or secret knowledge or information of the Company
which Employee has acquired or become acquainted with or will acquire or become
acquainted with prior to the termination of the Term of Employment, whether
developed by Employee or by others, concerning any trade secrets, confidential
or secret designs, processes, formulae, plans, devices or material (whether or
not patented or patentable) directly or indirectly useful in any aspect of the
business of the Company, any customer or supplier lists of the Company, any
confidential or secret development or research work of the Company, or any other
confidential information or secret aspects of the business of the Company.
Employee acknowledges that the above-described knowledge or information
constitutes a unique and valuable asset of the Company and represents a
substantial investment of time and expense by the Company and its predecessors,
and that any disclosure or other use of such knowledge or information other than
for the sole benefit of the Company would be wrongful and would cause
irreparable harm to the Company. The foregoing obligations of confidentiality,
however, shall not apply to any knowledge or information which is now published
or which subsequently becomes generally publicly known in the form in which it
was obtained from the Company, other than as a direct or indirect result of the
breach of this agreement by Employee. It is hereby acknowledged that it is not
the intention of the forgoing provisions to preclude the Employee from securing
gainful employment with
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subsequent employers who are not competitors of the Company or who would
otherwise have no reasonable commercial use of the above described knowledge or
information, but only to protect the Company's legitimate proprietary
information or knowledge.
6. VENTURES. If, during the Term of Employment, Employee is engaged in
or associated with the planning or implementing of any project, program or
venture involving the Company and a third party or parties, all rights in such
project, program or venture shall belong to the Company. Except as formally
approved by the Company's Board of Directors, Employee shall not be entitled to
any interest in such project, program or venture or to any commission, finder's
fee or other compensation in connection therewith other than the salary or other
compensation to be paid to Employee as provided in this agreement.
7. PATENT, COPYRIGHTS AND RELATED MATTERS.
7.01 Disclosure and Assignment. Employee will promptly disclose in
writing to the Company complete information concerning each and every invention,
discovery, improvement, device, design, apparatus, practice, process, method or
product, whether patentable or not, made, developed, perfected, devised,
conceived or first reduced to practice by Employee, either solely or in
collaboration with others, during the Term of Employment, or within six months
thereafter, whether or not during regular working hours, relating to any phase
of the business of the Company conducted at such time (hereinafter referred to
as "Developments"). Employee, to the extent that Employee has the legal right to
do so, hereby acknowledges that any and all of said Developments are the
property of the Company and hereby assigns and agrees to assign to the Company
and all of the Employee's right, title and interest in and to any and all of
such Developments.
7.02 Future Developments. As to any future Developments made by
Employee and which are first conceived or reduced to practice during the Term of
Employment, or within six months thereafter, but which are claimed for any
reason to belong to an entity or person other than the Company, Employee will
promptly disclose the same in writing to the Company and shall not disclose the
same to others if the Company, within sixty (60) days thereafter, shall claim
ownership of such Developments under the terms of this agreement. If the Company
makes such claim, Employee agrees that, insofar as the rights (if any) of
Employee are involved, it will be settled by arbitration in accordance with the
rules of the American Arbitration Association. The locale of the arbitration
shall be Minneapolis, Minnesota (or other locale convenient to the Company's
principal executive offices). If the Company makes no such claim, Employee
hereby acknowledges that the Company has made no promise to receive and hold in
confidence any such information disclosed by Employee.
7.03 Limitation on Sections 7.01 and 7.02. The provisions of
sections 7.01 and 7.02 shall not apply to any Development meeting the following
conditions:
(a) such Development was developed entirely on Employee's own
time; and
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(b) such Development was made without the use of any Company
equipment, supplies, facility or trade secret information; and
(c) either:
(i) such Development does not relate (i) directly to the
business of the Company, or (ii) to the Company's actual
or demonstrably anticipated research or development; or
(ii) such Development does not result from any work performed
by the Employee for the Company.
7.04 Employee Assistance. Employee agrees to assist Company in
obtaining patents or copyrights on any Developments assigned to the Company that
Company, in its sole discretion, seeks to patent or copyright. Employee also
agrees to sign all documents and do all things deemed necessary by Company to
obtain and/or maintain such patents or copyrights, to assign them to Company,
and to protect them against infringement. The obligations of this Section 7 are
continuing and shall survive the termination of Employee's employment with
Company.
