Document:

EXHIBT 10.1

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into by and between ZST Digital Networks, Inc. (“Company”), a Delaware corporation, and Henry H. Ngan (“Employee”), effective on the date indicated below.  (Company and Employee are sometimes referred to herein as “Party” or collectively as the “Parties.”)

 

RECITALS

 

WHEREAS, Employee has the experience, know-how, ability and qualifications to serve as the Company’s Chief Financial Officer.

 

WHEREAS, as the Company desires to secure the services of the Employee as Chief Financial Officer and the Employee desires to accept such employment.

 

WHEREAS, the parties desire to enter into this Agreement to establish the terms and conditions of the Employee’s employment as Chief Financial Officer of the Company.

 

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and the continued employment of Employee by the Company under this Agreement, the Parties agree as follows:

 

ARTICLE 1

EMPLOYMENT

Company hereby employs Employee and Employee hereby accepts employment from Company, effective as of March 18, 2011 (the “Effective Date”).  Employee agrees to perform the services and to comply faithfully with his obligations of employment, under the terms and conditions specified in this Agreement, and pursuant to the policies and procedures of the Company that may be issued from time to time.

ARTICLE 2

 

TERM

 

Section 2.1          Initial Term and Renewal.  The initial term of this Agreement shall be for a period of twenty-four (24) months commencing on the Effective Date (the “Initial Term”), unless terminated earlier pursuant to the provisions of Article 5 of this Agreement.  This Agreement shall automatically renew for an additional twelve (12) month period of employment (the “Subsequent Term”) on the expiration date of the Initial Term (the “Expiration Date”) unless either party gives written notice to the other party at least thirty (30) days prior to any Expiration Date that the Agreement is not being renewed and shall terminate on that Expiration Date, unless terminated earlier pursuant to the provisions of Article 5 of this Agreement.  The Initial Term and the Subsequent Term during which Employee shall perform services pursuant to this Agreement shall be referred to herein as the “Term.”

 

  

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ARTICLE 3

 

COMPENSATION AND BENEFITS

 

Section 3.1         Base Salary.  For all of the services to be rendered by Employee hereunder, Company shall pay to Employee an annual base salary of US $180,000.00 (“Salary”), beginning on the Effective Date of this Agreement.  This Salary shall be paid in equal monthly installments equal to USD $15,000 on the last day of each month, in accordance with the Company’s regular payroll practices, as in effect from time to time, and shall be subject to standard payroll deductions
and withholdings as required by applicable law.

 

Section 3.2         Adjustment to Salary.  Employee’s Salary may be changed from time to time by mutual agreement of the Employee and the Company.  Any such agreement shall be evidenced by a written amendment of this Agreement and signed by both Parties.

 

Section 3.3          Stock Option.

 

(i)           On the Effective Date, subject to Board approval, the Company will grant the Employee a stock option to purchase ninety thousand (90,000) shares of the Company’s common stock at a price per share equal to the Fair Market Value (as defined in the Company’s 2010 Omnibus Incentive Plan (the “Plan”)) on the date of grant (the stock options to purchase 90,000 shares of the Company’s common stock described in this paragraph, the “Option”).  The Options shall have a term of ten (10) years from the Effective Date.

 

(ii)         7,500 of the shares covered by the Option will vest on each of the twelve (12) quarterly anniversaries of the Effective Date, subject to the Employee’s continued employment by the Company under the terms and conditions of this Agreement through the respective quarterly anniversary.   The vesting of the Option award shall be subject to accelerated vesting upon a change of control, as defined in the restricted stock award agreement.

 

(iii)        The Option shall be granted under the Plan and shall be subject to such further terms and conditions as set forth in a written stock option notice of grant and agreement (“Option Agreement”) to be entered into by the Company to the Employee to evidence the Option under the Plan, a form of which is attached hereto as Exhibit A.

