Exhibit 10.8
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of
__________, 1997 (the "Effective Date") by and between AMERICAN CAPITAL
STRATEGIES, LTD., a Delaware corporation (the "Company"), and Xxxx X. Xxxxxxxx
(the "Employee").
W I T N E S S E T H:
WHEREAS, upon executing this Agreement Employee will become the chief
financial officer ("CFO") of the Company; and
WHEREAS, it is in the interests of the Company that Employee's service
continue to be available to the Company.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and for other
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions and Interpretations
1.1. Definitions
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires, the following terms shall have the
following respective meanings:
"Base Salary" shall have the meaning specified in Section 3.1.
"Board of Directors" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Compensation Committee" shall mean the compensation committee of the
Board of Directors.
"Confidential Information" shall have the meaning specified in Section
5.1(a).
"Disability" shall mean a physical or mental condition of Employee
that, in the good faith judgment of not less than a majority of the Executive
Committee, prevents Employee from being able to perform the services required
under this Agreement and which results in the Employee becoming eligible for
long-term disability benefits (if such benefits are provided by the Company). If
any dispute arises as to whether a Disability has occurred, or whether a
Disability has ceased and the Employee is able to resume duties, then such
dispute shall be referred to a licensed physician appointed by the president of
the Medical Society or similar organization in Washington, D.C., at the request
of either party. The Employee shall submit to such examinations and provide
information as such physician may request and the determination of such
physician as to the Employee's physical or mental condition shall be binding and
conclusive on the parties. The Company shall pay the cost of any such physician
and examination.
"Dispute" shall have the meaning specified in Article VI.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Executive Committee" shall mean the Executive Committee of the Board
of Directors or such other entity as may be designated for a particular function
by the Board of Directors.
"Expiration Date" shall have the meaning specified in Section 2.2.
"ISO Plan" shall have the meaning specified in Section 3.2.
"Misconduct" shall mean one or more of the following:
(i) the willful and continued failure by Employee to perform
substantially Employee's duties described in Section 2.3 (other than
any such failure resulting from Employee's incapacity due to physical
or mental illness) after two (2) written notices of such failure have
been given to Employee by the Company and Employee has had a reasonable
period (not to exceed 15 days from the second notice) to correct such
failure;
(ii) the commission by Employee of acts that are dishonest
and demonstrably injurious to the Company (monetarily or otherwise)
in any material respect; or
(iii) a material breach or violation by Employee of (a) any
material provision of this Agreement or (b) any material Company
employment policy, including its Stock Trading Policies and Procedures
which the Company will publish from time to time, which, if capable of
being remedied, remains unremedied for more than 15 days after written
notice thereof is given to Employee by the Company.
For purposes of this definition, no act or failure to act on Employee's
part shall be considered "Misconduct" if done or omitted to be done by Employee
in good faith and in the reasonable belief that such act or failure to act was
in the best interest the Company or in furtherance of Employee's duties and
responsibilities described in Section 2.3.
"Notice of Termination" shall mean a notice purporting to terminate
Employee's employment in accordance with Section 4.1 or 4.2. Such notice shall
specify the effective date of such termination, which date shall not be less
than 30 (one (1) day in the case of a termination by the Company for Misconduct)
or more than 60 days after the date such notice is given. If such termination is
by the Company for Disability or Misconduct, such notice shall set forth in
reasonable detail the reason for such termination and the facts and
circumstances claimed to provide a basis therefor.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust and an unincorporated organization.
"Principal Bonus Plan" shall have the meaning specified in Section 3.2.
"Term" shall have the meaning specified in Section 2.2.
"Termination Date" shall mean the termination date specified in a
Notice of Termination delivered in accordance with this Agreement.
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1.2. Interpretations
(a) In this Agreement, unless a clear contrary intention
appears, (i) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision, (ii) reference to any Article or Section,
means such Article or Section hereof, (iii) the words "including" (and with
correlative meaning "include") means including, without limiting the generality
of any description preceding such term, and (iv) where any provision of this
Agreement refers to action to be taken by either party, or which such party is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such party.
