PROTOCOL SYSTEMS, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
PARTIES: Protocol Systems, Inc. ("Company")
0000 XX Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
XXXXXX X. XXXXXX ("Executive")
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
DATE OF AGREEMENT: August 1, 1999
RECITALS:
A. The Company wishes to obtain the services of the Executive for at least the
duration of this Agreement, and the Executive wishes to provide his
services for such period, all upon the terms and conditions set out in this
Agreement.
B. It is expressly recognized by the parties that the Executive's continuance
in the Executive's position with the Company and agreement to be bound by
the terms of this Agreement represents a substantial commitment to the
Company in terms of the Executive's personal and professional career and a
foregoing of present and future career options by the Executive, for all of
which the Company receives substantial value.
C. The parties recognize that a Change of Control (as defined below) may
result in material alteration or diminishment of the Executive's position
and responsibilities and substantially frustrate the purpose of the
Executive's commitment to the Company and forbearance of career options.
D. The parties recognize that in light of the above-described commitment and
forbearance of career options, it is essential that, for the benefit of the
Company and its stockholders, provision be made for a Change of Control
Termination (as defined below) in order to enable the Executive to accept
and effectively continue in the Executive's position in the face of
inherently disruptive circumstances arising from the possibility of a
Change of Control, although no such change is now contemplated or foreseen.
1-EXECUTIVE 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 "BASE SALARY" shall mean regular cash compensation paid on a periodic basis
exclusive of benefits, bonuses or incentive payments.
1.2 "BOARD" shall mean the Board of Directors of Protocol Systems, Inc.
1.3 "DISABILITY" shall mean the inability of the Executive to perform the
essential functions of his 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.
1.4 "COMPANY" shall mean Protocol Systems, Inc. and, any successor in interest
by way of consolidation, operation of law, merger or otherwise.
1.5 "CONFIDENTIALITY AGREEMENT" shall mean that certain Non-competition and
Confidentiality Agreement dated 1 AUGUST 1999 by and between the Company and
Executive.
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 PRESIDENT AND CHIEF
EXECUTIVE OFFICER, and the Executive accepts such employment.
2.2 DUTIES. The Executive shall devote his full-time and best efforts to the
Company and to fulfilling the duties of his position which shall include such
duties as may from time to time be assigned him by the Chairman of the Board and
the Board, 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 remain in effect until the earlier of (i)
termination pursuant to Article 4 or Article 6 of this Agreement or (ii) two
years and five months from the date of this Agreement. Thereafter, this
agreement will be renewed automatically for successive one-year terms unless six
(6) months notice of non-renewal is given by either party to the other.
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 Executive's Base Salary
as of the date of this
2-EXECUTIVE EMPLOYMENT AGREEMENT
Agreement. 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 and any extensions. 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 AND INCENTIVE Bonus or incentive compensation shall be in the sole
discretion of the Board. Except as otherwise provided in Article 6, the Company
shall have the right in accordance with the terms of any bonus or 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.
3.3 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
his 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. Executive has signed a Relocation Agreement. Said
Agreement will not apply in the event of a termination without cause as defined
in Article 4 or a change in control as defined in Article 6.
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 Termination" as defined in Article 6. A
Change in 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 assets,
(d) intentional violations of law involving moral turpitude, (e) the
continued failure by the Executive to satisfactorily perform his 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, and (f) any material breach of the
Confidentiality Agreement.
4.2.2 In the event of termination for Cause pursuant to this
Section 4.2, the Executive shall be paid his Base Salary through the date
of termination specified in any notice of termination. The Executive will
not be entitled to any bonuses or incentives that are not earned and
payable at the time of the termination.
4.3 TERMINATION WITHOUT CAUSE. Either the Executive or the Company may
terminate this Agreement and the Executive's employment without Cause by
providing at least thirty (30) days'
3-EXECUTIVE EMPLOYMENT AGREEMENT
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 his Base Salary through a notice period of thirty (30) days. This
Section 4.3 shall not be applicable where Cause for termination exists.
4.3.1 If the notice of termination is given 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 the Base Salary for the remaining term of the
Agreement. The remaining term of the Agreement is defined as the
difference between the last day of the Agreement as defined in Section
2.3(ii) and the date the Agreement was terminated as defined by the written
notice.
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 or annual incentive, if any, to which the Executive would
otherwise have become entitled under any Company bonus or incentive
plan in effect at the time of termination of this Agreement had the
Executive remained continuously employed for the full fiscal year in
which termination occurred and continued to perform his duties in the
same manner as they were performed immediately prior to termination;
provided, however, that such bonus or incentive amount shall be pro-
rated to the date of termination. The amount payable pursuant to this
Section 4.3.2.1 shall be earned and payable as of the date that is
fifteen (15) days after the date such bonus, if any, would have been
paid had the Executive remained employed for the full fiscal year.
