Document:

exv10w1

 

EXHIBIT 10.1

PETROQUEST ENERGY, INC.

ANNUAL CASH BONUS PLAN

PURPOSE 

The purpose of this Annual Cash Bonus Plan (the “Plan”) as adopted by the Board of Directors (the
“Board”) of PetroQuest Energy, Inc. (the “Company”) is to attract, motivate and retain executive
management, officers and other employees by providing a financial incentive to employment with the
Company or its subsidiaries and rewarding them for performance in line with increasing stockholder
value based on a review of objective standards and subjective elements determined by the Committee
(as defined below).

DEFINITIONS 

“Actual Awarded Amount” means the total annual cash bonus actually awarded to a Participant as
determined by the Committee in writing pursuant to the Plan for a particular Plan Year.

“AFE Performance” is expressed as a percentage, and is calculated by dividing the total capital
expenditures of the Company’s operated projects during the Plan Year by the original AFE
(authorization for expenditure) of such projects, adjusted for any items defined as a change in
scope.

“Board” means the Board of Directors of the Company.

“Bonus Amount” means, with respect to each Participant, an amount equal to a percentage of the
Participant’s Salary that may be available for distribution to the Participant as an Actual Awarded
Amount for a Plan Year and expressed as minimum, target and maximum amounts awardable on
Exhibit A. Varying percentages will apply to Participants at different levels within the
Company. The Committee shall have the sole discretion to determine a Participant’s tier on
Exhibit A. The initial percentages are included on Exhibit A of this Plan. The
percentages on Exhibit A may be amended by the Committee at any time in writing at its sole
discretion for a particular Plan Year.

“Code” means the Internal Revenue Code of 1986, as amended and the regulations, rulings and notices
thereunder.

“Committee” means the Compensation Committee of the Board.

“Common Stock” means the Company’s common stock, par value $.001 per share.

“Company” means PetroQuest Energy, Inc., a Delaware corporation.

“Drilling Success Rate” is expressed as a percentage, and is calculated by dividing the number of
wells completed by the Company during the Plan Year by the numbers of wells drilled by the Company
during the Plan Year.

“Effective Date” means, August 9, 2006, until terminated by the Board.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Growth in Cash Flow Per Share” is expressed as a percentage, and is calculated by dividing (i) the
Company’s cash flow per share during the Plan Year minus the Company’s cash flow per share during
the previous year by (ii) the Company’s cash flow per share during the previous year. Cash flow
per share is calculated by dividing (i) the Company’s cash flow from operating activities during
the applicable year plus

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or minus the changes in working capital accounts by (ii) the diluted number of shares of Common
Stock outstanding at the end of the applicable year.

“Growth in Earnings Per Share” is expressed as a percentage, and is calculated by dividing (i) the
Company’s earnings per share during the Plan Year minus the Company’s earnings per share during the
previous year by (ii) the Company’s earnings per share during the previous year. Earnings per
share is defined as the Company’s diluted earnings per share during the applicable year.

“Increase in Net Asset Value” is expressed as a percentage, and is calculated by dividing (i) the
Net Asset Value at the end of the Plan Year minus the Net Asset Value at the end of the previous
year by (ii) Net Asset Value at the end of the previous year.

“Index Group” means the companies designated from time to time by the Committee on Exhibit
C to be included in the Company’s peer group of companies used to calculate the composite
Stockholder Return Percentage to which the Company’s Stockholder Return Percentage will be
compared.

“Net Asset Value” is calculated by dividing (i) the present value, discounted at 10% per annum
(PV-10), of estimated future net revenue before income tax of the Company’s estimated proven
reserves minus long-term debt plus the working capital surplus (deficit) by (ii) the diluted number
of shares of Common Stock outstanding at the end of the applicable year.

“Participant” means an individual officer or other employee of the Company or its subsidiaries
chosen by the Committee to participate in the Plan for a given Plan Year. Except as determined by
the Committee, each officer and employee of the Company or its subsidiaries are eligible for
consideration by the Committee to participate in the Plan as a Participant.

“Plan” means this Annual Cash Bonus Plan.

“Plan Year” means the calendar year commencing on January 1 and ending on December 31 of each year
beginning with calendar year 2006.

“Production Growth” is expressed as a percentage, and is calculated by dividing (i) the Company’s
oil and gas production (measured in Mcfe) during the Plan Year minus the Company’s oil and gas
production (measured in Mcfe) during the previous year by (ii) the Company’s oil and gas production
(measured in Mcfe) during the previous year.

“Reserve Replacement Ratio” is expressed as a percentage, and is calculated by dividing (i) the
Company’s total oil and gas reserves at the end of the Plan year minus the Company’s total oil and
gas reserves at the beginning of the Plan Year plus the Company’s oil and gas production during the
Plan Year by (ii) the Company’s oil and gas production during the Plan Year.

“Salary” means the base salary of a Participant, excluding all other forms of compensation, such as
benefits, insurance, retirement plan contributions, overtime, or other additional compensation
received in a Plan Year.

“Stockholder Return Percentage” is expressed as a percentage, and is calculated by dividing (i) the
average of the daily closing prices of the common stock of the applicable entity during the Plan
Year minus the average of the daily closing prices of the common stock of the applicable entity
during the previous three years by (ii) the average of the daily closing prices of the common stock
of the applicable entity during the previous three years, adjusted for dividends received during
any year and adjusted for stock transactions that in the judgment of the Committee should be
reflected to avoid distorted results (e.g., stock splits, stock dividends, etc.).

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“Subsidiary” means any entity (whether now or hereafter existing) which constitutes a “subsidiary”
of the Company, as defined in Section 424(f) of the Code.

“Superior Performance Percentage” is calculated by subtracting the average of the Stockholder
Return Percentage of the Index Group for the Plan Year from the Company’s Stockholder Return
Percentage for the Plan Year less the average of the Stockholder Return Percentage of the Index
Group for the Plan Year.