 

(iv)        The Option Agreement shall provide that in the event Employee’s employment under this Agreement with the Company is terminated for any reason except for death, disability, or Cause, he may exercise the Option only to the extent that the Option would have been exercisable on the termination date and no later than twelve months after the termination date.  If Employee’s employment is terminated because of his death or disability, the Option may be exercised only to the extent that such Option would have been exercisable by Employee on the termination date and must be exercised by Employee no later than twelve months after the termination date.   If the employment is terminated for Cause, as defined in Section 5.1 of this
Agreement, the Option will terminate immediately.

 

  

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Section 3.4          Restricted Stock Award.

 

(i)          The Company will also grant the Employee, subject to board approval, ninety thousand (90,000) shares of restricted stock (the "Restricted Stock Award”).

 

(ii)         7,500 shares of the Restricted Stock Award will vest on each of the twelve (12) quarterly anniversaries of the Effective Date, subject to the Employee’s continued employment by the Company under the terms and conditions of this Agreement through the respective quarterly anniversary. The vesting of the Restricted Stock Award shall be subject to accelerated vesting upon a change of control, as defined in the restricted stock award agreement.

 

(iii)        The Restricted Stock Award shall be granted under the Company’s Plan and shall be subject to such further terms and conditions as set forth in a written restricted stock agreement to be provided by the Company to the Employee to evidence the Restricted Stock Award under the Plan, a form of which is attached hereto as Exhibit B.

 

Section 3.5         Medical and Dental Benefits.  Company shall reimburse Employee for standard corporate-style healthcare insurance coverage with such terms and in such amounts as are generally provided for any other executives of companies of similar size and nature as the Company.

 

Section 3.6         Company Paid Holidays.  Employee will be eligible for all Company paid holidays that are provided to employees of the Company.

 

Section 3.7         Paid Leave.  Employee shall be entitled to accrue twenty-one (21) days of paid leave (vacation, sick, and personal) each year, with a total maximum accrual of thirty (30) days.  Employee may only take a maximum of thirty (30) consecutive work days for paid vacation.  In exercising paid leave, Employee shall take into consideration his duties and obligations as Chief Financial Officer of the Company and shall take leave at times mutually agreeable to Employee and the Company.

 

Section 3.8         Reimbursement of Expenses.  Employee shall be reimbursed for reasonable travel, hotel, entertainment, and other business related expenses, including reasonable home-office business expenses.  All reimbursement of expenses are subject to the Company’s policies in effect at the time on pre-approval of certain business expenses and reimbursement procedures.  Employee shall produce satisfactory supporting vouchers, receipts, and other documentation in connection with such expenses before such reimbursement is made in accordance with applicable Company policy.

 

Section 3.9         Indemnification.  Company agrees to obtain a directors and officers liability insurance policy covering the Employee and to continue and maintain such policy during the Term of the Employee’s service as the Chief Financial Officer of the Company.  Company agrees to hold harmless and indemnify the Employee to the fullest extent permitted by law, as such may be amended from time to time, with respect to any acts or nonaction the Employee may have committed during his employment in his capacity as the Chief Financial Officer of the
Company.  Additional terms of the indemnification shall be set in an indemnification agreement to be executed by the Company and the Employee.

 

  

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ARTICLE 4

 

DUTIES AND RESPONSIBILITIES

 

Section 4.1         Duties of Employee.  Employee agrees to serve as Chief Financial Officer, and will report to the Chief Executive Officer and the Company’s Board of Directors.  Employee shall perform the duties and functions and have the responsibilities commensurate with such position as may be assigned from time to time.  Employee’s duties as Chief Financial Officer shall encompass the operations of the Company and the Company’s subsidiaries.  Employee shall use his best skills and ability, consistent with sound business practices, to faithfully and diligently perform

his duties and responsibilities hereunder.  Employee shall devote his full working time and attention to the business of the Company and its related entities.

 

During his employment with Company, Employee shall not (i) engage in any other employment or business opportunity outside of his employment with the Company that may interfere with his ability to perform his duties under this Agreement, without the express written authorization of the Company; or (ii) engage, directly or indirectly, in any other employment, business, commercial, or professional activity (whether or not pursued for pecuniary advantage) that is or may be competitive with, or that might create a conflict of interest with, the business of Company or Company’s related entities or affiliates.

