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Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT, dated as of April 1, 1995, between
INCONTROL, INC., a Delaware corporation (the "Company"), and XXXX X. XXXXXXX
(the "Executive").
RECITALS
A. The Company and the Executive have entered into that certain
Executive Employment Agreement dated as of April 23, 1992 (as amended by the
First Amendment to Executive Employment Agreement dated as of October 1, 1993,
the "First Employment Agreement").
B. The Company and the Executive believe that the First Employment
Agreement fails to reflect accurately the spirit of the agreement between the
Company and the Executive, as set forth in correspondence between the Executive
and Xxxxx Xxxxxxx, a former director of the Company, predating the First
Employment Agreement, whereby the Executive agreed to join the Company as Chief
Executive Officer and relocate to Seattle from the San Francisco area.
C. Accordingly, the Company and the Executive desire to amend the
Executive's current employment arrangement as hereinafter set forth.
AGREEMENTS
1. EMPLOYMENT
The Company shall continue to employ the Executive and the Executive
shall continue to accept employment by the Company as its President and Chief
Executive Officer and Chairman of the Company's Board of Directors (the
"Board"), and the Executive shall have the authority, subject to the Company's
Certificate of Incorporation and Bylaws, as may be granted from time to time by
the Board. The Executive shall perform the duties assigned to the President and
Chief Executive Officer and Chairman of the Board in the Company's Bylaws, the
duties customarily performed by the President and Chief Executive Officer and
Chairman of the Board of a corporation that is, in all respects, similar to the
Company, and such other duties as may be assigned from time to time by the Board
which relate to the business of the Company.
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2. ATTENTION AND EFFORT
The Executive shall devote his entire time, ability, attention and
effort to the Company's business and shall serve its interests during the term
of this Agreement; provided, however, that the Executive may devote reasonable
periods of time to (a) serving on the Board of Directors of other corporations
and (b) engaging in charitable or community service activities, so long as such
additional activities do not materially interfere with the Executive's duties
under this Agreement.
3. TERM
Unless otherwise terminated pursuant to Section 7 hereof, the
Executive's term of employment under this Agreement shall expire on December 31,
1998.
4. COMPENSATION
4.1 BASE SALARY
The Company shall pay the Executive a base salary of Three Hundred
Twenty-Five Thousand Dollars ($325,000), payable in accordance with the
Company's standard payroll policy. Annually, the Board shall consider increases
in the Executive's base salary in light of the Executive's individual
performance, the Company's performance and other relevant factors.
4.2 ANNUAL BONUS
In addition to the base salary, the Executive shall be eligible to
receive an annual bonus, the amount of which, if awarded, shall be determined by
the Board in its sole discretion.
4.3 HOUSING ALLOWANCE
Effective as of April 1, 1995, as a continuation of the housing
allowance provided for in the Executive's relocation package, the Company shall
pay to the Executive a housing allowance in the amount of Three Thousand Dollars
($3,000) per month for twenty-four (24) months. In the event of the termination
of this Agreement (a) by the Company with Cause (as defined below) or (b) by the
Executive, no further payments shall be made by the Company under this Section
4.3.
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4.4 AUTOMOBILE ALLOWANCE
As a continuation of the automobile allowance provided for in the
Executive's relocation package, the Company shall pay to the Executive an
automobile allowance in the amount of Four Hundred Dollars ($400) per month for
eighteen (18) months. In the event of the termination of this Agreement (a) by
the Company with Cause or (b) by the Executive, no further payments shall be
made by the Company under this Section 4.4.
4.5 OPTIONS
On or before July 1, 1995, the Compensation Committee of the Board
shall grant to the Executive additional options to purchase one hundred thousand
(100,000) shares of the Company's Common Stock.
4.6 BENEFITS
During the term of his employment, the Executive shall be entitled to
the benefits that are generally made available to executive officers of the
Company, which shall include participation in the Company's key employee
insurance programs.
5. RELOCATION LOAN TO EXECUTIVE
5.1 MONTHLY ADVANCES
(a) As long as the Executive is an employee of the Company, the Company
shall periodically lend to the Executive an aggregate of Two Hundred Twenty-Six
Thousand Forty-One and 91/100 Dollars ($226,041.91) as a component of the loan
program provided in the Executive's relocation package.