ADMINISTRATION 

The Committee will be responsible for Plan administration. These responsibilities include, but are
not limited to, the following:

	 	1.	 	Designation and categorization of employees at different tiers on Exhibit A
and determination of which employees of the Company or its subsidiaries may be included as
Participants for each Plan Year, including employees who join the Company during the Plan
Year;
	 
	 	2.	 	Reviewing and proposing changes in the criteria, the weight to be given to each
criterion, the minimum and maximum thresholds and other factors utilized by the Committee
in determining whether minimum, target and maximum Bonus Amounts will be awarded to a
Participant as set forth on Exhibit B;
	 
	 	3.	 	Reviewing and proposing changes in the composition of the Index Group as set forth on
Exhibit C;
	 
	 	4.	 	Determining the Bonus Amounts for each Plan Year based on current economic and
financial conditions prevailing at the time and pursuant to the Plan; and
	 
	 	5.	 	Determining the Actual Awarded Amount.

The Committee shall have the authority to make all determinations under the Plan. The Committee
shall have the authority to interpret and construe the Plan, and provide any omitted terms or
definitions. All determinations under the Plan shall be vested in the sole and exclusive
discretion of the Committee, and the determinations of the Committee as to such matters shall be
final and conclusive on all persons interested in the Plan.

PARTICIPATION 

On an annual basis, and (except for the 2006 Plan Year) prior to or within 90 days of the beginning
of the Plan Year, the Committee shall determine those officers and other employees of the Company
who will participate in the Plan for a particular Plan Year, and shall categorize such officers and
other employees at different levels within the Company as shown on Exhibit A. The
Committee may establish objective criteria for setting individual Bonus Amounts or may use their
subjective judgment in setting Bonus Amounts in their sole discretion. Officers and employees who
participate in one particular Plan Year shall not automatically be entitled to participate in any
other Plan Year. Employees who join the Company during the Plan Year and Participants who
terminate due to death or disability, as determined by the Committee in its sole discretion, or
retirement on or after attaining age 65 may have their Bonus Amount for the Plan Year determined on
a pro-rata basis by the Committee after considering executive management’s recommendations and
payable only when the Actual Awarded Amount is determined by the Committee and when the Actual
Awarded Amounts are paid to all Participants for the Plan Year. All other Participants who
terminate (either voluntarily or involuntarily) during the applicable Plan Year will not be
entitled to a Bonus Amount for that Plan Year. Participants who terminate after the end of the
Plan Year but before the Actual Awarded Amounts are determined and payable may be entitled to a
Bonus Amount only if the Committee, after considering executive management’s recommendations,
determines that they or any of them are entitled to a Bonus Amount in its sole and absolute
discretion. No Bonus Amount shall be vested or payable hereunder until the Actual Awarded Amount
has been determined by the Committee in writing for the applicable Plan Year.

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BONUS AMOUNTS, CRITERIA AND ANNUAL REVIEWS

The percentages on Exhibit A for Bonus Amounts under the Plan will be determined by the Committee
in its sole discretion in writing for each Plan Year prior to or within 90 days of the beginning of
the Plan Year (except that the percentages on Exhibit A will be applicable to the 2006 Plan Year
and subsequent Play Years unless revised by the Committee) and expressed as the maximum, target and
minimum Bonus Amounts for each Participant on Exhibit A. In determining Bonus Amounts the
Committee will consider individual Participant performance and several factors that attempt to
quantify the annual performance of the Company from the perspective of stockholders and potential
investors. One basic premise is that stockholders should expect a certain level of performance
from officers and other employees for the base salary and other compensation provided. Cash
bonuses should be awarded, in large part, when performance meets or exceeds certain objective
benchmarks, but reserving to the Committee the ability to determine Bonus Amounts based on
discretionary, subjective factors as well.

Exhibit B lists the criteria, the weight to be given to each criterion, the minimum and
maximum thresholds and other factors utilized by the Committee in determining whether Participants
will be eligible to receive Bonus Amounts that are minimum, target or maximum or any amount
in-between based on the annual performance of the Company and will remain effective unless revised
by the Committee prior to or within 90 days of the beginning of the applicable Plan Year. As an
example of how the criteria are applied, for the stock price performance criterion to be met, the
stock price of the Company will need to increase at least 10%. If the increase is equal to or
greater than 20%, all 20 points are earned under this factor. If the increase is greater than 10%
but less than 20%, the points allocated to the stock price performance factor will be prorated.
Calculations for the points earned by the other objective criteria will be performed in a similar
fashion.

Participants will be eligible to receive up to the target Bonus Amount on Exhibit A if the
Committee determines that the points on Exhibit B have been substantially earned for the
Plan Year. For greater performance by the Company, as determined by the Committee, Participants
may be eligible to receive a Bonus Amount greater than the Target Bonus amount up to the maximum
Bonus Amount on Exhibit A, and for lesser performance by the Company, as determined by the
Committee, Participants may be eligible to receive a Bonus Amount equal to or in between the
minimum Bonus Amount and the target Bonus Amount on Exhibit A, all pro-rated based on
points earned and taking into consideration the extent to which the Company exceeded one or more
thresholds or did not meet one or more of the thresholds listed on Exhibit B, as determined by the
Committee. The Committee shall make all determinations as to the number of Exhibit B
points earned for a Plan Year and such determinations shall be verified by the independent public
accounting or consulting firm as selected by the Committee.

The Committee will determine the Actual Awarded Amount for the Chief Executive Officer.

The Chief Executive Officer shall recommend to the Committee the Bonus Amounts that may be awarded
to Participants who are executive officers and senior officers.

The Chief Executive Officer and executive management shall, after consulting with a Participant’s
supervisor, if applicable, recommend to the Committee the Bonus Amounts to be paid to Participants
who are vice presidents or other employees.

The Committee will determine the Actual Awarded Amount for each Participant after taking into
consideration the foregoing recommendations, and determine the Actual Awarded Amounts with strong
emphasis on the recommendations of the executive management and the Chief Executive Officer.

Notwithstanding the foregoing, the Committee shall have the sole discretion to determine the
amount of the Actual Awarded Amounts.

STOCK PRICE PERFORMANCE

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For the purpose of measuring the percentage change in the Company’s stock price, the Company’s
average closing stock price for the Plan Year will be compared with the Company’s trailing
three-year average closing stock price. For example, for the 2006 Plan Year, the Company’s average
closing stock price for 2006 will be compared with the Company’s average closing stock price for
2005, 2004 and 2003.