(b) The Article and Section headings herein are for convenience
only and shall not affect the construction hereof.
ARTICLE II
Employment: Term, Positions and Duties, Etc.
2.1. Employment
The Company agrees to employ Employee and Employee agrees to accept
employment with the Company, in each case on the terms and conditions set forth
in this Agreement.
2.2. Term of Employment
Unless sooner terminated pursuant to Article IV, the term of
Employee's employment under this Agreement (the "Term") shall commence on the
Effective Date and shall continue until the first anniversary of the Effective
Date (the "Expiration Date"); provided, however, that on each date during the
Term, the Expiration Date shall be reset to the date one year after the date
thereof, except that either party may terminate this Agreement by giving written
notice that such daily extensions of the Term shall be discontinued in which
case the Expiration Date shall be the date one year after the delivery of such
notice.
2.3. Positions and Duties
(a) While employed hereunder, Employee shall serve as the CFO of
the Company and the Company shall use its best efforts to
cause the Board of Directors to appoint the Employee to the
position of Treasurer of the Company. As CFO and Treasurer of
the Company Employee shall directly supervise the Controller
of the Company and shall be responsible for developing
management policy for financial control and treasury
functions; analyzing and interpreting financial information
pertaining to the Company's performance, making
recommendations concerning business policy, resource
allocation and business operations to improve Company
financial performance; alerting the President and other
managers to trends in the financial performance of the
business that may require management action, determining
Company requirements for financial analysis, planning,
control and reporting systems that adequately monitor and
provide financial insight into the operation of Company
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business and developing appropriate systems to do so;
forecasting capital requirements, identifying and analyzing
capital sources, developing financial alternatives and
determining the most advantageous financing methods,
developing and maintaining working relationships with banks,
financial institutions, investment firms, developing policies
and specific plans for conducting Company relations with
outside financial firms, maintaining financing contracts and
arrangements; managing investor relations effort including
quarterly and annual reports, maintaining relationships with
stock analysts and assuming the role of chief financial
spokesperson for the Company; managing all secondary debt and
equity offerings; preparing or supervising the preparation of
SEC filings (10-Q, 10-K, 8-K and other non recurring
financial filings), monthly internal balance sheet, statement
of operations, statement of cash flows, and statement of
stockholder's equity; preparing monthly and quarterly
financial analysis for the President and BOD; the annual
budgeting process; the maintenance of financial systems; the
dispersal of benefits and payroll; the development of benefit
and payroll policies; the coordination of audits, tax and
other services; the controls and review of corporate level
disbursements; and other projects requested by the President
(b) While employed hereunder, Employee shall (i) report directly
to the President of the Company and (ii) observe and comply
with all lawful policies, directions and instructions of the
President which are consistent with the foregoing provisions
of this paragraph (a).
(b) While employed hereunder, Employee shall (i) devote
substantially all of Employee's business time, attention, skill and efforts to
the faithful and efficient performance of Employee's duties hereunder and (ii)
not accept employment with any Person other than with the Company.
Notwithstanding the foregoing, Employee may engage in the following activities
so long as they do not interfere in any material respect with the performance of
Employee's duties and responsibilities hereunder: (i) serve on corporate, civic,
religious, educational or charitable boards or committees and (ii) manage
Employee's personal investments.
(c) While employed hereunder, Employee shall not knowingly
prejudice, in any material respect, the reputation of the Company in the fields
of business in which it is engaged or with the investment community or the
public at large.
ARTICLE III
Compensation and Benefits
3.1. Base Salary
(a) For services rendered by Employee under this Agreement, the
Company shall pay to Employee an annual base salary ("Base Salary") of $125,000
evenly paid twice a month. Subject to paragraph (b) below, the President may
adjust the amount of the Base Salary at any time as he may deem appropriate in
his sole discretion.