(b) As of the date of this Agreement, the Company has made, and the
Executive hereby acknowledges receipt of, advances contemplated under Section
5.1(a) hereof in the amount of One Hundred Thirty-Six Thousand Forty-One and
91/100 Dollars ($136,041.91). The balance of the advances shall be disbursed in
eighteen (18) equal monthly advances in the amount of Five Thousand Dollars
($5,000). In the event that this Agreement is terminated (i) by the Company with
Cause or (ii) by the Executive, no additional advances shall be made under this
Section 5.1.
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5.2 INITIAL ADVANCE
(a) In connection with the relocation of the Executive to the Seattle,
Washington metropolitan area, the Company has loaned the Executive Five Hundred
Thousand Dollars ($500,000).
(b) The relocation advances described in Sections 5.1 and 5.2(a) hereof
shall be referred to herein collectively as the "Loan."
5.3 INTEREST
The Loan shall bear interest at Four and 94/100 percent (4.94%). If at
any future time it is determined by the Company that such rate is insufficient
to prevent the Loans from constituting "below market loans" within the meaning
of section 7872 of the Code, the interest rate will be increased to the minimum
rate necessary to prevent such treatment (but not, in any event, in excess of
eight percent (8%)).
5.4 NOTE
The Loan shall be evidenced by a promissory note (the "Note") in form
and substance satisfactory to the Company and to the Executive.
5.5 PAYMENT OF PRINCIPAL AND INTEREST
(a) Subject to Section 5.5(b) hereof, the principal and accrued
interest on the Loan shall be due and payable by the Executive to the Company
within six (6) months after the occurrence of a Triggering Event under Section
5.5(c)(i) hereof or within nine (9) months after the occurrence of a Triggering
Event under Section 5.5(c)(ii) hereof. Notwithstanding the foregoing, the
principal and accrued interest on the Loan shall be due and payable promptly
upon the termination of this Agreement (i) by the Company for Cause or (ii) by
the Executive.
(b) If a Triggering Event does not occur on or before September 1,
1998, or, in any event, upon the occurrence of an Acquisition (as defined below)
which is not a Triggering Event, then the principal, but not the accrued
interest, on the Loan shall be forgiven and the Company shall compensate the
Executive for federal income taxes associated with such forgiveness.
(c) For purposes of this Section 5, a Triggering Event shall be deemed
to occur when (i) the aggregate value of all securities of the Company currently
held or hereafter acquired by the Executive exceeds Four Million Dollars
($4,000,000) for a period of
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ninety (90) consecutive calendar days, the Company's Common Stock is traded
over-the-counter or on a national securities exchange, and the Executive is
permitted to freely sell his shares of Common Stock, subject to applicable
securities laws, (ii) the cash and securities received by the Executive in the
merger, reorganization or sale of substantially all of the assets of the Company
("Acquisition") exceeds Four Million Dollars ($4,000,000) and the securities
received, if any, are traded over-the-counter or on a national securities
exchange, or (iii) this Agreement is terminated under Section 7.3 hereof.
5.6 SECURITY
In order to secure the Executive's obligations under the Note, the
Executive shall pledge to the Company Seventy Thousand (70,000) shares of the
Common Stock of the Company (the "Collateral") pursuant to the terms and
conditions of a Stock Pledge Agreement in form and substance satisfactory to the
Company and the Executive. Except for the rights of the Company with respect to
the Collateral, the Loans shall be nonrecourse to the Executive.
6. RELEASE OF GUARANTIES
In connection with the construction of the Executive's Seattle area
home, the Company and Xxxxxxxx Fund have guaranteed certain of the Executive's
obligations to Seafirst Bank. On or before September 15, 1995, the Executive
shall obtain the full release and termination of such guaranties and the return
of any certificates of deposit or other collateral pledged in support of such
guaranties.
7. TERMINATION
7.1 TERMINATION BY THE COMPANY
With or without Cause (as defined below), the Company may terminate the
employment of the Executive at any time during the term of employment upon
giving Notice of Termination (as defined below).
7.2 TERMINATION BY THE EXECUTIVE
Employee may terminate his employment at any time, for any reason, upon
giving Notice of Termination.