INDEX GROUP 

Each year the Committee shall review and modify, in writing, if necessary, the Index Group on
Exhibit C as it determines in its sole discretion prior to or within 90 days of each Plan
Year (except with respect to the 2006 Plan Year which shall be determined as of the date selected
by the Committee). It is the intention of the Board that companies included in the Index Group
should be similar to the Company and compete with the Company for capital. During a Plan Year, a
company in the Index Group for the Plan Year may be excluded at the discretion of the Committee
based on unusual/nonrecurring events that occur during the Plan Year that could materially distort
the Stockholder Return Percentage of the Index Group (e.g., takeover, bankruptcy, etc.). The
initial Index Group shall be the Company’s peer group as determined by the Committee as listed on
Exhibit C.

OTHER CRITERIA

For the purpose of measuring the other objective criteria listed on Exhibit B, the current
Plan Year performance will be compared to the previous year in making the calculations and
computations.

ACTUAL AWARDED AMOUNTS 

While the Company intends to award the Bonus Amounts for a Plan Year as determined by the
Committee, the Bonus Amounts payable under this Plan are discretionary and no amounts shall be
deemed to be awarded until the Committee has determined the Actual Awarded Amount in accordance
with this Plan. No Bonus Amounts will be vested or paid pursuant to this Plan until the Committee
has determined the Actual Awarded Amount; including, but not limited to, if, in the sole discretion
of the Committee, the financial health of the Company does not warrant the payment of any Bonus
Amounts or after the Company’s debt covenants are considered, regardless of whether the formulas
used to determine performance are positive.

PAYMENT

Actual Awarded Amounts will be paid as soon as possible after such awards are determined by the
Committee but not later than 2-1/2 months after they are determined by the Committee.

FINANCIAL REPORTING

This Plan is an annual plan that coincides with the calendar year and final amounts that may be
payable will be included in the December financial reports for the applicable Plan Year. Estimates
will be calculated quarterly and appropriate estimated accruals will be established each quarter by
executive management after consultation with the Chairman of the Committee, and the Committee will
be updated quarterly regarding the status of the Plan estimates and the accruals.

CHANGE-IN-CONTROL 

     Notwithstanding any contrary provision in the Plan, in the event of a Change in Control (as
defined below), each Participant shall receive the Participant’s target Bonus Amount on Exhibit
A pro rated for the Plan Year in which the Change in Control occurs to be paid as soon as
administratively feasible but in no event later than 2-1/2 months after the Change in Control
occurs.

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     For all purposes of this Plan, a “Change in Control” of the Company means the occurrence of
any one or more of the following events:

     (a) The acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”)) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of
either (i) the then outstanding shares of common stock of the Company (the “Outstanding
Company Stock”) or (ii) the combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that the following acquisitions shall not
constitute a Change in Control: (i) any acquisition directly from the Company or any
Subsidiary, (ii) any acquisition by the Company or any Subsidiary or by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary,
or (iii) any acquisition by any corporation pursuant to a reorganization, merger,
consolidation or similar business combination involving the Company (a “Merger”), if,
following such Merger, the conditions described in clauses (i) and (ii) of (c) below are
satisfied;

     (b) Individuals who, as of the Effective Date of this Plan, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the Effective Date
whose election, or nomination for election by the Company’s stockholders, was approved by a
vote of at least a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the Board;

     (c) Approval by the stockholders of the Company of a Merger, unless immediately
following such Merger, (i) substantially all of the holders of the Outstanding Company
Voting Securities immediately prior to Merger beneficially own, directly or indirectly,
more than 50% of the common stock of the corporation resulting from such Merger (or its
parent corporation) in substantially the same proportions as their ownership of Outstanding
Company Voting Securities immediately prior to such Merger and (ii) at least a majority of
the members of the board of directors of the corporation resulting from such Merger (or its
parent corporation) were members of the Incumbent Board at the time of the execution of the
initial agreement providing for such Merger;

     (d) The sale or other disposition of all or substantially all of the assets of the
Company, unless immediately following such sale or other disposition, (i) substantially all
of the holders of the Outstanding Company Voting Securities immediately prior to the
consummation of such sale or other disposition beneficially own, directly or indirectly,
more than 50% of the common stock of the corporation acquiring such assets in substantially
the same proportions as their ownership of Outstanding Company Voting Securities
immediately prior to the consummation of such sale or disposition, and (ii) at least a
majority of the members of the board of directors of such corporation (or its parent
corporation) were members of the Incumbent Board at the time of execution of the initial
agreement or action of the Board providing for such sale or other disposition of assets of
the Company;

     (e) The adoption of any plan or proposal for the liquidation or dissolution of the
Company; or

     (f) Any other event that a majority of the Board, in its sole discretion, determines
to constitute a Change in Control hereunder.

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Notwithstanding the occurrence of any of the foregoing events set out in this section which would
otherwise result in a Change in Control, the Board may determine in its discretion, if it deems it
to be in the best interest of the Company, that an event or events otherwise constituting or
reasonably leading to a Change in Control shall not be deemed a Change in Control hereunder. Such
determination shall be effective only if it is made by the Board prior to the occurrence of an
event that otherwise would be, or reasonably lead to, a Change in Control, or after such event only
if made by the Board a majority of which is composed of directors who were members of the Board
immediately prior to the event that otherwise would be, or reasonably lead to, a Change in Control.

MISCELLANEOUS PLAN PROVISIONS 

The Plan is an incentive bonus arrangement and is, therefore, not intended to be subject to the
reporting requirements of the Employee Retirement Income Security Act of 1974, as amended, and Code
for certain employee benefit plans. The Plan is a discretionary plan and does not require annual
distributions.

The Board reserves the right to amend, revise, modify, revoke or terminate the Plan at any time in
its sole discretion, without prior notice to or consent of Participants. No contractual right to
any benefit or payment described herein is created or is intended to be created by this document or
any related action of the Board or the Committee and none should be inferred from the descriptions
of this Plan. No officer or other employee of the Company is automatically entitled to any Bonus
Amount under the Plan.

