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EXHIBIT 10.56
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and effective as of
May 21, 1997, by and between XXXX Technology, Inc., a Delaware corporation
("Company"), and Xxxx X. Xxxxxxx, Xx., an individual ("Executive"), with respect
to the following facts and circumstances:
RECITALS
Company desires to engage Executive as Company's President, Chief
Executive Officer, and as a member of Company's Board of Directors ("Board"),
subject to shareholder ratification of continuing Board membership. Executive
desires to be retained by Company in that capacity, on the terms and conditions
and for the consideration set forth below.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE 1
EMPLOYMENT AND TERM
1.1 EMPLOYMENT. Company hereby engages Executive in the capacity as
Company's President, Chief Executive Officer, and as a member of the Board,
subject to shareholder ratification of continuing Board membership, and
Executive hereby accepts such engagement by Company upon the terms and
conditions specified below.
1.2 TERM. The term of this Agreement (the "Term") shall commence on May
21, 1997 (the "Hire Date") and shall continue in force until May 31, 2001,
unless earlier terminated under Article 7 below. The period from the date hereof
through May 31, 1998 and each 12-month period thereafter is sometimes called a
"year of the Term."
ARTICLE 2
DUTIES OF EXECUTIVE
2.1 DUTIES. Executive shall perform all the duties and obligations of a
President and Chief Executive Officer, including without limitation such duties
as may be assigned to him from time to time by the Board, provided, however,
that the Board may, in its discretion, delegate certain responsibilities to
other executive officers and may also delegate such right to assign duties to
one or more of the committees of the Board. Executive shall report to the Board.
Executive shall perform the services contemplated herein faithfully, diligently,
to the best of his ability and in the best interests of Company and its
shareholders. Executive shall devote substantially all his business time and
efforts to the rendition of such services. Executive shall at all times perform
such services in compliance with and to the extent of his authority, shall use
his best efforts to ensure that Company is in compliance with, any and all
material laws, rules and regulations applicable to Company of which Executive is
aware.
2.2 COMPANY RULES. Executive shall, at all times during the Term, in
all material respects, adhere to and obey any and all written internal rules and
regulations governing the conduct of Company's executives and employees, as
established or modified from time to time; provided, however, in the event of
any conflict between the provisions of this Agreement and any such rules or
regulations, the provisions of this Agreement shall control.
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2.3 LOCATION OF SERVICES. Executive shall not be required to relocate
from Austin, Texas, to perform the services hereunder, without his consent,
except for travel reasonably required in the performance of his duties
hereunder.
2.4 EXCLUSIVE SERVICES. Except as otherwise expressly provided herein,
Executive shall devote his business time, attention, energies, skills, learning
and best efforts to the business of Company. Executive may participate in
social, civic, charitable, religious, business, educational or professional
associations, so long as such participation does not interfere with the duties
and obligations of Executive hereunder. This Section 2.4, however, shall not be
construed to prevent Executive from making passive outside investments so long
as such investments do not require material time of Executive or otherwise
interfere with the performance of Executive's duties and obligations hereunder.
Executive shall not make any investment in an enterprise that competes with
Company or that is a material supplier of Company without the prior written
approval of the Board after full disclosure of the facts and circumstances;
provided, however, that so long as Executive does not utilize material,
non-public information this sentence shall not preclude Executive from owning up
to one percent (1%) of the securities of a publicly traded entity.
2.5 SERVICES ON OTHER BOARDS. Subject to prior approval of the XXXX
Board of Directors, Executive shall be allowed to participate as a member of the
Board of Directors of other companies or organizations.
ARTICLE 3
COMPENSATION
3.1 DIRECT COMPENSATION. In consideration for Executive's services
hereunder, Company shall pay Executive the amount of $13,460 in biweekly
payments, annualized to approximately $350,000.00 per year ("Direct
Compensation"), in accordance with Company's regular payroll schedule (less any
deductions required for state, federal and local withholding taxes, any
withholdings that are pursuant to Company's employee benefit plans or
governmentally mandated, and any other authorized withholdings).
3.2 DISCRETIONARY ANNUAL MERIT REVIEW. Company's Board, or the Human
Resources Committee of the Board (the "HRC") will in its discretion conduct an
annual merit review of Executive's Direct Compensation. This review will be
conducted in the first quarter following the end of Company's each fiscal year.
Any such review will not result in a decrease in Executive's then-effective
Direct Compensation.
3.3 BONUS.
3.3.1 GOALS AND BONUS AMENDMENT. For each fiscal year of
Company ("FY") during the Term of this Agreement, conditioned upon Executive's
accomplishment of certain pre-determined goals and objectives (the "Goals") to
be established by the parties consistent with the Company's approved operating
plan, Executive shall be eligible to receive a target bonus ("Bonus") as
follows: The Bonus shall amount to 50% of the annual Direct Compensation of
Executive during said fiscal year if 100% of the Goals are met. The Bonus shall
be computed on a continuous linear scale from 0% to 50% for attaining 75% to
100% of the Goals. (For example, 30% of the Direct Compensation would be the
Bonus amount for attaining 90% of the Goals.) No Bonus will be paid under this
plan if less than a threshold of 75% of the Goals is met. However, in the event
that 75% of the Goals is not achieved, the Board may, in its discretion, award
to Executive a bonus in an amount to be solely determined by the Board. If 100%
of the Goals are exceeded, the total bonus can be as high as 100% of the annual
Direct Compensation of Executive during said fiscal year. If 100% to 150% of the
Goals are attained, the bonus shall be 50% for the first 100% of the Goals
attained plus a maximum of an additional 50% computed on a continuous linear
scale up to 150% of the Goals attained. (For example, 80% of the Direct
Compensation would be the Bonus amount for attaining 130% of the Goals.)