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7.3 AUTOMATIC TERMINATION
This Agreement and the Executive's employment hereunder shall terminate
automatically upon the Executive's death or total disability. The term "total
disability" shall mean the Executive's inability to perform the duties as set
forth in Section 1 hereof for a period or periods aggregating ninety (90)
calendar days in any twelve-month period as a result of physical or mental
illness, loss of legal capacity or any other cause beyond the Executive's
control, unless the Executive is granted a leave of absence by the Board at its
discretion. Termination hereunder shall be deemed to be effective (a) at the end
of the calendar month in which the Executive's death occurs or (b) immediately
upon a determination by the Board of the Executive's total disability.
7.4 NOTICE
The term "Notice of Termination" shall mean at least fourteen (14)
days' written notice of termination of the Executive's employment, during which
period the Executive's employment and performance of services will continue;
provided, however, that the Company may upon notice to the Executive and without
reducing the Executive's compensation during such period, excuse the Executive
from any or all of his duties during such period. The effective date of the
termination of the Executive's employment hereunder shall be the date on which
such fourteen-day period expires.
8. TERMINATION PAYMENTS
8.1 GENERAL
In the event of termination of the employment of the Executive, all
compensation benefits set forth in this Agreement shall terminate except as
specifically provided in this Section 8.
8.2 TERMINATION BY THE COMPANY
If the Company terminates the Executive's employment without Cause
prior to the expiration of the term of this Agreement, the Executive shall be
entitled to receive termination payments equal to the aggregate base salary and
housing allowance payments the Executive would have received from the date of
his termination by the Company to the end of the term of this Agreement. In
addition, the Company shall continue to make advances under the Loan. If the
Executive is terminated by the Company for Cause, the Executive shall not be
entitled to receive any of the foregoing benefits other than any
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unpaid portion of base salary that has accrued for services already performed as
of the date termination of the Executive becomes effective.
8.3 TERMINATION BY THE EXECUTIVE
If the Executive terminates the Executive's employment, the Executive
shall not be entitled to any payments hereunder, other than any unpaid portion
of base salary that has accrued for services already performed as of the date
termination of the Executive becomes effective.
8.4 PAYMENT SCHEDULE
All payments under this Section 8 shall be made to the Executive at the
same interval as payments of the base salary were made to the Executive
immediately prior to termination.
8.5 CAUSE
Wherever reference is made in this Agreement to termination being made
with or without Cause, "Cause" means cause given by the Executive to the Company
and is limited to the occurrence of one or more of the following events:
(a) Violation by the Executive of a state or federal criminal law
involving the commission of a felony or a crime against the Company;
(b) Habitual or repeated misuse by the Executive of alcohol or
controlled substances; deception, fraud, misrepresentation or dishonesty by the
Executive with respect to the business of the Company; any incident materially
compromising the Executive's reputation or ability to represent the Company with
the public; any intentional act or omission by the Executive that substantially
impairs the Company's business, good will or reputation; or
(c) Any material violation of this Agreement.
9. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the Company and
the Executive with respect to the Executive's employment by the Company and
compensation therefor and supersedes all prior agreements and understandings,
whether written or oral, with respect to such subject matter, including, without
limitation, the First Employment Agreement.
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10. NOTICES
All notices, requests and other communications to the Company or the
Executive hereunder shall be in writing and shall refer specifically to this
Agreement and shall be personally delivered or sent by telecopy or other
electronic facsimile transmission or by registered mail, or certified mail,
return receipt requested, postage prepaid, in each case to addressed as follows:
To the Company: InControl, Inc.
0000 - 000xx Xxxxxx X.X.
Xxxxxxx, XX 00000
Attention: President
To the Executive: Xxxx X. Xxxxxxx
0000 00xx Xxxxx XX
Xxxxxx, XX 00000
or to such other address as the party to receive the notice or request shall
designate by notice to the other. The effective date of any notice, request or
communication shall be five days (5) from the date on which it is sent by the
addressor, or when sent by facsimile or other electronic transmission, receipt
confirmed, or personally delivered.