Section 4.2         Compliance with Law.  Employee agrees to comply with any and all governmental laws, regulations, and policies in connection with his actions as an employee of the Company.  Employee shall conduct himself in accordance with the highest business standards as are reasonably and customarily expected of such position.  Employee agrees to fully cooperate and participate in any investigation conducted by the Company relating to its interests or as may be required by applicable law.

Section 4.3         Policies and Procedures.  Employee agrees to abide by all Company policies and procedures.  Company may issue policies, rules, regulations, guidelines, procedures or other informational material, whether in the form of handbooks, memoranda, or otherwise, relating to its employees and Employee agrees to comply with all such policies applicable to Employee.

Section 4.4         Confidential Information and Trade Secrets.  Employee acknowledges that, as a condition of his employment hereunder, Employee agrees to execute and abide by the Company’s confidentiality, non-disclosure, invention assignment, and similar agreements that are presented to Employee to protect the Company’s trade secret, proprietary and business interests.  Employee hereby acknowledges and agrees that such agreements shall survive termination of employment and this Agreement and shall remain in force following such termination regardless of the reason for the termination.

 

  

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ARTICLE 5

TERMINATION

 

Employee’s employment relationship with the Company will terminate upon the occurrence of one of the following defined events, which shall effect a termination of this Agreement on the effective date of any such termination of employment (the “Termination Date”):

 

Section 5.1         Right to Terminate for “Cause”.  The Company may immediately terminate the Employee’s employment for “Cause” under this Agreement at any time during the Term upon the occurrence of any of the following events:

 

(i)          Employee commits an act or acts of dishonesty, fraud, embezzlement, or misappropriation of funds or proprietary information in connection with his employment duties or responsibilities; or

 

(ii)         Employee’s conviction of, or plea of nolo contendere to, a felony or a crime involving moral turpitude (other than minor traffic violations); or

 

(iii)        Employee materially breaches his obligations under this Agreement, including failure to perform his job duties satisfactorily or failure to follow Company policies or any directive of the Company, if such failure or refusal is not cured by Employee within ten (10) days after receiving written notice of such from the Company; or

 

(iv)        Employee’s willful or gross misconduct in connection with his employment duties.

Section 5.2          Death or Disability.  The Employee’s employment under this Agreement shall also terminate upon the occurrence of the following:

 

(i)           the Employee’s employment under this Agreement shall automatically terminate upon the occurrence of the death of the Employee during the Term of this Agreement; or

 

(ii)          notice of termination from the Company after the Employee has become permanently disabled, or disabled for a period exceeding 120 consecutive days or 120 days calculated on a cumulative basis over any one year period during the Term of this Agreement, such that Employee is no longer able to perform the essential functions of his job even with reasonable accommodation pursuant to applicable law.

 

Section 5.3         Compensation Due to the Employee on Termination. In the event of the termination of the Employee’s employment under this Agreement pursuant to any provision as set forth above, the Company shall pay to the Employee on the date of termination only the amount of Salary pursuant to Section 3.1 of this Agreement that is earned but unpaid as of the date of termination, as well as any accrued but unused Paid Leave, and any unreimbursed business expenses incurred as of the termination date pursuant to Section 3.8 of this Agreement, but Employee shall
not be entitled to receive any other payments, compensation or benefits from the Company under this Agreement, provided that, however, in the event of the termination of the Employee’s employment by the Company under this Agreement for any reason other than death, disability, or Cause (pursuant Section 5.1 above), the Company shall pay to the Employee a severance payment in an amount equal to three (3) months of the Employee’s annual Salary at the time of termination pursuant to Section 3.1 of this Agreement, less applicable statutory deductions and withholdings, to be paid by the Company monthly over the two-month period, provided that Employee signs a standard waiver and release of all claims as presented by the Company.

 

  

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Section 5.4         Return of Company Property.  Upon the termination of employment for any reason, Employee shall promptly return to Company any and all equipment or property owned by Company including, but not limited to, any and all client materials, copies of documents and photographs, models, prototypes, tools, and supplies, as well as inventory, records, documents, manuals, reports, customer lists, operations manuals, and any other written information, records, or books relating in any manner whatsoever to the business of Company, whether prepared by Company or otherwise coming into Employee’s
possession.