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(b) The amount of the Base Salary may not be decreased without
the prior written approval of the Employee except that if the President
increases the Base Salary as provided in the last sentence of paragraph (a)
above, the President may thereafter decrease the Base Salary by an amount not to
exceed the amount of such increase.
3.2 Principal Bonus Plan
During the Term, the Company shall maintain and the Employee shall be
entitled to participate in an annual incentive bonus plan open to Principals and
the CFO and certain other employees of the Company (the "Principal Bonus Plan"),
which will provide for the payment of cash bonuses to participants within 90
days of the end of each fiscal year based on the Company's financial performance
for that year and other appropriate factors. Under the Principal Bonus Plan,
Employee shall be eligible to earn a target bonus (the "Target Bonus") each year
of up to 125% of Employee's Base Salary for such year based on criteria
established by the Compensation Committee, and the performance of the Company
against such criteria. The establishment of such criteria and of the necessary
performance targets for partial or full earning of the Target Bonus shall be at
the sole discretion of the Compensation Committee.
3.3 Long-term Incentive Compensation
The Company has established a long-term incentive compensation plan,
which provides key employees of the Company with ownership interests in the
Company, as substantially set forth in Attachment A hereto (the "ISO Plan").
Under the ISO Plan, the Company shall use its best efforts to cause the Board of
Directors to grant Employee options to purchase 25,000 shares of common stock of
the Company, of which 5,000 options would be awarded immediately and the
remaining 20,000 options would be subject to shareholders approval. One-third of
such options will vest and become exercisable on each of the first three
anniversaries of the grant of the options. To the extent permissible, such
options shall be characterized as Incentive Stock Options as defined in Section
422 of the Code. Failing Board of Director or shareholder approval, the Company
shall in good faith attempt to develop mutually agreeable alternative
compensation.
3.4. Vacation
While employed hereunder, Employee shall be entitled to vacation
benefits in accordance with the vacation policy adopted by the Company from time
to time for Principals. Unless changed by the President in a manner generally
applicable to Principals of the Company, the Employee shall be entitled to three
weeks of vacation in each of the first two years of employment with the Company,
three weeks of vacation in each of the third and fourth years of employment with
the Company and four weeks per year in the fifth and subsequent years of
employment. Employee shall not be entitled to accumulate and carryover unused
vacation time from year to year.
3.5. Other Benefits
Employee shall be entitled to receive all employee benefits, fringe
benefits and other perquisites that may be offered by the Company to its
Principals as a group, including, without limitation, participation by Employee
and, where applicable, Employee's dependents, in the various employee benefit
plans or programs (including, without limitation, pension plans,
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profit sharing plans, stock plans, health plans, life insurance, parking and
disability insurance) generally provided to Principals of the Company, subject
to meeting the eligibility requirements with respect to each of such benefit
plans or programs. However, nothing in this Section 3.5 shall be deemed to
prohibit the Company from making any changes in any of the plans, programs or
benefits described herein, provided such changes apply to all similarly situated
Principals.
ARTICLE IV
Termination of Employment
4.1. Termination by Employee
Employee may, at any time prior to the Expiration Date, terminate
Employee's employment hereunder for any reason by delivering a Notice of
Termination to the President. Upon such termination, Employee shall be entitled
only to those rights and payments payable under Section 4.3. All options of the
Employee under the ISO Plan (or similar plan) which have not vested as of
employee's Termination Date shall lapse and shall not be exercisable. All
previously vested options shall remain exercisable for the shorter of 90 days
following the Termination Date and their original term. All loans to the
Employee in connection with the prior exercise of any options under the ISO Plan
(or similar plan) shall be due the earlier of 90 days following the Employee's
death and their original term.
