EXHIBIT 10.1
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EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of April 22,
2001 (the "Effective Date") by and between Xxxxxxx Xxxxxx, an individual
("Executive"), and Entrust Technologies, Inc., a Maryland corporation (the
"Company").
1. Employment by the Company.
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(a) Duties. Subject to the terms set forth herein, the Company agrees
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to employ Executive as President and Chief Executive Officer, and in such other
executive capacities as may be requested from time to time by the Board of
Directors of the Company or a duly authorized committee thereof (the "Board"),
and Executive hereby accepts such employment. Executive shall perform such
duties as are customarily associated with the position of President and Chief
Executive Officer of a publicly traded company engaged in a comparable business,
consistent with the Bylaws of the Company and as reasonably required by the
Board. Executive shall render such other services for the Company and
corporations controlled by, under common control with, or controlling the
Company, and to successor entities and assignees of the Company (the "Company's
Affiliates") as the Company may from time to time reasonably request and as
shall be consistent with the duties Executive is to perform for the Company and
with Executive's experience. Executive shall be elected to the Company's Board
upon beginning his employment under this Agreement, and in the event Executive
remains employed under this Agreement, he shall be transitioned to the position
of Chairman of the Company's Board within one year of such time.
(b) Full Time and Best Efforts. During the term of his employment
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with the Company, Executive will devote his full business time and use his best
efforts to advance the business and welfare of the Company, and will not engage
in any other employment or business activities for any direct or indirect
remuneration that, in any material way, would be harmful or detrimental to, or
competes with, the business and affairs of the Company, or that materially would
interfere with his duties hereunder. The foregoing shall not preclude Executive
from managing his personal affairs, serving on any Board of Directors or
Trustees of which he is a member on the date hereof, including without
limitation, Travelocity, Joint Forces, the Dallas Symphony or Southern Methodist
University, or serving as a non-executive member of the Board of Directors of
any other company with approval of the Board and provided that such company or
companies do not directly and materially compete with the Company.
(c) Employment At Will. Consistent with the provisions of Section 4
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of this Agreement, the employment relationship between the Company and Executive
shall remain at all times at will in nature. Accordingly, Executive's
employment with the Company is not guaranteed to continue for any specified term
and may be ended by either party at any time, with or without reason or cause
and with or without advance notice.
2. Compensation and Benefits.
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(a) Base Salary. Executive shall receive for services to be rendered
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hereunder a starting base salary, paid biweekly, equivalent to an annualized
rate of $500,000.00 US, which will be paid according to the normal payroll
procedures of the Company and subject to payroll deductions as may be necessary
or customary in respect of the Company's salaried employees (the "Base Salary").
The Base Salary may be reviewed and increased (but not decreased) at the
discretion of the Board from time to time on and after April 1, 2002.
(b) Bonuses. Executive shall be eligible for an annual performance
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bonus in the a target amount of 100% of base salary at the end of each calendar
year in which he remains employed under this Agreement. Executive's bonus for
calendar year 2001 shall be guaranteed at the full targeted amount and shall be
paid to Executive upon commencing employment with the Company. Executive shall
present his recommended bonus terms and criteria for his executive team,
including himself, in each subsequent calendar year to the Board for
consideration and approval.
(c) Sign-On Bonus. Executive shall receive a sign-on bonus of
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$2,000,000 in cash payable as follows: (i) $1,000,000, less applicable
withholdings and deductions, payable within the first week of Executive's
employment under this Agreement; (ii) $500,000, less applicable withholdings and
deductions, payable upon Executive completing one year of employment under this
Agreement; and (iii) $500,000, less applicable withholdings and deductions,
payable upon Executive completing two years of employment under this Agreement.
(d) Participation in Benefit Plans. During his employment hereunder,
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Executive shall be entitled to participate in any retirement, retirement
savings, group insurance, hospitalization, medical, dental, health, accident,
disability or similar plan or program of the Company now existing or established
hereafter to the extent that he is eligible under the general provisions
thereof. In particular, Executive shall be eligible for coverage under the
Company's group health plan on the first of the month following his commencing
employment with the Company. In order to help ensure that there is no gap in
Executive's coverage for group health benefits, the Company will reimburse
Executive for the cost, if any, of continuation coverage under COBRA until
Executive qualifies for coverage under the Company's group health plan.
