Exhibit 10.12
EMPLOYMENT AGREEMENT
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THIS AGREEMENT made as of the 29th day of June, 1998, by and
between CGX Communications, Inc.(hereinafter referred to as the
"Employer" or the "Corporation"), and Xxxxx Xxxxxx (hereinafter
referred to as the "Employee").
WITNESSETH:
WHEREAS, the Employer is engaged, inter alia, through CAIS
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Internet, in the business of providing Internet services and related
activities and operations throughout the United States of America;
and
WHEREAS, the Employee is experienced in the operation and
marketing of communications services; and
WHEREAS, the Employer desires to obtain the services of the
Employee in connection with the Employer's activities and the
Employee is willing to render same to the Employer, all upon the
terms and conditions hereinafter set forth.
WHEREAS, Employee also understands and hereby accepts that
the Performance Targets described in Exhibit A are based on the
Employer's current lines of business and current investments, and
consequently, to the extent other lines of business are offered for
sale by CAIS, an adjustment to the Performance Targets will be
necessitated, such adjustment to be made on reasonable terms
mutually acceptable to Employer and Employee.
NOW, THEREFORE, in consideration of the premises, which are
incorporated into and made part of this Agreement, and of the mutual
covenants and agreements herein contained, the parties hereby agree
as follows:
1. Duties and Term of Employment.
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(A) The Employer does hereby employ the Employee in the
capacity of Vice-President of Sales, CAIS Internet and OverVoice, to
manage the Employer's Internet and OverVoice sales, to develop new
business opportunities and to perform
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such other duties as Employer may from time to time designate.
Employee shall report to the Vice President and General Manager of
CAIS Internet.
(B) The Employee's employment hereunder shall commence on
or before June 29, 1998 and shall continue for a period of one (1)
year thereafter, unless sooner terminated as hereinafter provided.
The parties may extend the term of this Agreement by mutual consent,
and agree to discuss extension a minimum of thirty days prior to the
end of the initial one year period.
2. Compensation of Employee.
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As the sole compensation for all of the Employee's
services rendered hereunder to the Employer, the Employer hereby
agrees to pay the Employee compensation and reimbursements as set
forth in Exhibit "A" attached hereto and made a part hereof.
3. Conduct of Employee.
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Employee does hereby accept said employment under the
terms and conditions herein set forth, and further agrees that
during the term hereof Employee will devote full time, attention and
energies to the business of the Employer, and will not, without the
prior written consent of Employer, actively engage in any other
business, employment or undertaking whatsoever, during the said
period of time. Employee further agrees to, at all times during the
term hereof, abide by and comply with the directions, instructions
and decisions of the Employer and, during the term hereof, to
dutifully and faithfully carry out and perform the duties and
obligations of Employee's position, as herein set forth.
4. Limitations Upon Acts of Employee. Employee agrees:
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(A) That Employee will not draw, accept or make any xxxx
of exchange or promissory note for or on behalf of the Employer; nor
shall Employee otherwise pledge the credit of the Employer, nor
execute or deliver any contracts or documents for or on behalf of
the Employer, except to the extent of the
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Employer's written policies consented to by its General Partner.
(B) That Employee will make available when requested such
information and fully advise the Employer, of all matters in which
Employee shall become involved, and acts which Employee shall
perform, for or on the account of the Employer; and that Employee
shall also promptly inform the Employer of any matters coming to
Employee's attention or knowledge that may materially affect the
interests of the Employer, or its business operations.
(C) The policies of operation of the business of the
Employer shall, from time to time, be determined by the Employer;
and the Employee agrees to conform to and execute all reasonable
policies of Employer as so determined.
5. Termination of Employment.
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The Employer shall have the right to cancel and terminate
this Agreement, and to discharge the Employee for "good cause", or,
without cause upon seven (7) days' prior written notice to Employee.
