EXHIBIT 99.(e)(11)
Protocol Systems, Inc.
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
---------------------------------------------------
PARTIES: Protocol Systems, Inc. ("Company")
0000 XX Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Xxxxx X. Xxxxx ("Executive")
00000 XX 000xx Xxx
Xxxxxx, XX 00000
DATE: May 23, 2000
RECITALS:
A. Executive and the Company are parties to an Executive Employment Agreement
dated as of July 1, 1998 (such agreement, as amended, hereafter referred to as
the "Existing Employment Agreement") pursuant to which the Company agreed to
employ Executive and the Executive agreed to be employed by the Company.
B. Xxxxx Xxxxx, Inc., a New York corporation ("Xxxxx Xxxxx") has made an offer
to acquire, through a wholly owned subsidiary, all of the outstanding capital
stock of the Company, and Xxxxx Xxxxx, its subsidiary and the Company intend to
enter into an Agreement and Plan of Merger setting forth the terms upon which
Xxxxx Xxxxx would offer to acquire the outstanding capital stock of the Company
(the "Merger Agreement"). The parties are entering into this Amended and
Restated Executive Employment Agreement in anticipation of Xxxxx Xxxxx acquiring
more than 50% of the outstanding common stock of the Company pursuant to the
Offer being made under the Merger Agreement.
C. This Agreement shall become effective upon a closing of the Offer (as such
term is defined in the Merger Agreement) by Xxxxx Xxxxx or one of its
subsidiaries. If the Offer is not made or if the closing of the Offer does not
occur for any reason, this Agreement shall be null and void and Executive's
employment by the Company shall continue to be governed by the terms of the
Existing Employment Agreement.
NOW, THEREFORE, for valuable consideration the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
ARTICLE 1
DEFINITIONS
-----------
1.1 "Affiliate", when used in reference to a party, means any person that
---------
directly or indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with, the specified party. For
purposes of this definition, "control" means the direct or indirect ownership of
50% or more of the outstanding voting equity securities (or similar ownership
interests) of such person, or the ability, through agreement or otherwise, to
direct the management of such person.
1.2 "Agreement" shall mean this Amended and Restated Executive Employment
---------
Agreement
1.3 "Base Salary" shall mean regular cash compensation paid on a periodic basis
-----------
exclusive of benefits, bonuses or incentive payments.
1.4 "Board" shall mean the Board of Directors of the Company.
-----
1.5 "Disability" shall mean the inability of the Executive to perform the
----------
essential functions of Executive's position under this Agreement with or without
reasonable accommodation because of physical or mental incapacity for a
continuous period of five (5) months, as reasonably determined by the Company
after consultation with a qualified physician selected by the Company.
1.6 "Company" shall mean Protocol Systems, Inc. and any successor in interest
-------
by way of consolidation, operation of law, merger or otherwise.
1.7 "Effective Date" shall mean the date that Xxxxx Xxxxx or one of its
--------------
Affiliates acquires more than 50% of the outstanding voting common stock of the
Company pursuant to the Offer.
1.8 "Existing Employment Agreement" shall have the meaning given to such term
-----------------------------
in the Recitals.
1.9 "Good Reason" shall mean the occurrence of one or more of the following
-----------
events without the Executive's express written consent, and the Company's
failure to correct such occurrence for a period of thirty (30) days following
Executive's written notice to Company identifying the event alleged to provide
Good Reason:
(a) A change in the Executive's responsibilities or titles
as in effect on the Effective Date, which has the effect of
materially diminishing the Executive's responsibility or
authority; other than a change in administrative
responsibilities attributable to conversion of the Company
from a public company to a subsidiary of a private company
as a result of the transaction contemplated by the Merger
Agreement;
2
(b) A reduction by the Company in the Executive's Base
Salary or in the "target" percentage of incentive
compensation to which the Executive is eligible under the
management bonus plan described in Section 3.2;
(c) The aggregate expenditures made by the Company to
provide life insurance, health, accident, disability and
retirement benefits to Executive immediately after the
Effective Date are materially reduced other than reductions
in cost achieved by the Company without a material reduction
in such benefits, in the aggregate, to the Executive;
(d) The failure of the Company to implement a bonus plan in
accordance with Section 3.2 below;
(e) The failure of the Company to implement a long-term
incentive plan in accordance with Section 3.3 below;
(f) A requirement by the Company that the Executive be
based anywhere other than within twenty-five (25) miles of
the Executive's job location on the Effective Date;
(g) Any material breach of this Agreement by the Company.