Executive shall also participate in all fringe benefits offered by the Company
to executive level employees within the Company. The Company may, in its sole
discretion and from time to time, amend, eliminate or establish benefit programs
as it deems appropriate.
(e) Vacation. Executive shall be entitled to paid vacation time of
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four weeks per calendar year. Two weeks of such vacation may be carried from
one year to the next. When Executive's total accrued vacation reaches six
weeks, Executive will accrue no further vacation until, and to the extent that,
Executive's total accrued vacation is reduced below the maximum of six weeks.
The days selected for Executive's vacation must be mutually and reasonably
agreed to by Company and Executive.
(f) Reimbursement of Expenses. Executive shall be reimbursed for
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reasonable business expenses incurred in connection with the performance of his
duties hereunder consistent with the Company's policy regarding reimbursement of
such expenses. In
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addition, upon accepting employment with the Company, Executive shall be
reimbursed for up to $50,000.00 US in reasonable and documented legal and
accounting fees incurred in connection with entering into this Agreement.
3. Options.
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(a) Grant. As an inducement to accept employment, the Company shall
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grant Executive upon execution of this Agreement non-qualified options to
purchase 4,000,000 shares of Common Stock of the Company (including 1,000,000
options as part of Executive's sign-on package to offset lost compensation
opportunities resulting from resignation of his former employment) at an
exercise price equal to the fair market value of such Common Stock at the close
of business on April 20, 2001. At the Company's election, such options may be
issued from the Company's 1996 Stock Option Plan, such appropriate alternative
stock option plan as the Company may establish, or otherwise under an individual
option agreement or agreements. All such plans or agreements shall provide for
cashless exercise of vested options and performance shares so that the Executive
shall, at his election, subject to the approval of the Company's Board of
Directors (or the Compensation Committee of the Company's Board of Directors),
which approval shall not be required if the Company's Common Stock is not listed
on the Nasdaq Stock Market or any other exchange at the time of the proposed
cashless exercise, receive upon exercise of all or part of an option a net
number of shares determined by reducing the number of shares to be delivered by
the number of shares that, when sold at fair market value on the date of
exercise would provide cash sufficient to pay the exercise price of such option
and the applicable taxes, incurred by reason of such exercise, computed at the
highest individual marginal tax rate (including payroll taxes imposed on the
Executive), on the spread between the option exercise price and the fair market
value of the stock subject to the exercised option on the date of exercise,
which amount shall be paid to the Internal Revenue Service as taxes withheld
from the Executive. In addition, the Executive may, at his option, pay for
shares of the Company's Common Stock purchased upon exercise of all or a portion
of his vested options and performance shares by (i) delivery of an irrevocable
and unconditional undertaking by a creditworthy broker to deliver promptly to
the Company sufficient funds to pay the exercise price and any required tax
withholding, (ii) delivery by the Executive to the Company of a copy of
irrevocable and unconditional instructions to a creditworthy broker to deliver
promptly to the Company cash or a check sufficient to pay the exercise price and
any required tax withholding or (iii) when the Company's Common Stock is
registered under the Securities Exchange Act of 1934, as amended, delivery of
shares of the Company's Common Stock owned by the Executive valued at their fair
market value (as determined in accordance with the applicable option agreement),
provided (A) such method of payment is then permitted under applicable law and
(B) such shares, if acquired directly from the Company, were owned by the
Executive at least six months prior to such delivery.