4.3.3 The Board authorized the issuance of an option to purchase
200,000 shares of stock as part of the original offer of employment. In
the event of a Termination Without Cause as defined in paragraph 4.3, any
unvested shares from that option will be handled as follows. If the
Termination occurs on or before December 31, 2000, Executive shall be
entitled to a total of 100,000 shares of the above mentioned option. Any
unvested shares necessary to make up the difference between the 100,000
shares and any shares already vested will vest immediately. If the
Termination occurs after December 31, 2000, all unvested shares, if any, of
said option will vest immediately. Executive may exercise such options in
accordance with the terms and conditions of the stock option plan and the
agreement pursuant to which such options were granted
4.4 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.
4.4.1 In the event of the Executive's death, the Company shall pay an
amount equal to six (6) 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 4.4.3 below.
4-EXECUTIVE EMPLOYMENT AGREEMENT
4.4.2 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.
4.4.3 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 incentive plan bonus for the
year in which termination occurred had "target" goals been achieved,
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 termination
occurred.
4.5 CONTINUATION OF BENEFITS. In the event of termination of Executive's
employment by the Company pursuant to Section 4.3.1 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.
4.6 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 his employment by the Company, any Proprietary Information which he may
produce, obtain or otherwise acquire during the course of his 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, business plans, 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 he will provide
special skills, and acquire special information, regarding the activities of the
Company. Executive agrees,
5-EXECUTIVE EMPLOYMENT AGREEMENT
therefore, that he will not, for a period of twelve (12) months from and after
the date he 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, in such a manner and
position that he would likely use Proprietary Information, unless released
from such obligation by the Board of Directors of the Company. Executive
agrees that he shall be deemed to be connected with a business if such a
business is carried on by a partnership in which he 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 him
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 CONSENT TO INJUNCTION. Executive agrees that the Company will or would
suffer an irreparable injury if Executive were to compete with the business of
the Company or any of its subsidiaries in violation of this Agreement and that
the Company would by reason of such competition be entitled to injunctive relief
in a court of appropriate jurisdiction and Executive stipulates to the entering
of such injunctive relief prohibiting him from competing with the Company or any
present affiliate of the Company in connection with the business of the Company,
in violation of this Agreement.
5.4 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.
5.5 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 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 his
employment with the Company which relate in any manner to the actual or
demonstrably anticipated business, work, or research and 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 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.
5.6 DISCLOSURE OF INVENTIONS, PATENTS. Executive agrees that in connection
with any invention as defined in Section 5.5, above:
5.6.1 Executive will disclose such invention promptly in writing to the
Board, regardless of whether he believes the invention is protected by
applicable state law, in order to permit
6-EXECUTIVE EMPLOYMENT AGREEMENT
the Company to claim rights to which it may be entitled under this
Agreement. Such disclosure shall be received in confidence by the Company.
5.6.2 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 5.5 ("assignable invention") and Executive will
preserve any such assignable invention as confidential information of the
Company; and
5.6.3 Upon request, Executive agrees to assist the Company or its
nominee (at its expense) during and at any time subsequent to his
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.
5.6.4 Executive agrees to submit a list of inventions made prior to his
employment by the Company on Exhibit B attached hereto and incorporated by
reference herein.
5.7 EXECUTION OF DOCUMENTATION. In connection with Section 5.5 and Section
5.6, 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 obtain
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.
5.8 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
obligations and restrictions and to take all action necessary to discharge the
obligations of the Company thereunder.
5.9 TRADE SECRETS OF OTHERS. Executive represents that his 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 his 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.
5.10 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.
5.11 PREVIOUS AGREEMENTS. Executive represents and warrants to the Company
that as of the date of this Agreement, he has fully complied with the terms of
the Confidentiality Agreement.
7-EXECUTIVE EMPLOYMENT AGREEMENT
Executive's obligations under this Agreement are in addition to, do not
limit, and are not limited by, Executive's Confidentiality Agreement. To the
extent any provision of the Confidentiality Agreement conflicts with the
provisions of this Agreement, the provisions of this Agreement control.
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 is a party if
the individuals and entities who were stockholders of the Company
immediately prior to the effective date of such merger or
consolidation 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 direct or indirect beneficial ownership (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934), in the
aggregate, of securities of the Company, representing twenty percent
(20%) or more of the total combined voting power of the Company's then
issued and outstanding securities, by any person or entity, or group
of associated persons or entities acting in concert; or
6.1.1.3 the sale of all or substantially all of the assets of the
Company to any person or entity which is not a subsidiary of the
Company; or
6.1.1.4 the stockholders of the Company approve any plan or proposal
for the liquidation of the Company; or
6.1.1.5 a change in the composition of the Board at any time during
any consecutive 24-month period such that the Continuity Directors
cease for any reason to constitute at least a seventy percent (70%)
majority of the Board. For purposes of this clause, "Continuity
Directors" means those members of the Board who either:
6.1.1.5.1 were directors at the beginning of such consecutive
24-month period; or
6.1.1.5.2 were elected by, or on the nomination or
recommendation of, at least a two-thirds (2/3)
majority of the then-existing Board.