1.10 "Merger Agreement" shall have the meaning given to such term in the
----------------
Recitals
1.11 "Offer" shall have the meaning given to such term in the Merger Agreement.
-----
1.12 "Xxxxx Xxxxx" shall have the meaning given to such term in the Recitals.
-----------
ARTICLE 2
EMPLOYMENT, DUTIES AND TERM
---------------------------
2.1 Employment. Upon the terms and conditions set forth in this Agreement,
----------
the Company hereby employs the Executive in the position of Vice
President/General Manager, Medical Device Technologies & Secretary, Xxxxx Xxxxx
Protocol Systems, Inc. and the Executive accepts such employment.
2.2 Duties. The Executive shall devote Executive's full-time and best efforts
------
to the Company and to fulfilling the duties of Executive's position which shall
include such duties as may from time to time be assigned Executive by the
President of the Company, provided that such duties are reasonably consistent
with the Executive's position. The Executive shall comply with the Company's
policies and procedures to the extent they are not inconsistent with this
Agreement, in which case the provisions of this Agreement prevail.
2.3 Term. This Agreement shall become effective on the Effective Date and
----
remain in effect until the earlier of (i) termination pursuant to Article 4 or
Article 6 of this Agreement or (ii) two years from the
3
Effective Date, provided however that if a Change of Control occurs during the
term of this Agreement, then this Agreement shall remain in effect for one (1)
year from the date of the first Change of Control event described in Section
6.1.1. Continued employment of the Executive beyond the expiration of the term
of this Agreement does not extend this Agreement, and the terms set forth herein
shall not apply to such continued employment.
ARTICLE 3
COMPENSATION AND EXPENSES
-------------------------
3.1 Base Salary. For all services rendered under this Agreement, the Company
-----------
shall pay Executive a Base Salary that is not less than $180,000. If the
Executive's salary is increased from time to time during the term of this
Agreement, the increased amount shall be the Base Salary for the remainder of
the term. All amounts payable to the Executive under this Agreement shall be
reduced by such amounts as are required to be withheld by law.
3.2 Bonus. Bonus compensation shall be in the sole discretion of the Board.
-----
Executive shall be entitled to participate in the existing management bonus plan
of the Company through December 31, 2000, at which time the Company intends to
terminate the management bonus plan. On or before January 1, 2001, the Company
intends to implement a new management bonus plan which will provide an annual
bonus based on a "target" percentage of annual Base Salary of 45% payable
conditioned on (i) the Company achieving the financial performance goals
specified in the Company's strategic business plan, and (ii) the Executive
achieving the personal performance goals assigned to the Executive in
furtherance of the Company's strategic business plan. Notwithstanding the
foregoing, the Company shall have the right in accordance with the terms of any
bonus plan to alter, amend or eliminate all or any part of such plan, or the
Executive's participation therein, without compensation to the Executive.
3.3 Long-Term Incentive Plan. Long-term incentive compensation shall be in
------------------------
the sole discretion of the Board. On or before January 1, 2001, the Company
intends to implement a management long-term incentive plan which will provide
incentive compensation to Executive that is market-competitive. Notwithstanding
the foregoing, the Company shall have the right in accordance with the terms of
any incentive plan to alter, amend or eliminate all or any part of such plan, or
the Executive's participation therein, without compensation to the Executive.