(b) Vesting. The foregoing options shall vest as follows:
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(i) 1,100,000 shares immediately upon the date of grant;
(ii) 250,000 shares upon Executive completing one year of
employment;
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(iii) 250,000 shares upon Executive completing two years of
employment;
(iv) 1,200,000 shares at a rate of 1/36 of such total upon each
complete month of continued employment after the first year;
(v) 550,000 shares upon the fifth year anniversary of the date
of grant, or such earlier date as the price at which the Company's Common
Stock shares traded on the NASDAQ exchange shall have closed at or above
$15.00 per share for at least 50 out of 60 consecutive trading days
including the day of vesting, provided in either case that Executive
remains employed as of such date with the Company; and
(vi) 650,000 shares upon the fifth year anniversary of the date
of grant, or such earlier date as the price at which the Company's Common
Stock shares traded on the NASDAQ exchange shall have closed at or above
$25.00 per share for at least 50 out of 60 consecutive trading days
including the day of vesting, provided in either case that Executive
remains employed as of such date with the Company.
(c) Acceleration of Vesting. Upon the occurrence of an "Acquisition
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Event" as defined herein, or upon termination of the Executive's employment by
the Company for any reason other than Cause within 120 days before either an
Acquisition Event or the announcement of an Acquisition Event, the vesting
schedules described in Sections 3(b)(i) - (iv) shall be accelerated so that all
of the number of shares that would otherwise have first become exercisable on
any vesting date scheduled to occur on or after the date of such Acquisition
Event shall become vested immediately prior to such Acquisition Event. In the
event that an Acquisition Event involves the purchase or exchange of the
Company's Common Stock at a price at or above the target prices described in one
or both of Sections 3(b)(v) - (vi), the vesting schedules described in those
sections, as the case may be, shall be accelerated so that all of the number of
shares that would otherwise have first become exercisable on any vesting date
scheduled to occur on or after the date of such Acquisition Event shall become
vested immediately prior to such Acquisition Event. An "Acquisition Event"
shall mean:
(i) any 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 or acquiring entity) less
than 70% of the combined voting power of the voting securities of the
Company or such surviving or acquiring entity outstanding immediately after
such merger or consolidation;
(ii) any sale of all or substantially all of the assets of the
Company;
(iii) the complete liquidation of the Company;
(iv) the acquisition of "beneficial ownership" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934 (the "Exchange Act"))
of securities of the Company representing 30% or more of the combined
voting power of the Company's then outstanding securities (other than
through an acquisition of securities directly from
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the Company) by any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) other than the Company, Nortel Xxxxxxxx.xxx, any
trustee or other fiduciary holding securities under an employee benefit
plan of the Company, or any corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportion as their
ownership of stock of the Company.
(d) Exercise of Options. Except as otherwise provided for herein, the
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duration and exercise of the options described in this section shall be governed
by the terms of the stock plan under which such options are granted.
4. Termination of Employment. The date on which Executive's employment by
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the Company ceases, under any of the following circumstances, shall be defined
herein as the "Termination Date."
(a) Termination by the Company for Cause. The Board may terminate
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Executive's employment with the Company for Cause. Any termination purporting
to be for Cause shall be effective on the date notice to Executive is given of
the circumstances upon which the Board has based it's conclusion that Cause
exists.
(i) "Cause" means the occurrence or existence of any of the
following with respect to Executive, as determined in good faith by a
majority of the disinterested directors of the Board: (a) a material
failure or refusal by Executive to perform any of his material duties or
obligations of his position, including duties hereunder, which remains
uncured 30 days following the date that the Company has given Executive
written notice thereof; (b) the repeated breach by Executive of any
material duty covered by clause (a) as to which at least two written
notices have been given pursuant to such clause; (c) any willful and
material act of misappropriation, embezzlement, fraud or similar conduct
involving the Company or any of its Affiliates; or (d) the conviction or
the plea of nolo contendere or the equivalent with respect to a felony or
misdemeanor involving moral turpitude that materially prejudices the
Company.
(ii) In the event that Executive's employment is terminated for
Cause, Executive shall receive payment for all earned salary and accrued
but unused vacation time through the Termination Date, less standard
withholdings for tax and social security purposes. The Company shall have
no further obligation to pay severance or any other payment or obligation
of any kind whether under this Agreement or otherwise nor to make any
payment in lieu of notice.