For purposes of this Article 5, "good cause" shall be construed to
mean proven dishonesty in a material matter, habitual intoxication,
continued and repeated failure (after receipt of written notice from
Employer and reasonable opportunity to cure) to devote proper time
and attention to the business of the Employer, repeated failure
(after receipt of written notice from Employer and reasonable
opportunity to cure) by Employee to carry out the reasonable
directions and instructions of the Employer, conviction of a crime
involving moral turpitude or requiring imprisonment of Employee,
repeated and unexcused absenteeism (after receipt of written notice
from Employer and reasonable opportunity to cure), death of the
Employee, or the material breach by Employee of any of Employee's
obligations or agreements contained in Articles 7 or 8 below, or the
making of any representation or warranty pursuant to Article 6
hereinbelow which shall prove to be inaccurate, incorrect or false
in any respect. Upon termination of Employee's employment by
Employer without cause, the Employer agrees to pay Employee as
severance pay and in full and final settlement all claims between
the parties (excluding any claim by Employee for stock options or
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for wages or other compensation previously earned and fully vested
and not paid) an amount equal to six (6) months of the base salary
of Employee thereafter, plus a pro-rated amount equal to six (6)
months of Cash Incentive Compensation calculated as set forth in
Paragraph 3 of Exhibit A hereto and based on an assumed achievement
of 100% of the Performance Target applicable as of the termination
date. Severance pay shall be paid to Employee immediately upon
termination of her employment by Employer.
6. Employee's Representations.
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Employee hereby represents and warrants to
Employer that there are not now operative and in force any
employment agreements or other instruments of any nature, to which
Employee is a party or under which Employee may be otherwise bound
or subject, which contain any terms or provisions that in any manner
restrict, limit, prevent, prohibit or make unlawful the execution of
Employee of this Agreement, or the performance by Employee of any or
all of Employee's obligations, covenants and duties herein
specified, or Employee's employment by Employer hereunder or
otherwise. In the event the representatives and warranties made by
Employee under this Article 6 should prove to be inaccurate,
incorrect or false in any respect, whether through inadvertence or
willful misrepresentation by Employee, Employer may, at its option,
upon discovering such inaccuracy or the falsity of said
representations, terminate this Agreement for good cause and
Employee's employment hereunder.
7. Trade Secrets.
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The Employee agrees that during the term of employment
with the Employer and at all times after expiration thereof,
Employee will not communicate or divulge, for the benefit of any
competitor, rival or other person, firm, association, or
corporation, whether associated with the Employee or not, any trade
secrets, client lists, confidential employee information or any
other confidential information or confidential material matters of
any nature relating to the business of affairs of the Employer,
which may be utilized by Employer in or about its business and which
trade secrets, information or other matters are communicated or
otherwise become known to the Employee by reason of Employee's
employment
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hereunder, or otherwise. This provision shall expressly
survive any termination or other expiration of this Agreement.
8. Agreement Not to Compete.
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Employee acknowledges that the services to be rendered
hereunder are of a special and unusual character which have a unique
value to the Employer, the loss of which cannot adequately be
compensated by damages in an action at law. Because of the unique
value to the Employer of the services of Employee for which the
Employer has contracted hereunder, and because of the confidential
information to be obtained by Employee, as aforesaid, Employee
agrees and covenants as follows:
(A) Employee agrees that after Employee ceases to be
employed by the Employer, Employee will not, directly or indirectly,
for a period of twenty-four (24) months next following such
cessation of employment, solicit business from, divert business
from, or attempt to convert to other methods of performing functions
related to the services provided by the Employer, any client,
account or customer of the Employer which for purposes hereof shall
be defined as client, account or customer having done business with
the Employer on a sole supplier basis at any time during the one (1)
year period immediately preceding the date of the cessation of
Employee's employment by the Employer.
(B) Employee agrees that for a period of twenty-four (24)
months after Employee ceases to be employed by the Employer,
Employee will not, directly or indirectly, solicit for employment or
employ for Employee's own or for another's benefit any employee of
the Employer.
9. Injunction.
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Should the Employee engage in or perform, either directly
or indirectly, any of the acts prohibited in Articles 7 and 8
hereof, it is agreed that the Employer shall be entitled to recover
any damages incurred by it as a result of such engagement or
violation by Employee in an action at law, and to full injunctive
relief, to be issued by any competent court of equity, enjoining and
restraining the Employee and
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each and every person, firm, organization, association, or
corporation concerned therein, from the continuance of such
violative acts. The provisions of this Article 9 and or Article 8
above shall expressly survive any termination or other expiration of
this Agreement.
