FORM OF EMPLOYMENT AGREEMENT
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This Employment Agreement (the "Agreement") is made and entered into this
1st day of July, 1997, by and between Xxxxx X. Xxxxxx (the "Executive") and Xxx
Research Corporation, a Delaware corporation (the "Company").
R E C I T A L S
A. The Company, Omega Acquisition Corporation, a Delaware corporation and
a wholly owned subsidiary of the Company, and OnTrak Systems, Inc., a Delaware
corporation ("OnTrak"), have entered into that certain Agreement and Plan of
Merger dated March 24, 1997 (the "Merger Agreement") pursuant to which OnTrak
will become a wholly owned subsidiary of the Company (the "Merger").
B. The Executive is currently employed by OnTrak as its Chief Executive
Officer pursuant to an employment agreement dated May 17, 1996 (the "OnTrak
Employment Agreement"). In addition, the Executive serves as Chairman of
OnTrak's Board of Directors.
C. It is a condition to the closing of the Merger that the Executive and
the Company enter into an employment agreement providing for the Executive's
employment with the Company.
D. The Company and Executive desire to enter into this Agreement with
respect to the Executive's employment with the Company.
E. Certain capitalized terms used in the Agreement are defined in Section
8 below.
In consideration of the mutual covenants herein contained, and in
consideration of the employment of Executive by the Company, the parties agree
as follows:
1. Effectiveness of Agreement; Effective Date. The effectiveness of this
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Agreement shall be conditioned upon and subject to the closing of the Merger,
and this Agreement shall be effective as of the first business day following the
closing date of the Merger (the "Effective Date"). In the event the Merger does
not close or the transactions contemplated under the Merger Agree-
ment are otherwise abandoned, this Agreement shall terminate without obligation
of the Executive or the Company hereunder.
2. Duties and Scope of Employment.
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(a) Position. During the Employment Period (as defined in Section
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3(a) below), the Executive shall serve as the Chief Executive Officer of the
Company. In addition, during the Employment Period, the Company shall use its
best efforts to elect the Executive as a director of the Company. The duties
and responsibilities of the Executive shall include the duties and
responsibilities for the Executive's corporate offices and positions as set
forth in the Company's Bylaws from time to time in effect and such other duties
and responsibilities as the Board of Directors of the Company (the "Board") may
from time to time reasonably assign to the Executive, in all cases to be
consistent with the Executive's corporate offices and positions.
(b) Obligations. During the Employment Period, the Executive shall
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devote his full business efforts and time to the Company. The foregoing,
however, shall not preclude the Executive from engaging in such activities and
services as do not interfere or conflict with his responsibilities to the
Company.
3. Employment Period.
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(a) Basic Rule. The Employment Period (the "Employment Period") shall
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begin upon the Effective Date and shall continue thereafter until the fifth
anniversary of the Effective Date, unless earlier terminated in accordance
herewith.
(b) Early Termination.
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(i) By the Company. The Company may terminate the Executive's
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employment for Cause (as defined in Section 8(a) below), by giving the
Executive 30 days' advance notice in writing. The Company may terminate
the Executive's employment with the Company other than for Cause by giving
the Executive 180 days' advance notice in writing. Any waiver of notice
shall be valid only if it is made in writing and expressly refers to the
applicable notice requirement of this Section 3(b).
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(ii) By the Executive. The Executive may terminate his
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employment with the Company by reason of Involuntary Termination (as
defined in Section 8(d) below) by giving the Company 30 days' advance
written notice, subject, however, to the cure provisions of such Section.
The Executive may terminate his employment with the Company at any time for
any other reason by giving the Company 180 days' advance written notice.
Any waiver of notice shall be valid only if it is made in writing and
expressly refers to the applicable notice requirement of this Section 3(b).
(c) Death. The Executive's employment shall terminate in the event of
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his death. The Company shall pay to the Executive's estate any earned but
unpaid salary and vacation pay accrued to the date of his death.