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3.3.2 BONUS PLAN. After consultation with Executive, the goals
for each fiscal year will be determined by the Board or the Human Resources
Committee of the Board (the "HRC") and will be presented in a formal document
("Bonus Plan") to Executive. In the first quarter of each subsequent fiscal year
from FY1999 through FY2001 a new Bonus Plan will be presented to Executive.
3.3.3 PERFORMANCE RATING. In June, following the end of each
fiscal year of the Term, the Board or the HRC will evaluate Executive's
performance against the Goals set forth in the Bonus Plan for that fiscal year,
determine the percentage attainment of those Goals ("Rating"), and inform
Executive of the Rating and corresponding bonus amount.
3.3.4 PRO-RATING OF BONUS. In the event the full fiscal year
specified in a Bonus Plan is not completed for any reason, except for
termination as specified in Sections 7.1.1, 7.1.2, 7.1.3 or 7.2 the HRC will, in
its sole judgment fairly determine a Rating and a pro-rated bonus amount for
Executive after said fiscal year has ended. Any bonus under this Section 3.3
will be paid by the Company to Executive within 60 days after the end of the
applicable fiscal year or the conclusion of a Major Event (as defined in Section
4.4), whichever is sooner.
3.4 REPLACEMENT BONUS. Within thirty (30) days of the Hire Date,
Company shall pay to Executive a one-time bonus in the amount of $130,000 (the
"Replacement Bonus") to compensate Executive for amounts which Executive would
otherwise have received had he remained employed by his previous employer.
ARTICLE 4
EQUITY PARTICIPATION
4.1 NON-QUALIFIED STOCK OPTIONS. Subject to the approval of the Stock
Option Committee of the Board and to the approval of the "Restated Plan" (as
defined below) by Company's shareholders, and pursuant to Company's Employee
Stock Option and Restricted Stock Purchase Plan 3.0 (the "Restated Plan"), which
is incorporated herein by this reference, Company will grant Executive
non-qualified stock options for 100,000 shares of Company common stock with an
exercise price of $0.05 per share to vest fifty percent (50%) on April 1, 1998,
and fifty percent (50%) on April 1, 1999. Such vesting shall be conditioned upon
Executive continuing to be an employee of the Company on the applicable vesting
date (except as provided in Sections 7.3, 7.5.3 and 7.5.4 hereof). Any stock
options received pursuant to this Section 4.1 shall be in addition to those
received under Sections 4.2 and 4.3. Executive must exercise options for the
100,000 shares of Company common stock, if at all, no later than May 21, 2007.
4.2 ADDITIONAL NON-QUALIFIED STOCK OPTIONS. Subject to the approval of
the Stock Option Committee of the Board and to the approval of the Restated Plan
by Company's shareholders, and pursuant to the Restated Plan, Company will also
grant Executive non-qualified stock options for 400,000 shares of Company common
stock, of which options to purchase 100,000 shares shall vest immediately. The
remaining 300,000 options shall vest monthly at the rate of 6,250 per month,
over the Term. Such vesting shall be conditioned upon Executive continuing to be
an employee of the Company on the applicable vesting date (except as provided in
Sections 7.3, 7.5.3 and 7.5.4 hereof). The exercise price for such options shall
be $2.437 per share (the closing price of Company common stock on The Nasdaq
Stock Market's National Market on the Hire Date). Executive must exercise
options for the 400,000 shares of Company common stock, if at all, no later than
May 21, 2007. In the event of a repricing of any of Executive's stock options,
the vesting period for the 300,000 options granted pursuant to this Section 4.2
which did not vest immediately shall be reset (but the option to purchase
100,000 shares granted pursuant to this Section 4.2 which vested immediately
shall remain fully vested).
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4.3 PERFORMANCE STOCK OPTIONS. Subject to the approval of the Stock
Option Committee of the Board and to the approval of the Restated Plan by
Company's shareholders, and pursuant to the Restated Plan, Company will grant
Executive non-qualified stock options for 100,000 shares of Company common stock
with an exercise price of $0.05 per share, to vest fifty percent (50%) on the
day on which the average of the closing prices (computed for the preceding ten
consecutive trading days) on The Nasdaq Stock Market's National Market or other
national market system or other primary exchange on which Company common stock
trades (the "FMV") exceeds $4.00 per share, and to vest fifty percent (50%) on
the date on which the FMV exceeds $7.00 per share. If not previously vested, the
stock options granted pursuant to this Section 4.3 shall terminate immediately
upon termination of Executive's employment with the Company for any reason
(subject to Sections 7.3, 7.5.3 and 7.5.4). Executive must exercise options for
the 100,000 shares of Company common stock, if at all, no later than May 21,
2007.
4.4 CHANGE OF CONTROL/MAJOR EVENT. In the event of a Major Event, any
options granted pursuant to Sections 4.1 and 4.2, above, or subsequently granted
to Executive by Company shall vest in full immediately, notwithstanding the
foregoing provisions of this Article 4. A "Major Event" shall mean the
occurrence of any of the following:
(A) Any "Person" or "Group" (as such terms are defined in
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder) other than Fujitsu Limited, a Japanese
corporation, or a Person controlled thereby (collectively, "Fujitsu")
becoming the "Beneficial Owner" (within the meaning of Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the
Company, or of any entity resulting from a merger or consolidation
involving the Company, representing more than fifty percent (50%) of
the combined voting power of the then outstanding securities of the
Company or such entity.
(B) The consummation of the acquisition by Fujitsu, directly
or indirectly, and regardless of the form or manner of the acquisition,
of all of the issue and outstanding shares of Common Stock of the
Company.