4.2. Termination by the Company
The President may, at any time prior to the Expiration Date, terminate
Employee's employment hereunder for any reason by delivering a Notice of
Termination to Employee. If such termination occurs during the first six months
of employment by the Company for any reason other than Misconduct, the Employee
shall be entitled to a severance amount of $60,000 and such rights and
privileges as are set forth in section 4.3 and to no other rights and privileges
which may be available hereunder upon a termination of employment.
4.3. Payment of Accrued Base Salary, Vacation Pay, etc.
(a) Promptly upon the termination of Employee's employment for
any reason (including death), the Company shall pay to Employee (or Employee's
estate) a lump sum amount for (i) any unpaid Base Salary earned hereunder prior
to the Termination Date, (ii) all unused vacation time accrued by Employee as of
the Termination Date in accordance with Section 3.4, and (iii) all unpaid
benefits earned or vested, as the case may be, by Employee as of the Termination
Date under any and all incentive or deferred compensation plans or programs of
the Company.
(b) A termination of Employee's employment in accordance with
this Agreement shall not alter or impair any of Employee's accrued rights or
benefits as of the Termination Date under any employee benefit plan or program
maintained by the Company, in each case except as provided therein or in any
written agreement entered into between the Company and Employee pursuant
thereto.
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4.4. Additional Rights in Connection With Disability
In the event that the Company terminates Employee by delivering
a Notice of Termination to Employee stating that such Termination is by reason
of a Disability, the Employee shall be entitled to the benefits and payments set
forth in this Section 4.4:
(a) Base Salary and Target Bonus. The Company shall continue to
pay to Employee the Base Salary in effect as of the date on which the Notice of
Termination was delivered for one (1) year following the Termination Date (such
period being the "Continuation Period") which amount shall be reduced by any
amount payable to Employee under any disability plan maintained by the Company
for the benefit of Employee. In addition, the Employee shall be entitled to
continue to participate in the Annual Bonus Plan for one (1) year following the
Termination Date with the first anniversary of the Termination Date being the
Expiration Date for purposes of Section 3.2.
(b) Insurance Benefits, etc. The Company shall at all times
during the Continuation Period, without charge to Employee or Employee's
dependents, cause Employee and Employee's eligible dependents to be covered by
and to participate in, to the fullest extent allowable under the terms thereof,
all life, accidental death and dismemberment and health insurance plans and
programs that may be offered to the Principals of the Company so that Employee
will receive, at all times during the Continuation Period, the same benefits
under such plans and programs as Employee would have been entitled to receive
had Employee remained a Principal of the Company. In no event shall Employee's
continuation period for purposes of Part 6 of Title I of the Employee Retirement
Income Security Act of 1974, as amended ("COBRA"), begin prior to the end of
Employee's coverage under the Company's group health plan as provided in this
paragraph (b).
(c) Options. All options of the Employee under the ISO Plan (or
similar plan) which have not vested as of Employee's Termination Date and which
would vest within one year of Employee's Termination Date shall vest and shall
become immediately exercisable and shall remain exercisable by the Employee for
the shorter of 18 months following the Employee's Termination Date and their
original term. All other options shall expire. All loans to the Employee in
connection with the prior exercise of any options under the ISO Plan (or similar
plan) shall be due the earlier of 18 months following the Employee's Termination
Date and their original term.
Should the Employee's Disability end during the pendency of the Term,
the Company may discontinue the payments contemplated by this Section 4.4 if it
offers to reemploy Employee under the terms of this Agreement, but no such offer
shall affect the terms of Section 4.4(c) above.
4.5. Additional Rights in Connection With Termination by the Company
for Other than Misconduct or Disability
In the event that the President terminates Employee's employment
with the Company pursuant to Section 4.2 for other than Misconduct or a
Disability, the Employee shall be entitled to the payments and benefits set
forth in this Section 4.5:
(a) Severance Payment. The Company shall pay to the Employee a
severance payment equal to $60,000. In addition, the Employee shall be entitled
to receive any Target Bonus for the year in which the Employee is entitled for
the year in which the Termination occurs prorated through the
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Employee's Termination Date. The amount payable to Employee under this paragraph
(a) is in lieu of, and not in addition to, any severance payment due to or
become due to Employee under any separate agreement or contract between Employee
and the Company or pursuant to any severance payment plan, program or policy of
the Company.