3.4 Business Expenses. The Company shall, in accordance with, and to the
-----------------
extent of, its policies in effect from time to time, reimburse all ordinary and
necessary business expenses reasonably incurred by the Executive in performing
Executive's duties as an employee of the Company, provided that the Executive
accounts promptly for such expenses to the Company in the manner prescribed from
time to time by the Company.
ARTICLE 4
EARLY TERMINATION
-----------------
4.1 Early Termination. This Article 4 governs termination of this Agreement at
-----------------
any time during the term of the Agreement; provided, however, that this Article
shall not govern a "Change of Control
4
Termination" as defined in Article 6. A Change of Control Termination is
governed solely by the provisions of Article 6.
4.2 Termination for Cause. The Company may terminate this Agreement and
---------------------
Executive's employment immediately for "Cause" as that term is defined herein,
upon written notice to the Executive.
4.2.1 "Cause" means any one of the following: (a) fraud, (b)
misrepresentation, (c) theft or embezzlement of the Company's
assets, (d) intentional violations of law involving moral
turpitude, (e) the continued failure by the Executive to
satisfactorily perform Executive's duties as reasonably assigned
to the Executive pursuant to Section 2.2 of this Agreement for a
period of sixty (60) days after a written demand for such
satisfactory performance which specifically and with reasonable
detail identifies the manner in which it is alleged the Executive
has not satisfactorily performed such duties, (f) any material
breach of Article 5 of this Agreement, and (g) a material
violation of any of the Company's personnel policies, including,
without limitation, the Company's sexual harassment policy.
4.2.2 In the event of termination for Cause pursuant to this
Section 4.2, the Executive shall be paid Executive's Base Salary
through the date of termination specified in any notice of
termination. The Executive will not be entitled to any bonuses or
incentives which are not earned and payable at the time of the
termination.
4.3 Termination Without Cause. The Company may terminate this Agreement and the
-------------------------
Executive's employment without Cause by providing at least thirty (30) days'
written notice; provided, however, that the Company shall have the option of
making termination of the Agreement and termination of the Executive's
employment effective immediately upon notice, in which case Executive shall be
paid Executive's Base Salary through the notice period of thirty (30) days.
This Section 4.3 shall not be applicable where Cause for termination exists.
4.3.1 Upon termination by the Company, in addition to any other
amounts payable to Executive, under this Section 4.3, the Company
shall pay Executive within fifteen (15) days following
termination, a lump sum amount equal to one (1) year's Base
Salary.
4.3.2 In the event that termination occurs pursuant to Section
4.3.1 then, in addition to the payments specified in said
Section, the Company shall pay to the Executive bonuses, if any,
as follows:
4.3.2.1 Company shall pay Executive an amount equal to
the annual bonus, if any, to which the Executive would
otherwise have become entitled under any Company bonus
plan in effect at the time of termination of this
Agreement based on the assumption that the Company
satisfied the financial performance criteria for the
fiscal year in which the termination occurred and that the
Executive achieved Executive's "target" personal goals and
remained continuously employed for the full fiscal year;
provided, however, that such bonus amount shall be pro-
rated to the date of termination. The amount payable
pursuant to this Section 4.3.2.1 shall
5
be earned and payable, without further action by the
Board, fifteen (15) days after termination of the
Executive's employment.
4.4 Resignation by Employee. Executive may terminate Executive's employment at
-----------------------
any time by resigning upon two weeks' notice to the Company. The Executive
shall be paid Executive's Base Salary through the end of the two-week notice
period or the effective date of his resignation, whichever is earlier. The
Executive will not be entitled to any bonuses or incentive which are not earned
and payable at the time of Executive's resignation.
4.5 Termination in the Event of Death or Disability. This Agreement and
-----------------------------------------------
Executive's employment shall terminate in the event of death or Disability of
the Executive.