(C) The consummation of (x) a merger, consolidation or
reorganization to which the Company is a party, whether or not the
Company is the Person surviving or resulting therefrom, or (y) a sale,
assignment, lease, conveyance or other disposition of all or
substantially all of the assets of the Company, in one transaction or a
series of related transactions, to any Person other than the Company,
where any such transaction or series of related transactions as is
referred to in clause (x) or clause (y) above in this subparagraph (C)
(a "Transaction") does not otherwise result in a "Major Event" pursuant
to subparagraph (A) of this definition of "Major Event"; provided,
however, that no such Transaction shall constitute a "Major Event"
under this subparagraph (C) if the Persons who were the stockholders of
the Company immediately before the consummation of such Transaction and
Fujitsu are the Beneficial Owners, immediately following the
consummation of such Transaction, of fifty percent (50%) or more of the
combined voting power of the then outstanding voting securities of the
Person surviving or resulting from any merger, consolidation or
reorganization referred to in clause (x) above in this subparagraph (C)
or the Person to whom the assets of the Company are sold, assigned,
leased, conveyed or disposed of in any transaction or series of related
transactions referred in clause (y) above in this subparagraph (C).
4.5 STOCK OPTION AGREEMENTS. All grants of options pursuant to this
Article 4 shall be made pursuant to Company's standard stock option agreement,
with such changes as may be necessary to effectuate the provisions of this
Article 4, and shall otherwise be subject to the terms and conditions set forth
in the Restated Plan.
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ARTICLE 5
EXECUTIVE BENEFITS
5.1 VACATION. Executive shall be eligible for five (5) weeks of paid
vacation each calendar year in accordance with the policies of Company generally
applicable to senior executives; provided, however, to accommodate previously
made commitments, Executive shall be eligible for four (4) weeks of paid
vacation in Calendar 1997.
5.2 LIFE INSURANCE BENEFITS. During the term of the Agreement, Company
will pay the premium for the life insurance policy (which has a current death
benefit of $1,448,500) which Executive purchased from his previous employer.
Company has previously reimbursed Executive for having purchased this policy
from his previous employer. The policy shall be owned solely by the Executive.
Premiums for the policy will be paid annually and will be pro-rated in the event
of termination or other interruption of Executive's employment (except as set
forth in Sections 7.5.3 and 7.5.4). Executive's compensation shall be adjusted
(i.e., grossed up) to compensate for any income tax Executive incurs as a result
of the payment of the life insurance policy premiums by Company.
5.3 RETIREMENT PLAN REPLACEMENT. During the term of the Agreement,
quarterly premiums will be paid by Company, with a double payment to be made in
the first quarter, to fund a deferred annuity owned by Executive to replace
Executive's former SERP plan at his previous employer, in an amount appropriate
to fully fund an annuity that will yield an annual benefit, upon Executive's
sixtieth (60th) birthday, in the pre-tax amount of $152,540, payable for
Executive's life. Company and Executive will cooperate in good faith with
Xxxxxxx Xxxxxx Co. to implement such a plan. Executive's compensation shall be
adjusted (i.e., grossed up) to compensate for any income tax Executive incurs as
a result of the funding of such an annuity. Company and Executive agree that the
quarterly payment necessary to fund the annuity (before "gross-up") is $68,056.
5.4 TRAVEL, MOVING AND LIVING EXPENSES. Company will reimburse
Executive for direct expenses, up to a maximum outlay of $100,000.00 (plus
"gross-up") in connection with Executive's relocation to Austin, Texas.
Executive's direct expenses shall include: expenses related to the sale and
purchase of Executive's primary residence; expenses for moving personal items
and household goods to Austin, Texas; and temporary living expenses (including
apartment rental) in connection with Executive's move to Austin, Texas . The
referenced "gross-up" shall compensate for income taxes incurred by Executive as
a result of the reimbursements for direct expenses.
5.5 AUTOMOBILE ALLOWANCE. Company shall, in its discretion, either
provide Executive with a leased car or pay Executive a $1,000.00 monthly
automobile allowance. Executive's compensation shall not be adjusted (i.e.,
grossed up) to compensate for any federal income tax Executive incurs as a
result of the automobile allowance.
5.6 BENEFITS. Executive shall receive all other such fringe benefits,
such as health and disability insurance coverage and paid sick leave, and
including Directors and Officers Liability coverage and indemnification for
conduct in the course and scope of Executive's employment hereunder, as Company
may offer generally to other senior executives under Company personnel policies
in effect from time to time.
5.7 DIRECTORS' AND OFFICERS' LIABILITY INSURANCE. During the Term and
for a period of at least three years thereafter, Company shall use commercially
reasonable efforts to maintain in effect, if available, directors' and officers'
liability insurance (which may be a run-off policy) covering Executive on terms
and in an amount comparable to those applicable to Company's directors and
officers as of the date of this Agreement; provided, however, that in no event
shall Company be required to expend in excess of 150% of the current premium
being paid by Company for such coverage.
ARTICLE 6
REIMBURSEMENT FOR EXPENSES
Executive shall be reimbursed by Company for all ordinary and necessary
expenses incurred by Executive in the performance of his duties or otherwise in
furtherance of the business of Company in accordance with the policies of
Company in effect from time to time. Executive shall keep accurate and complete
records of all such expenses, including, but not limited to, proof of payment
and purpose. Executive shall account fully for all such expenses to Company.
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ARTICLE 7
TERMINATION
7.1 TERMINATION FOR CAUSE. Without limiting the generality of Section
7.2, Company shall have the right to terminate Executive's employment, without
further obligation or liability to Executive, upon the occurrence of any one or
more of the following events, which events shall be deemed termination for
cause:
7.1.1 FAILURE TO PERFORM DUTIES. If Executive neglects or
otherwise fails adequately to perform the duties of his employment under this
Agreement, after having received written notice and a copy of a resolution from
the Board specifying such failure to perform and a reasonable opportunity to
perform; provided, however, that Executive's inability or failure to perform his
duties due to sickness or disability shall not constitute grounds for
termination for cause.
7.1.2 WILLFUL BREACH. If Executive willfully commits a
material breach of this Agreement or a material breach of his fiduciary duty to
Company or its shareholders.
