Exhibit 10.43
EMPLOYMENT AGREEMENT
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This Employment Agreement (the "Agreement") is made and entered into as
of August 5, 1997 (the "Effective Date"), by and between Xxxxxxx Xxxxxxxx (the
"Executive") and Xxx Research Corporation, a Delaware corporation (the
"Company").
R E C I T A L S
A. The Company and Executive desire to enter into this Agreement with
respect to the Executive's employment with the Company.
B. Certain capitalized terms used in the Agreement are defined in
Section 7 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. Duties and Scope of Employment.
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(a) Position. During the Employment Period (as defined in
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Section 2(a) below), the Executive shall initially serve as Executive Vice
President and Chief Operating Officer of the Company and a member of the Office
of the President. 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 Chief Executive Officer and 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
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shall 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.
2. Employment Period.
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(a) Basic Rule. The Employment Period (the "Employment Period")
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shall begin upon the Effective Date and shall continue thereafter until the
fifth anniversary of the Effective Date, unless earlier terminated in accordance
herewith. For the period August 5, 1997 through August 17, 1997, Executive will
be on unpaid leave from the Company, although he will be an employee of the
Company during such period.
(b) Early Termination.
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(i) By the Company. The Company may terminate the
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Executive's employment for Cause (as defined in Section 7(a) below), by giving
the Executive 30 days' advance written notice, subject, however, to the cure
provisions of such Section. 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 2(b).
(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 7(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 2(b).
(c) Death. The Executive's employment shall terminate in the
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event of 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
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employment for Disability (as defined in Section 7(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 2(d) becomes effective, the
notice of termination shall automatically be deemed to have been revoked.
3. 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 $450,000. The Board, at least annually, will review such
base salary for possible increase, reasonably taking into account Executive's
performance and prevailing compensation for executives at similar levels in
similar sized companies in the industry. Such salary shall be paid periodically
in accordance with normal Company payroll. The annual compensation specified in
this Section 3(a) is referred to in this Agreement as "Base Compensation."
(b) Bonus. Unless otherwise determined by the Board of Directors
in 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) The Executive shall be granted non-qualified stock
options (the "Incentive Options") to purchase 200,000 shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), with an exercise
price equal to the closing price of the Common Stock as reported on the NASDAQ
Stock Market on the date of grant, as determined by the Compensation Committee
of the Board of Directors in its sole discretion, but in no event later than
August 31, 1997 (the "Grant Date"). The Incentive Options shall vest with
respect to one-fifth of the option shares on the first anniversary of the Grant
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;
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provided, that except as provided in Section 5(c) below, no portion of the
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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 Grant Date, but, except as otherwise provided herein or in the
Company's 1997 Stock Incentive Plan (the "1997 Stock Plan") (in the case of any
inconsistencies between the 1997 Stock Plan and this Agreement, this Agreement
will control), the Incentive Options shall terminate 90 days following the
termination of Executive's employment with the Company.
(ii) In lieu of entitlement to participate in performance
bonus plans, Executive shall also be granted nonqualified stock options (the
"Base Options") to purchase an additional 100,000 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 Grant Date. The Base Options shall vest with
respect to one-fifth of the option shares on the first anniversary of the Grant
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 Section 5(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
Grant Date, but, except as otherwise provided herein or in the 1997 Stock Plan
(in the case of any inconsistencies between the 1997 Stock Plan and this
Agreement, this Agreement will control), 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
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be 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-
benefit plans, stock option, life, disability, health, accident and other
insurance programs, paid vacations (but accruing at not less than four weeks per
year), 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 of Business Expenses. The Company shall
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reimburse 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
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reasonable good faith efforts, to the extent reasonably practicable and not
materially adverse to Executive, 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 Internal Revenue Code (the "Code")
or any successor provision.
(h) Deferred Bonus. Upon execution of this Agreement, Executive
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shall be entitled to a signing bonus in the amount of $500,000, the entire
amount of which shall
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immediately be deferred and held in a deferred compensation account (the
"Deferred Account") pursuant to the Company's Elective Deferred Compensation
Plan, provided that notwithstanding the provisions of the Elective Deferred
Compensation Plan, the following terms shall apply:
(i) Except as provided below, Executive's interest in the
Deferred Account shall vest in equal 25% installments on each of the first four
anniversaries of the Effective Date, including with respect to associated
investment gains.
(ii) Executive's interest in the Deferred Account shall vest
in full upon his death, Disability or Involuntary Termination.
(iii) In the event Executive's employment is terminated by the
Company for Cause or by Executive's voluntary termination (other than an
Involuntary Termination), Executive shall forfeit any interest in the Deferred
Account that has not vested prior to the date of such termination of employment.