4.5.1 In the event of the Executive's death, the Company shall
pay an amount equal to six month's Base Salary to the executor,
administrator or other personal representative of the Executive's
estate. The amount shall be paid as a lump sum as soon as
practicable following Company's receipt of notice of the
Executive's death. All such payments shall be in addition to any
payments due pursuant to Section 4.5.3 below.
4.5.2 In the event of termination due to Executive's Disability,
Base Salary shall be terminated as of the final day of the fifth
month referenced in the definition of "Disability." Unless
otherwise disqualified by the disability benefit program
provider, this Section is not intended to limit the Executive
from qualifying for and claiming disability benefits from any
other disability program in which the Executive may be enrolled
or otherwise for which he is qualified at the time of disability.
4.5.3. In the event of termination by reason of the Executive's
death or Disability, the Company shall pay to the Executive an
amount equal to the amount the Executive would have received in
bonus for the year in which the termination occurred based on the
Company's actual performance during the fiscal year in which the
termination occurred and on the assumption that the Executive
achieved Executive's "target" personal goals and remained
continuously employed for the full fiscal year; provided,
however, that such amount shall be pro-rated to the date of
termination. This amount shall be earned and payable as of the
date that is fifteen (15) days after the date such bonus would
have been paid had the Executive remained employed for the full
fiscal year in which the termination occurred.
4.6 Termination for Good Reason. Executive may terminate this Agreement for
---------------------------
Good Reason if an event constituting Good Reason occurs within two years from
the Effective Date of this Agreement and the Company has not corrected such
occurrence within thirty (30) days following Executive's written notice to
Company identifying the event alleged to provide Good Reason.
4.6.1 If Employee terminates this Agreement for Good Reason on
or before May 1, 2001, the Company shall pay Executive (a) a lump
sum amount equal to two (2) year's Base Salary, payable within
fifteen (15) days following termination, and
6
(b) an amount equal to two (2) times the annual bonus or annual
incentive, if any, to which the Executive would otherwise have
become entitled under any Company bonus plan in effect at the
time of termination of this Agreement based on the Company's
actual performance during the fiscal year in which the
termination occurred and on the assumption that the Executive
achieved Executive's "target" personal goals and remained
continuously employed for the full fiscal year. The amount
payable pursuant to this Section 4.6.1 shall be earned and
payable as of the date that is fifteen (15) days after the date
such bonus would have been paid had the Executive remained
employed for the full fiscal year.
4.6.2 If Employee terminates this Agreement for Good Reason
after May 1, 2001, the Company shall pay Executive (a) a lump sum
amount equal to one (1) year's Base Salary, payable within
fifteen (15) days following termination, and (b) an amount equal
to the annual bonus or annual incentive, if any, to which the
Executive would otherwise have become entitled under any Company
bonus plan in effect at the time of termination of this Agreement
based on the Company's actual performance during the fiscal year
in which the termination occurred and on the assumption that the
Executive achieved Executive's "target" personal goals and
remained continuously employed for the full fiscal year;
provided, however, that such bonus amount shall be pro-rated to
the date of termination. The amount payable pursuant to this
Section 4.6.2 shall be earned and payable as of the date that is
fifteen (15) days after the date such bonus would have been paid
had the Executive remained employed for the full fiscal year.
4.7 Continuation of Benefits. In the event of termination of Executive's
------------------------
employment pursuant to Sections 4.3.1 or 4.6 or termination due to Disability,
the Company shall pay the applicable premiums for such group health plan
continuation as Executive is entitled to under the Consolidated Omnibus
Reconciliation Act of 1985 ("COBRA") and shall continue such payment for the
period of time the Executive is entitled to continue such coverage under COBRA.
4.8 Entire Termination Payment. The compensation provided for in this Article
--------------------------
4 shall constitute the Executive's sole remedy for termination pursuant to this
Article. The Executive shall not be entitled to any other termination or
severance payment which may be payable to the Executive under any other
agreement between the Executive and the Company preceding or following the date
of termination.