7.1.3 WRONGFUL ACTS. If Executive is convicted of a felony or
any other serious crime, commits a serious wrongful act or engages in other
misconduct that would make the continuance of his employment by Company
materially detrimental to Company, which determination shall be made as a
reasonable exercise of the Board's judgment.
7.2 TERMINATION BY EXECUTIVE. Executive may terminate his employment
upon thirty (30) day's written notice to Company without liability to Company
for damages incurred solely by reason of such termination.
7.3 TERMINATION WITHOUT CAUSE. Notwithstanding anything to the contrary
herein, Company shall have the right to terminate Executive's employment under
this Agreement at any time without cause by giving notice of such termination to
Executive; provided, however, that any termination without cause which occurs
while an identifiable Major Event is being planned or executed shall not
preclude the vesting (x) of all stock options (other than those granted to
Executive pursuant to Section 4.3 hereof), which options shall totally vest if
such Major Event occurs within nine months of the termination without cause, or
(y) of the stock options granted to Executive pursuant to Section 4.3 hereof,
which options shall vest if the performance targets set forth in Section 4.3 for
the vesting of such options are satisfied within three months of the termination
without cause. Executive may exercise any stock options which vest as a result
of this Section 7.3, if Executive desires to do so, no later than three months
after the occurrence of the Major Event (in the case of options covered by
clause (x)) or three months after the performance targets are satisfied (in the
case of the options covered by clause (y)).
7.4 EFFECTIVENESS ON NOTICE. Any termination under this Section 7 shall
be effective upon receipt of notice by Executive of such termination or upon
such other later date as may be specified by Company in the notice (the
"Termination Date"), or in the event of notice by the Executive under Section
7.2, on the date specified by Executive in conformity with said section (also
the "Termination Date").
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7.5 EFFECT OF TERMINATION.
7.5.1 PAYMENT OF SALARY AND EXPENSES UPON TERMINATION. If the
Term of this Agreement is terminated for any reason whatever, except as provided
below, all pay and benefits provided to Executive by Company hereunder shall
thereupon immediately cease and Company shall pay or cause to be paid to
Executive all accrued but unpaid salary, earned bonus, if any (as provided by
and subject to Sections 3.3.3 and 3.3.4), life insurance premiums, if
applicable, and vacation benefits. In addition, promptly upon submission by the
Executive of his unpaid expenses incurred prior to the Termination Date and
owing to Executive pursuant to Article 6, reimbursement for such expenses shall
be made. In the event of any termination pursuant to Sections 7.1 or 7.2, no
further vesting shall occur after the Termination Date with regard to any
unvested stock options and Executive may exercise any vested and unexercised
options, if Executive desires to do so, no later than three months after the
date of termination.
7.5.2 [INTENTIONALLY OMITTED].
7.5.3 BENEFITS IN CONNECTION WITH TERMINATION WITHOUT CAUSE.
If Company terminates Executive without cause (whether or not in connection with
or following the planning or occurrence of a Major Event), in addition to the
amounts payable to Executive under Section 7.5.1, in exchange for and subject to
Executive's execution of a release containing substantive provisions
substantially in the form attached hereto as Exhibit 1, and so long as Executive
is in compliance therewith and with the non-competition, non-solicitation and
confidentiality covenants set forth in Sections 8.1 and 8.2 hereof, Company
shall continue to pay to Executive the amounts specified in Sections 3.1 (as
such amount may be modified pursuant to Section 3.2) and 5.2 as well as its
share of Executive's health and life insurance premiums for a period of
twenty-four (24) months from the Termination Date (the "Termination Period"). In
addition, subject to Section 7.3, the stock options described in Sections 4.1
and 4.2 shall continue to vest during the Termination Period (if not already
vested) and Executive may exercise any vested and unexercised options, if
Executive desires to do so, no later than three months after the expiration of
the Termination Period; subject to Section 7.3, no further vesting shall occur
with respect to the stock options described in Section 4.3; and Company shall
continue to fund the annuity specified in Section 5.3 until May 21, 1999.
Executive shall not be obligated to seek alternative employment nor shall
payments hereunder be reduced as a result of any such employment. At any time
that Executive executes a release under this Agreement, Company will in good
faith and in its sole and absolute discretion consider a request by Executive
that Company provide a release to Executive comparable to the release executed
by Executive.
7.5.4 BENEFITS IN CONNECTION WITH VOLUNTARY TERMINATION
FOLLOWING CERTAIN MAJOR EVENTS. If Executive voluntarily terminates his
employment in accordance with Section 7.2 more than sixty (60) days but less
than one hundred twenty (120) days following the occurrence of a Major Event
which results in Company ceasing to be a public company (a "GOING PRIVATE
EVENT"), in addition to the amounts payable to Executive under Section 7.5.1, in
exchange for and subject to Executive's execution of a release containing
substantive provisions substantially in the form attached hereto as Exhibit 1,
and so long as Executive is in compliance therewith and with the
non-competition, non-solicitation and confidentiality covenants set forth in
Sections 8.1 and 8.2 hereof, Executive shall be entitled to receive the same
amounts and benefits as if he had been terminated without cause (i.e., the
amounts and benefits set forth in Section 7.5.3), except that the period of time
set forth in Section 7.5.3 during which Company is required to fund the annuity
specified in Section 5.3 shall be extended on a day-for-day basis for each day
that Executive continues his employment with Company after the consummation of
the Going Private Event.
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7.6 BENEFITS LIMITATION. Notwithstanding anything to the contrary
contained in this Agreement, any amounts which would otherwise be payable to
Executive under this Agreement shall be reduced to the extent (if any) necessary
to prevent (a) the sum of all amounts payable by the Company to Executive
(whether pursuant to this Agreement or otherwise) which constitute "parachute
payments" under Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code") from exceeding (b) 2.99 times Executive's "base amount" as defined
in Section 280G of the Code. The Company's certified public accountants shall
determine Executive's "parachute payments," "base amount," and, consequently,
the amount of any reduction in the payments by the Company to Executive under
this Agreement, and such determinations shall be final and binding on Executive
and the Company. At Executive's request, Company shall provide Executive with
its determination of Executive's "base amount" for any particular calendar year.