10. Non-Assignability.
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The Employee shall have no right to assign this Agreement, or any of
his or her rights or obligations hereunder, to another party or
parties. Employer shall have the right to assign this Agreement to
any successor entity provided that such entity agrees to assume all
of Employer's obligations hereunder.
11. Law Applicable.
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This Agreement shall be construed in accordance with the
laws of the District of Columbia.
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12. Non-Waiver of Breach.
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No waiver by the Employer of any breach of any covenant or
obligation hereof on the part of the Employee to be kept and
performed shall be considered to be a waiver of any such covenant or
provision, or of any future breach thereof.
13. Arbitration.
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Except as herein otherwise provided, any claim or
controversy arising out of or relating to this Agreement or any
breach hereof shall, upon the request of either the Employer or
Employee, be submitted to and settled by arbitration in accordance
with the rules of the American Arbitration Association then in
effect. Any decision made pursuant to such arbitration shall be
binding and conclusive upon the Employer and the Employee and
judgment upon such decision may be entered in any court having
jurisdiction thereof. This Section 13 shall not apply with respect
to any breach or threatened breach of Section 7 or 8.
14. Entire Agreement.
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This instrument contains all of the agreements and
understandings between the parties hereto with respect to the
employment of the Employee by the Employer, and no oral agreements
or written correspondence shall be held to affect the provisions
hereof and shall be binding upon Employer's successors and assigns.
All subsequent changes and modifications, to be valid, shall be by
written instrument executed by the Employer and the Employee.
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IN WITNESS WHEREOF, the Employer has caused this Agreement
to be executed on its behalf by its duly authorized officers and the
Employee has hereunto set his hand and seal, all done on the day and
in the year first hereinabove written.
EMPLOYER:
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ATTEST: CGX Communications, Inc.
/s/ Xxx Xxxxxxxx By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
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Title:Vice President
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EMPLOYEE:
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/s/ Xxx Xxxxxxxx /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
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EXHIBIT "A"
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COMPENSATION
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1. Base Compensation. During the term of the Agreement,
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Employee shall receive a base salary of $xxx,000.00 per Employment
Year. Base salary shall be paid during an Employment Year in twenty-
six (26) equal installments, less applicable social security and
withholding taxes. Employee's base salary will be subject to such
periodic increases as may be determined by the Employer.
2. Employee Benefits. Employer shall reimburse Employee
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for all expenses reasonably incurred by her in the performance of
her duties hereunder, with such reimbursement to be made upon
submission by Employee of itemized statements and receipts in form
reasonably satisfactory to Employer. Employee shall be entitled to
such amount of vacation as is normal and usual for an executive of
his position with the Employer and shall be eligible to participate
in all hospitalization, 401k Plan, insurance and other employee
benefit plans for non-union executive employees which may be
maintained wholly or partially funded by Employer.
3. Incentive Compensation.
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(A) Cash Incentive Compensation.
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During the term of the Agreement, Employee shall be
entitled to Cash Incentive Compensation (to be paid within thirty
(30) days after the end of each quarter) to the extent the
Employer's actual performance for the quarter meets or exceeds the
budgeted quarter performance target (the "Performance Target") for
CAIS total Xxxxxxxx as described below.
It is agreed that the Performance Target for Employment
Year 1, which covers the period of July 1, 1998 through June 30,
1999, shall be $9,500,000 of CAIS total Xxxxxxxx ("Xxxxxxxx" defined
as CAIS xxxxxxxx generated by Employee and/or her sales staff
excluding pass throughs and reduced by any billing credits), with
the break down of such Xxxxxxxx as follows:
7/1/98-12/31/98 1/1/99-6/30/99 7/1/98-6/30/99
---------------- --------------- ---------------
CAIS Internet Billlings (Non-OverVoice) $ 3,200,000 $ 3,950,000 $ 7,150,000
OverVoice Hotels $ 200,000 $ 1,000,000 $ 1,200,000
OverVoice MDUs $ 100,000 $ 1,050,000 $ 1,150,000
--------------- --------------- ---------------
CAIS total Xxxxxxxx $ 3,500,000 $ 6,000,000 $ 9,500,000
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Employer and Employee shall in good faith mutually agree
upon the Performance Target for the any subsequent employment years
prior to the commencement of each such respective employment year.