Bonus Amounts may not be assigned or transferred except in the event of the Participant’s death.
Unless otherwise designated in writing, the Participant’s beneficiary will be the same as stated in
the Participant’s 401k beneficiary designation.

The Company shall have the right to deduct all minimum required withholding for tax purposes from
the Actual Awarded Amount for a Participant.

All administrative expenses of the Plan will be borne by the Company.

All amounts payable under this Plan shall be paid from the general assets of the Company and shall
remain subject to the creditors of the Company. Neither the establishment of the Plan nor the
making of Bonus Amounts hereunder shall be deemed to create a trust. No individual shall have any
security or other interest in any of the assets of the Company, in shares of stock of the Company
or otherwise.

An individual shall be considered to be in the employment of the Company as long as he or she
remains an officer or other employee of either the Company or any subsidiary of the Company.
Nothing in the adoption of the Plan nor the making of Bonus Amounts hereunder shall confer on any
individual the right to continued employment by the Company or a subsidiary or affect in any way
the right of the Company or such subsidiary to terminate his or her employment at any time.

All provisions of the Plan and all amounts paid or payable hereunder shall be construed in
accordance with and governed by the laws of Delaware.

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Exhibit 10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT is entered into on the 15th day of August, 2006 (the “Effective
Date”), by and between Optelecom-NKF, Inc., a Delaware corporation (the “Company”), and Steven
Tamburo (the “Executive”).

Recitals

     WHEREAS, the Company desires to hire the Executive, and the Executive desires to work for the
Company, all pursuant to the terms and conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the mutual promises made below, the parties agree as
follows:

     1. Employment, Duties and Acceptance.

          1.1 Employment.

          (a) Effective upon the Effective Date, the Company shall employ the Executive as its Chief
Financial Officer. In such capacity, the Executive shall report to the Chief Executive Officer of
the Company and shall perform such duties and assume such responsibilities as may be assigned by
the Chief Executive Officer or the Board of Directors of the Company from time to time. The
Executive accepts such employment and shall perform his duties faithfully and to the best of his
abilities.

          (b) The Executive shall devote his full working time and creative energies to the performance
of his duties hereunder and will at all times devote such additional time and efforts as are
reasonably sufficient for fulfilling the significant responsibilities entrusted to him. So long as
such activities, in the aggregate, do not interfere with the performance by the Executive of his
duties hereunder, the Executive shall be permitted a reasonable amount of time to participate (as
board member, officer or volunteer) in civic, political and charitable activities.

          1.2 Place of Employment. The Executive’s principal place of employment shall be in
the Washington, D.C. metropolitan area, subject to such travel as may be reasonably required by his
employment pursuant to the terms hereof. The Executive shall not be required to relocate outside
of the Washington, D.C. metropolitan area during the Term unless the Company provides relocation
benefits acceptable to the Executive in his sole discretion.

 

 

     2. Term of Employment.

          Unless terminated earlier in accordance with the provisions of this Agreement, the
Executive’s employment hereunder shall continue until the one (1) year anniversary of the Effective
Date (the “Term”). If on or before the expiration of the Term the Company and the Executive enter
into a subsequent employment agreement, it is the expectation of the Company that such subsequent
employment agreement would include a provision providing for the automatic renewal of such
subsequent agreement upon the expiration of the term thereof unless either party were to provide
notice of termination not less than thirty (30) days prior to the date of such expiration.

     3. Compensation.

          3.1 Salary. As compensation for all services to be rendered pursuant to this
Agreement, the Company shall pay to the Executive during the Term a salary of $165,000 per annum
(the “Base Salary”) less such deductions as shall be required to be withheld by applicable laws and
regulations or as otherwise authorized by the Executive. The Base Salary shall accrue from and
after the Effective Date, and shall be payable during the Term, in arrears in equal periodic
installments, in accordance with the Company’s customary payroll practices in effect at the time of
payment. The Executive’s Base Salary may be reviewed by the Board of Directors of the Company or
the Compensation Committee thereof (collectively, the “Board”) and may be increased (but not
decreased) based upon the evaluation of the Executive’s performance and the compensation policies
of the Company in effect at the time of each such review.

          3.2 Incentive Compensation. The Executive will be entitled to participate in the
Company’s Incentive Bonus Plan for Plan Year 2006 (the “2006 Incentive Plan”).
Provided the Company’s annual defined goals as determined by the Board and set forth in the 2006
Incentive Plan are met, the Executive’s potential estimated bonus under the 2006
Incentive Plan would be up to 25% of the Base Salary, pro-rated for 2006 based on the number of
days employed. The Executive’s variable compensation under the 2006 Incentive Plan
would also include restricted stock and stock options to be earned according to the 2006 Incentive
Plan, as determined by the Board. In addition, during the Term, the Executive shall be
entitled to participate in any subsequent bonus or incentive plan or program adopted by the Board
in which executive officers of the Company are eligible to participate, in accordance with such
terms as are determined by the Board.

          3.3
Stock
Options. As further compensation, on the Effective Date,
the Executive shall be granted non-qualified stock options to
purchase 7,500 shares of the Company’s common stock (the
“Options”). The Options shall have an exercise price equal
to the fair market value of the Company’s common stock on the
Effective Date. All of the terms of the Options shall be in
accordance with the provisions of the Optelecom-NKF, Inc Stock Option
Plan of 2002, as amended from time to time (the “Option
Plan”). The Executive acknowledges that he has been provided
with a copy of the Option Plan.

          3.4 Participation in Executive Benefit Plans. The Executive shall be
permitted during the Term, if and to the extent eligible, to participate in any group medical,
dental, long-term and short-term disability insurance, life insurance, and 401(k) plan of the
Company available to other comparable executives of the Company generally on the same terms as such
other executives.

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          3.5 Vacation. The Executive shall be entitled to accrue twenty (20) days of paid
vacation and three (3) days of paid sick leave per year, to be scheduled and taken at the
Executive’s option at such times as his duties may permit. The established vacation year is the
calendar year, January 1 through December 31. Vacation leave can be accrued for a maximum of 240
hours at the end of a calendar year. Any vacation leave accrued in excess of 240 hours on any
December 31st will be paid to the employee by March 31st of the following year, provided that the
employee has taken at least two weeks vacation leave during the year in which the excess was
accrued, otherwise the excess will be lost by the employee. Pay for any unused earned vacation
will be given at the time of termination, up to a maximum of 240 hours.