(b) Options. All options of the Employee under the ISO Plan (or
similar plan) which have not vested as of Employee's Termination Date shall
lapse and shall not be exercisable. All previously vested options shall remain
exercisable for the shorter of 90 days following the Termination Date and their
original term. All loans to the Employee in connection with the prior exercise
of any options under the ISO Plan (or similar plan) shall be due the earlier of
90 days following the Employee's termination and their original term.
(c) Release. Notwithstanding anything in this Section 4.5 to the
contrary, as a condition to the receipt of any benefit under this Section 4.5,
Employee must first execute and deliver to the Company a release as set out in
exhibit 4.5(d) hereto, releasing the Company, its officers, Board of Directors,
employees and agents from any and all claims and from any and all causes of
action of any kind or character that Employee may have arising out of Employee's
employment with the Company or the termination of such employment, but excluding
any claims and causes of action that Employee may have arising under or based
upon this Agreement.
4.6. Additional Rights in the Event of Death
In the event that the Employee's employment is terminated as a result
of Employee's death, the Employee's estate or beneficiaries shall be entitled to
the payments and benefits set forth in this Section 4.6:
(a) Target Bonus. The Employee's estate shall be entitled to
receive the Target Bonus that the deceased employee would have been entitled to
have received in the year in which the death occurred.
(b) Insurance Benefits, etc. The Company shall pay the cost for
dependents of the Employee for insurance coverage that they are entitled to
obtain from the Company following the Employee's death pursuant to COBRA for a
period equal to two months multiplied by the number of full years (not to exceed
nine) during which the Employee was employed by the Company.
(c) Options. All options of the Employee under the ISO Plan (or
similar plan) which have not vested as of Employee's death and which would vest
within one year thereof shall vest immediately upon the Employee's death and
shall remain exercisable by the Employee's estate for the shorter of 18 months
following the Employee's death and their original term. All loans to the
Employee in connection with the prior exercise of any options under the ISO Plan
(or similar plan) shall be due the earlier of 18 months following the Employee's
death and their original term.
4.7. Rights in the Event of Termination for Employee's Misconduct
In the event that the Company terminates Employee's employment with the
Company pursuant to Section 4.2 for Employee's Misconduct, Employee shall be
entitled to the rights set forth in this Section 4.7
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(a) Options. All options of the Employee under the ISO Plan (or
similar plan) which have not vested as of employee's Termination Date shall
lapse and shall not be exercisable. All previously vested options shall remain
exercisable for the shorter of 90 days following the Termination Date and their
original term. All loans to the Employee in connection with the prior exercise
of any options under the ISO Plan (or similar plan) shall be due the earlier of
90 days following the Employee's death and their original term.
(c) Release. Notwithstanding anything in this Section 4.7 to the
contrary, as a condition to the receipt of any benefit under this Section 4.7,
Employee must first execute and deliver to the Company a release as set out in
exhibit 4.5(d) hereto, releasing the Company, its officers, Board of Directors,
employees and agents from any and all claims and from any and all causes of
action of any kind or character that Employee may have arising out of Employee's
employment with the Company or the termination of such employment, but excluding
any claims and causes of action that Employee may have arising under or based
upon this Agreement.