As a result of the uncertainty in the application of Section 280G of the Code,
it is possible that the amounts paid by the Company to Executive may be made in
a manner inconsistent with the limitations provided in this Section 7.6 (an
"Excess Payment" or "Underpayment", respectively). If it is established that an
Excess Payment has been made, such Excess Payment shall be deemed for all
purposes to be a loan to Executive made on the date Executive received the
Excess Payment and Executive shall repay the Excess Payment to the Company on
demand, together with interest on the Excess Payment at one hundred twenty
percent (120%) of the applicable federal rate (as defined in Section 1274(d) of
the Code) compounded semi-annually from the date of your receipt of such Excess
Payment until the date of such repayment. If it is determined that an
Underpayment has occurred, the Company shall pay an amount equal to the
Underpayment to Executive within ten (10) calendar days of such determination,
together with interest on such amount at one hundred twenty percent (120%) of
the applicable federal rate compounded semi-annually from the date such amount
should have been paid to Executive pursuant to the terms of this Agreement or
otherwise, but for the operation of this Section 7.6, until the date of payment.
ARTICLE 8
CONFIDENTIALITY, NON-COMPETITION, AND
COMPANY IDEAS AND PROPERTY
8.1 CONFIDENTIAL INFORMATION. "Confidential Information" shall mean all
business information, technological information, intellectual property, trade
secrets, client lists and other information belonging to Company or relating to
Company's business, technology or clients which is not a public record. In
particular, such Confidential Information shall specifically include the
information described in attached Exhibit 2, which is incorporated herein by
this reference. Company agrees to provide access to such Confidential
Information to Executive immediately upon and during the course of his
employment. Executive agrees as follows:
a. While employed by Company, not to use or disclose any
Confidential Information except as required in the
performance of his duties with Company;
b. To turn over to Company all documents or other data
compilations of any nature containing Confidential
Information at the termination of his employment with
Company; and
c. Following termination of his employment for any
reason, not to use or disclose any Confidential
Information for any reason without the prior written
consent of Company.
8.2 NONCOMPETITION. If Executive's employment with Company is
terminated for any reason, Executive agrees not to engage directly or indirectly
in any of the conduct set forth in subsections (a) through (c) below for a
period of two years:
a. Hire, attempt to hire or assist any other person in
hiring or attempting to hire, or otherwise interfere
with the relationship of the Company with, any person
who is then employed by the Company or has been so
employed by the Company within the four month period
preceding any such solicitation, discussion, hire or
attempt to hire, or any contractor or other agent of
Company who is then performing services for Company
or who has so performed services for the Company
within the four month period preceding any such
solicitation, discussion, hire or attempt to hire
(unless, in the case of a contractor or agent who
does not have a confidential relationship with
Company, any such action by Executive would not
prevent Company from using the services of such
contractor or agent;
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b. Solicit the business of either (i) any customer or
client of Company to whom Company rendered services
or sold products during the one-year period prior to
termination of Executive's employment, or (ii) any
person or entity whose business Company solicited
during the one-year period prior to termination of
Executive's employment, except for those introduced
by Executive to Company (who shall be identified from
time to time by letter from Executive to Company or
otherwise, subject to Company's approval thereof); or
c. Engage in any business in which the knowledge of
Executive of Confidential Information is or may be
used, directly or indirectly, in competition with
Company, whether as an employee, consultant, or
otherwise.
8.3 OWNERSHIP OF IDEAS.
a. Company will own, and Executive hereby agrees to
transfer and assign to it, all rights in and to any
material and/or ideas and all results and proceeds of
Executive's services hereunder, conceived of or
produced during the Term by Executive. Executive
agrees to execute and deliver to Company such
assignments, certificates of authorship, or other
instruments in accordance with standard industry
practice, and otherwise provide proper assistance, at
Company's request and expense and for its benefit or
that of its nominees, during and after Executive's
employment by Company to obtain patents, copyrights,
and legal protection for inventions or innovations in
any country;
b. Executive's agreement to assign to Company any of his
rights as set forth above does not apply to any
invention which Executive develops entirely upon his
own time without using Company's equipment, supplies,
facilities or trade secret information, the invention
does not relate at the time of conception or
reduction to practice to Company's business, or
actual or demonstrably anticipated research or
development of Company, and the invention does not
result from any work performed by Executive for
Company.
8.4 PROPERTY OF COMPANY.
a. All memoranda, notes, records, papers, data and
documents concerning the business of Company or any
of its subsidiaries, whether in tangible or
intangible form (including all information stored in
electronic form), all computer programs and software,
and all copies of any of the foregoing, made,
obtained, compiled by or made available to Executive
during the Term, and all equipment (including
personal computers and other computer equipment) made
available to or obtained by Executive from Company
(collectively referred to as "Company Property"),
will be and remain the exclusive property of Company
during and after the termination of Executive's
employment relationship with Company, and Executive
will leave all Company Property with Company at the
time his employment terminates. Executive will return
any and all Company Property that he may have taken,
and, if requested by Company to do so, will execute a
statement confirming compliance with this subsection
upon termination of his employment relationship with
Company.
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8.5 REMEDIES. Executive understands and agrees that Company will be
irreparably damaged in the event that the noncompetition provisions set forth
above are violated. Executive agrees that, in addition to any other remedy to
which it may be entitled, at law or in equity, Company shall be entitled to an
injunction to specifically enforce the terms and provisions hereof.