ARTICLE 5
CONFIDENTIALITY; CONFLICT OF INTEREST
-------------------------------------
5.1 Proprietary Information. Executive shall keep confidential, except as the
-----------------------
Company may otherwise consent in writing, and not disclose or make any use of
except for the benefit of the Company, at any time either during or subsequent
to Executive's employment by the Company, the terms of this Agreement and any
Proprietary Information which Executive may produce, obtain or otherwise acquire
during the course of Executive's employment. As used herein, "Proprietary
Information" shall include any trade secrets, confidential information,
knowledge, data, or other information of the Company relating to products,
processes, know-how, designs, formulae, test procedures and results, customer
lists,
7
business plans or marketing plans and strategies, and pricing strategies, or
other subject matter pertaining to any business of the Company for any of its
clients, customers, consultants, licensees of affiliates, which information is
not in the public domain at the time of the alleged breach. In the event of the
termination of the Executive's employment for any reason whatsoever, Executive
shall promptly return all records, materials, equipment, drawings and the like
pertaining to any Proprietary Information.
5.2 Covenant Not to Compete. Executive acknowledges that Executive will
-----------------------
provide special skills, and acquire special information, regarding the
activities of the Company. Executive agrees, therefore, that Executive will not,
for a period of twelve (12) months from and after the date Executive ceases to
be employed by the Company, join, control or participate in the ownership,
management, operation or control of or be connected with, any business located
in the United States of America whose commercial products are in direct
competition with the Company or which is developing products which will be in
direct competition with the Company, unless released from such obligation by the
Board of Directors of the Company. Executive agrees that Executive shall be
deemed to be connected with a business if such a business is carried on by a
partnership in which Executive is a general or limited partner or employee of a
corporation or association of which he is a shareholder, officer, director,
employee, member, consultant or agent; provided, that nothing herein shall
prohibit the purchase or ownership by Executive of shares of less than five
percent (5%) in a publicly or privately held corporation. Executive agrees to
submit a list of such business interests in Exhibit A attached hereto and
incorporated by reference herein.
5.3 Nonsolicitation. For a period of one (1) year following the date Executive
---------------
cease to be employed by the Company, Executive agrees not to employ or solicit
or attempt to employ, directly or indirectly, or cause or solicit to be employed
by another, any person who is an employee, officer or director of the Company or
any of its Affiliates nor form any partnership with or establish any business
venture in cooperation with such person, without the express written consent of
the Board of Directors of the Company.
5.4 Consent to Injunction. Executive agrees that the Company will or would
---------------------
suffer an irreparable injury if Executive were to violate Sections 5.2 or 5.3 of
this Agreement and that the Company would be entitled to injunctive relief in a
court of appropriate jurisdiction and Executive stipulates to the entering of
such injunctive relief prohibiting Executive from continuing to violate Sections
5.2 and/or 5.3.
5.5 Severability. The parties intend that the covenants contained in Section
------------
5.2 be deemed to be separate covenants as to each county and state, and that if
in any judicial proceeding a court shall refuse to enforce all of the separate
covenants included herein because, taken together, they cover too extensive a
geographic area or because any one includes too large an area or because they
cover too large a period of time, the parties intend that such covenants shall
be reduced in scope to the extent required by law or, if necessary, eliminated
from the provisions hereof, and that all of the remaining covenants hereof not
so affected shall remain fully effective and enforceable.
5.6 Assignment of Inventions. As used in this Agreement, "inventions" shall
------------------------
include, but not be limited to, ideas, improvements, designs, and discoveries.
Executive hereby assigns and transfers to the Company Executive's entire right,
title and interest in and to all inventions whether or not conceived by
Executive (whether made solely by Executive or jointly with others) during the
period of Executive's employment with the Company which relate in any manner to
the actual or demonstrably anticipated
8
business, work, or research an development of the Company or its subsidiaries,
or result from or are suggested by any tasks assigned to Executive or any work
performed by Executive for or on behalf of the Company or its subsidiaries.