          3.6 Expenses. Subject to such policies as may from time to time be established by the
Board, the Company shall pay or reimburse the Executive for all ordinary, necessary and reasonable
expenses (including, without limitation, travel, meetings, dues, subscriptions, fees, educational
expenses, computer equipment, mobile telephones, professional insurance, and the like) actually
incurred or paid by the Executive during the Term in the performance of the Executive’s services
under this Agreement, upon presentation of expense statements or vouchers or such other supporting
information as the Board may require.

          3.7. Withholding. The Company is authorized to withhold from the amount of any Base
Salary and incentive compensation and any other things of value paid to or for the benefit of the
Executive, all sums authorized by the Executive or required to be withheld by law, court decree, or
executive order, including (but not limited to) such things as income taxes, employment taxes, and
employee contributions to fringe benefit plans sponsored by the Company.

     4. Termination.

          4.1 General. This Agreement shall terminate upon the expiration of the Term, unless
earlier terminated in accordance with the provisions of this Section 4.

          4.2 Termination Upon Mutual Agreement. The Company and the Executive may, by mutual
written agreement, terminate this Agreement and/or the employment of the Executive at any time.

          4.3 Death or Disability of Executive.

          (a) The employment of the Executive hereunder shall terminate upon (i) the death of the
Executive, and (ii) at the option of the Company upon not less than thirty (30) days’ prior written
notice to the Executive or his personal representative or guardian, if the Executive suffers a
Total Disability (as defined in Section 4.3(b) below).

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          (b) For purposes of this Agreement, “Total Disability” shall mean (i) if the Executive is
subject to a legal decree of incompetency (the date of such decree being deemed the date on which
such disability occurred), or (ii) the written determination by a physician selected by the Company
that, because of a medically determinable disease, injury or other physical or mental disability,
the Executive is unable substantially to perform each of the material duties of the Executive
required hereby, and that such disability has lasted for the immediately preceding ninety (90) days
and is, as of the date of determination, reasonably expected to last an additional ninety (90) days
or longer after the date of determination, in each case based upon medically available reliable
information, and the provision of clear and convincing evidence by the Company of the Executive’s
inability substantially to perform each material duty hereunder in support of such determination by
the physician.

          (c) Any leave on account of illness or temporary disability which is short of “Total
Disability” shall not constitute a breach of this Agreement by the Executive and in no event shall
any party be entitled to terminate this Agreement for “cause” or “good reason” (as such terms are
defined herein) due to any such leave. All physicians selected hereunder shall be board certified
in the specialty most closely related to the nature of the disability alleged to exist.

          4.4 Termination For Cause. The Company may, upon action of the Board, and upon
written notice to the Executive specifying in reasonable detail the reason therefor, terminate the
employment of the Executive at any time for “cause” (as defined below), provided, however, that if
the reason for termination for “cause” is susceptible of cure, the Executive shall have a period of
thirty (30) days after such written notice to effect a cure. “Cause” means (i) the material
failure of the Executive to perform his duties under this Agreement which failure materially
adversely affects the Company or its business after notice and a reasonable opportunity to cure;
(ii) willful malfeasance by the Executive in connection with the performance of his duties under
this Agreement that could in the good faith judgment of the Board (x) have a material adverse
impact on the Company’s business, (y) subject the Company to criminal penalties in excess of
$50,000, or (z) result in the incarceration of any officer, director or employee of the Company;
(iii) the Executive being convicted of, or pleading guilty or nolo contendere to, or being indicted
for a felony or other crime involving theft, fraud or moral turpitude; (iv) fraud or embezzlement
against the Company; (v) the failure of the Executive to obey in all material respects any proper
written direction of the Chief Executive Officer or the Board that is not inconsistent with this
Agreement and which failure to obey has a material adverse effect on the Company; or (vi) the
violation by the Executive of the non-competition and confidentiality provisions of Section 5 of
this Agreement.

          4.5 Termination For Good Reason. The Executive may resign (and thereby terminate his
employment under this Agreement) at any time for “good reason” (as defined below), upon not less
than thirty (30) days’ prior written notice to the Company specifying in reasonable detail the
reason therefor, provided, however, that if the reason for resignation for “good reason” is susceptible of cure, the Company shall have a period of thirty
(30) days after such written notice to effect a cure. For purposes of this Agreement, “good
reason” shall mean (i) any material failure by the Company to comply with any material obligation
imposed by this Agreement; or (ii) a substantial reduction in the Executive’s title, position,
duties or responsibilities.

-4-

 

          4.6 Payments Upon Termination.

          (a) In the event that the Executive’s employment is terminated by the Company without “cause,”
or by the Executive for “good reason,” then, if no Change of Control (as defined below) has
occurred on or before the date of such termination, the following provisions shall apply:

               (i) The Company shall pay the Executive the Base Salary to which the Executive would have been
entitled pursuant to Section 3.1 of this Agreement had the Executive remained in the employ of the
Company for a period of three (3) months from the date of termination (the “Termination Payment
Period”). Such payments shall be paid on the same schedule used to pay Base Salary to the
Executive during the Term.

               (ii) Unless prohibited by law or, with respect to any insured benefit, the terms of the
applicable insurance contract, the Executive shall continue to participate in, and be covered
under, the Company’s medical, dental, long-term and short-term disability insurance, and
life insurance plan on the same basis as other executives of the Company during the
Termination Payment Period.

               (iii) Notwithstanding the foregoing, the Company shall not be required to make any payment to
the Executive or maintain the Executive’s participation or coverage under any plan pursuant to this
Section 4.6(a) if the Executive breaches any of the provisions of Section 5 hereof. In such event,
the Company shall provide written notice to the Executive detailing such violation.

          (b) In the event the Executive’s employment is terminated (i) pursuant to Section 2, (ii) by
the Company for “cause,” or (iii) by the Executive without “good reason,” then the Company shall
have no duty to make any payments or provide any benefits to the Executive pursuant to this
Agreement other than payment of the amount of the Executive’s Base Salary accrued through the date
of termination of his employment.