ARTICLE 9
ARBITRATION
9.1 EXCLUSIVE REMEDY. In the event there is any dispute between
Executive and Company which the parties are unable to resolve themselves,
including any dispute with regard to the application, interpretation or validity
of this Agreement or any dispute with regard to any aspect of Executive's
employment or the termination of Executive's employment, both Executive and
Company agree by entering into this Agreement that the exclusive remedy for
determining any such dispute, regardless of its nature, will be by arbitration
in accordance with the then most applicable rules of the American Arbitration
Association; provided, however, the breach of the obligation to provide services
under this Agreement or of the obligations of Article 8 may be enforced by an
action for injunctive relief and damages in a court of competent jurisdiction.
9.2 SELECTION OF ARBITRATOR. In the event the parties are unable to
agree upon an arbitrator, the parties shall select a single arbitrator from a
list designated by the Houston, Texas office of the American Arbitration
Association of seven arbitrators all of whom shall be retired judges who have
had experience in the employment law, who are actively involved in hearing
private cases and who are resident in the greater Austin area. If the parties
are unable to select an arbitrator from the list provided by the American
Arbitration Association, then the parties shall each strike names alternatively
from the list, with the first to strike being determined by lot. After each
party has used three strikes, the remaining name on the list shall be the
arbitrator. Any arbitration shall be administered by the American Arbitration
Association only if both parties so agree.
9.3 APPLICATION OF PROCEDURES. This agreement to resolve any disputes
by binding arbitration shall extend to claims against any shareholder or partner
of Company, any brother-sister company, parent, subsidiary or affiliate of
Company, any officer, director, employee, or agent of Company, or of any of the
above, and shall apply as well to claims arising out of state and federal
statutes and local ordinances as well as to claims arising under the common law.
The arbitrator shall apply the same substantive law as would be applied by a
court having jurisdiction over the parties and their dispute and the remedial
authority of the arbitrator shall be the same as, but no greater than, would be
the remedial power of a court having jurisdiction over the parties and their
dispute. The arbitrator shall, upon an appropriate motion, dismiss any claim
brought in arbitration if the arbitrator determines that the claim does not
state a claim or a cause of action which could have been properly pursued
through court litigation. In the event of a conflict between the then
most-applicable rules of the American Arbitration Association and these
procedures, the provisions of these procedures shall govern.
9.4 REPRESENTATION AND COSTS. Each party may be represented by counsel
or other representative of the party's choice and each party shall be
responsible for the costs and fees of its counsel or other representative. Any
filing or administrative fees shall be borne by the party incurring such fees.
The fees and costs of the arbitrator shall be borne equally between the parties.
The prevailing party in such arbitration proceeding, as determined by the
arbitrator, and in any enforcement or other court proceedings, shall be entitled
to the extent permitted by law, to reimbursement from the other party for all of
the prevailing party's costs (including but not limited to the arbitrator's
compensation), expenses and attorneys' fees.
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9.5 AWARD. The arbitrator shall render an award and opinion in the form
typical of that rendered in labor arbitrations and the award of the arbitrator
shall be final and binding upon the parties. If any of the provisions of this
Section are determined to be unlawful or otherwise unenforceable, in whole or in
part, such determination shall not affect the validity of the remainder of these
provisions and this Section shall be reformed to the extent necessary to insure
that the resolution of all conflicts between Executive and Company, including
those arising out of statutory claims, shall be resolved by neutral, binding
arbitration. In the event a court finds that the arbitration procedure set forth
herein is not absolutely binding, then it is the intent of the parties that any
arbitration decision should be fully admissible in evidence, given great weight
by any finder of fact and treated as determinative to the maximum extent
permitted by law.
9.6 LOCATION OF ARBITRATION. Unless mutually agreed by the parties
otherwise, any arbitration shall take place in Austin, Texas. In the event the
parties are unable to agree upon a location for the arbitration, the location
within Texas shall be determined by the arbitrator.
ARTICLE 10
MISCELLANEOUS
10.1 AMENDMENTS. The provisions of this Agreement may not be waived,
altered, amended or repealed in whole or in part except by the signed written
consent of the parties sought to be bound by such waiver, alteration, amendment
or repeal.
10.2 ENTIRE AGREEMENT. This Agreement, including the Restated Plan and
any stock option agreements, constitutes the total and complete agreement of the
parties and supersedes all prior and contemporaneous understandings and
agreements heretofore made, and there are no other representations,
understandings or agreements.
10.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument.
10.4 SEVERABILITY. Each term, covenant, condition or provision of this
Agreement shall be viewed as separate and distinct, and in the event that any
such term, covenant, condition or provision shall be deemed by an arbitrator or
a court of competent jurisdiction to be invalid or unenforceable, the court or
arbitrator finding such invalidity or unenforceability shall modify or reform
this Agreement to give as much effect as possible to the terms and provisions of
this Agreement. Any term or provision which cannot be so modified or reformed
shall be deleted and the remaining terms and provisions shall continue in full
force and effect.
10.5 WAIVER OR DELAY. The failure or delay on the part of Company or
Executive to exercise any right or remedy, power or privilege hereunder shall
not operate as a waiver thereof. A waiver, to be effective, must be in writing
and signed by the party making the waiver. A written waiver of a default shall
not operate as a waiver of any other default or of the same type of default on a
future occasion.
10.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding on and
shall inure to the benefit of the parties to it and their respective heirs,
legal representatives, successors and permitted assigns, except as otherwise
provided herein. Company may assign its rights under this Agreement to any
entity controlled (directly or indirectly) by Company, but no such assignment
shall relieve Company of its obligation to make the payments due to Executive
hereunder if the assignee does not make such payments.
10.7 NO ASSIGNMENT OR TRANSFER BY EXECUTIVE. Neither this Agreement nor
any of the rights, benefits, obligations or duties hereunder may be assigned or
transferred by Executive. Any purported assignment or transfer by Executive
shall be void.
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10.8 NECESSARY ACTS. Each party to this Agreement shall perform any
further acts and execute and deliver any additional agreements, assignments or
documents that may be reasonably necessary to carry out the provisions or to
effectuate the purpose of this Agreement.