4. Benefits Upon a Change in Control. In the event of a Change in
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Control (as defined in Section 7(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.
5. Severance Benefits.
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(a) Severance Benefits. If Executive's employment with the Company
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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.
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(A) If the Executive's employment terminates as a
result of Involuntary Termination 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 two
(2) times annual Base Compensation (based on annualizing the rate at which
Executive most recently was accruing Base Compensation).
(B) If the Executive's employment terminates as a
result of Involuntary Termination on or after 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 one
times annual Base Compensation (based on annualizing the rate at which Executive
most recently was accruing Base Compensation).
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
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for 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
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severance and benefits plans and policies at the time of such termination and
except as otherwise provided in Section 5(b).
(b) Benefits; Miscellaneous. In the event the Executive is
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entitled to severance benefits pursuant to subsection 5(a)(i) or is terminated
due to death or Disability, then in addition to such severance benefits, the
Company shall continue to provide the Executive (and his family), (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 5(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.
In addition, in the event of any termination of Executive's employment,
(i) the Company shall pay the Executive any unpaid Base Compensation 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 5(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 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 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 5(a)(i), any options to purchase Common Stock held by Executive that
have vested as of the Termination Date
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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 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 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 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.
(iv) In the event Executive's employment terminates due to
death or Disability, 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.
However, if such event occurs within one year of the Effective Date, (x) there
shall be deemed vested as of the Termination Date, such number of options to
purchase Common Stock as would have vested had Executive remained employed by
the Company through the date that is twelve months following the date of
termination due to death or Disability; and (y) such vested options shall remain
exercisable for a period of three (3) years following the Termination Date.
6. 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 or
benefit 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 6 (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.
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7. Definition of Terms. The following terms referred to in this
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Agreement shall have the following meanings:
(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, (iii) any refusal by the Executive to comply with
a reasonable written directive of the Board, (iv) a willful breach by the
Executive of a material provision of this Agreement, or (v) 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), (iv) or (v), specifying the particulars thereof;
provided that in the case of conduct set forth in (iii), (iv) or (v), the
Executive shall have the opportunity to cure same within 30 days following the
Executive's receipt of written notice thereof.
(b) Change in Control. "Change in Control" shall mean the
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occurrence 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
(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).
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(c) Disability. "Disability" shall mean that the Executive has
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been or will be unable to substantially perform his duties under this Agreement
for a period of six or more consecutive months due to illness, accident or other
physical or mental incapacity.
(d) Involuntary Termination. "Involuntary Termination" shall
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mean:
(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);
(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 8 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
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of the applicable notice period set forth in Section 2(b) above, the date as of
which such notice is waived in accordance with the terms of Section 2(b) or the
date of Executive's employment termination pursuant hereto if notice of same is
otherwise not required under Section 2.
8. 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
enforceable by, the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
9. 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
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Cause 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 9(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 2(b). Subject to
the second provision to Section 7(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 Executive hereunder or
preclude the Executive from asserting such fact or circumstance in enforcing his
rights hereunder.
10. 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 and not to solicit as set forth in this
Section 10 is essential to protect the business and goodwill of the Company.
(b) The Executive agrees that during the Employment 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
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("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 10, 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 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 expiration of the five-year Employment
Period without early termination thereof), 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 10 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 10 in its reduced form for all
purposes in the manner contemplated hereby.
11. Existing Confidentiality and Non-Compete Agreements. Executive
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represents and warrants (i) that 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) to the best of Executive's knowledge, full compliance with the terms of
each such agreement will not materially interfere with Executive's duties
hereunder (except to the extent that Executive reasonably may determine to
absent himself from certain Company meetings and communication during the first
year of the Employment Period). The Executive further covenants that he will
not willfully and knowingly fail to fully abide by the terms of any and all such
agreements, and will work in good faith with the Company to avoid any breach
thereof.
12. Arbitration. At the option of either party, any and all disputes
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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.
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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.
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
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awarded, and provided, further, that the Executive shall be entitled to
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reimbursement for his 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.
13. 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,
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waived 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.
(c) Whole Agreement. This Agreement and the documents expressly
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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. Nothing herein affects the continued
enforceability of that certain pre-existing indemnification letter between the
parties.
(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.
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(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 shall 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.
(j) Expense Reimbursement. The Company will reimburse Executive
---------------------
for his reasonable legal fees and costs associated with the negotiation and
execution of this Agreement and all other matters associated with becoming an
employee of the Company, not to exceed $12,000 in the aggregate.
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IN WITNESS WHEREOF, the parties have executed this Agreement.
XXX RESEARCH CORPORATION
By:
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Its:
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XXXXXXX XXXXXXXX
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