          (c) Upon termination of Executive’s employment for death or Total Disability, the Company
shall pay to the Executive, guardian or personal representative, as the case may be, in addition to
any insurance or disability benefits to which he may be entitled hereunder, all amounts accrued or
vested prior to such termination.

          (d) In the event that the Executive’s employment is terminated by the Company without “cause,”
or by the Executive for “good reason,” then, if a Change of Control (as defined below) has occurred
on or before the date of such termination or the Company has entered into a definitive agreement for a Change of Control on or before the date of
termination and such termination is effected in contemplation of such Change of Control, the
following provisions shall apply:

-5-

 

               (i) The Company shall pay the Executive the Base Salary to which the Executive would have been
entitled pursuant to Section 3.1 of this Agreement had the Executive remained in the employ of the
Company for a period of twenty four (24) months from the date of termination (the “Change of
Control Payment Period”) and any bonus payments earned through the date of termination. Such
payments shall be paid on the same schedule used to pay Base Salary to the Executive during the
Term.

               (ii) Unless prohibited by law or, with respect to any insured benefit, the terms of the
applicable insurance contract, the Executive shall continue to participate in, and be covered
under, the Company’s medical, dental, long-term and short-term disability insurance, and
life insurance plan on the same basis as other executives of the Company during the Change of
Control Payment Period.

               (iii) Notwithstanding the foregoing, the Company shall not be required to make any payment to
the Executive or maintain the Executive’s participation or coverage under any plan pursuant to this
Section 4.6(d) if the Executive breaches any of the provisions of Section 5 hereof. In such event,
the Company shall provide written notice to the Executive detailing such violation.

          (e) For purposes of this Agreement, the term “Change of Control” shall mean:

               (i) Any person (as defined conventionally in the context of corporate ownership) becomes the
beneficial owner directly or indirectly (within the meaning of Rule 13(d)(3) of the Securities
Exchange Act of 1934, as amended) of more than 50% of the Company’s then outstanding voting
securities (measured on the basis of voting power);

               (ii) The closing of an agreement of merger or consolidation with any other corporation or
business entity, other than (x) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the surviving entity), in
combination with the ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, at least 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after such merger or
consolidation, or (y) a merger or consolidation effected to implement a re-capitalization of the
Company (or similar transaction) in which no person acquires more than 50% of the combined voting
power of the Company’s then outstanding securities; or

               (iii) The liquidation or dissolution of the Company or upon the closing of a sale or
disposition by the Company of all or substantially all of the Company’s assets.

-6-

 

          (f) The Executive acknowledges that, upon termination of his employment, he is entitled to no
other compensation, severance, or other benefits other than those specifically set forth in this
Agreement or any applicable grant agreement under the Option Plan.

          4.7 No Disparaging Comments Upon Termination.

          Upon termination of this Agreement, the Company will refrain from making any disparaging
remarks about the Executive. Similarly, the Executive shall refrain from making any disparaging
remarks about the businesses, services, products, stockholders, officers, directors or other
personnel of the Company or any of its affiliates.

     5. Certain Covenants of the Executive.

          5.1 Necessity for Covenants. The Executive acknowledges that (i) the Company
is engaged and will in the future be engaged in the Business (as defined below); (ii) his
employment pursuant to this Agreement will give him access to customers and suppliers of, and trade
secrets of and confidential information concerning, the Company; and (iii) the agreements and
covenants contained in this Section 5 are essential to protect the business and goodwill of the
Company. In order to induce the Company to enter into this Agreement and pay the compensation and
other benefits at the levels requested by the Executive, the Executive enters into the following
covenants:

          5.2 Definitions.

          (a) “Company” for purposes of this Article 5 shall include the Company and all of the
Company’s majority owned subsidiaries and affiliates.

          (b) “Business” shall mean the development, manufacturing, marketing, sale and/or
supply of network video equipment, including video servers, Ethernet switches, fiber optic systems
and video management software.

          (c) “Business Contact” shall mean any (i) customer which has purchased goods or
services provided by the Company during the Term, (ii) prospective customer whom the Executive or
persons working for or directly with the Executive has contacted during the Term for the purpose of
endeavoring to sell the goods or services of the Company to the prospective customer, or (iii)
provider of goods or services to the Company.

          (d) “Service Area” means the geographic area in which the Company markets and sells
its goods and services.

          5.3 Restrictions. During the Term and for a period of one (1) year after the date
(the “Termination Date”) the Executive’s employment hereunder is terminated (the “Restricted
Period”), the Executive shall not, directly or indirectly, for himself or on behalf of any other
person, firm, corporation or other entity, whether as a principal, agent, employee, stockholder,
partner, officer, member, director, sole proprietor, or otherwise:

-7-

 

          (a) call upon or solicit any Business Contact for the purpose of persuading the Business
Contact to engage the Executive or any other person, firm, corporation or other entity to provide
goods or services which are the same or similar to those the Company provided to the Business
Contact or to engage the Business Contact to provide goods or services which are the same or
similar to those the Business Contact provided to the Company to any other person, firm,
corporation or other entity;

          (b) solicit, participate in or promote the solicitation of any person who was employed by the
Company at any time during the twelve (12) months preceding the Termination Date to leave the
employ of the Company, or hire or engage any of those persons;

          (c) make any disparaging remarks about the Company’s business, services or personnel;

          (d) interfere in any way with the Company’s business, prospects or personnel; or

          (e) become affiliated with or render services to any person engaged in any business that
competes with the Business within the Service Area, directly or indirectly, in any capacity,
including, without limitation, as an individual, partner, shareholder, officer, director,
principal, agent, employee, trustee or consultant; provided, however, that the Executive may own,
directly or indirectly, solely as an investment, securities which are publicly traded if the
Executive (a) is not a controlling person of, or a member of a group which controls, the issuer and
(b) does not, directly or indirectly, own 5% or more of any class of securities of the issuer.