10.9 GOVERNING LAW. This Agreement and all subsequent agreements
between the parties shall be governed by and interpreted, construed and enforced
in accordance with the laws of the State of Texas without regard to its or any
other jurisdiction's conflicts of laws principles.
10.10 LEGAL ENFORCEMENT. If either of the parties shall initiate legal
action or other proceeding under Article 8 for the enforcement of this
Agreement, or because of an alleged breach, default or misrepresentation in
connection with such Article, the parties consent to personal jurisdiction in
the appropriate state or federal court located in Austin, Texas.
10.11 NOTICES. All notices, requests, demands and other communications
to be given under this Agreement shall be in writing and shall be deemed to have
been duly given on the date of service, if personally served on the party to
whom notice is to be given, or three (3) business days after mailing, if mailed
to the party to whom notice is to be given by certified or registered mail,
return receipt requested, postage prepaid, and properly addressed to the party
at his or its address set forth as follows or any other address that any party
may designate by written notice to the other parties:
To Executive at: 0000 Xxxxxx Xxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
and : 000 Xxxxxx Xxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
With a copy to: Xxxxxxxxx, Xxxxxx & Xxxxx, LLP
0000 Xxxxxxxxxx Xxxxx, X.X.
X.X. Xxx 0000
Xxxxxx, Xxxx 00000-0000
Attention: Xxxx Xxxxxx, Esq.
To Company at: XXXX Technology, Inc.
0000 Xxxxxxx 000 Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Chairman of the Board
and Chief Financial Officer
With a copy to: Irell & Xxxxxxx LLP
1800 Avenue of the Stars
Xxxxx 000
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxx, Esq.
10.12 HEADINGS AND CAPTIONS. The headings and captions used herein are
solely for the purpose of reference only and are not to be considered as
construing or interpreting the provisions of this Agreement.
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10.13 CONSTRUCTION OF AGREEMENT. This Agreement has been negotiated by
sophisticated parties and each party has cooperated in the drafting and
preparation of this Agreement. In any construction or interpretation of this
Agreement, the same shall not be construed against any party by reason of the
source of drafting, but rather all terms and definitions contained herein shall
be construed to give effect to the fullest extent possible to the express or
implied intent of the parties.
10.14 COUNSEL. Executive has been advised by Company that he should
seek the advice of independent counsel in connection with the negotiation,
preparation and execution of this Agreement and Executive has had an opportunity
to do so. Executive has read and understands this Agreement, and has sought the
advice of counsel to the extent he has determined appropriate. THE PARTIES
ACKNOWLEDGE THAT IRELL & XXXXXXX LLP HAS ACTED SOLELY AS COUNSEL TO COMPANY IN
CONNECTION WITH THE NEGOTIATION, PREPARATION AND EXECUTION OF THIS AGREEMENT.
10.15 WITHHOLDING OF COMPENSATION. Executive hereby agrees that Company
may deduct and withhold from the compensation or other amounts payable to
Executive hereunder or otherwise in connection with Executive's employment any
amounts required to be deducted and withheld by Company under the provisions of
any applicable Federal, state and local statute, law, regulation, ordinance or
order.
10.16 SURVIVAL OF CERTAIN OBLIGATIONS. The obligations created under
the provisions of Sections 8 and 9, shall survive the expiration, suspension or
termination, for any reason, of this Agreement or the Executive's employment
hereunder until such obligations created thereunder are fully satisfied.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first written above.
XXXX TECHNOLOGY, INC.,
a Delaware Corporation
By:
-----------------------
Its:
----------------------
XXXX X. XXXXXXX, XX.
Social Security # ###-##-####
-------------
Date of Birth August 16, 1941
---------------
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EXHIBIT 1
FORM OF RELEASE
1. General Release by Xxxxxxx. Xxxxxxx does hereby and forever
release and discharge the Company and any subsidiary and affiliated corporations
of the Company as well as the successors, shareholders (including without
limitation Fujitsu Limited ("Fujitsu")), officers, directors, heirs,
predecessors, assigns, agents, employees, attorneys and representatives of each
of them, past or present (collectively, the "Company Parties"), from any and all
cause or causes of action, actions, judgments, liens, indebtedness, damages,
losses, claims, liabilities, and demands of whatsoever kind or character, known
or unknown, suspected to exist or not suspected to exist, anticipated or not
anticipated, whether or not heretofore brought before any state or federal court
or before any state or federal agency or other governmental entity, whether
statutory or common law, heretofore or hereafter arising out of, connected with
or incidental to any dealings between the parties prior to the date of execution
of this release, including without limitation on the generality of the
foregoing, any and all claims, demands or causes of action attributable to,
connected with, or incidental to the employment of Xxxxxxx by the Company, the
separation of that employment, and any dealings between Xxxxxxx and any of the
Company Parties concerning the Company, Xxxxxxx'x employment or any other matter
existing prior to the date of execution of this release, excepting only (i) the
Company's obligations to make payments or provide benefits to Xxxxxxx in
connection with the termination of his employment as and to the extent required
by the Employment Agreement, (ii) Xxxxxxx'x rights under outstanding stock
options and the related stock option agreements, as such rights may have been
affected by the termination of Xxxxxxx'x employment, as explicitly set forth in
the Employment Agreement or the applicable stock option agreements, and (iii)
Xxxxxxx'x right as a director and/or officer of the Company to indemnification
as set forth in the Company's Certificate of Incorporation or Bylaws or any
indemnification agreement between the Company and Xxxxxxx. This release is
intended to apply to any claims arising under federal, state or local laws,
including those which prohibit discrimination on the basis of race, national
origin, sex, religion, age, marital status, pregnancy, handicap, perceived
handicap, ancestry, sexual orientation, family or personal leave or any other
form of discrimination, any common law claims of any kind whatever, any claims
for salary, severance pay, sick leave, family leave, vacation pay, life
insurance, bonuses, stock, stock options, incentive compensation, health
insurance, disability or medical insurance or any other fringe benefit or
compensation, and all rights and claims arising under the Employee Retirement
Income Security Act of 1974 ("ERISA"), or pertaining to ERISA regulated
benefits. In the event any shareholder released by this release shall bring an
action against Xxxxxxx with regard to any matters occurring before the effective
date of this release, Xxxxxxx'x release of such party pursuant to this paragraph
shall be null and void from the effective date of this release. This release is
not intended to affect any interest Xxxxxxx may have as the beneficiary of any
judgment or settlement secured by (or for the benefit of) the Company as a
result of any shareholder's derivative action; provided, however, that Xxxxxxx
agrees he will not instigate, initiate or assist any such action.