 

ARTICLE 6

 

MISCELLANEOUS

 

Section 6.1         Non-Compete.  During the term of his employment and during the 12-month period following termination of his employment, the Employee shall not directly own, manage, operate, join, control, or participate in or be connected with, as an officer, employee, partner, stockholder or otherwise, any firm that is in competition to the Company within service area. Employee declares that the foregoing limitations are reasonable and necessary to protect the business of the Company and its affiliates.  If any portion of these restrictions be
declared invalid by a court of competent jurisdiction, the validity or enforceability of the remainder of such restrictions shall not thereby be adversely affected, but rather such court shall reform the provision deemed invalid so that it shall be as near to the terms of this Agreement as possible and still remain enforceable under applicable law.

 

Section 6.2         Non-Solicitation.  The Employee shall not directly or indirectly through his own efforts, or otherwise, during the term of this Agreement, and for a period of 24 months thereafter, employ, solicit to employ, or otherwise contract with, or in any way retain the services of any employee or former employee of the Company. The Employee will not interfere with the relationship of the Company and any of its employees and the Employee will not attempt to divert from the Company any business in which the Company has been actively engaged during his employment.  Nor shall the Employee directly or
indirectly through his own efforts, or otherwise, during the term of this Agreement, and for a period of 24 months thereafter, solicit or attempt to solicit the business of any customer or client of the Company, or induce or attempt to induce any client or customer of the Company to reduce its business with the Company.

 

Section 6.3         No Breach of Contract.  The Employee represents to the Company that: (i) the Employee is not bound by any employment, consulting, non-compete, confidentiality, trade secret, or similar agreement or any judgment, order, or decree that would prevent, or be violated by, the Employee entering into this Agreement or carrying out his duties hereunder; and (ii) the Employee understands the Company will rely upon the accuracy and truth of the representations and warranties of the Employee set forth herein and the Employee consents to such reliance.

 

  

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Section 6.4         Notices.  Any notice given under this Agreement shall be sufficient if given in writing and personally delivered or sent by registered or certified mail, return receipt requested, postage prepaid, to the Company at its principal place of business or to Employee at his last known residence address.

 

Section 6.5         Governing Law.  This Agreement shall be interpreted, construed, and governed under and according to the laws of the State of Delaware.

 

Section 6.6         Change, Modification, Waiver.  No change or modification of this Agreement shall be valid unless it is in writing and signed by each of the Parties hereto.  No waiver of any provision of this Agreement shall be valid unless it is in writing and signed by the Party against whom the waiver is sought to be enforced.  The failure of a Party of insist upon strict performance of any provision of this Agreement in any one or more instances shall not be construed as a waiver or relinquishment of the right to insist upon strict compliance with such provision in the future.

 

Section 6.7         Entire Agreement.  This Agreement constitutes the entire, final and complete and exclusive agreement between the Parties regarding the subject matter hereof and supersedes all previous agreements or representations, whether written, oral or implied, with respect to employment by the Company provided, however, the Employee shall remain bound by any confidentiality, nondisclosure, and invention assignment agreement(s) previously executed in favor of the Company, to the extent such ancillary agreements exist.  There are no terms, promises, representations, agreements, or understandings between

the Parties relating to the subject matter of this Agreement, which are not fully expressed herein.

 

Section 6.8         Assignability.  This Agreement is personal in nature, and neither this Agreement nor any part of any obligation herein shall be assignable by Employee.  The Company shall be entitled to assign this Agreement to any affiliate or successor of the Company that assumes the ownership or control of the business of the Company, and the Agreement shall inure to the benefit of any such successor or assign.

 

Section 6.9         Legal Construction.  If any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein.  In addition, if any court of competent jurisdiction determines that any of the provisions set forth herein are unenforceable because of the duration or geographic scope of such provision, such court shall

have the power to reduce the duration or scope of such provision as the case may be, to the extent necessary to render such provision enforceable.