7.05 Appointment of Agent. Employee irrevocably appoints the Company
to act as Employee's agent and attorney in fact to perform all acts necessary to
obtain/or maintain patents or copyrights to any Developments assigned by
Employee to Company under this agreement if (i) Employee refuses to perform
those acts or (ii) is unavailable, within the meaning of the United States
patent and copyright laws. Employee acknowledges that the grant of the foregoing
power of attorney is coupled with an interest and shall survive the death or
disability of Employee and the termination of Employee's employment with
Company.
8. TERMINATION.
8.01 Grounds for Termination. This agreement shall be terminated
prior to the end of the Term of Employment under the following circumstances:
(a) By mutual agreement of Employee and the Company;
(b) Immediately upon the death of Employee;
(c) Upon delivery by Employee of a notice of termination to the
Company, in which event this agreement shall be terminated
ninety (90) days after receipt of such notice; and
(d) Immediately for Cause, in the event of (i) Employee's personal
dishonesty, willful misconduct, breach of fiduciary duty,
intentional failure to perform stated duties, willful
violation of any laws (other than
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minor traffic violations or similar offenses), or material
breach of the policies or procedures of the Company. The
Company agrees to give Employee thirty (30) days notice to
cure those limited items that can actually be cured prior to
effecting termination pursuant to this subsection, such
termination to be deemed to be termination for cause; or (ii)
the bankruptcy or insolvency of the Company.
Notwithstanding any termination of this agreement, Employee, in consideration of
his employment hereunder to the date of such termination, shall remain bound by
the provisions of this agreement which specifically relate to periods,
activities or obligations upon or subsequent to the termination of Employee's
employment, and the Company shall remain bound by the provisions of section 5
(to the extent that they relate to time periods prior to the date of such
termination).
8.02 Severance Payment for Termination Following a Change in
Control. If a Change in Control of the Company occurs during the Term of
Employment and, following such Change in Control, either (i) the Company
terminates the employment of Employee other than for Cause, or (ii) Employee
voluntarily terminates their employment, in either case during the six (6) month
period following the Change in Control, Employee shall be entitled to the
severance compensation provided in this Section 8.02, in full and complete
satisfaction of any and all obligations of the Company under this Agreement and
as the sole and exclusive remedy or severance available to Employee as a result
of the termination. The amount of the severance compensation shall be equal to
the sum of Employee's then current minimum base salary for twelve (12) months.
Any severance compensation shall be paid in equal installments over the twelve
(12) month period following the effective date of termination, and shall be
subject to applicable withholdings and in accordance with the regular payroll
practices of the Company. Any employee benefits provided to Employee shall
terminate upon the effective date of termination, subject to such continuation
rights as may be available to Employee by law. Nothing in this agreement,
including the severance payments described in this section, shall in any way be
construed to extend the period of Employee's employment with the Company.
For purposes of this section, a Change in Control shall mean either of
the following:
(a) a change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), whether or not the
Company is then subject to such reporting requirement; or
(b) a merger or consolidation to which the Company is a party if,
following the effective date of such merger or consolidation,
the individuals and entities who were shareholders of the
Company prior to the effective date of such merger or
consolidation have beneficial ownership (as
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defined in Rule 13d-3 under the Exchange Act) of less than
fifty percent (50%) of the combined voting power of the
surviving corporation following the effective date of such
merger or consolidation.
8.03 Surrender of Records and Property. Upon termination of
his employment with the Company, Employee shall deliver promptly to the Company
all records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof, which are the
property of the Company or which relate in any way to the business, products,
practices or techniques of the Company, and all other property, trade secrets
and confidential information of the Company, including, but not limited to, all
documents which in whole or in part contain any trade secrets or confidential
information of the Company, which in any of these cases are in Employee's
possession or under Employee's control. Provided, however, that Employee shall
be entitled to retain items of sentimental value, copies of which shall be
provided to the Company at the request of the Company and at the Company's
expense.
9. MISCELLANEOUS.
9.01 Governing Law. This agreement is made under and shall be
governed by and construed in accordance with the laws of the State of Minnesota.
9.02 Prior Agreements. This agreement contains the entire agreement
of the parties relating to the subject matter hereof and supersedes all prior
agreements and understandings with respect to such subject matter, and the
parties hereto have made no agreements, representations or warranties relating
to the subject matter of this agreement which are not set forth herein.
9.03 Withholding Taxes. The Company may withhold from all salary,
bonus, severance or other benefits payable under this agreement all federal,
state, city or other taxes as shall be required pursuant to any law or
governmental regulation or ruling.