(d) Disability. The Company may terminate the Executive's employment
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for Disability (as defined in Section 8(c) below) by giving the Executive 90
days' advance notice in writing. In the event the Executive resumes the
performance of substantially all of his duties hereunder before the termination
of his employment under this Section 3(d) becomes effective, the notice of
termination shall automatically be deemed to have been revoked.
4. Compensation and Benefits.
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(a) Base Compensation. During the Employment Period, the Company
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shall pay the Executive as compensation for services a base salary at the
annualized rate of $100,000. Such salary shall be paid periodically in
accordance with normal Company payroll. The annual compensation specified in
this Section 4(a) is referred to in this Agreement as "Base Compensation."
(b) Bonus. Unless otherwise determined by the Board of Directors in
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its sole discretion, Executive shall not be entitled to participate in any
performance bonus plan of the Company.
(c) Stock Options.
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(i) Subject to stockholder approval of the Company's 1997 Stock
Incentive Plan (the "1997 Stock Plan"), the Executive shall be granted non-
qualified stock options (the "Incentive Options") to purchase 250,000
shares of the Company's common stock, par value $.001 per share (the
"Common Stock"), with an exercise price equal to the closing
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price of the Common Stock as reported on the Nasdaq Stock Market on the
Effective Date. The Incentive Options shall vest with respect to one-fifth
of the option shares on the first anniversary of the Effective Date, and
with respect to an additional one-sixtieth of the option shares on the last
day of each of the thirteenth through sixtieth months of the Employment
Period; provided, that except as provided in Sections 5 and 6(c) below, no
portion of the Incentive Options shall vest following the termination of
Executive's employment with the Company. The Incentive Options shall have
a term of ten (10) years from the Effective Date, but, except as otherwise
provided herein or in the 1997 Stock Plan, the Incentive options shall
terminate 90 days following the termination of Executive's employment with
the Company.
(ii) In lieu of additional Base Compensation or entitlement to
participate in performance bonus plans, and subject to stockholder approval
of the 1997 Stock Plan, Executive shall also be granted non-qualified stock
options (the "Base Options") to purchase an additional 225,000 shares of
Common Stock, with an exercise price equal to the closing price of the
Common Stock as reported on the Nasdaq Stock Market on the Effective Date.
The Base Options shall vest with respect to one-fifth of the option shares
on the first anniversary of the Effective Date, and with respect to an
additional one-sixtieth of the option shares on the last day of each of the
thirteenth through sixtieth months of the Employment Period; provided, that
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except as provided in Section 6(c) below, no portion of the Base Options
shall vest following the termination of Executive's employment with the
Company. The Base Options shall have a term of ten (10) years from the
Effective Date, but, except as otherwise provided herein or in the 1997
Stock Plan, the Base Options shall terminate 90 days following the
termination of Executive's employment with the Company.
(d) Deferred Compensation. The Executive shall be entitled to
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participate in the Company's Executive Deferred Compensation Plan pursuant to
the terms thereof.
(e) Benefits. During the Employment Period, the Executive shall be
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eligible to participate in the benefit plans and compensation programs
maintained by the Company of general applicability to other key executives of
the Company, including (without limitation) retirement plans, savings or profit-
sharing plans, deferred compensation plans, supplemental retirement or excess-
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benefit plans, stock option, life, disability, health, accident and other
insurance programs, paid vacations, and similar plans or programs, but excluding
any performance bonus plans, subject in each case to the generally applicable
terms and conditions of the plan or program in question and to the determination
of the Board or any committee administering such plan or program. Without
limiting the generality of the foregoing, Executive shall be entitled to an
automobile allowance of not less than $800 per month.
(f) Reimbursement for Business Expenses. The Company shall reimburse
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the Executive for all reasonable and necessary business expenses incurred by the
Executive in the performance of his duties hereunder upon proper submission of
expense reports in accordance with Company policies regarding such
reimbursement.
(g) Section 162(m). Executive and the Company agree to use reasonable
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good faith efforts, to the extent reasonably practicable, to structure payment
of all amounts of Executive's compensation from the Company so as to avoid non-
deductibility of any such amounts under Section 162(m) of the Code or any
successor provision.