11. FURTHER ASSURANCES
The Executive shall duly execute and deliver (to the Company or
otherwise), or cause to be duly executed and delivered (to the Company or
otherwise), such further instruments and do and cause to be done such further
acts that may be necessary or as the Company may at any time and from time to
time reasonably request in connection with its administration of this Agreement.
12. AMENDMENTS
No amendment, modification, waiver, termination or discharge of any
provision of this Agreement, nor consent to any departure by the Executive
thereof shall in any event be effective unless the same shall be in writing
specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by the Company
and the Executive, and each such amendment, modification, waiver, termination or
discharge shall be effective only in the specific instance and for the specific
purpose for which given. No provision of this Agreement shall be varied,
contradicted or explained by any oral agreement, course of dealing or
performance or any
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other matter not set forth in a subsequent agreement in writing and signed by
the Company and the Executive.
13. EXECUTION IN COUNTERPARTS
This Agreement may be executed in any number of counterpart, each of
which, when so executed and delivered, shall be deemed to be an original, and
all of which taken together, shall constitute one and the same instrument.
14. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the state of Washington
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
INCONTROL, INC. EXECUTIVE:
By: /s/ Xxxxxx X. Xxxxxx III /s/ Xxxx X. Xxxxxxx
------------------------------- -----------------------------------
Title: Vice President, Finance Xxxx X. Xxxxxxx
Chief Financial Officer
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FIRST AMENDMENT TO
EXECUTIVE EMPLOYMENT AGREEMENT
FIRST AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT, dated as of
September 30, 1996, between INCONTROL, INC., a Delaware corporation (the
"Company"), and XXXX X. XXXXXXX (the "Executive").
RECITALS
A. The Company and the Executive have entered into that certain
Executive Employment Agreement dated as of April 1, 1995 (the "Agreement").
B. The Company and the Executive desire to amend the Agreement as
hereinafter set forth.
AGREEMENTS
1. AUTOMOBILE ALLOWANCE
Section 4.4 of the Agreement is hereby amended to read in its entirety
as follows:
The Company shall pay to the Executive an automobile allowance in the
amount of Four Hundred Dollars ($400) per month. Annually, the Board
shall reconsider the automobile allowance in light of the Executive's
individual performance, the Company's performance and other relevant
factors.
2. RELOCATION LOAN TO EXECUTIVE
Section 5.1 of the Agreement is hereby amended to read in its entirety
as follows:
5.1 MONTHLY ALLOWANCES
(a) As long as the Executive is an employee of the Company,
the Company shall periodically lend to the Executive an aggregate total
of Two Hundred Fifty-Six Thousand Forty-One and 93/100 Dollars
($256,041.93) as a component of the Executive's relocation package.
(b) As of the date of this Amendment, the Company has made,
and the Executive hereby acknowledges receipt of, advances under
Section 5.16(a) hereof in the amount of Two Hundred Twenty-Six Thousand
Forty-One and 93/100 Dollars ($226,041.93). The balance of the advance
shall be disbursed in six (6) equal monthly advances in the amount of
Five Thousand Dollars
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($5,000). In the event that this Agreement is terminated (i) by the
Company with Cause or (ii) by the Executive, no additional advances
shall be made under this Section 5.1.
3. NOTE
The Executive shall execute a promissory to evidence the maximum amount
of the Loan (the "Note") in form and substance satisfactory to the Company and
to the Executive.
4. CONFIRMATION
Except as expressly modified in this Amendment, all terms, conditions,
representations, warranties and covenants contained in the Agreement are hereby
confirmed and shall remain in full force and effect.
5. COUNTERPARTS
This Amendment may be executed in any number of counterparts, each of
which shall be deemed an original if fully executed, but all of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
INCONTROL, INC.
By: /s/ Xxxxxx X. Xxxxxx III
-------------------------------------------
Its: Vice President and Chief Financial Officer
EXECUTIVE
/s/ Xxxx X. Xxxxxxx
-------------------
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PROMISSORY NOTE
$500,000 Seattle, Washington
October 1, 1993
FOR VALUE RECEIVED, the undersigned XXXX X. XXXXXXX ("Maker"), hereby promises
to pay to the order of INCONTROL, INC. (the "Company"), at its office in
Redmond, Washington, or at such other place as the holder of this Note may
designate in writing from time to time, (a) the principal sum of Five Hundred
Thousand Dollars ($500,000) or (b) the aggregate principal amount of all
advances made by the Company under this Note and outstanding on the date of
payment, whichever is less.