2. Age Discrimination in Employment Act Waiver and Release.
The waiver and release given below is given only in exchange for consideration
in addition to anything of value to which Xxxxxxx is already entitled. This
waiver and release set forth does not waive rights or claims which may arise
after the date of execution of this release. Xxxxxxx acknowledges that (i) this
paragraph is written in a manner calculated to be understood by Xxxxxxx, (ii) by
reviewing this paragraph or drafts thereof he has been advised in writing to
consult with an attorney before executing this release, (iii) he was given a
period of 21 days within which to consider this paragraph, and (iv) to the
extent he executes this release, including this paragraph, before the expiration
of the 21 day period, he does so knowingly and voluntarily and only after
consulting with an attorney. Two hundred fifty thousand dollars of the severance
consideration to be received by Xxxxxxx shall be allocated to this paragraph.
Xxxxxxx shall have the right to cancel and revoke this paragraph during a period
of seven days following his execution of the release and this paragraph shall
not become effective, and no money shall be paid hereunder, until the expiration
of such seven day period. All other provisions of this release shall become
effective upon execution and the Company shall pay to Xxxxxxx all of the
severance consideration he is to receive except for the two hundred fifty
thousand dollars allocated to the waiver and release under this paragraph.
Xxxxxxx shall
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Exhibit 1
(continued)
notify the Company in writing of the date of the execution of this
release by faxing to the Company a signed and dated copy of the signature page
signed by him. The seven day period of revocation shall commence upon the date
of Xxxxxxx'x execution of this release. Within the seven day revocation period,
Xxxxxxx or his counsel shall forward to the Company a copy of this release fully
executed by Xxxxxxx. In order to revoke this paragraph, Xxxxxxx shall deliver to
the Company, prior to the expiration of said seven day period, a written notice
of revocation. In the event of such revocation, the Company's obligation to pay
to Xxxxxxx the fifty thousand dollars allocated to the waiver and release under
this paragraph shall be cancelled.
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EXHIBIT 2
CONFIDENTIAL INFORMATION
1. Confidential Information. For purposes of the Agreement to which
this is attached, the term "Confidential Information" includes all of the
following information and materials, whether in written, oral, magnetic,
photographic, optical or other form and whether now existing, or developed or
created during the period of Executive's employment with Company:
1.1 Software. Any and all ideas, concepts, know-how, methods,
techniques, structures, information and materials relating to existing software
products or firmware products and software or firmware in various states of
research and development including source code, object and load modules,
requirements specifications, design specifications, design notes, flow charts,
coding sheets, annotations, documentation, technical and engineering data,
laboratory studies, benchmark test results, and the structures, organization,
sequence, designs, formulas and algorithms which reside in such products and
which are not generally known to the public or within the industries or trades
in which Company competes.
1.2 Hardware. Any and all ideas, concepts, know-how, methods,
techniques, structures, information and materials relating to the design,
development, engineering, invention, patent, patent application, manufacture or
improvement of any and all computer, telecommunications, or electronic
equipment, components, devices, techniques, processes or formulas (including,
without limitation, mask works, semiconductor chips, processors, memories, disc
drives, tape heads, computer terminals, keyboards, storage devices, printers,
testers and optical character recognition devices) and any and all components,
devices, techniques or circuitry incorporated in any of the above which is or
are constructed, designed, improved, altered or used by Company and which is or
are not generally known to the public or within the industries or trades in
which Company competes.
1.3 Business Procedures. Internal business procedures and
business plans, including analytical methods and procedures, licensing
techniques, processes and equipment, technical and engineering data, vendor
names, other vendor information, purchasing information, financial information
(including Company fees and rates for services and other billing or collection
related information), service and operational manuals and documentation
therefor, ideas for new services and other such information which relates to the
way Company conducts its business and which is not generally known to the public
or within the industries or trades in which Company competes, except for those
management techniques and tools introduced by Executive to Company (which shall
be identified from time to time by letter from Executive to Company or
otherwise, subject to Company's approval thereof).
1.4 Marketing Plans and Clients Lists. Any and all client and
marketing information and materials, such as (a) strategic data, including
marketing and development plans, forecasts and forecast assumptions and volumes,
and future plans and potential strategies of Company which have been or are
being discussed; (b) financial data, including price and cost objectives, price
lists, pricing policies and procedures, and quoting policies and procedures; and
(c) client data, including client lists, names of existing, past or prospective
clients and their representatives, data provided by or about prospective,
existing or past clients, client service information and materials, data about
the terms, conditions and expiration dates of existing contracts with clients
and the type and quantity of services received by clients of Company.
1.5 Third Party Information. Any and all information and
materials in Company's possession or under its control from any other person or
entity which Company is obligated to treat as confidential or proprietary.
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Exhibit 2
(continued)
1.6 Not Generally Known. Any and all information not generally
known to the public or within the industries or trades in which Company
competes.
1.7 Exclusion. Excluded from Confidential Information are any
procedures introduced to the Company by Executive such as "Decision Mapping."
This exclusion shall not apply to procedures developed by Executive while an
employee of the Company.
2. General Skills and Knowledge. The general skills and experience
gained by Executive during Executive's employment with Company, and information
publicly available or generally known within the industries or trades in which
Company competes, are not Confidential Information.
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