5. Benefits Upon a Change in Control. In the event of a Change in
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Control (as defined in Section 8(b) below) that occurs during the Employment
Period, any unvested portion of the Incentive Options shall automatically be
accelerated in full so as to become completely vested.
6. Severance Benefits.
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(a) Severance Benefits. If the Executive's employment with the
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Company terminates prior to the fifth anniversary of the Effective Date, then
the Executive shall be entitled to receive severance benefits as follows:
(i) Involuntary Termination. (A) If the Executive's employment
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terminates as a result of Involuntary Termination other than for Cause
prior to the first anniversary of the Effective Date, then the Company
shall pay the Executive within ten (10) business days after the Termination
Date a lump sum amount in cash equal to $200,000.
(B) If the Executive's employment terminates as a result of
Involuntary Termination other than for Cause on or after the first
anniversary of the Effective Date, then the Company shall pay the Execu-
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tive within ten (10) business days after the Termination Date a lump sum
amount in cash equal to $100,000.
In the case of either (A) or (B), the Executive shall also receive such
other benefits as may be payable to the Executive under the Company's then-
existing benefit plans in accordance with the terms of such plans.
(ii) Voluntary Resignation; Disability; Death; Termination for
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Cause. If (A) the Executive's employment terminates by reason of the
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Executive's (i) voluntary resignation (and is not the result of an
Involuntary Termination), (ii) Disability or (iii) death, or (B) the
Executive's employment is terminated by the Company for Cause, then the
Executive shall not be entitled to receive severance or other benefits
except for those (if any) as may then be established (and applicable) under
the Company's then-existing severance and benefits plans and policies at
the time of such termination.
(b) Benefits; Miscellaneous. In the event the Executive is entitled
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to severance benefits pursuant to subsection 6(a)(i), then in addition to such
severance benefits, the Company shall continue to provide the Executive, (A) if
his employment is terminated prior to the first anniversary of the Effective
Date, through the second anniversary of the Effective Date, and (B) if his
employment is terminated on or after the first anniversary of the Effective
Date, for a period of one year following the Termination Date, welfare benefits
or such comparable alternative welfare benefits as the Company may, in its
discretion, determine to be sufficient to satisfy its obligations to the
Executive under this Agreement (including, without limitation, medical,
prescription, dental, disability, individual life, group life, accidental death
and travel accident plans and programs) which are at least as favorable as the
most favorable plans of the Company applicable to other peer executives and
their families as of the Termination Date. Notwithstanding the foregoing, if
the Executive is covered under any medical, life, or disability insurance
plan(s) provided by a subsequent employer, then the amount of coverage required
to be provided by the Company hereunder shall be reduced by the amount of
coverage provided by the subsequent employer's medical, life or disability
insurance plan(s). The Executive's rights under this Section 6(b) shall be in
addition to, and not in lieu of, any post-termination continuation coverage or
conversion rights the Executive may have pursuant to applicable law, including
without limitation, continuation coverage required by Section 4980B of the Code.
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In addition, in the event of any termination of Executive's employment, (i)
the Company shall pay the Executive any unpaid base salary due for periods prior
to the Termination Date; (ii) the Company shall pay the Executive all of the
Executive's accrued and unused vacation through the Termination Date; and (iii)
following submission of proper expense reports by the Executive, the Company
shall reimburse the Executive for all expenses reasonably and necessarily
incurred by the Executive in connection with the business of the Company prior
to termination. These payments shall be made promptly upon termination and
within the period of time mandated by law.
(c) Option Accelerated Vesting; Post-Termination Exercisability of
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Options.
