OPTION AGREEMENT
THIS AGREEMENT is made and entered into as of the 30th day of June,
1994, by and between SHOP AT HOME, INC. (the "Company"), a Tennessee
corporation, and XXXXXX X. XXXXXX ("Consultant");
WHEREAS, the Company engages in the business of retail sales of
merchandise by sales presentations broadcast directly to potential
customers by cable and satellite television transmissions commonly known as
the "shop at home business";
WHEREAS, Company employs Consultant as a television and cable system
advisor and wishes to provide a mechanism to reward Consultant for his
continued service;
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. STOCK OPTIONS. The Company will grant to consultant a non-
qualified (as defined by the Internal Revenue Code) option to purchase up
to 50,000 shares of the Company's Common Stock, $.0025 par value, at an
exercise price of $1.00 per share, expiring five (5) years from the date of
vesting. Pursuant to this Section, options to purchase 10,000 shares shall
vest immediately upon execution of this Agreement, and thereafter options
to purchase 10,000 shares shall vest on January 1 of each year commencing
on January 1, 1995, and continuing until all options shall have vested.
Such options shall be in the form of Exhibit A hereto.
In the event Consultant resigns or otherwise ceases to serve as a
consultant to the Company, or the Company terminates Consultant for "cause"
as defined herein, all of Consultant's rights with respect to options not
yet vested shall terminate. In the event the Company terminates Consultant
for any other reason, Consultant shall retain his rights solely with
respect to those options that would vest on January 1 following the date of
termination and such rights shall immediately terminate if Consultant
separately, jointly or in association with others, directly or indirectly,
as an agent, employee, owner, partner, stockholder, or otherwise,
establishes, engages in, or becomes interested in any business similar to
the business being conducted by Employer.
2. DEFINITIONS. For purposes of this Agreement the following terms
shall have the meanings specified below:
2.1 "Cause" - (a) Consultant commits an act of dishonesty,
embezzlement or fraud against the Company or any other party.
(b) Consultant fails to use his best efforts on behalf of the
Company, or conducts himself in a manner substantially detrimental to the
Company.
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(c) Consultant is convicted of a misdemeanor involving
dishonesty, breach of trust or moral turpitude, or is convicted of any
felony.
(d) Consultant engages in the illegal usage of any drug.
(e) Any state or federal regulatory agency or court of competent
jurisdiction issues an order requiring the Consultant's removal from any
duties or responsibilities for the Company.
(f) Consultant dies or is unable, due to illness, accident or
any other physical or mental incapacity, to perform the duties provided for
herein for an aggregate of 90 days within any period of 240 consecutive
days.
3. MISCELLANEOUS.
3.1 LEGEND ON CERTIFICATE. Each certificate evidencing any of
the shares required by Consultant pursuant to the Option shall be endorsed
as follows:
The shares evidenced by this certificate have not been
registered under the Securities Act of 1993, as amended, or
under the securities laws of any state. The shares may not
be sold, transferred, pledged or hypothecated in the absence
of any effective registration statement under the Securities
Act of 1933, as amended, and such registration or
qualification, as may be necessary under the securities laws
of any state, or an opinion of counsel satisfactory to the
Corporation that such registration or qualification is not
required.
3.2 HOLD HARMLESS. Consultant and the Company covenant and agree
that they will indemnify and hold harmless the other from (i) any and all
losses, damages, liabilities, expenses or claims resulting from or arising
out of any nonfulfillment by the defaulting party of any material provision
of this Agreement, and (ii) any and all losses or damages resulting from
the defaulting party's malfeasance or gross negligence.
4. CONTRACT NONASSIGNABLE. The parties acknowledge that this
Agreement has been entered into due to, among other things, the special
skills of Consultant, and agree that this Agreement may not be assigned or
transferred by Consultant, in whole or in part, without the prior written
consent of the Company. This Agreement shall be binding and shall inure to
the benefit of the Company and its successors and assigns.
5. NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to
have been duly given if delivered or mailed, first class, certified mail,
postage prepaid:
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To Company:
Shop At Home, Inc.
0000 Xxxxxxxx Xxxx
X.X. Xxx 00000
Xxxxxxxxx, Xxxxxxxxx 00000
To Consultant:
Xxxxxx X. Xxxxxx
000 Xxxxxxx Xxxxx
Xxxx, Xxxxxxx 00000
6. AMENDMENTS AND MODIFICATIONS. This Agreement may be amended or
modified only by a writing signed by both parties hereto.