Executive agrees that all such inventions are the sole property of the Company,
provided, however, that this Agreement does not require assignment of any
invention if such assignment would contravene applicable state law.
5.7 Disclosure of Inventions, Patents. Executive agrees that in connection
---------------------------------
with any invention as defined in Section 5.6, above:
5.7.1 Executive will disclose such invention promptly in writing
to the Chief Executive Officer of the Company regardless of
whether Executive believes the invention is protected by
applicable state law, in order to permit the Company to claim
rights to which it may be entitled under this Agreement. Such
disclosure shall be received in confidence by the Company.
5.7.2 Executive will, at the Company's request, promptly execute
a written assignment of title to the Company for any invention
required to be assigned by Section 5.6 ("assignable invention")
and Executive will preserve any such assignable invention as
confidential information of the Company;
5.7.3 Upon request, Executive agrees to assist the Company or
its nominee (at its expense) during and at any time subsequent to
Executive's employment in every reasonable way to obtain for its
own benefit patents and copyrights for such assignable inventions
in any and all countries, which inventions shall be and remain
the sole and exclusive property of the Company or its nominee,
whether or not patented or copyrighted. Executive agrees to
execute such papers and perform such lawful acts as the Company
deems to be necessary to allow it to exercise all right, title,
and interest in such patents and copyrights.
5.7.4 Executive agrees to submit a list of inventions made prior
to Executive's employment by the Company on Exhibit B attached
hereto and incorporated by reference herein.
5.8 Execution of Documentation. In connection with Section 5.6 and Section
--------------------------
5.7, Executive further agrees to execute, acknowledge and deliver to the Company
or its nominee upon request and at its expense all such assignments of
inventions, patents, and copyrights to be issued therefor, as the Company may
determine necessary or desirable for which to apply. Executive agrees to
cooperate with the Company in obtaining letters, patents, and copyrights on such
assignable inventions in any and all countries and/or protect the interest of
the Company or its nominee in such inventions, patents and copyrights and to
vest title thereto in the Company or its nominee.
5.9 Other Obligations. Executive acknowledges that the Company from time to
-----------------
time may have agreements with other persons or with the U.S. Government, or
agencies thereof, which impose obligations or restrictions on the Company
regarding inventions made during the course of work thereunder or regarding the
confidential nature of such work. Executive agrees to be bound by all such
9
obligations and restrictions and to take all action necessary to discharge the
obligations of the Company thereunder.
5.10 Trade Secrets of Others. Executive represents that Executive's
-----------------------
performance of all the terms of this Agreement and as an employee of the Company
such employment does not and will not breach any agreement to keep in confidence
proprietary information, knowledge, or data acquired by Executive in confidence
or in trust prior to Executive's employment with the Company. Executive will not
disclose to the Company, or induce the Company to use, any confidential or
proprietary information or material belonging to any previous employer or
others. Executive agrees not to enter into any agreement, either written or
oral, in conflict herewith.
5.11 Conflict of Interest. During Executive's employment with the Company,
--------------------
Executive will engage in no activity or employment which may conflict with the
interest of the Company and will comply with the Company's policies and
guidelines pertaining to business conduct and ethics.
5.12 Survival of Obligations. The provisions of this Article 5 shall survive
-----------------------
termination of this Agreement.
ARTICLE 6
CHANGE OF CONTROL
-----------------
6.1 Definitions. For purposes of this Article 6, the following definitions
-----------
shall be applied:
6.1.1 "Change of Control" shall mean any of the following
-----------------
events:
6.1.1.1 a merger or consolidation to which the Company
or Xxxxx Xxxxx is a party if the individuals and entities
who were stockholders of the Company or Xxxxx Xxxxx (as
the case may be) immediately prior to the effective date
of such merger or consolidation or their Affiliates have
beneficial ownership (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of less than fifty
percent (50%) of the total combined voting power for
election of directors of the surviving corporation
immediately following the effective date of such merger
or consolidation; or
6.1.1.2 the sale of all or substantially all of the
assets of the Company or Xxxxx Xxxxx to any person or
entity which is not an Affiliate of Xxxxx Xxxxx; or
6.1.1.3 the stockholders of the Company approve any plan
or proposal for the liquidation of the Company.