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(i) In the event the Executive is entitled to severance benefits
pursuant to subsection 6(a)(i), any unvested portion of the Incentive
Options shall automatically be accelerated in full so as to become
completely vested. In addition, if the Executive's employment terminates
as a result of Involuntary Termination other than for Cause prior to the
first anniversary of the Effective Date, that portion of the Base Options
that would have vested on or before the second anniversary of the Effective
Date had Executive continued employment with the Company through such
anniversary shall automatically be accelerated so as to become completely
vested. Alternatively, if the Executive's employment terminates as a
result of Involuntary Termination other than for Cause on or after the
first anniversary of the Effective Date, any portion of the Base Options
that would have vested within the one year period following the date of
such termination had Executive continued employment with the Company
through the end of such period shall automatically be accelerated so as to
become completely vested. In the event Executive is entitled to severance
benefits pursuant to subsection 6(a)(i), any options to purchase Common
Stock held by Executive that have vested as of the Termination Date shall
remain exercisable for a period of two (2) years following the Termination
Date (or, if earlier, until the expiration of the term of such options),
whereupon such options shall terminate.
(ii) In the event Executive's employment is terminated by reason
of the Executive's voluntary resignation (and is not the result of an
Involuntary Termination), any options to purchase the Common Stock held by
the Executive that have vested as of the Termination Date shall remain
exercisable for a period of six months following the Termination
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Date (or, if earlier, until the expiration of the term of such options),
whereupon such options shall terminate.
(iii) In the event Executive is terminated for Cause, any
options to purchase the Common Stock held by the Executive that have vested
as of the Termination Date shall remain exercisable for a period of 30 days
following the Termination Date (or, if earlier, until expiration of the
term of such options), whereupon such options shall terminate.
7. Excise Tax on Payments. Notwithstanding anything to the contrary
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contained herein, in the event it shall be determined that any payment by the
Company to or for the benefit of the Executive, whether paid or payable but
determined without regard to any additional payments required under this Section
7 (a "Payment"), would be subject to the excise tax imposed by Section 4999 of
the Code or any comparable federal, state, or local excise tax (such excise tax,
together with any interest and penalties, are hereinafter collectively referred
to as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in such an amount that after the
payment of all taxes (including, without limitation, any interest and penalties
on such taxes and the Excise Tax) on the Payment and on the Gross-Up Payment,
the Executive shall retain an amount equal to the Payment minus all applicable
taxes on the Payment not imposed as a result of the Excise Tax. The intent of
the parties is that the Company shall be solely responsible for, and shall pay,
any Excise Tax on the Payment and Gross-Up Payment and any income and employment
taxes (including, without limitation, penalties and interest) imposed on any
Gross-Up Payment, as well as any loss of tax deduction caused by the Gross-Up
Payment.
All determinations required to be made under this Section, including
without limitation, whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving
at such determinations, shall be made by a nationally recognized accounting firm
that is the Company's outside auditor at the time of such determinations, which
firm must be reasonably acceptable to the Executive (the "Accounting Firm").
All fees and expenses of the Accounting Firm shall be borne solely by the
Company.
8. Definition of Terms. The following terms referred to in this
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Agreement shall have the following meanings:
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(a) Cause. "Cause" shall mean (i) a willful act of personal
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dishonesty knowingly taken by the Executive in connection with his
responsibilities as an employee and intended to result in his substantial
personal enrichment, (ii) a willful and knowing act by the Executive which
constitutes gross misconduct, or any refusal by the Executive to comply with a
reasonable written directive of the Board, (iii) a willful breach by the
Executive of a material provision of this Agreement, or (iv) a material and
willful violation of a federal or state law or regulation applicable to the
business of the Company. No act, or failure to act, by the Executive shall be
considered "willful" unless committed without good faith and without a
reasonable belief that the act or omission was in the Company's best interest.
Termination for Cause shall not be deemed to have occurred unless, by the
affirmative vote of all of the members of the Board (excluding the Executive, if
applicable), at a meeting called and held for that purpose (after reasonable
notice to the Executive and his counsel and after allowing the Executive and his
counsel to be heard before the Board), a resolution is adopted finding that in
the good faith opinion of such Board members the Executive was guilty of conduct
set forth in (i), (ii), (iii), or (iv) and specifying the particulars thereof.