(b) Termination by Executive Without Good Reason. Executive may
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terminate his employment with the Company at any time, immediately upon notice
to the Company of such decision to terminate. In the event that Executive's
termination is without Good Reason as defined below, Executive shall receive
payment for all earned salary and accrued but unused vacation time through the
Termination Date, which in this event shall be the date upon which notice of
termination is given, and all vested accrued benefits to which the Executive or
any of his dependents or beneficiaries is entitled under any plan described in
Section 2(d), less standard withholdings for tax and social security purposes.
The Company shall
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have no further obligation to pay severance or any other payment or obligation
of any kind whether under this Agreement or otherwise.
(c) Termination Upon Death or Disability. Executive's employment
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shall automatically terminate in the event Executive dies or suffers a
disability that renders Executive unable to perform the essential functions of
his position, even with reasonable accommodation, for 60 consecutive days or for
90 days within any 180-day period. After the Termination Date, which in this
event shall be the date of such death or of meeting the foregoing definition of
disability, no further compensation will be payable under this Agreement except
that (i) Executive or his estate shall receive the earned portion of any salary
and bonus and any accrued but unused vacation hereunder through the Termination
Date; (ii) Executive and his beneficiaries and dependents shall remain entitled
to all vested accrued benefits to which the Executive or any of his dependents
or beneficiaries is entitled under and plan described in Section 2(d) and in the
case of health benefits continuation coverage as required by law; (iii)
Executive or his estate shall receive any remaining portion of the cash sign-on
bonus described in Section 2(c) of this Agreement not previously received; (iv)
the interest of Executive or his estate in the options described in Section
3(b)(ii) and (iii) of this Agreement, to the extent not previously vested, shall
vest; and (v) the schedule of vesting for options described in Section 3(b)(iv)
- (vi) of this Agreement shall be accelerated by 12 months, and the period
during which the performance targets described in Section 3(b)(v) - (vi) may be
met shall extend for 12 months from the Termination Date. Vested options held
by Executive or his estate shall be exercisable for 12 months following
Executive's death or disability or, in the case of options described in Sections
3(b)(v) - (vi), for 180 days following their vesting. All amounts to be
delivered under this Section shall be reduced by standard withholdings for tax
and social security purposes.
(d) Termination Without Cause or With Good Reason. In the event the
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Company terminates Executive's employment other than for Cause, death, or
disability, or in the event Executive terminates his employment for Good Reason
as defined below, Executive shall be entitled to the earned but unpaid portion
of any salary and bonus and any accrued but unused vacation through the
Termination Date, and all vested accrued benefits to which the Executive or any
of his dependents or beneficiaries is entitled under and plan described in
Section 2(d), plus continuation coverage under any applicable health benefit
plans as required by law, with all amounts payable less standard withholdings
for tax and social security purposes. In addition, Executive shall be entitled
to the equivalent of 12 months' acceleration of option vesting, with all options
so vested remaining exercisable for 180 days, plus:
(i) If such termination occurs within the first 18 months of
Executive's employment, then Executive shall receive a lump-sum payment
equivalent to two years' base salary and bonus at his then-current rate,
less applicable withholdings and deductions;
(ii) If such termination occurs more than 18 but less than 24
months after the start of Executive's employment, then Executive shall
receive the lump sum payment described in Section 4(d)(i) reduced by one
month's base salary and bonus for each months of Executive's actual
employment beyond the first 18 months;
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(iii) If such termination occurs after the first 24 months of
Executive's employment, then Executive shall receive a lump-sum payment
equivalent to 18 months' base salary and bonus at his then-current rate,
less applicable withholdings and deductions, plus the equivalent of six
months' acceleration of option vesting.