6.1.2 "Change of Control Termination" shall mean, with respect
-----------------------------
to the Executive, any of the following events occurring within
one (1) year after a Change of Control:
6.1.2.1 Termination of the Executive's employment by the
Company without Cause, as Cause is defined in Section
4.2.1 of this Agreement.
10
6.1.2.2 Termination of employment with the Company by the
Executive for Good Reason. A Change of Control Termination
shall not, however, include termination by reason of
death, Disability, or for Cause.
6.1.3 "Internal Revenue Code" -- Any references to a section of
---------------------
the Internal Revenue Code shall mean that section of the Internal
Revenue Code of 1986, or to the corresponding section of such
Code, as from time to time amended.
6.2 Change of Control Payment. In the event of a Change of Control
-------------------------
Termination, the following provisions shall apply:
6.2.1 In the event of a Change of Control Termination as defined
in Section 6.1.2, without further action by the Board, the
Company shall, within fifteen (15) days of such termination, make
a lump sum payment to the Executive, equal to 12 month's Base
Salary.
6.2.2 In addition to the amounts paid pursuant to Section 6.2.1
the Company shall pay to the Executive an amount equal to one
time[s] what the Executive would have received in incentive plan
bonus for the year in which termination occurs based on the
Company's actual performance during the fiscal year in which the
termination occurred and on the assumption that the Executive
achieved Executive's "target" personal goals and remained
continuously employed for the full fiscal year. The amount
provided by this Section 6.2.2 shall be earned and payable on the
date that is fifteen (15) days after the date Executive would
have been paid an annual incentive bonus had he remained with the
Company for the fiscal year in which termination occurs.
6.2.3 Notwithstanding anything in this Agreement to the
contrary, in the event any of the payments to the Executive under
this Agreement would constitute an excess parachute payment
pursuant to Section 280G of the Internal Revenue Code, the amount
payable pursuant to Section 6.2.2 shall be reduced by the minimum
amount necessary such that none of the compensation payable to
Executive as a result of a Change of Control shall constitute an
excess parachute payment.
6.3 Interest. In the event the Company does not make timely payment in full of
--------
the Change of Control Termination payment described in Section 6.2, the
Executive shall be entitled to receive interest on any unpaid amount at the
lower of: (a) prime rate of interest (or such comparable index as may be
adopted) established from time to time by the Company's principal banking
institution or (b) the maximum rate permitted under Section 2800(d)(4) of the
Internal Revenue Code.
6.4 Continuation of Benefits. In the event of termination of Executive's
------------------------
employment pursuant to Section 6.2 herein, the Company shall pay the applicable
premiums for such group health plan continuation as Executive is entitled to
under COBRA and such payment shall continue for the period of time the Executive
is entitled to continue such coverage under COBRA.
11
6.5 Waiver of Rights. Executive agrees that consummation of the transactions
----------------
contemplated by the Merger Agreement will not constitute a Change of Control for
purposes of the Existing Employment Agreement. Executive hereby unconditionally
and irrevocably waives any rights granted to Executive in Article 6 of the
Existing Employment Agreement in connection with (i) the making of the Offer by
Xxxxx Xxxxx or its subsidiary, (ii) the acquisition of a controlling interest in
the Company by Xxxxx Xxxxx or its subsidiary and (iii) the consummation of the
transactions contemplated in the Merger Agreement.
ARTICLE 7
GENERAL PROVISIONS
------------------
7.1 Successors and Assigns. This Agreement shall be binding upon and inure to
----------------------
the benefit of the successors and assigns of the Company and each subsidiary,
whether by way of merger, consolidation, operation of law, assignment, purchase
or other acquisition of substantially all of the assets or business of the
Company, and any such successor or assign shall absolutely and unconditionally
assume all of the Company's obligations hereunder.