(b) Change in Control. "Change in Control" shall mean the occurrence
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of any of the following events:
(i) Any "person" or "group" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, but
excluding any person or group as such term is used in Rule 13d-1(b) under
the Exchange Act)) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under said Act), directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the total voting power
represented by the Company's then outstanding voting securities; or
(ii) A change in the composition of the Board occurring within a
two-year period, as a result of which fewer than a majority of the
directors are Incumbent Directors. "Incumbent Directors" shall mean
directors who either (A) are directors of the Company as of the Effective
Date, or (B) are elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the Incumbent Directors at the
time of such election or nomination (but shall not include an individual
whose election or nomination is in connection with an actual or threatened
proxy contest relating to the election of directors to the Company); or
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(iii) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than 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) more than fifty percent (50%) of the
total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's assets
(other than to a subsidiary or subsidiaries).
(c) Disability. "Disability" shall mean that the Executive has been
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or will be unable to substantially perform his duties under this Agreement for a
period of six or more months due to illness, accident or other physical or
mental incapacity.
(d) Involuntary Termination. "Involuntary Termination"shall mean:
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(i) the continued assignment to the Executive of any duties or
the continued significant change in the Executive's duties, either of which
is substantially inconsistent with the Executive's duties immediately prior
to such assignment or change for a period of 30 days after notice thereof
from the Executive to the Board setting forth in reasonable detail the
respects in which Executive believes such assignments or duties are
significantly inconsistent with the Executive's prior duties;
(ii) a reduction in the Executive's Base Compensation, other than
any such reduction which is part of, and generally consistent with, a
general reduction of officer salaries;
(iii) a material reduction by the Company in the kind or level
of employee benefits (other than salary) to which the Executive is entitled
immediately prior to such reduction with the result that the Executive's
overall benefits package (other than salary) is substantially reduced
(other than any such reduction applicable to officers of the Company
generally);
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(iv) the relocation of the Company's principal executive office
to a location more than fifty (50) miles from its present location;
(v) any purported termination of the Executive's employment by
the Company other than for Cause;
(vi) the failure of the Company to obtain the assumption of this
Agreement by any successors contemplated in Section 9 below; or
(vii) any material breach by the Company of any material
provision of this Agreement;
provided, that none of the foregoing shall constitute Involuntary Termination to
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the extent the Executive has agreed thereto; and provided, further, that the
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foregoing shall constitute Involuntary Termination only if and to the extent
that (i) the Executive provides written notice to the Company setting forth in
reasonable detail such facts which Executive believes constitute Involuntary
Termination and (ii) any circumstances constituting Involuntary Termination
remain uncured for a period of 30 days following the Company's receipt of such
written notice.
(e) Termination Date. "Termination Date" shall mean the last day of
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the applicable notice period set forth in Section 3(b) above or the date as of
which such notice is waived in accordance with the terms of Section 3(b).
9. Successors.
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(a) Company's Successors. Any successor to the Company (whether
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direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and/or assets shall assume the Company's obligations under this Agreement and
agree expressly to perform such obligations in the same manner and to the same
extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and/or assets
which executes and delivers the assumption agreement described in this
subsection (a) or which becomes bound by the terms of this Agreement by
operation of law.
(b) Executive's Successors. The terms of this Agreement and all
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rights of the Executive hereunder shall inure to the benefit of, and be enforce-
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able by, the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
10. Notice.
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(a) General. Notices and all other communications contemplated by
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this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by U.S. registered or certified mail,
return receipt requested and postage prepaid. In the case of the Executive,
mailed notices shall be addressed to him at the home address which he most
recently communicated to the Company in writing. In the case of the Company,
mailed notices shall be addressed to its corporate headquarters, and all notices
shall be directed to the attention of its Secretary.
(b) Notice of Termination. Any termination by the Company for Cause
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or by the Executive as a result of a voluntary resignation or an Involuntary
Termination shall be communicated by a notice of termination to the other party
hereto given in accordance with Section 10(a) of this Agreement. Such notice
shall indicate the specific termination provision in this Agreement relied upon,
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination under the provision so indicated, and shall
specify the termination date in accordance with Section 3(b). Subject to the
second proviso to Section 8(d), the failure by the Executive to include in the
notice any fact or circumstance which contributes to a showing of Involuntary
Termination shall not waive any right of the Executive hereunder or preclude the
Executive from asserting such fact or circumstance in enforcing his rights
hereunder.