9.04 Amendments. No amendment or modification of this agreement
shall be deemed effective unless made in writing and signed by the parties
hereto.
9.05 No Waiver. No term or condition of this agreement shall be
deemed to have been waived, nor shall there be any estoppel to enforce any
provisions of this agreement, except by a statement in writing signed by the
party whom enforcement of the waiver or estoppel is sought. Any written waiver
shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than specifically waived.
9.06 Severability. To the extent any provision of this agreement
shall be invalid or unenforceable, it shall be considered deleted herefrom and
the remainder of such provision and of this agreement shall be unaffected and
shall continue in full force and effect.
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In furtherance and not in limitation of the foregoing, should the duration or
geographical extent of, or business activities covered by, any provision of this
agreement be in excess of that which is valid and enforceable under applicable
law, then such provision shall be construed to cover only that duration, extent
or activities which may validly and enforceably be covered. Employee
acknowledges the uncertainty of the law in this respect and expressly stipulates
that this agreement be given the construction which renders its provisions valid
and enforceable to the maximum extent (not exceeding its express terms) possible
under applicable law.
9.07 Assignment. This agreement shall not be assignable, in whole or
in part, by either party without the written consent of the other party.
9.08 Injunctive Relief. Employee agrees that it would be difficult
to compensate the Company fully for damages for any violation of the provisions
of this agreement, including without limitation the provisions of sections 5, 6,
and 7. Accordingly, Employee specifically agrees that the Company shall be
entitled to temporary and permanent injunctive relief to enforce the provisions
of this agreement and that such relief may be granted without the necessity of
proving actual damages. This provision with respect to injunctive relief shall
not, however, diminish the right of the Company to claim and recover damages in
addition to injunctive relief.
9.09 Mandatory Arbitration, In the event any dispute arises under
this agreement, or as to the breach hereof, and if the dispute cannot be settled
within a reasonable time through direct negotiations between the parties, which
the parties agree to pursue in good faith, such dispute shall be submitted to
binding arbitration conducted in Minneapolis, Minnesota, in accordance with the
then-current Commercial Rules of the American Arbitration Association ("AAA").
The costs and expenses of the arbitration shall be paid by the party against
whom the arbitrators render a decision, if a decision is rendered against a
party, otherwise the costs and expenses shall be shared equally by Employee and
the Company. The arbitrators shall have full power and authority to rule on any
question of law in the same manner as any judge of any court of competent
jurisdiction, and the decision of the arbitrators shall be final and conclusive
upon the parties, and shall not be subject to any appeal or review if the
arbitrators have followed the Commercial Rules of the AAA. The arbitrators shall
have full power to make any award (including the award of equitable remedies)
that shall under the circumstances presented to them be deemed to be proper;
provided that the arbitrators shall not have the power to award punitive damages
or to limit, expand or otherwise modify the terms of this agreement. Judgment
may be entered upon any award rendered by the arbitrators in accordance with
applicable law in any court of competent jurisdiction.
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IN WITNESS WHEREOF, the parties have executed this agreement effective
as of the date and year first written above.
VIDEOLABS, INC.
By
-------------------------------------
Its
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Xxxxx Xxxxxxx
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EXHIBIT 2.2(h) CONTINUED
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (the "AGREEMENT"), is made and entered
into effective as of June ___, 1999, by and between Xxxxx Xxxxxxx, a Minnesota
resident (the "PRINCIPAL"), and VideoLabs, Inc., a Delaware corporation (the
"COMPANY").
RECITALS:
WHEREAS, pursuant to the terms of a Plan and Agreement of Merger dated
May ___, 1999, by and between, among others, Acoustic Communication Systems,
Inc., a Minnesota corporation ("ACS") and Company (the "MERGER AGREEMENT"), ACS
has agreed to be merged with and into a subsidiary of Company; and
WHEREAS, as a condition to Company's agreement to the merger, Company
has required that the Principal refrain from competing with the Company pursuant
to the terms of this Agreement; and
WHEREAS, the Principal is willing to enter into this Agreement subject
to the consideration set forth in this Agreement.