          5.4 Trade Secrets and Confidential Information 

               5.4.1 Trade Secrets Defined. The term “Trade Secrets,” as used in this Agreement,
includes, without limitation, (i) all information concerning the Company and all aspects of the
Business, including costs, revenues, profits, pricing, customer information, product information,
supply sources, marketing, prospective and executed contracts, budgets and business plans, (ii) all
information which is unique to the Company or to any aspect of the Business which has a significant
business purpose and is not known or generally available from sources outside the Company or
typical of industry practice, and which would have a material adverse effect on the Company or the
Business if disclosed, and (iii) all formulae, innovations, inventions, improvements, compilations,
programs, devices, lists, methods, techniques, practices, procedures or processes of the Company
and all information relating thereto.

               5.4.2 Confidential Information Defined. Any other information not qualifying as a
Trade Secret, but relating to the business of the Company which is disclosed by
the Company to the Executive, or is discovered by the Executive in the course of employment, is
Confidential Information.

               5.4.3 Duty to Maintain Secrecy and Confidentiality. During the Period of the
Executive’s employment with the Company, and for a period of three (3) years thereafter, the
Executive shall maintain the secrecy and confidentiality of the Trade Secrets and the Confidential
Information and shall not (i) divulge, furnish or make accessible to anyone or

-8-

 

in any way use, for his own benefit or for the benefit of any other individual firm or entity (other than in the
ordinary course of the Company’s business), any Trade Secret or Confidential Information; (ii) take
or permit any action to be taken which would reduce the value of the Trade Secrets or Confidential
Information to the Company; or (iii) otherwise misappropriate or suffer the misappropriation of the
Trade Secrets or the Confidential Information.

               5.4.4 Information Which is Publicly Known. Notwithstanding anything herein to the
contrary, the obligations of secrecy and confidentiality set forth herein shall not apply to any
information which is now generally publicly known or which subsequently becomes generally publicly
known other than as a direct or indirect result of the breach of this Agreement by the Executive,
or which is required by law or order of any court to be disclosed.

          5.5 Property of the Company. All memoranda, notes, lists, records and other documents
or papers (and all copies thereof), including but not limited to, such items stored in computer
memories, on microfiche or by any other means, made or compiled by or on behalf of the Executive,
or made available to the Executive concerning the Business, are and shall be the property of the
Company and shall be delivered to the Company promptly upon the termination of the Executive’s
employment with the Company or at any other time on request.

          5.6 Executive’s Ideas, Etc. All inventions, prototypes, discoveries, improvements,
innovations and the like (“Inventions”) and all works of original authorship or images that are
fixed in any tangible medium of expression and all copies thereof (“Works”) which are designed,
created or developed by Executive, solely or in conjunction with others, in the course of
performance of the Executive’s duties which relate to the Business, shall be made or conceived for
the exclusive benefit of and shall be the exclusive property of the Company. The Executive shall
immediately notify the Company upon the design, creation or development of all Inventions and
Works. At any time thereafter, the Executive, at the request and expense of the Company, shall
execute and deliver to the Company all documents or instruments which may be necessary to secure or
perfect the Company’s title to or interest in the Inventions and Works, including but not limited
to applications for letters of patent, and extensions, continuations or reissues thereof,
applications for copyrights and documents or instruments of assignment or transfer. All Works are
agreed and stipulated to be “works made for hire,” as that term is used and understood within the
Copyright Act of 1976, as amended or any successor statute. To the extent any Works are not deemed
to be works made for hire as defined above, and to the extent that title to or ownership of any
Invention or Work and all other rights therein are not otherwise vested exclusively in the Company,
the Executive shall, without further consideration but at the expense of the Company, assign and
transfer to the Company the Executive’s entire right, title and interest (including copyrights and patents) in or
to those Inventions and Works.

          5.7 Rights and Remedies Upon Breach. If the Executive breaches, or threatens to
commit a breach of, any of the provisions of Sections 5.1 through 5.6 (the “Restrictive
Covenants”), the Company shall, in addition to its right immediately to terminate this Agreement,
have the right and remedy (which right and remedy shall be independent of others and severally
enforceable, and which shall be in addition to, and not in lieu of, any other

-9-

 

rights and remedies available to the Company under law or in equity) to have the Restrictive Covenants specifically
enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such
breach or threatened breach could cause irreparable injury to the Company or its affiliates and
that money damages may not provide adequate remedy to the Company.

          5.8 Covenants Currently Binding Executive. The Executive warrants that his employment
by the Company will not (a) violate any non-disclosure agreements, covenants against competition,
or other restrictive covenants made by the Executive to or for the benefit of any previous employer
or partner, or (b) violate or constitute a breach or default under, any statute, law, judgment,
order, decree, writ, injunction, deed, instrument, contract, lease, license or permit to which the
Executive is a party or by which the Executive is bound.

          5.9 Litigation. There is no litigation, proceeding or investigation of any nature
(either civil or criminal) which is pending or, to the best of the Executive’s knowledge,
threatened against or affecting the Executive or which would adversely affect his ability to
substantially perform the duties herein.

          5.10 Review. The Executive has received or been given the opportunity to review the
provisions of this Agreement, and the meaning and effect of each provision, with independent legal
counsel of the Executive’s choosing.

          5.11 Severability of Covenants. The Executive acknowledges and agrees that the
Restrictive Covenants are reasonable and valid in geographical and temporal scope and in all
respects. If any court determines that any of the Restrictive Covenants, or any part thereof, is
invalid or unenforceable, the remainder of the Restrictive Covenants shall not thereby be affected
and shall be given full effect, without regard to the invalid portions.

          5.12 Blue-Penciling. If any court determines that any of the Restrictive Covenants,
or any part thereof, is 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, and, in its reduced form, such provision shall then be enforceable and shall be
enforced. If any such court declines to so revise such covenant, the parties agree to negotiate in
good faith a modification that will make such duration or scope enforceable.

     6. Dispute Resolution.

          6.1 Costs of Arbitration. If either party brings an arbitration proceeding to enforce
its rights under this Agreement, the prevailing party shall be entitled to recover from the other
party all expenses incurred by it in preparing for and in trying the case, including, but not
limited to, investigative costs, arbitration and court costs and reasonable attorneys’ fees.