Except as set forth above, the Company shall have no further obligation to make
any other payment or obligation of any kind whether under this Agreement or
otherwise. For purposes of this Section, Good Reason shall mean the occurrence
of any of the following: (i) the material failure of the Company to perform a
material obligation under this Agreement that remains uncured after 30 days
following written notice thereof by Executive to the Company; (ii) repeated
breach by the Company of any material obligation under this Agreement as to
which Executive has previously given notice pursuant to the preceding clause;
(iii) the Company's failure to grant Executive compensation increases or
additional stock options on an equivalent basis as other Company executives
where performance and merit are similar; (iv) material reduction in Executive's
title, duties, responsibilities, or base and potential bonus compensation; or
(v) involuntary relocation of the site of Executive's work without his consent
to a location more than 15 miles from his current home. In the event of
termination by Executive for Good Reason, the Termination Date shall be the date
upon which written notice is given to the Company by Executive of the
circumstances leading to such termination.
5. Proprietary Information Obligations. During his employment under this
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Agreement, Executive will have access to and become acquainted with the
Company's and the Company's Affiliates' confidential and proprietary
information, including, but not limited to, information or plans regarding
customer relationships; personnel; sales, marketing, and financial operations
and methods; trade secrets; formulas; devices; inventions; processes; and other
compilations of information, records, and specifications (collectively
"Proprietary Information"). Executive shall not disclose any of the Company's
or the Company's Affiliates' Proprietary Information directly or indirectly, or
use it in any way, either during the term of this Agreement or at any time
thereafter, except as required in the course of his employment for the Company
or as authorized in writing by the Company. All files, records, documents,
computer-recorded information, drawings, specifications, equipment and similar
items relating to the business of the Company or the Company's Affiliates,
whether prepared by Executive or otherwise coming into his possession, shall
remain the exclusive property of the Company or the Company's Affiliates, as the
case may be, and shall not be removed from the premises of the Company except
when (and only for the period) necessary to carry out Executive's duties
hereunder, and if removed shall be immediately returned to the Company upon any
termination of his employment. Notwithstanding the foregoing, Proprietary
Information shall not include (i) information which is or becomes general public
knowledge except through disclosure by the Executive in violation of this
Agreement and (ii) information that may be required to be disclosed by
applicable law.
6. Noninterference. For a period of 18 months after termination of his
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employment under this Agreement, Executive agrees not to interfere with the
business of the Company or any Company Affiliate by directly or indirectly
soliciting, attempting to solicit, inducing, or otherwise causing (i)any
employee of the Company or any Company Affiliate to terminate his or her
employment in order to become an employee, consultant or independent contractor
to or for any other employer by which the Executive is then employed or in which
the Executive has a material interest; or (ii) any customer or client of the
Company or any Company Affiliate, or any
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potential customer or client to the extent such entity was identified as such
during Executive's employment with the Company, to terminate or limit its
dealings with the Company by means of disparaging statements regarding the
Company or use of Proprietary Information as defined herein. A general
advertisement of employment opportunities with any such other employer shall not
be considered direct or indirect solicitation hereunder.
7. Noncompetition. Executive acknowledges and agrees that the nature of
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the Proprietary Information to which he will have access by virtue of his
employment under this Agreement will render it impossible, even with the
exercise of complete good faith, to render services to or be affiliated with any
other entity with which the Company competes in its highly competitive,
international industry. Accordingly, Executive agrees that during the term of
this Agreement and for a period of eighteen months after the termination hereof,
he will not, without the prior consent of the Company, directly or indirectly,
have a material interest in (other than an interest held on the date hereof or
derived directly, without further material investment by the Executive, from any
such interest), be employed by, or be connected with, as an employee,
consultant, officer, director, partner, stockholder or joint venturer in any
entity which is in direct and material competition with the business of the
Company anywhere in North America or Europe; provided, however, that the
foregoing shall not prevent Executive from being a stockholder of less than one
percent of the issued and outstanding securities of any publicly traded
corporation nor shall the foregoing preclude Executive's employment by Nortel
Xxxxxxxx.xxx or any successor thereto, nor shall it preclude Executive's
employment by a competitor of the Company if the Executive is employed in a part
of such competitor's business that does not compete directly with the Company.
Executive acknowledges and agrees that the foregoing covenant is reasonable in
scope and duration in light of the nature of the Company's business, is given in
connection with and in order to protect the value of the Proprietary Information
to which Executive will be given access during his employment, and is neither
injurious to the public nor oppressive to Executive and his ability to be
gainfully employed following his employment with the Company.