EXECUTIVE EMPLOYMENT AGREEMENT. This Note is issued pursuant to the
terms and conditions of the Executive Employment Agreement, dated as of April
23, 1992, between the Company and Maker, as amended (the "Employment
Agreement").
INTEREST. Interest shall accrue on the principal balance until final
maturity with interest compounded semi-annually at the rate of Four and 94/100
percent (4.94%) per annum.
PAYMENTS OF PRINCIPAL AND INTEREST. Principal, together with accrued
interest, shall be payable in accordance with the terms of the Employment
Agreement.
PREPAYMENT. Maker may prepay all or any portion of the principal due
under this Note without premium or penalty.
PENALTY INTEREST. In the event Maker fails to pay principal and
interest when due in the manner provided herein, the principal balance of this
Note and accrued but unpaid interest thereon shall thereafter bear interest at a
rate equal to fifteen percent (15%) per annum, until payment in full of the
amount owed. Notwithstanding the foregoing, the interest paid under this Note
shall never be greater than the maximum rate of interest permitted under
applicable law.
LIABILITY AND WAIVER. Maker hereby waives diligence, presentment,
demand, protest and notice of any kind whatsoever. The nonexercise by the holder
of this Note of its rights hereunder in any particular instance shall not
constitute a waiver thereof in that or any subsequent instance.
COSTS OF COLLECTION. Maker agrees to pay all costs of collection and
reasonable attorneys' fees in case of any default in any payment required under
this Note.
APPLICABLE LAW. This Note shall be governed by and construed in
accordance with the laws of the state of Washington.
COLLATERAL. This Note is secured by 80,000 shares of Common Stock
issued by the Company, together with all proceeds thereof (the "Collateral").
Except for the Collateral, this Note shall be nonrecourse to Maker.
/s/ Xxxx X. Xxxxxxx
------------------------------------
Xxxx X. Xxxxxxx
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STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT, dated as of the first day of October, 1993,
given by XXXX X. XXXXXXX ("Grantor"), to INCONTROL, INC. (the "Company").
AGREEMENTS
1. DEFINITIONS
Terms capitalized in this Agreement which are not otherwise defined
shall have the meanings assigned to such terms in the Executive Employment
Agreement, dated as of April 23, 1992, between the Company and Grantor, as
amended (the "Employment Agreement").
2. PLEDGE OF THE COLLATERAL
Grantor hereby pledges to the Company, and grants to the Company a
security interest in, the following described property, together with all
proceeds thereof (the "Collateral"):
No. of
Shares Title of Class Issuer
------ -------------- ------
80,000 Common InControl, Inc.
This pledge and security interest is given to secure the full, prompt, due and
timely payment, performance and observance by Grantor of each obligation,
covenant and condition owed, to be owed or to be performed at any time by
Grantor under the Notes and the performance by Grantor of his obligations under
this Agreement (together, the "Obligations").
3. REPRESENTATIONS
Grantor hereby represents that he owns the Collateral, free and clear
of all liens, charges and encumbrances on or with respect to the Collateral,
except as created by this Agreement.
4. DELIVERY OF CERTIFICATE
Prior to or concurrently herewith Grantor shall deliver to the Company
the stock certificates representing all of the Collateral, together with
appropriate
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assignments separate from the certificates naming the Company as assignee, duly
endorsed by Grantor for transfer in blank, in form and substance satisfactory to
the Company.
5. HANDLING OF COLLATERAL
The Company shall not exercise voting rights or collect cash dividends
with respect to the Collateral unless and until the occurrence of an Event of
Default, as defined in paragraph 9 hereof, and such rights may be exercised by
Grantor prior to any such occurrence. Upon an Event of Default, the Company is
authorized to transfer to itself or to any other person all or any of the
Collateral, and may fill in blanks in any transfers or other documents delivered
to it.
6. HOLDER OF RECORD; VOTING RIGHTS
So long as an Event of Default does not exist hereunder, Grantor shall
remain the holder of record of the Collateral and Grantor shall have all voting
rights with respect to the Collateral.