 

Section 6.10       Paragraph Headings.  The paragraph headings used in this Agreement are included solely for convenience and shall not affect or be used in connection with the interpretation of this Agreement.

 

Section 6.11       Legal Fees and Costs.  Except as otherwise provided herein, in the event that any Party hereto shall institute any litigation or other proceeding in order to construe or enforce this Agreement, the prevailing Party therein shall be entitled to recover its reasonable attorney’s fees and costs incurred in connection therewith.

 

  

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Section 6.12       Interpretation.  This Agreement has been negotiated at arm’s length and between and among parties sophisticated and knowledgeable in the matters dealt with in this Agreement.  Accordingly, none of the Parties shall be presumptively entitled to have any provisions of the Agreement construed against any of the other Parties in accordance with any rule of law, legal decision, or doctrine, such as the doctrine of contra proferentem, that would require interpretation of any ambiguities in this Agreement against the party that has drafted
it.

 

[SIGNATURES ON FOLLOWING PAGE]

 

  

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WHEREFORE, the parties hereto have executed this Agreement on the dates indicated below, to be effective as of the Effective Date, regardless of the dates actually signed.

 

	
Dated:  March 18, 2011

	
ZST DIGITAL NETWORKS, INC.

	  	  	  
	  	
By:

	
/s/ Zhong Bo

	  	
 Name:   Zhong Bo

	  	
 Title:     Chief Executive Officer

	  	  
	
Dated:  March 18, 2011

	
HENRY H. NGAN

	  	  
	  	
/s/ Henry H. Ngan

 

  

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EXHIBIT A

FORM OF STOCK OPTION AGREEMENT

 

  

  

  

 

EXHIBIT B

FORM OF RESTRICTED STOCK AWARD AGREEMENTUnassociated Document

Exhibit 10.2

 

NOTICE OF GRANT OF INCENTIVE STOCK OPTION AWARD

 

ZST DIGITAL NETWORKS, INC.

2010 OMNIBUS INCENTIVE PLAN

 

FOR GOOD AND VALUABLE CONSIDERATION, ZST Digital Networks, Inc. (the “Company”) hereby grants, pursuant to the provisions of the Company’s 2010 Omnibus Incentive Plan (the “Plan”), to the Participant designated in this Notice of Grant of Incentive Stock Option Award (the “Notice”) an option to purchase the number of shares of the common stock of the Company set forth in the Notice (the “Shares”), subject to certain restrictions as outlined below in this Notice and the additional provisions set forth in the attached Terms and Conditions of Stock Option Award (collectively, the “Agreement”).  Also enclosed is a copy of the information statement describing important provisions of the Plan.

 

	
Optionee:

	
Henry Ngan

 

	
Date of Grant:          March 18, 2011

	
Type of Option:  Incentive Stock Option

	
Exercise Price per Share:           $5.96

	
Expiration Date: March 18, 2021

	
Total Number of Shares Granted:              90,000

	
Total Exercise Price:                              $536,400

	
Vesting Schedule:   7,500 of the shares covered by this Option shall vest over a three-year period on each of the twelve (12) quarterly anniversaries of the Date of Grant

	
Exercise After Termination of Service:

Termination of Service for any reason: any non-vested portion of the Option expires immediately;

Termination of Service due to death or Disability: vested portion of the Option is exercisable by the Optionee (or, in the event of the Optionee’s death, the Optionee’s Beneficiary) for one year after the Optionee’s Termination;

Termination of Service for any reason other than death, Disability, or Cause: vested portion of the Option is exercisable for a period of one year following the Optionee’s Termination.

Termination of Service for Cause (as defined in the Optionee's Employment Agreement dated March 18, 2011): vested portion of the Option terminates immediately.

   

In no event may this Option be exercised after the Expiration Date as provided above.

 

By signing below, the Optionee agrees that this Incentive Stock Option Award is granted under and governed by the terms and conditions of the Company’s 2010 Omnibus Incentive Plan and the attached Terms and Conditions.

	
Participant

	  	
ZST Digital Networks, Inc.