8. Enforcement. Executive acknowledges and agrees that the covenants
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contained in Sections 5, 6, and 7 shall survive any termination of his
employment. Executive further acknowledges and agrees that, in the event of any
breach or threatened breach of such covenants, the damage resulting to the
Company would be immediate and irreparable, would be difficult, and perhaps
impossible, to adequately ascertain, and would not be subject to adequate remedy
by virtue of money damages. Accordingly, Executive agrees that the Company will
be entitled, in addition to any money damages that may be shown, to restrain and
enjoin Executive from any breach or threatened breach of his obligations under
this Agreement without need for any bond or other security. Executive further
acknowledges and agrees that the Company shall not be deprived of the benefit of
the restrictive covenants in this Agreement as a result of the time involved in
detecting any breach and obtaining relief. Accordingly, the duration of any
such covenant shall be extended by a period equivalent to any period of
Executive's breach of such covenant, but not to exceed 18 months.
9. Miscellaneous.
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(a) Notices. Any notices provided hereunder must be in writing and
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shall be deemed effective upon the earlier of the first business day following
personal delivery (including
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personal delivery by telecopy or telex), or the fourth day after mailing by
first class mail to the recipient at the address indicated below:
To the Company:
Entrust Technologies, Inc.
One Preston Park South, Suite 400
0000 Xxxxxxx Xxxx Xxxxxxxxx
Xxxxx, Xxxxx 00000
Attn: Xxx Xxxxxx, Esq.
Telecopier No: (000) 000-0000
With a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 XxXxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
To Executive:
Mr. Xxxxxxx Xxxxxx
0000 Xxxxx Xxxx
Xxxxxx, Xxxxx 00000
Telecopier: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Dechert
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telecopier: 215.994.2222
or to such other address or to the attention of such other person as the
recipient party will have specified by prior written notice to the sending
party.
(b) Conditions to Employment. Executive's acknowledges and agrees
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that his employment under this Agreement is contingent upon Executive's
execution of the Company's standard Conflict of Interest Agreement, Intellectual
Property and Confidentiality Agreement, Trading and Securities Agreement, and
Corporate Electronic Agreement and upon satisfactory completion of the Company's
standard pre-employment background investigation and drug screen.
(c) Severability. Any provision of this Agreement which is deemed
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invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction and subject to this Section
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9(c), be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provisions of this Agreement
invalid, illegal, or unenforceable in any other jurisdiction. If any covenant
should be deemed invalid, illegal or unenforceable because its scope is
considered excessive, such covenant shall be modified so that the scope of the
covenant is reduced only to the minimum extent necessary to render the modified
covenant valid, legal and enforceable.
(d) Entire Agreement. This document, in combination with those
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ancillary agreements referenced in Section 9(b) above, constitutes the final,
complete, and exclusive embodiment of the entire agreement and understanding
between the parties related to the subject matter hereof and supersedes and
preempts any prior or contemporaneous understandings, agreements, or
representations by or between the parties, written or oral.
(e) Counterparts. This Agreement may be executed on separate
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counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
agreement.
(f) Successors and Assigns. This Agreement is intended to bind and
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inure to the benefit of and be enforceable by Executive and the Company, and
their respective successors and assigns, except that Executive may not assign
any of his duties hereunder and he may not assign any of his rights hereunder
without the prior written consent of the Company.
(g) Amendments. No amendments or other modifications to this
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Agreement may be made except by a writing signed by both parties. No amendment
or waiver of this Agreement requires the consent of any individual, partnership,
corporation or other entity not a party to this Agreement. Nothing in this
Agreement, express or implied, is intended to confer upon any third person any
rights or remedies under or by reason of this Agreement.
(h) Choice of Law. All questions concerning the construction,
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validity and interpretation of this Agreement will be governed by the laws of
the State of Texas without giving effect to principles of conflicts of law.