7. NO EMPLOYMENT AGREEMENT. The parties acknowledge that Consultant
is an "independent contractor," and that pursuant to the parties agreement,
his service as a consultant may be terminated at any time by the Company
without penalty. This Agreement is not, and is not intended by the parties
to be, an agreement for the continued employment of the Consultant by the
Company.
8. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, and
all of which shall constitute one and the same instrument.
9. HEADINGS. The headings set out in this Agreement are for
convenience of reference and shall not be deemed a part of this Agreement
and shall not affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
COMPANY:
SHOP AT HOME, INC.
By: /S/ XXXX X. XXXXXX
Xxxx X. Xxxxxx
President and
Chief Executive Officer
CONSULTANT:
/S/ XXXXXX X. XXXXXX
Xxxxxx X. Xxxxxx
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EXHIBIT A
THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON
PARAGRAPH 13 OF CODE SECTION 10-5-9 OF THE GEORGIA SECURITIES ACT
OF 1973 AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER SUCH ACT.
SHOP AT HOME, INC.
1994 $1.00 COMMON STOCK PURCHASE OPTION
NUMBER 1
1. GENERAL PROVISIONS. Shop At Home, Inc., a Tennessee corporation
(herein called the "Corporation"), for value received, and other good and
valuable consideration, receipt of which is hereby acknowledged, hereby
certifies that XXXXXX X. XXXXXX, or his registered assigns (herein called
the "Option Holder") is entitled to purchase shares of the fully paid and
voting nonassessable Common Stock, $.0025 par value per share, of the
Corporation (such number and character of such shares being subject to
adjustment as provided in paragraph 4 below), at Exercise Price Per Share
set forth herein by surrendering this Option with the Subscription Form
attached hereto as EXHIBIT 1 duly executed, at the offices of the
Corporation, and by paying in full the Exercise Price Per Share for the
number of shares of Common Stock as to which this Option is exercised. No
fractional shares shall be issued hereunder, and instead, any fractional
shares created by exercise hereunder shall be purchased by the Corporation
at the rate of the Exercise Price Per Share then in effect.
2. EXERCISE PERIOD. This Option may be exercised by the Option
Holder at any time after the earlier of: (i) the second anniversary of the
issuance of this Option; (ii) the date of issuance of notice by the
Corporation of its intent to offer its Common Stock to the public in a
public offering registered with the Securities and Exchange Commission; or
(iii) the date of issuance of notice by the Corporation to its shareholders
of its intent (w) to sell, lease or otherwise transfer all or substantially
all of the assets of the Corporation, or (x) to engage in any consolidation
of the Corporation with, or a merger of the Corporation into, any other
corporation (that is not an affiliated entity), or (y) a distribution by
the Corporation of its assets with respect to its Common Stock as a
liquidating or partial liquidating dividend, or (z) the happening of any
other similar event affecting the Common Stock. This Option shall expire
and all rights hereunder shall cease on the earlier of the date that is
thirty (30) days after termination of Consultant's relationship with the
Corporation or January 1, 1999.
3. NUMBER OF SHARES COVERED BY OPTION; EXERCISE PRICE. The number
of shares of the Corporation's Common Stock, $.0025 par value per share,
for which this Option may be exercised shall be
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10,000 voting, common shares, subject to adjustment as provided in paragraph
4 below, which may be purchased as a whole at any time or in part from time
to time subject to paragraph 4 within the time limit herein specified. The
price per share for the shares purchased upon exercise of this Option shall
be $1.00 per share, subject to adjustment as provided in paragraph 5 below
(the "Exercise Price Per Share").
4. ADJUSTMENTS IN NUMBER OF SHARES AND EXERCISE PRICE. If at any
time after this Option is granted, the Corporation shall declare or pay a
dividend or dividends payable in shares of its Common Stock (or any
security convertible into or granting rights to purchase shares or such
Common Stock) or split the then outstanding shares of its Common Stock into
a greater number of shares, the number of shares of Common Stock which may
be purchased upon the exercise of this Option in effect at the time of
taking of a record for such dividend or at the time of such stock split
shall be proportionately increased and the Exercise Price Per Share
proportionately decreased as of such time; and conversely, if at any time
the Corporation shall contract the number of outstanding shares of its
Common Stock by combining such shares into a smaller number of shares, the
number of shares which may be purchased upon the exercise of this Option at
the time of such action shall be proportionately decreased and the Exercise
Price Per Share proportionately increased as of such time. If the
Corporation declares or pays a dividend or makes a distribution on shares
of its Common Stock payable otherwise than out of earnings or earned
surplus, then thereafter the Option Holder, upon the exercise hereof, will
be entitled to receive the number of shares of Common Stock to be received
upon exercise of this Option determined as stated above and, in addition
and without further payment, the cash, stock or other securities and other
property which the Option Holder would have received by way of dividends
and distributions (otherwise than out of such earnings or surplus) as if
the Option Holder (i) has exercised this Option immediately prior to the
declaration of such dividend or the making of such distribution so as to be
entitled thereto, and (ii) had retained all dividends in stock or
securities payable in respect of such Common Stock or in respect of any
stock or securities paid as dividends and distributions and originating
directly or indirectly from such Common Stock. For the purposes of the
foregoing a dividend other than in cash shall be considered payable out of
earnings or earned surplus only to the extent that such earnings or surplus
are charged an amount equal to the fair value of such dividend.