AGREEMENTS:
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, the receipt and sufficiency of which
are acknowledged, the parties agree as follows:
1. Restrictive Covenants. In consideration of the amount payable
pursuant to Section 3, the consummation of the transactions pursuant to the
Merger Agreement and other agreements, and in addition to (and not in lieu of)
any other covenants given by Principal in connection with the Merger Agreement
and that certain Employment Agreement by and between Principal and the Company
of even date herewith (the "Employment Agreement"), Principal covenants and
agrees that for a period of twelve (12) years commencing on the date of this
Agreement (the "Term of Restriction"):
(a) Principal shall not, for any person or entity other than
VideoLabs or its affiliates, directly or indirectly, own, manage,
operate, join, control or participate in, be compensated by or be
connected with as an officer, employee, agent, consultant, partner,
stockholder, or otherwise, any Competitive Business (as defined below)
anywhere within Iowa, Minnesota, Nebraska, North Dakota, South Dakota,
or
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Wisconsin. As used in this Agreement, the term "COMPETITIVE BUSINESS"
means any business involving the provision of equipment, software or
design, installation or maintenance services with regard to the data,
voice or video conferencing or presentation systems for customers;
provided, however, that the foregoing shall not prevent the Principal
from owning not more than a one percent (1%) interest in any entity
engaged in such a competing business whose securities are traded on any
securities exchange or in the over-the-counter markets.
(b) Except as permitted or directed by the Company's Board of
Directors, during the Term of Restriction or at any time thereafter
Principal shall not divulge, furnish or make accessible to anyone or use
in any way (other than in the ordinary course of the business of the
Company) any confidential or secret knowledge or information of ACS
which Principal has acquired or become acquainted with prior to or as of
the Closing of the Merger Agreement, whether developed by Principal or
by others, concerning any trade secrets, confidential or secret designs,
processes, formulae, plans, devices or material (whether or not patented
or patentable) directly or indirectly useful in any aspect of the
business of the ACS, any customer or supplier lists of the ACS, any
confidential or secret development or research work of ACS, or any other
confidential information or secret aspects of the business of ACS.
Principal acknowledges that the above-described knowledge or information
constitutes a unique and valuable asset of ACS and represents a
substantial investment of time and expense by ACS and its predecessors,
and that any disclosure or other use of such knowledge or information
other than for the sole benefit of ACS or the Company would be wrongful
and would cause irreparable harm to ACS. Both during and after the Term
of Restriction, Principal will refrain from any acts or omissions that
would reduce the value of such knowledge or information to ACS. The
foregoing obligations of confidentiality, however, shall not apply to
any knowledge or information which is now published or which
subsequently becomes generally publicly known in the form in which it
was obtained from the ACS, other than as a direct or indirect result of
the breach of this Agreement by Principal. It is hereby acknowledged
that it is not the intention of the forgoing provisions to preclude the
Principal from securing gainful employment with subsequent employers who
are not competitors of ACS or the Company or who would otherwise have no
reasonable commercial use of the above described knowledge or
information, but only to protect ACS's legitimate proprietary
information or knowledge.
The covenants of the Principal set forth in this Section 1 are collectively
referred to as the "RESTRICTIVE COVENANTS."
2. Reasonable Scope of Restrictive Covenants; Severability. The
necessity of protection against the competition of Principal and the nature and
scope of such protection has been carefully considered and negotiated by the
parties to this Agreement. Principal agrees and acknowledges that (a) the
duration, scope and geographic areas applicable to the covenant not to compete
described in this Section are fair, reasonable and necessary and (b)
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adequate consideration has been received by Principal for such obligations. If,
however, for any reason any term or provision of this Agreement, or any part or
aspect thereof, shall be deemed by a court of competent jurisdiction to be
overly broad in scope or duration or both, the court considering the same shall
have the power and hereby is authorized and the parties agree that it may modify
such term or provision to limit such scope and duration so that such term or
provision is no longer overly broad and to enforce the same as so limited.
Subject to the foregoing sentence, in the event that any provisions of this
Agreement shall be held to be invalid or unenforceable for any reason, such
invalidity or unenforceability shall attach only to such provisions and shall
not affect or render invalid or unenforceable any other provision of this
Agreement. Subject further to the foregoing, if a court of any one or more
jurisdictions holds any term or provision of this Agreement, or any part or
aspect thereof, unenforceable by reason of the breadth of such scope or
otherwise, then such determination will not affect or render invalid or
unenforceable such term or provision in any other jurisdiction; such terms and
provisions as they relate to each such jurisdiction being, for this purpose,
severable into separate and independent covenants.
3. Consideration. In consideration of the provisions of this Agreement,
the Company agrees to pay Principal the sum of $750,000, in cash or other
immediately available funds, on April 7, 2000. The Principal may at his
discretion defer such payment for up to twelve (12) successive one-year periods,
in which event the deferred balance shall accrue interest at the Company's short
term, cost of borrowing.