The parties further agree that the Performance Targets for any
subsequent employment years following Employment Year 1 shall be
premised on the anticipated continuation of rapidly increasing sales
growth for CAIS.
Cash Incentive Compensation shall be determined based upon the
following formula:
(1) To be eligible to receive any cash incentive compensation,
the Employee must achieve a minimum of 70% of the of the
Performance Target for that Employment Quarter which will be
trued up semi annually. The parties agree that 50% of the semi
annual numbers above will be the quarterly target.
(2) In the event that a minimum of 70% of the Performance
Target for a particular Employment Quarter is achieved as stated
above, the Employee shall be entitled to receive Cash Incentive
Compensation of $xx,000 for such Employment Quarter.
4. Granting of Stock Options. (a) Subject to the terms and
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conditions of the CGX 1998 Employee Equity Plan (the "Plan") (a copy
of which Plan shall be provided to Employee) and to the vesting
requirements, forfeiture provisions and other terms and conditions
set forth on the form of Incentive Stock Option Certificate, the
form of which is attached hereto, and as an inducement to entering
into this Agreement, Employer hereby grants to Employee stock
options equal to 40,000 shares at the option price and on the
vesting schedule specified on the attached form of Incentive Stock
Option Certificate ("Incentive Stock Options"). Such Incentive Stock
Options shall be in addition to and separate from all other stock
options previously granted to Employee under the Plan.
(b) Notwithstanding the vesting schedule set forth on the
Incentive Stock Option Certificate for options granted pursuant to
subparagraph 4(a) above, but otherwise subject to the terms and
conditions of the CGX 1998 Employee Equity Plan and to the
forfeiture provisions and other terms and conditions set forth on
the such Incentive Stock Option Certificate, if, prior to any of the
vesting dates set forth in such Incentive Stock Option Certificate,
a merger, acquisition, or a sale of substantially all of Employer's
assets occurs that results in a change of ownership control of
Employer from current majority ownership control and the removal of
any two of the following three members of current management,
Xxxxxxx X. Xxxxx, XX, Xxxxxxx X. Xxxxxxxx XX, and Xxxxx Xxxxxxxx,
then the vesting of all of Employee's Incentive Stock
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Options and all other stock options granted to Employee under the
Plan shall immediately accelerate and become exerciseable as of one
day prior to the effective date of such merger, acquisition, or
sale.
(c) Notwithstanding the vesting schedule set forth on the
Incentive Stock Option Certificate for options granted pursuant to
subparagraph 4(a) above, but otherwise subject to the terms and
conditions of the CGX 1998 Employee Equity Plan and to the
forfeiture provisions and other terms and conditions set forth on
the such Incentive Stock Option Certificate, if Employee's
employment ceases, except for a termination for "good cause" as
provided in Article 5, on a date two years or later after the date
of this Agreement but prior to the final vesting date provided for
in such Incentive Stock Option Certificate, then either (i) if such
cessation of employment occurs on a date at least two years but less
than three years after the date of this Agreement, then 10,000 of
the 25,000 Incentive Stock Option shares scheduled to become
exerciseable on such final vesting date but otherwise forfeited as a
result of such cessation of employment and any other stock options
granted to Employee under the Plan shall immediately accelerate and
become exerciseable as of such cessation of employment date, (ii) if
such cessation of employment occurs on a date at least three years
but less than four years after the date of this Agreement then
15,000 of the 25,000 Incentive Stock Option shares scheduled to
become exerciseable on such final vesting date but otherwise
forfeited as a result of such cessation of employment and any other
stock options granted to Employee under the Plan shall immediately
accelerate and become exerciseable as of such cessation of
employment date, or (iii) if such cessation of employment occurs on
a date at least four years after the date of this Agreement then
20,000 of the 25,000 Incentive Stock Option shares scheduled to
become exerciseable on such final vesting date but otherwise
forfeited as a result of such cessation of employment shall
immediately accelerate and become exerciseable as of such cessation
of employment date.