Appropriate and similar adjustment of the number of shares which may
be purchased upon the exercise of this Option and of the Exercise Price Per
Share shall also be made in the event of any other capital adjustment,
recapitalization, reorganization, reclassification or any consolidation of
the Corporation with, or a merger of the Corporation into, any other
corporation, or a sale, lease or other transfer of all or substantially all
of the assets of the Corporation, or a distribution by the Corporation of its
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assets with respect to its Common Stock as a liquidating or partial
liquidating dividend, or the happening of any similar event affecting the
Common Stock. In any such event, the Option Holder shall have the right
thereafter to exercise this Option for the acquisition of any kind and
amount of shares of stock and other securities and property to which the
Option Holder would have been entitled if the Option Holder had purchased
Common Stock of the Corporation by the full exercise of this Option
immediately prior to such capital adjustment, recapitalization,
reorganization, reclassification, consolidation, merger, sale, lease,
transfer, distribution or other similar event and the Corporation shall
make lawful provision therefor as a part of such event. The Corporation
shall not effect any such consolidation, merger, sale, lease or similar
transfer involving another corporation unless, upon or prior to the
consummation thereof, the successor corporation or the corporation to which
the property of the Corporation has been consolidated, merger, sold, leased
or otherwise transferred shall assume by written instrument the obligation
to deliver to the Option Holder such shares of stock, securities, cash or
property as in accordance with the foregoing provisions of the Option
Holder shall be entitled to receive.
5. RESERVATION OF SHARES. The Corporation shall at all times
reserve and keep available a number of its authorized but unissued shares
of its Common Stock sufficient to permit the exercise in full of this
Option.
6. SALE OF OPTION OR SHARES. This Option is not transferable or
assignable except by will or by the applicable laws of descent and
distribution, and it may be exercised during the Option Holder's lifetime
only by him. The shares to be issued hereunder have not been registered
under the Securities Act, or under the securities laws of any state, and
such shares to be issued hereunder, when issued, may not be sold,
transferred, pledged or hypothecated in the absence of an effective
registration statement for this Option, or the shares to be issued
hereunder, as the case may be, under the Securities Act, and such
registration or qualification as may be necessary under the securities
laws of any state, or an opinion of counsel satisfactory to the Corporation
that such registration or qualification is not required. The certificate
or certificates evidencing all or any of the shares to be issued hereunder
shall bear the following legend:
The shares evidenced by this Certificate have not been registered
under the Securities Act of 1933, as amended, or under the
securities laws of any state. The shares may not be sold,
transferred, pledged or hypothecated in the absence of any
effective registration statement under the Securities Act of
1933, as amended, and such registration or qualification as may
be necessary under the securities laws of any state, or an
opinion of counsel satisfactory to the Corporation that such
registration or qualification is not required.
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This Option shall be registered on the books of the Corporation, which
shall be kept by it as its principal office for the purpose and shall be
transferable only on said books by the registered owner hereof in person or
by duly authorized attorney upon surrender of this Option properly
endorsed, and only in compliance with the provision of the preceding
paragraph. In case of the exercise hereof in part only, the Corporation
will deliver the Option Holder a new Option of like tenor in the name of
the Option Holder evidencing the right to purchase the number of shares as
to which this Option has not been exercised.
7. GOVERNING LAW. This Option is to be construed and enforced in
accordance with and governed by the laws of the State of Tennessee.
IN WITNESS WHEREOF, the Corporation has caused this Option to be
issued in its corporate name by its duly appointed officer.
DATED: June 30, 1994
SHOP AT HOME, INC.
By:
Xxxx X. Xxxxxx
President and
Chief Executive Officer
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EXHIBIT 1
The undersigned optionee under that certain 1994 $1.00 Common Stock
Purchase Option (Number 1) (the "Agreement"), hereby exercises the Option
granted under the Agreement for the following number of shares of Common
Stock, subject to the terms and conditions of the Agreement:
Number of shares purchased
Total purchased price $
submitted herewith
(Signature)
(Date)