11. Non-Compete; Non-Solicit.
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(a) The parties hereto recognize that the Executive's services are
special and unique and that his level of compensation and the provisions herein
for compensation upon Involuntary Termination are partly in consideration of and
conditioned upon the Executive's not competing with the Company, and that the
covenant on his part not to compete or solicit as set forth in this Section 11
during and after his employment is essential to protect the business and
goodwill of the Company.
(b) The Executive agrees that during the Employment Period and for the
period ending twelve (12) months following the date the Executive ceases to
render services to the Company as an employee (other than upon
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expiration of the five-year Employment Period without early termination thereof
(the "Covenant Period"), the Executive will not either directly or indirectly,
whether as a director, officer, consultant, employee or advisor or in any other
capacity (i) render any planning, marketing or other services respecting the
creation, design, manufacture or sale of semiconductor manufacturing equipment
and/or software to any business, agency, partnership or entity ("Restricted
Business") other than the Company, or (ii) make or hold any investment in any
Restricted Business in the United States other than the Company, whether such
investment be by way of loan, purchase of stock or otherwise, provided that
there shall be excluded from the foregoing the ownership of not more than 2% of
the listed or traded stock of any publicly held corporation. For purposes of
this Section 11, the term "Company" shall mean and include the Company, any
subsidiary or affiliate of the Company, any successor to the business of the
Company (by merger, consolidation, sale of assets or stock or otherwise) and any
other corporation or entity of which the Executive may serve as a director,
officer or employee at the request of the Company or any successor of the
Company.
(c) During the Covenant Period, the Executive will not, directly or
indirectly, induce or attempt to influence any employee of the Company to leave
its employ and the Executive will not, directly or indirectly, involve himself
in decisions to hire any employee who has left the Company's employ within the
three-month period preceding the Executive's cessation of employment or the
three-month period following his cessation of employment.
(d) The Executive agrees that the Company would suffer an irreparable
injury if he were to breach the covenants contained in subparagraphs (b) or (c)
and that the Company would by reason of such breach or threatened breach be
entitled to injunctive relief in a court of appropriate jurisdiction and the
Executive hereby stipulates to the entering of such injunctive relief
prohibiting him from engaging in such breach.
(e) If any of the restrictions contained in this Section 11 shall be
deemed to be unenforceable by reason of the extent, duration or geographical
scope or other provisions thereof, then the parties hereto contemplate that the
court shall reduce such extent, duration, geographical scope or other provisions
hereof (but only to the extent necessary to render such restrictions
enforceable) and then enforce this Section 11 in its reduced form for all
purposes in the manner contemplated hereby.
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12. Coordination with the OnTrak Employment Agreement. As of the
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Effective Date, the OnTrak Employment Agreement shall terminate without further
obligation by the Executive or the Company or any affiliate of the Company;
provided, that (i) the Executive shall be entitled to receive amounts of base
salary payable under and reimbursement of reimbursable expenses as provided in
Section 4 of the OnTrak Employment Agreement, together with benefits under any
of OnTrak's employee welfare benefit plans, in each case to the extent accrued
or incurred through the Effective Date, (ii) the Executive shall be entitled to
receive a bonus payment in the amount of $250,000 as set forth in Section 11 of
the OnTrak Employment Agreement, and (iii) as of the closing of the Merger, all
unvested options to purchase OnTrak common stock (which in connection with the
Merger shall be converted into options to purchase Company Common Stock) held by
the Executive shall become vested and exercisable in full.
13. Existing Confidentiality and Non-Compete Agreements. Executive
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represents and warrants that (i) prior to the date hereof he has provided the
Company with true and complete copies of any and all written confidentiality
and/or non-compete agreements to which Executive is a party as of the date
hereof (together with a written description of any oral such agreements) and
(ii) full compliance with the terms of each such agreement will not interfere in
any respect with the performance of Executive's duties hereunder. The Executive
further covenants that he will fully abide by the terms of any and all such
agreements.