          6.2 No Jury Trial. NEITHER PARTY SHALL ELECT A TRIAL BY JURY IN ANY ACTION,
SUIT, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT.

-10-

 

          6.3 Personal Jurisdiction. Both parties agree to submit to the jurisdiction
and venue of the federal or state courts in the State of Maryland as to matters involving
enforcement of this Agreement, including any award under an arbitration proceeding.

          6.4 Arbitration. SUBJECT TO THE COMPANY’S RIGHT TO SEEK INJUNCTIVE RELIEF AS
SPECIFIED IN THIS AGREEMENT, ANY DISPUTE BETWEEN THE PARTIES HERETO ARISING UNDER OR RELATING TO
THIS AGREEMENT (INCLUDING, BUT NOT LIMITED TO, THE AMOUNT OF DAMAGES, THE NATURE OF THE EXECUTIVE’S
TERMINATION OR THE CALCULATION OF ANY BONUS OR OTHER AMOUNT OR BENEFIT DUE) SHALL BE RESOLVED IN
ACCORDANCE WITH THE PROCEDURES OF THE AMERICAN ARBITRATION ASSOCIATION. ANY RESULTING HEARING
SHALL BE HELD IN THE WASHINGTON, D.C. METROPOLITAN AREA. THE RESOLUTION OF ANY DISPUTE ACHIEVED
THROUGH SUCH ARBITRATION SHALL BE BINDING AND ENFORCEABLE BY A COURT OF COMPETENT JURISDICTION.
THE ARBITRATOR(S) SHALL HAVE NO AUTHORITY TO MODIFY ANY PROVISION OF THIS AGREEMENT OR TO AWARD A
REMEDY FOR A DISPUTE INVOLVING THIS AGREEMENT OTHER THAN A BENEFIT SPECIFICALLY PROVIDED UNDER OR
BY VIRTUE OF THE AGREEMENT.

     7. Other Provisions.

          7.1 Notices. Any notice or other communication required or which may be given
hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by
facsimile transmission or sent by certified, registered or express mail, postage paid, and shall be
deemed given when so delivered personally, telegraphed, telexed or sent by facsimile transmission
or, if mailed, four days after the date of mailing, as follows:

(i) if to the Company, to:

Optelecom-NKF, Inc.

12920 Cloverleaf Center Drive

Germantown, Maryland 20874

Facsimile: (301) 528-8190

Attention: Chief Executive Officer

with copies to:

Thomas W. France, Esquire

Venable LLP

8010 Towers Crescent Drive

Suite 300

Vienna, Virginia 22182

Facsimile: (703) 821-8949

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(ii) if to the Executive, to:

Steven Tamburo

11917 Richland Lane

Oak Hill, Virginia 20171

Facsimile :                     

          Any party may by notice given in accordance with this Section to the other party designate
another address or person for receipt of notices hereunder.

          7.2 Entire Agreement. This Agreement contains the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior agreements and
understandings, written or oral, with respect thereto. In the event there is any conflict or
ambiguity between the provisions of this Agreement and any other agreement, plan or policy of the
Company relating to the Executive’s employment with the Company, the resolution of any such
conflict or ambiguity shall be governed by the terms of this Agreement.

          7.3 Waivers and Amendments. This Agreement may be amended, modified, superseded,
canceled, renewed or extended, and the terms and conditions hereof may be waived, only by a written
instrument signed by the Executive and a duly authorized officer (other than the Executive) of the
Company (each, in such capacity, a party) or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any
right, power or privilege hereunder, nor any single or partial exercise of any right, power or
privilege hereunder, preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder.

          7.4 Governing Law. This Agreement has been negotiated and is to be performed in the
State of Maryland, and shall be governed and construed in accordance with the laws of the State of
Maryland applicable to agreements made and to be performed entirely within such State.

          7.5 Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one and the same
instrument.

          7.6
Confidentiality.
Neither party shall disclose the contents of this Agreement or of any
other agreement they have simultaneously entered into to any person,
firm or entity, except the agents or representatives of the parties
(including any tax advisors or attorneys of a party) and immediate
family members, or except as required by law.

          7.7 Word Forms. Whenever used herein, the singular shall include the plural and the
plural shall include the singular. The use of any gender or tense shall include all genders and
tenses.

          7.8 Headings. The Section headings have been included for convenience only, are not
part of this Agreement, and are not to be used to interpret any provision hereof.

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          7.9 Binding Effect and Benefit; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties, their successors, heirs, personal representatives and other
legal representatives. This Agreement may be assigned by the Company to any entity in connection
with a Change of Control; provided, however, that notwithstanding any other provision within
this Agreement, this Agreement shall survive any Change in Control that shall occur for the
remainder of the Term. The Executive may not assign this Agreement without the prior
written consent of the Company.

          7.10 Rule 409A. If any compensation or benefits provided by this Agreement may
result in the application of Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), the Company shall in consultation with the Executive, modify the Agreement in the least
restrictive manner necessary in order to exclude such compensation from the definition of “deferred
compensation” within the meaning of such Section 409A or in order to comply with the provisions of
Section 409A, other applicable provision(s) of the Code and/or any rules, regulations or other
regulatory guidance issued under such statutory provisions and without any diminution in the value
of the payments to the Executive.

          7.11 Separability. The covenants contained in this Agreement are separable,
and if any court of competent jurisdiction declares any of them to be invalid or unenforceable,
that declaration of invalidity or unenforceability shall not affect the validity or enforceability
of any of the other covenants, each of which shall remain in full force and effect.

-13-

 

          IN WITNESS WHEREOF, the parties, intending to be legally bound, have executed this Agreement
or caused it to be executed and attested by their duly authorized officers as a document under seal
on the day and year first above written.

	 	 	 	 	 	 
	ATTEST/WITNESS:	 	OPTELECOM-NKF, INC.	 
	 
	 	 	 	 	 
	 

	 	By:
	 	 	(SEAL)
	 

	 	 	 	 	 
	 

	 	 	 	Chief Executive Officer	 
	 
	 	 	 	 	 
	 

	 	EXECUTIVE:	 	 	 
	 
	 	 	 	 	(SEAL)
	 	 	 	
	 	 	Steven Tamburo	 

-14-

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