7.2 Notices. All notices, requests and demands given to or made pursuant
-------
hereto shall, except as otherwise specified herein, be in writing and be
delivered or mailed to any such party at its address as set forth at the
beginning of this Agreement. Either party may change its address, by notice to
the other party given in the manner set forth in this Section. Any notice, if
mailed properly addressed, postage prepaid, registered or certified mail, shall
be deemed dispatched on the registered date or that stamped on the certified
mail receipt, and shall be deemed received within the third business day
thereafter or when it is actually received, whichever is sooner.
7.3 Caption. The various headings or captions in this Agreement are for
-------
convenience only and shall not affect the meaning or interpretation of this
Agreement
7.4 Governing Law. The validity, construction and performance of this
-------------
Agreement shall be governed by the laws of the State of Oregon
7.5 Mediation. In case of any dispute arising under this Agreement which
---------
cannot be settled by reasonable discussion, the parties agree that, prior to
commencing any arbitration proceeding as contemplated by Section 7.6 they will
first engage the services of a professional mediator agreed upon by the parties
and attempt in good faith to resolve the dispute through confidential nonbinding
mediation. Each party shall bear one-half (1/2) of the mediator's fees and
expenses and shall pay all of its own attorneys' fees and expenses related to
the mediation.
7.6 Arbitration. Any dispute concerning the interpretation, construction,
-----------
breach or enforcement of this Agreement or arising in any way from Executive's
employment with the Company or termination of employment shall be submitted to
final and binding arbitration. Such arbitration is to be before a single
arbitrator in Portland, Oregon. In the event the parties are unable to agree
upon an arbitrator, an arbitrator shall be appointed by the court pursuant to
ORS 36.320. The arbitration shall be conducted pursuant to the rules of the
American Arbitration Association ("AAA") Employment Dispute Resolution Rules.
12
Executive and the Company agree that the procedures outlined in Section 7.5 and
7.6 are the exclusive method of dispute resolution.
7.7 Attorney Fees. If any action at law, in equity or by arbitration is taken
-------------
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled, including fees
and expenses on appeal.
7.8 Construction. Wherever possible, each provision of this Agreement shall
------------
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
7.9 Waivers. No failure on the part of either party to exercise, and no delay
-------
in exercising, any right or remedy hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other
right or remedy granted hereby or by any related document or by law.
7.10 Assignment. This Agreement shall be binding upon and inure to the benefit
----------
of the Company and its successors and assigns, and shall be binding upon the
Executive, Executive's administrators, executors, legatees, and heirs. In that
this Agreement is a personal services contract, it shall not be assigned by the
Executive.
7.11 Modification. This Agreement may not be and shall not be modified or
------------
amended except by written instrument signed by the parties hereto.
7.12 Effectiveness. This Agreement shall become effective on the Effective
-------------
Date. If the Merger Agreement is terminated or if for any reason the Offer is
not made by Xxxxx Xxxxx or its subsidiary pursuant to the Merger Agreement or,
if made, is not consummated, this Agreement shall be null and void, and the
Existing Employment Agreement shall remain in full force and effect.
7.13 Entire Agreement. This Agreement constitutes the entire agreement and
----------------
understanding between the parties hereto in reference to all the matters herein
agreed upon. On the Effective Date, this Agreement will replace and supersede
all prior employment agreements or understandings of the parties hereto
(including the Existing Employment Agreement).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
EXECUTIVE PROTOCOL SYSTEMS, INC.
/s/ Xxxxx X. Xxxxx By /s/ Xxxxxx X. Xxxxxx
-------------------------------- -------------------------------
Xxxxx X. Xxxxx Title: President
Date: May 23, 2000 Date: May 23, 2000
--------------------------- ----------------------------
13