14. Arbitration.
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At the option of either party, any and all disputes or controversies
whether of law or fact and of any nature whatsoever arising from or respecting
this Agreement shall be decided by arbitration by the American Arbitration
Association in accordance with the rules and regulations of that Association.
The arbitrator shall be selected as follows. In the event the Company and
the Executive agree on one arbitrator, the arbitration shall be conducted by
such arbitrator. In the event the Company and the Executive do not so agree,
the Company and the Executive shall each select one independent, qualified
arbitrator and the two arbitrators so selected shall select the third
arbitrator. The Company reserves the right to object to any individual
arbitrator who shall be employed by or affiliated with a competing organization.
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Arbitration shall take place in San Jose, California, or any other location
mutually agreeable to the parties. At the request of either party, arbitration
proceedings will be conducted in the utmost secrecy; in such case all documents,
testimony and records shall be received, heard and maintained by the arbitrators
in secrecy under seal, available for the inspection only by the Company and the
Executive and their respective attorneys and their respective experts who shall
agree in advance and in writing to receive all such information confidentially
and to maintain such information in secrecy unless and until such information
shall become generally known. The arbitrator, who, if more than one, shall act
by majority vote, shall have the power and authority to decree any and all
relief of an equitable nature including, but not limited to, such relief as a
temporary restraining order, a temporary and/or permanent injunction, and shall
also have the power and authority to award damages, with or without an
accounting and costs, provided, that punitive damages shall not be awarded, and
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provided, further, that the Executive shall be entitled to reimbursement for his
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reasonable attorney's fees to the extent he prevails as to the material issues
in such dispute. The decree or judgment of an award rendered by the arbitrators
may be entered in any court having jurisdiction thereof.
Reasonable notice of the time and place of arbitration shall be given to
all persons, other than the parties, as shall be required by law, in which case
such persons or those authorized representatives shall have the right to attend
and/or participate in all the arbitration hearings in such a manner as the law
shall require.
15. Miscellaneous Provisions.
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(a) No Duty to Mitigate. The Executive shall not be required to
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mitigate the amount of any payment contemplated by this Agreement, nor shall any
such payment be reduced by any earnings that the Executive may receive from any
other source.
(b) Waiver. No provisions of this Agreement shall be modified, waived
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or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by the Executive and by an authorized officer of the Company
(other than the Executive). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same
condition or provision at another time.
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(c) Whole Agreement. This Agreement and the documents expressly
---------------
referred to herein represent the entire agreement of the parties with respect to
the matters set forth herein. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
referred to herein have been made or entered into by either party with respect
to the subject matter hereof.
(d) Choice of Law. The validity, interpretation, construction and
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performance of this Agreement shall be governed by the laws of the State of
California.
(e) Severability. The invalidity or unenforceability of any provision
------------
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision hereof, which shall remain in full force and effect.
(f) No Assignment of Benefits. The rights of any person to payments
-------------------------
or benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this subsection (f) shall be
void.
(g) Employment Taxes. All payments made pursuant to this Agreement
----------------
will be subject to withholding of applicable income and employment taxes.
(h) Assignment by Company. The Company may assign its rights under
---------------------
this Agreement to an affiliate, and an affiliate may assign its rights under
this Agreement to another affiliate of the Company or to the Company, provided,
however, that no assignment shall be made if the net worth of the assignee is
less than the net worth of the Company at the time of assignment. In the case
of any such assignment, the term "Company" when used in a section of this
Agreement shall mean the corporation that actually employs the Executive.
(i) Counterparts. This Agreement may be executed in counterparts,
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each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement,
in the case of the Company by its duly authorized officer, as the day and year
first above written.
COMPANY XXX RESEARCH CORPORATION
By: _______________________
Title: ____________________
EXECUTIVE ___________________________
XXXXX X. XXXXXX
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