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1998 ISO 40,000 Shares
CGX COMMUNICATIONS, INC. -- 1998 EQUITY INCENTIVE PLAN
Incentive Stock Option Certificate
CGX Communications, Inc. (the "Company"), a Delaware corporation, hereby
grants to the person named below an option to purchase shares of Common Stock,
$0.01 par value (the "Common Stock"), of the Company (the "Option") under and
subject to the Company's 1998 Equity Incentive Plan (the "Plan") exercisable on
the following terms and conditions and those set forth on the reverse side of
this certificate:
Name of Optionholder: Xxxxx Xxxxxx
Address: ________________________________________________________________
Social Security No. ___________________
Total Number of Option Shares: 40,000
Option Price: $3.07
Date of Grant: June XX, 1998
Exercisability Schedule: Options granted hereunder may be exercised only in
accordance with the following schedule:
Date Options First Exercisable total option shares exercisable
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Earlier of October 15, 1999 5,000 option share
or date of initial public offering
12 months after date options 5,000 option shares
first become exercisable
24 months after date options 5,000 option shares
first become exercisable
36 months after date options 25,000 option shares
first become exercisable
Expiration Date: June XX, 2008
This Option shall be treated as an Incentive Stock Option under Section 422
of the Internal Revenue Code of 1986, as amended (the "Code").
If Employee ceases to be employed by Employer before the earlier of October
15, 1999, or the date of initial public offering, then Employee forfeits her
Incentive Stock Options;
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provided however, that if before the earlier of October 15, 1999, or the date of
initial public offering, there is a merger, aquisition or sale of substantially
all of Employer's assets that results in a change of ownership control of
Employer from current majority ownership control and the removal of any two of
the following three members of current management, Xxxxxxx X. Xxxxx, XX, Xxxxxxx
X. Xxxxxxxx XX, and Xxxxx Xxxxxxxx, as contemplated in article 4(b) of Exhibit A
attached to Employee's Employment Agreement, in which case, Employee's Incentive
Stock Options and any other stock options granted to Employee under the Plan
shall be exerciseable in accordance with the aforesaid article 4(b) of Exhibit
A.
By acceptance of this Option, the Optionholder agrees to the terms and
conditions hereof.
CGX Communications, Inc.
By:_______________________
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CGX COMMUNICATIONS, INC. -- 1998 EQUITY INCENTIVE PLAN
Incentive Stock Option Terms And Conditions
(Reverse Side of Option Certificate)
1. Plan Incorporated by Reference. This Option is issued pursuant to the
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terms of the Plan and may be amended as provided in the Plan. Capitalized terms
used and not otherwise defined in this certificate have the meanings given to
them in the Plan. This certificate does not set forth all of the terms and
conditions of the Plan, which are incorporated herein by reference. The
Committee administers the Plan and its determinations regarding the operation of
the Plan are final and binding. Copies of the Plan may be obtained upon written
request without charge from the Company.
2. Option Price. The price to be paid for each share of Common Stock
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issued upon exercise of the whole or any part of this Option is the Option Price
set forth on the face of this certificate.
3. Exercisability Schedule. This Option may be exercised at any time and
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from time to time for the number of shares and in accordance with the
exercisability schedule set forth on the face of this certificate, but only for
the purchase of whole shares. This Option may not be exercised as to any shares
after the Expiration Date.
4. Method of Exercise. To exercise this Option, the Optionholder shall
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deliver written notice of exercise to the Company specifying the number of
shares with respect to which the Option is being exercised accompanied by
payment of the Option Price for such shares in cash, by certified check or in
such other form, including shares of Common Stock of the Company valued at their
Fair Market Value on the date of delivery, as the Committee may approve in
writing. Promptly following such notice, the Company will deliver to the
Optionholder a certificate representing the number of shares with respect to
which the Option is being exercised.
5. Rights as a Stockholder or Employee. The Optionholder shall not have
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any rights in respect of shares as to which the Option shall not have been
exercised and payment made as provided above. The Optionholder shall not have
any rights to continued employment by the Company or its Affiliates by virtue of
the grant of this Option.