	  	  	  
	
/s/ Henry H. Ngan

	  	
By:

	
/s/ Zhong Bo

	  	  	  	  
	  	  	
Name:

	
Zhong Bo

	  	  	
Title:

	
Chief Executive Officer

	  	  	  	  
	
Date:   

	
March 18, 2011

	
  

	
Date:   

	
March 18, 2011

 

  

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TERMS AND CONDITIONS OF STOCK OPTION AWARD

 

1.           Grant of Option.  The Option granted to the Optionee and described in the Notice of Grant is subject to the terms and conditions of the Plan, which is incorporated by reference in its entirety into these Terms and Conditions of Stock Option Award (the “Terms and Conditions”).

 

The Board of Directors of the Company has authorized and approved the 2010 Omnibus Incentive Plan (the “Plan”), which has been approved by the stockholders of the Company.  The Committee has approved an award to the Optionee of a number of shares of the Company’s common stock, conditioned upon the Participant’s acceptance of the provisions set forth in the Notice and these Terms and Conditions within 60 days after the Notice and these Terms and Conditions are presented to the Optionee for review.  For purposes of the Notice and these Terms and Conditions, any reference to the Company shall include a reference to any Affiliate.

 

If designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code.  Nevertheless, to the extent that the Option fails to meet the requirements of an ISO under Section 422 of the Code, this Option shall be treated as a Non-Qualified Stock Option (“NSO”).

 

The Company intends that this Option not be considered to provide for the deferral of compensation under Section 409A of the Code and that this Agreement shall be so administered and construed.  Further, the Company may modify the Plan and this Award to the extent necessary to fulfill this intent.

 

2.           Exercise of Option.

 

(a)           Right to Exercise.  This Option shall be exercisable, in whole or in part, during its term in accordance with the Vesting Schedule set out in the Notice of Grant and with the applicable provisions of the Plan and this Option Agreement.  No Shares shall be issued pursuant to the exercise of an Option unless the issuance and exercise comply with applicable laws.  Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares.  The Committee may, in its discretion, (i) accelerate vesting of the Option, or (ii) extend the
applicable exercise period to the extent permitted under Section 6.03 of the Plan.

 

(b)           Method of Exercise.  The Optionee may exercise the Option by delivering an exercise notice in a form approved by the Company (the “Exercise Notice”) which shall state the election to exercise the Option, the number of Shares with respect to which the Option is being exercised, and such other representations and agreements as may be required by the Company.  The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Shares exercised.  This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price.

 

(c)           Acceleration of Vesting on Change in Control.  All Options outstanding on the date of a Change of Control that have not previously vested or terminated under the terms of this Option shall be immediately and fully vested and exercisable upon the date of a Change of Control, except if the in the Change in Control results from such the Optionee’s beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of Common Stock.

 

3.           Method of Payment.  If the Optionee elects to exercise the Option by submitting an Exercise Notice under Section 2(b) of this Agreement, the aggregate Exercise Price (as well as any applicable withholding or other taxes) shall be paid by cash or check; provided, however, that the Committee may consent, in its discretion, to payment in any of the following forms, or a combination of them:

 

  

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(a)           cash or check;

 

(b)           a “net exercise” (as described in the Plan or such other consideration received by the Company under a cashless exercise program approved by the Company in connection with the Plan);

 

(c)           surrender of other Shares owned by the Optionee which have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the Exercised Shares and any applicable withholding; or

 

(d)           any other consideration that the Committee deems appropriate and in compliance with applicable law.

 

4.           Restrictions on Exercise.  This Option may not be exercised until such time as the Plan has been approved by the stockholders of the Company, or if the issuance of the Shares upon exercise or the method of payment of consideration for those shares would constitute a violation of any applicable law or regulation.

 

5.           Non-Transferability of Option.  This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of the Optionee only by the Optionee.  The terms of the Plan and this Option Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

 

6.           Term of Option.  This Option may be exercised only within the term set out in the Notice of Grant, and may be exercised during such term only in accordance with the Plan and the terms of this Option Agreement.

 

7.           Withholding.

 

(a)           The Committee shall determine the amount of any withholding or other tax required by law to be withheld or paid by the Company with respect to any income recognized by the Optionee with respect to the Option Award.