6.1.2 "CHANGE OF CONTROL TERMINATION" shall mean, with respect to the
Executive, any of the following events occurring during the term of the
Agreement:
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6.1.2.1 Termination of the Executive's employment by the Company for
any reason other than for Cause, as Cause is defined in Section 4.2 of
this Agreement.
6.1.2.2 Termination of employment with the Company by the Executive
pursuant to Section 6.2 of this Article 6. A Change of Control
Termination shall not, however, include termination by reason of death
or Disability.
6.1.3 "GOOD REASON" shall mean a good faith determination by the
Executive, in the Executive's reasonable judgment, that any one or more of
the following events has occurred without the Executive's express written
consent, after a Change of Control, 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 and stating Executive's intent to invoke Section 6.2 of this Article
6.
6.1.3.1 A change in the Executive's reporting responsibilities,
titles or offices as in effect immediately prior to the Change of
Control, or any removal of the Executive from, or any failure to
re-elect the Executive to, any of such positions, which has the effect
of materially diminishing the Executive's responsibility or authority;
6.1.3.2 A reduction by the Company in the Executive's Base Salary as
in effect immediately prior to the Change of Control;
6.1.3.3 A requirement by the Company that the Executive be based
anywhere other than within twenty-five (25) miles of the Executive's
job location at the time of the Change of Control;
6.1.3.4 A material diminishment of Executive's pension, bonus,
incentive, stock ownership, purchase, option, life insurance, health,
accident, disability, or any other employee compensation or benefit
plan, program or arrangement and/or any membership (collectively,
"Benefit Plans"), in which the Executive is participating immediately
prior to a Change of Control; or the taking of any action by the
Company that would materially adversely affect the Executive's
participation or materially reduce the Executive's benefits under any
Benefit Plans or Benefit Plan;
6.1.3.5 Any material breach of this Agreement by the Company.
6.1.4 "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 TERMINATION RIGHT. During the term of the Agreement and
following a Change of Control, the Executive shall have the right, at any time,
to terminate employment with the Company for Good Reason. Such termination
shall be accomplished by, and effective upon, the Executive giving written
notice to the Company of the Executive's decision to terminate. Except as
otherwise expressly provided in this Agreement, upon the exercise of said right,
all obligations and duties of the Executive under this Agreement shall be of no
further force and effect.
9-EXECUTIVE EMPLOYMENT AGREEMENT
6.2.1 CHANGE OF CONTROL TERMINATION PAYMENT. In the event of a
termination pursuant to Section 6.2, without further action by the Board,
the Company shall, within thirty (30) days of such termination, make a lump
sum payment to the Executive, equal to the Base Salary for the remaining
term of the Agreement. The remaining term of the Agreement is defined as
the difference between the last day of the Agreement as defined in Section
2.3 and the date the Agreement was terminated as defined by the written
notice.
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 the annual bonus or
annual incentive, if any, to which the Executive would otherwise have
become entitled under any Company bonus or incentive plan in effect at the
time of termination of this Agreement had the Executive remained
continuously employed for the full fiscal year in which termination
occurred and continued to perform his duties in the same manner as they
were performed immediately prior to termination; provided, however, that
such bonus or incentive amount shall be pro-rated to the date of
termination. 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 280 G 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 in 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 280G(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.
6.5 VESTING OF STOCK OPTIONS. The Board authorized the issuance of an option to
purchase 200,000 shares of stock as part of the original offer of employment.
In the event of a Change in Control Termination as defined in paragraph 6.1.2.1,
any unvested shares from that option will be handled as follows. If the Change
in Control Termination occurs on or before December 31, 2000, Executive shall be
entitled to a total of 100,000 shares of the above mentioned option. Any
unvested shares necessary to make up the difference between the 100,000 shares
and any shares already vested will vest immediately. If the Change in Control
Termination occurs after
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December 31, 2000, all unvested shares, if any, of said option will vest
immediately. Executive may exercise such options in accordance with the terms
and conditions of the stock option plan and the agreement pursuant to which
such options were granted.
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 non-
binding 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 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.
Executive and the Company agree that the procedures outlined in Section 7.5 and
7.6 are the exclusive method of dispute resolution.
11-EXECUTIVE EMPLOYMENT AGREEMENT
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, his 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 ENTIRE AGREEMENT. This Agreement together with the Confidentiality
Agreement, the June 16 offer of employment letter, and the Relocation Agreement
referred to in the offer of employment constitutes the entire agreement and
understanding between the parties hereto in reference to all the matters herein
agreed upon. This Agreement replaces and supersedes all prior employment
agreements or understandings of the parties hereto; provided, however, that the
Confidentiality Agreement continues in full force and effect according to its
terms.
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/ Xxxxxx X. Xxxxxx By /s/ Xxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxx Xxxxx Xxxxxxxx, Chairman & CEO
Date: July 7, 1999 Date July 5, 1999
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12-EXECUTIVE EMPLOYMENT AGREEMENT