ARTICLE V
Confidential Information and Non-Competition
5.1. Confidential Information
(a) Employee recognizes that the services to be performed by
Employee hereunder are special, unique, and extraordinary and that, by reason of
such employment with the Company, Employee may acquire Confidential Information
concerning the operation of the Company, the use or disclosure of which would
cause the Company substantial loss and damages which could not be readily
calculated and for which no remedy at law would be adequate. Accordingly,
Employee agrees that Employee will not (directly or indirectly) at any time,
whether during or after Employee's employment hereunder, (i) knowingly use for
an improper personal benefit any Confidential Information that Employee may
learn or has learned by reason of Employee's employment with the Company or (ii)
disclose any such Confidential Information to any Person except (A) in the
performance of Employee's obligations to the Company hereunder, (B) as required
by applicable law, (C) in connection with the enforcement of Employee's rights
under this Agreement, (D) in connection with any disagreement, dispute or
litigation (pending or threatened) between Employee and the Company or (E) with
the prior written consent of the Board of Directors. As used herein,
"Confidential Information" includes information with respect to the Company's
products, facilities and methods, research and development, trade secrets and
other intellectual property, systems, patents and patent applications,
procedures, manuals, confidential reports, product price lists, customer lists,
financial information, business plans, prospects or opportunities; provided,
however, that such term, shall not include any information that (x) is or
becomes generally known or available other than as a result of a disclosure by
Employee or (y) is or becomes known or available to Employee on a
nonconfidential basis from a source (other than the Company) which, to
Employee's knowledge, is not prohibited from disclosing such information to
Employee by a legal, contractual, fiduciary or other obligation to the Company.
(b) Employee confirms that all Confidential Information is the
exclusive property of the Company. All business records, papers and documents
kept or made by Employee while employed by the Company relating to
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the business of the Company shall be and remain the property of the Company at
all times. Upon the request of the Company at any time, Employee shall promptly
deliver to the Company, and shall retain no copies of, any written materials,
records and documents made by Employee or coming into Employee's possession
while employed by the Company concerning the business or affairs of the Company
other than personal materials, records and documents (including notes and
correspondence) of Employee not containing proprietary information relating to
such business or affairs. Notwithstanding the foregoing, Employee shall be
permitted to retain copies of, or have access to, all such materials, records
and documents relating to any disagreement, dispute or litigation (pending or
threatened) between Employee and the Company.
5.2. Non-Competition
(a) While employed hereunder and for the (i) a period of one (1)
year thereafter or (ii) the period of two (2) years after the Termination Date,
if this Agreement is terminated and the Employee is entitled to receive
compensation and benefits under either Section 4.5 or Section 4.7 (the
"Restricted Period"), Employee shall not, unless Employee receives the prior
written consent of the Board of Directors, own a material interest in, manage,
operate, join, control, lend money or render financial or other assistance to or
participate in or be connected with, as an officer, employee, partner,
stockholder, consultant or otherwise, (A) any Person (x) which competes with the
Company in investing or consulting with small and medium sized businesses in the
United States with regard to change of control transactions in which the
transaction utilizes employee stock ownership plans, or (y) which provides or
proposes to provide services to any Person which is a client of the Company as
of the Termination Date or to which the Company has outstanding loans or in
which the Company then has investments (including warrants or options), or (B)
any potential client of the Company with which the Company has discussed a
client, loan or investment relationship within 12 months prior to, as
applicable, the end of Employee's employment or the Termination Date. It being
understood that investments in mutual funds and Employee's current financial
interest in Storage USA, Inc. is not prohibited by this section.
(b) Employee has carefully read and considered the provisions of
this Section 5.2 and, having done so, agrees that the restrictions set forth in
this Section 5.2 (including the Restricted Period, scope of activity to be
restrained and the geographical scope) are fair and reasonable and are
reasonably required for the protection of the interests of the Company, its
officers, directors, employees, creditors and shareholders. Employee understands
that the restrictions contained in this Section 5.2 may limit Employee's ability
to engage in a business similar to the Company's business, but acknowledges that
Employee will receive sufficiently high remuneration and other benefits from the
Company hereunder to justify such restrictions.
(c) During the Restricted Period, Employee shall not, whether
for Employee's own account or for the account of any other Person (excluding the
Company), intentionally (i) solicit, endeavor to entice or induce any employee
of the Company to terminate Employee's employment with the Company or accept
employment with anyone else or (ii) interfere in a similar manner with the
business of the Company.