 

(b)           The Optionee shall be required to meet any applicable tax withholding obligation in accordance with the provisions of Section 11.05 of the Plan.

 

(c)           Subject to any rules prescribed by the Committee, the Optionee shall have the right to elect to meet any withholding requirement (i) by having withheld from this Award at the appropriate time that number of whole shares of common stock whose fair market value is equal to the amount of any taxes required to be withheld with respect to such Award, (ii) by direct payment to the Company in cash of the amount of any taxes required to be withheld with respect to such Award or (iii) by a combination of shares and cash.

 

8.           Defined Terms.  Capitalized terms used but not defined in the Notice and these Terms and Conditions shall have the meanings set forth in the Plan, unless such term is defined in any Employment Agreement between the Optionee and the Company or an Affiliate.  Any terms used in the Notice and these Terms and Conditions, but defined in the Optionee’s Employment Agreement are incorporated herein by reference and shall be effective for purposes of the Notice and these Terms and Conditions without regard to the continued effectiveness of the Employment Agreement.

 

9.           Optionee Representations.  The Optionee hereby represents to the Company that the Optionee has read and fully understands the provisions of the Notice, these Terms and Conditions and the Plan and the Optionee’s decision to participate in the Plan is completely voluntary.  Further, the Optionee acknowledges that the Optionee is relying solely on his or her own advisors with respect to the tax consequences of this stock option award.

 

  

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10.          Regulatory Limitations on Exercises.  Notwithstanding the other provisions of this Option Agreement, no option exercise or issuance of shares of Common Stock pursuant to this Option Agreement shall be effective if (i) the shares reserved under the Plan are not subject to an effective registration statement at the time of such exercise or issuance, or otherwise eligible for an exemption from registration, or (ii) the Company determines in good faith that such exercise or issuance would violate any applicable securities or other law or regulation.

 

11.          Miscellaneous.

 

(a)           Notices.  All notices, requests, deliveries, payments, demands and other communications which are required or permitted to be given under these Terms and Conditions shall be in writing and shall be either delivered personally or sent by registered or certified mail, or by private courier, return receipt requested, postage prepaid to the parties at their respective addresses set forth herein, or to such other address as either shall have specified by notice in writing to the other.  Notice shall be deemed duly given hereunder when delivered or mailed as provided herein.

 

(b)          Waiver.  The waiver by any party hereto of a breach of any provision of the Notice or these Terms and Conditions shall not operate or be construed as a waiver of any other or subsequent breach.

 

(c)          Entire Agreement.  These Terms and Conditions, the Notice and the Plan constitute the entire agreement between the parties with respect to the subject matter hereof.

 

(d)          Binding Effect; Successors.  These Terms and Conditions shall inure to the benefit of and be binding upon the parties hereto and to the extent not prohibited herein, their respective heirs, successors, assigns and representatives.  Nothing in these Terms and Conditions, express or implied, is intended to confer on any person other than the parties hereto and as provided above, their respective heirs, successors, assigns and representatives any rights, remedies, obligations or liabilities.

 

(e)           Governing Law.  The Notice and these Terms and Conditions shall be governed by and construed in accordance with the laws of the State of Delaware.

 

(f)           Headings.  The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of these Terms and Conditions.

 

(g)          Conflicts; Amendment.  The provisions of the Plan are incorporated in these Terms and Conditions in their entirety.  In the event of any conflict between the provisions of these Terms and Conditions and the Plan, the provisions of the Plan shall control.  The Agreement may be amended at any time by written agreement of the parties hereto.

 

(h)          No Right to Continued Employment.  Nothing in the Notice or these Terms and Conditions shall confer upon the Optionee any right to continue in the employ or service of the Company or affect the right of the Company to terminate the Optionee’s employment or service at any time.

 

(i)           Further Assurances.  The Optionee agrees, upon demand of the Company or the Committee, to do all acts and execute, deliver and perform all additional documents, instruments and agreements which may be reasonably required by the Company or the Committee, as the case may be, to implement the provisions and purposes of the Notice and these Terms and Conditions and the Plan.

 

  

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