(i) Adjustments to Common Stock. In the event of any stock split,
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stock dividend, recapitalization, reorganization, merger, consolidation,
combination, exchange of shares, liquidation, spin-off or other similar change
in capitalization or event, or any distribution to holders of Common Stock other
than a normal cash dividend, references to the number, class, and price of
shares in this Agreement shall be appropriately adjusted to the extent the Board
shall determine, in good faith, that such an adjustment is necessary and
appropriate.
10. Arbitration.
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(a) Any disputes or claims arising out of or concerning this
Agreement, Executive's employment, or the termination thereof, whether arising
under theories of liability or damages based upon contract, tort or statute,
shall be determined exclusively by arbitration before a single arbitrator in
accordance with the employment arbitration rules of the American Arbitration
Association, except as modified by this Agreement. The arbitrator will have
authority in his or her discretion to grant injunctive relief, award specific
performance and
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impose sanctions upon any party to any such arbitration. The arbitrator's
decision shall be final and binding on both parties. Judgment upon the award
rendered by the arbitrator may be entered in any court of competent
jurisdiction. In recognition of the fact that resolution of any disputes or
claims in the courts is rarely timely or cost effective for either party, the
Company and Executive enter this mutual agreement to arbitrate in order to gain
the benefits of a speedy, impartial and cost-effective dispute resolution
procedure.
(b) Any arbitration shall be held in Dallas, Texas. The arbitrator
shall be an attorney with substantial experience in employment matters, selected
by the parties alternately striking names from a list of five such persons
provided by the American Arbitration Association following a request by the
party seeking arbitration for a list of five such attorneys with substantial
professional experience in employment matters. If either party fails to strike
names from the list, the arbitrator shall be selected from the list by the other
party.
(c) Each party shall have the right to take the depositions of a
maximum of three individuals, as deemed appropriate by such party. Each party
shall also have the right to propound requests for production of documents to
any party and the right to subpoena documents and witnesses for the arbitration.
Additional discovery may be made only where the arbitrator selected so orders
upon a showing of substantial need. The arbitrator shall have the authority to
entertain a motion to dismiss and/or a motion for summary judgment by any party
and shall apply the standards governing such motions under the Federal Rules of
Civil Procedure.
(d) The Company and Executive agree that they will attempt, and they
intend that they and the arbitrator should use their best efforts in that
attempt, to conclude the arbitration proceeding and have a final decision from
the arbitrator within 120 days from the date of selection of the arbitrator;
provided, however, that the arbitrator shall be entitled to extend such 120-day
period for a total of two 120-day periods. The arbitrator shall immediately
deliver a written award with respect to the dispute to each of the parties, who
shall promptly act in accordance therewith.
(e) The Company shall advance the fees and expenses of the arbitrator.
Each party shall pay its own attorney fees and costs including, without
limitation, fees and costs of any experts. However, fees and costs (including
arbitrator fees and costs) incurred by the party that prevails in any such
arbitration commenced pursuant to this Section 10 or any judicial action or
proceeding seeking to enforce the agreement to arbitrate disputes as set forth
in this Section 10 or seeking to enforce any order or award of any arbitration
commenced pursuant to this Section 10 may be assessed against the party or
parties that do not prevail in such arbitration in such manner as the arbitrator
or the court in such judicial action, as the case may be, may determine to be
appropriate under the circumstances. If any party prevails on a statutory claim
that entitles the prevailing party to a reasonable attorney fees (with or
without expert fees) as part of the costs, the arbitrator may award reasonable
attorney fees (with or without expert fees) to the prevailing party in accord
with such statute. Any controversy over whether a dispute is an arbitrable
dispute or as to the interpretation or enforceability of this Section 10(e) with
respect to such arbitration shall be determined by the arbitrator.
(f) In a contractual claim under this Agreement, the arbitrator shall
have no authority to add, delete or modify any term of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the Effective Date.
ENTRUST TECHNOLOGIES, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxx
----------------------------
Title: Chairman
---------------------------
EXECUTIVE
/s/ F. Xxxxxxx Xxxxxx
---------------------
XXXXXXX XXXXXX
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