(d) In the event that any provision of this Section 5.2 relating
to the Restricted Period or the areas of restriction shall be
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declared by a court of competent jurisdiction to exceed the maximum time period
or areas such court deems reasonable and enforceable, the Restricted Period or
areas of restriction deemed reasonable and enforceable by the court shall become
and thereafter be the maximum time period and/or areas.
5.3. Injunctive Relief
Employee acknowledges that a breach of any of the covenants contained
in this Article V may result in material irreparable injury to the Company for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of such a
breach, any payments remaining under the terms of this Agreement shall cease and
the Company shall be entitled to obtain a temporary restraining order or a
preliminary or permanent injunction restraining Employee from engaging in
activities prohibited by this Article V or such other relief as may be required
to specifically enforce any of the covenants contained in this Article V.
Employee agrees to and hereby does submit to in personam jurisdiction before
each and every such court for that purpose.
ARTICLE VI
Dispute Resolution
In the event a dispute shall arise between the parties as to whether
the provisions of this Agreement have been complied with (a "Dispute"), the
parties agree to resolve such Dispute in accordance with the following
procedure:
(a) A meeting shall be held promptly between the Parties,
attended by (in the case of the Company) by one or more individuals with
decision-making authority regarding the Dispute, to attempt in good faith to
negotiate a resolution of the Dispute.
(b) If, within 10 days after such meeting, the parties have not
succeeded in negotiating a resolution of the Dispute, the parties agree to
submit the Dispute to mediation in accordance with the Commercial Mediation
Rules of the American Arbitration Association except that Disputes with regard
to the existence of a Disability shall be resolved in accordance with the
definition of the term "Disability" above.
(c) The parties will jointly appoint a mutually acceptable
mediator, seeking assistance in such regard from the American Arbitration
Association if they have been unable to agree upon such appointment within 10
days following the 10-day period referred to in clause (b) above.
(d) Upon appointment of the mediator, the parties agree to
participate in good faith in the mediation and negotiations relating thereto for
15 days.
(e) If the parties are not successful in resolving the Dispute
through mediation within such 15-day period, the parties agree that the Dispute
shall be settled by arbitration in accordance with the Expedited Procedures of
the Commercial Arbitration Rules of the American Arbitration Association.
(f) The fees and expenses of the mediator/arbitrators shall be
borne solely by the non-prevailing party or, in the event there is no clear
prevailing party, as the mediator/arbitrators deem appropriate.
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(g) Except as provided above, each party shall pay its own costs
and expenses (including, without limitation, attorneys' fees) relating to any
mediation/arbitration proceeding conducted under this Article VI.
(h) All mediation/arbitration conferences and hearings will
be held in the greater Washington, D.C. area.
(i) In the event there is any disputed question of law involved
in any arbitration proceeding, such as the proper legal interpretation of any
provision of this Agreement, the arbitrators shall make separate and distinct
findings of all facts material to the disputed question of law to be decided
and, on the basis of the facts so found, express their conclusion of the
question of law. The facts so found shall be conclusive and binding on the
parties, but any legal conclusion reached by the arbitrators from such facts may
be submitted by either party to a court of law for final determination by
initiation of a civil action in the manner provided by law. Such action, to be
valid, must be commenced within 20 days after receipt of the arbitrators'
decision. If no such civil action is commenced within such 20-day period, the
legal conclusion reached by the arbitrators shall be conclusive and binding on
the parties. Any such civil action shall be submitted, heard and determined
solely on the basis of the facts found by the arbitrators. Neither of the
parties shall, or shall be entitled to, submit any additional or different facts
for consideration by the court. In the event any civil action is commenced under
this paragraph (b), the party who prevails or substantially prevails (as
determined by the court) in such civil action shall be entitled to recover from
the other party all costs, expenses and reasonable attorneys' fees incurred by
the prevailing party in connection with such action and on appeal.