6. Recapitalization, Mergers, Etc. As provided in the Plan, in the event
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of corporate transactions affecting the Company's outstanding Common Stock, the
Committee may, in its sole discretion, equitably adjust the number and kind of
shares subject to this Option and the exercise price hereunder or make provision
for a cash payment. If such transaction involves a consolidation or merger of
the Company with another entity, the sale or exchange of all or substantially
all of the assets of the Company or a reorganization or liquidation of the
Company, then in lieu of the foregoing, the Committee may upon written notice to
the Optionholder provide that this Option shall terminate on a date not less
than 20 days after the date of such notice unless theretofore exercised. In
connection with such notice, the Committee may in its discretion accelerate or
waive any deferred exercise period.
7. Option Not Transferable. This Option is not transferable by the
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Optionholder otherwise than by will or the laws of descent and distribution, and
is exercisable, during the Optionholder's lifetime, only by the Optionholder.
No transfer of an option by a participant by will or by laws of descent and
distribution shall be effective to bind the Company unless the Company shall
have been furnished with written notice thereof and a copy of the will and such
other evidence as the Company may deem necessary to establish the validity of
the transfer and the acceptance by the transferee or transferees of the terms
and conditions of such option. The naming of a Designated Beneficiary does not
constitute a transfer.
8. Exercise of Option After Termination of Employment. If the
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Optionholder's employment with (a) the Company, (b) an Affiliate, or (c) a
corporation (or parent or subsidiary corporation of such corporation) issuing or
assuming a stock option in a transaction to which Section 424(a) of the Code
applies, is terminated for any reason other than by disability (within the
meaning of Section 22(e)(3) of the Code) or death, the Optionholder may exercise
the rights which were available to the Optionholder at the time of such
termination only within thirty days from the date of termination. If
Optionholder's employment is terminated as a result of disability, such rights
may be exercised within twelve months from the date of termination. Upon the
death of the Optionholder, his or her Designated Beneficiary shall have the
right, at any time within twelve months after the date of death, to exercise in
whole or in part any rights that were available to the Optionholder at the time
of death. Notwithstanding the foregoing, no rights under this Option may be
exercised after the Expiration Date.
9. Compliance with Securities Laws. It shall be a condition to the
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Optionholder's right to purchase shares of Common Stock hereunder that the
Company may, in its discretion, require (a) that the shares of Common Stock
reserved for issue upon the exercise of this Option shall have been duly listed,
upon official notice of issuance, upon any national securities exchange or
automated quotation system on which the Company's Common Stock may then be
listed or quoted, (b) that either (i) a registration statement under the
Securities Act of 1933 with respect to the shares shall be in effect, or (ii) in
the opinion of counsel for the Company, the proposed purchase shall be exempt
from registration under that Act and the Optionholder shall have made such
undertakings and agreements with the Company as the Company may reasonably
require, and (c) that such other steps, if any, as counsel for the Company shall
consider necessary to comply with any law applicable to the issue of such shares
by the Company shall have been taken by the Company or the Optionholder, or
both. The certificates representing the shares purchased under this Option may
contain such legends as counsel for the Company shall consider necessary to
comply with any applicable law.
10. Restricted Stock; Restrictions Prior to Public Offering. All shares
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of Common Stock purchased hereunder shall be subject to the provisions of
Section 7 of the Plan, including but not limited to the option granted to the
Company under such Section.
11. Payment of Taxes. The Optionholder shall pay to the Company, or make
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provision satisfactory to the Company for payment of, any taxes required by law
to be withheld with respect to the exercise of this Option. The Committee may,
in its discretion, require any other Federal or state taxes imposed on the sale
of the shares to be paid by the Optionholder. In the Committee's discretion,
such tax obligations may be paid in whole or in part in shares of Common Stock,
including shares retained from the exercise of this Option, valued at their Fair
Market Value on the date of delivery. The Company and its Affiliates may, to
the extent permitted by law, deduct any such tax obligations from any payment of
any kind otherwise due to the Optionholder.
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12. Notice of Sale of Shares Required. The Optionholder agrees to notify
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the Company in writing within 30 days of the disposition of any shares purchased
upon exercise of this Option if such disposition occurs within two years of the
date of the grant of this Option or within one year after such purchase.
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