4. Remedies for Breach. In the event that the Principal shall breach the
Restrictive Covenants, then the Principal shall pay to the Company, as
liquidated damages and as full and complete settlement of any damages incurred
by Company, an amount equal to the then unamortized balance of the consideration
(which will amortize evenly over the one hundred forty-four (144) months at
$5,208.33 per month) set forth in Section 3 of this Agreement, plus attorneys'
fees and collection costs. The balance of the consideration to be repaid by
Principal to the Company shall be calculated by rounding the date of Principal's
breach to the first day of the nearest month and subtracting that period of
Principal's compliance with the Restrictive Covenants from one hundred
forty-four (144). However, in the event of Principal's actual or threatened
breach of this Agreement and Principal's failure to repay the consideration as
set forth above, the Company shall be entitled to such full and complete relief
as any court of equity can then afford, including, but not limited to, the
remedies of specific performance and injunctive relief, until the repayment
obligation set forth above is paid in full. To secure the foregoing repayment
obligation, from the time of payment by the Company under Section 3 above, and
until the end of the Term of Restriction, Principal shall deliver, and Company
shall hold in pledge, an equivalent number of shares of the Buyer's Stock (as
defined in the Merger Agreement) equal to the unamortized balance of such
amount. The number of shares so held in pledge shall be reasonably adjusted from
time to time to reflect changes in the unamortized balances and the fair value
of such shares. Principal shall be entitled to substitute collateral of
equivalent value upon notice to Company. Upon termination of the Term of
Restriction, payment of the foregoing amount, or such substitution, the Company
shall return to Principal any shares then held in pledge.
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5. Termination. This Agreement shall immediately terminate upon the
occurrence of any of the following:
(a) At the option of Principal, provided that to exercise this
option the Principal provides Company with: (i) thirty (30) days
written notification thereof; and (ii) a cash payment with the
notice in an amount equal to the unamortized balance of the
consideration as set forth in Sections 3 and 4 of this Agreement
from and after the date of the notice (or the date of
termination, if later); provided, however, that in calculating
the cash payment for the unamortized portion, Principal shall
not be required to pay for any period as to which Principal is
restricted from competing under any other agreement with
Company, so long as Principal is not in breach thereof.
(b) Immediately upon a "Change in Control" as defined herein. For
purposes of this section, a Change in Control shall mean either
of the following:
(i) a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),
whether or not the Company is then subject to such
reporting requirement; or
(ii) a merger or consolidation to which the Company is a
party if, following the effective date of such merger or
consolidation, the individuals and entities who were
shareholders of the Company prior to the effective date
of such merger or consolidation have beneficial
ownership (as defined in Rule 13d-3 under the Exchange
Act) of less than fifty percent (50%) of the combined
voting power of the surviving corporation following the
effective date of such merger or consolidation.
6. Miscellaneous.
6.01 Governing Law. This Agreement is made under and shall be governed
by and construed in accordance with the laws of the State of Minnesota.
6.02 Prior Agreements. This Agreement, the Merger Agreement, and the
Employment Agreement contain the entire agreement of the parties relating to the
subject matter hereof and thereof and supersedes all prior agreements and
understandings with respect to such subject matter, and the parties hereto and
thereto have made no agreements,
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representations or warranties relating to the subject matter of this Agreement,
the Merger Agreement, and the Employment Agreement which are not set forth
herein and therein.
6.03 Withholding Taxes. The Company may withhold from the consideration
all federal, state, city or other taxes as shall be required pursuant to any law
or governmental regulation or ruling.
6.04 Amendments. No amendment or modification of this Agreement shall be
deemed effective unless made in writing and signed by the parties hereto.
6.05 No Waiver. No term or condition of this Agreement shall be deemed
to have been waived, nor shall there be any estoppel to enforce any provisions
of this agreement, except by a statement in writing signed by the party whom
enforcement of the waiver or estoppel is sought. Any written waiver shall not be
deemed a continuing waiver unless specifically stated, shall operate only as to
the specific term or condition waived and shall not constitute a waiver of such
term or condition for the future or as to any act other than specifically
waived.
6.06 Assignment. This Agreement shall not be assignable, in whole or in
part, by either party without the written consent of the other party. However,
the Company may assign the Agreement to an affiliate under the control of the
Company or under common control with the Company without the consent of the
Principal.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date and year first written above.
VIDEOLABS, INC.
By
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Its
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Xxxxx Xxxxxxx
14