(j) Except as limited by paragraph (b) above, the parties agree
that judgment upon the award rendered by the arbitrators may be entered in any
court of competent jurisdiction. In the event legal proceedings are commenced to
enforce the rights awarded in an arbitration proceeding, the party who prevails
or substantially prevails in such legal proceeding shall be entitled to recover
from the other party all costs, expenses and reasonable attorneys' fees incurred
by the prevailing party in connection with such legal proceeding and on appeal.
(k) Except as provided above, (i) no legal action may be brought
by either party with respect to any Dispute and (ii) all Disputes shall be
determined only in accordance with the procedures set forth above.
ARTICLE VII
Miscellaneous
7.1. No Mitigation or Offset
The provisions of this Agreement are not intended to, nor shall they be
construed to, require that Employee mitigate the amount of any payment provided
for in this Agreement by seeking or accepting other employment, nor shall the
amount of any payment provided for in this Agreement be reduced by any
compensation earned by Employee as the result of employment by another employer
or otherwise. Without limitation of the foregoing, the Company's obligations to
make the payments to Employee required under this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set off,
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counterclaim, recoupment, defense or other claim, right or action that the
Company may have against Employee, except that the Company may deduct from any
amount required to be reimbursed to the Company by Employee under Section 4.10
or Article VI(a) the amount of any payment which the Company is then required to
make to Employee hereunder.
7.2. Assignability
The obligations of Employee hereunder are personal and may not be
assigned or delegated by Employee or transferred in any manner whatsoever, nor
are such obligations subject to involuntary alienation, assignment or transfer.
The Company shall have the right to assign this Agreement and to delegate all
rights, duties and obligations hereunder as provided in Section 7.5.
7.3. Notices
All notices and all other communications provided for in the Agreement
shall be in writing and addressed (i) if to the Company, at its principal office
address or such other address as it may have designated by written notice to
Employee for purposes hereof, directed to the attention of the President with a
copy to the Secretary of the Company and (ii) if to Employee, at Employee's
residence address on the records of the Company or to such other address as
Employee may have designated to the Company in writing for purposes hereof. Each
such notice or other communication shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return receipt requested,
postage prepaid, except that any notice of change of address shall be effective
only upon receipt.
7.4. Severability
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
7.5. Successors: Binding Agreement
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, by agreement in form
and substance reasonable acceptable to Employee, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement. As used herein, the
term "Company" shall include any successor to its business and/or assets as
aforesaid which executes and delivers the Agreement provided for in this Section
7.5 or which otherwise becomes bound by all terms and provisions of this
Agreement by operation of law.
(b) This Agreement and all rights of Employee hereunder shall
inure to the benefit of and be enforceable by Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributes,
devisees and legatees. If Employee should die while any amounts would be payable
to Employee hereunder if Employee had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance
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with the terms of this Agreement to Employee's devisee, legatee, or other
designee or, if there be no such designee, to Employee's estate.
7.6. Tax Matters. The Company shall withhold from all payments
hereunder all applicable taxes (federal, state or other) which it is required to
withhold therefrom unless Employee has otherwise paid (or made other
arrangements satisfactory) to the Company the amount of such taxes.
7.7 Amendments and Waivers
No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and signed
by Employee and the President. No waiver by either party hereto at any time of
any breach by the other party hereto of, or in compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
7.8. Entire Agreement, Termination of Other Agreements
This Agreement is an integration of the parties' agreement and no
agreement or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement.
7.9. Governing Law
THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF MARYLAND WITHOUT
REGARD TO ITS CONFLICT OF LAWS PROVISION.
7.10. Counterparts
This Agreement may be executed in or more counterparts, each of which
shall be deemed to be an original, but all of which together will constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date first above written.
AMERICAN CAPITAL STRATEGIES, LTD.
By:_______________________________
Xxxxx Xxxxxx, President
EMPLOYEE:
_________________________________
Xxxx X. Xxxxxxxx