7. STOCK DIVIDENDS AND RECAPITALIZATIONS
In the event the Company shall declare a stock dividend or any stock
split with respect to the Collateral, or in the event the Collateral shall be
replaced as a result of any dissolution, merger, consolidation, reorganization,
recapitalization or other similar proceeding involving the Company, or in the
event there shall be a distribution of assets or securities with respect to the
Collateral, all such distributed assets or other securities to which Grantor is
entitled as a result of any such transactions shall be delivered to the Company
and shall automatically become subject to all of the terms and conditions of
this Agreement to the same extent as though they had been included as, and shall
be deemed to be, a part of the Collateral from the date hereof.
8. TERMINATION
This Agreement shall terminate upon Grantor's payment or satisfaction
in full of all of the Obligations.
9. EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT
Grantor's default in the payment or performance of any obligation under
the Notes or this Agreement shall constitute a default under this Agreement (an
"Event of Default").
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9.2 EFFECT
Upon the occurrence of any Event of Default, the Obligations shall then
or at any time thereafter, at the option of the Company, become immediately due
and payable without notice or demand, and the Company shall have an immediate
right to pursue the remedies provided herein.
10. REMEDIES
If an Event of Default occurs, the Company shall have all remedies
provided by law, including, without limitation, all rights of a secured party
under the Uniform Commercial Code as enacted in the State of Washington (the
"UCC"), whether or not this Agreement and the transactions contemplated hereby
are determined to be governed by the UCC. Without limiting the generality of the
foregoing, the Company shall be entitled to exercise all voting rights connected
with the Collateral and to transfer all right, title and interest in and to the
Collateral or cause all right, title and interest in and to the Collateral to be
transferred to the Company or to any purchaser acceptable to the Company upon
terms and conditions acceptable to the Company. Grantor hereby waives any notice
of the occurrence of any Event of Default.
11. CUMULATIVE RIGHTS
The security and the rights and remedies provided for in this Agreement
are cumulative, and are in addition to any rights or security or remedies of the
Company under other instruments or agreements, or under applicable law.
12. EXPENSES
Grantor shall pay on demand the costs of all filings and recordings
deemed desirable by the Company, and all expenses, including reasonable
attorneys' fees, which the Company may incur in protecting, defending or
realizing any part of the Collateral, or in protecting or defending the priority
of the security interest created hereby, whether or not a lawsuit be involved.
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13. MODIFICATIONS, CONSENTS AND WAIVERS
No failure or delay on the part of the Company in exercising any power
or right under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of such right or power preclude any other or further
exercise thereof or the exercise of any other right or power. No amendment,
modification or waiver of any provision of this Agreement, nor consent to any
departure therefrom shall be effective unless in writing and consented to by the
Company.
14. ADDITIONAL DOCUMENTS
Grantor shall at the Company's request, from time to time, at Grantor's
sole cost and expense, execute, reexecute, deliver and redeliver any and all
documents, and do and perform such other and further acts, as may reasonably be
required by the Company to enable the Company to perfect, preserve and protect
its security interest in the Collateral and its right and remedies under this
Agreement or granted by law and to carry out and effect the intents and purposes
of this Agreement.
15. APPLICABLE LAW
This Agreement shall be construed in accordance with and governed by
the laws of the state of Washington.
IN WITNESS WHEREOF, Grantor has executed this Stock Pledge Agreement as
of the date first above written.
/s/Xxxx X. Xxxxxxx
--------------------------------
Xxxx X. Xxxxxxx
ACCEPTED:
INCONTROL, INC.
By:/s/Xxxxx X Xxxxxxx
--------------------------------
Its:Chairman of the Board
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PROMISSORY NOTE
$256,041.93 Seattle, Washington
September 30, 1996
FOR VALUE RECEIVED, the undersigned XXXX X. XXXXXXX ("Maker"), hereby promises
to pay to the order of INCONTROL, INC. (the "Company"), at its office in
Redmond, Washington, or at such other place as the holder of this Note may
designate in writing from time to time, (a) the principal sum of Two Hundred
Fifty-Six Thousand Forty-One and 93/100 Dollars ($256,041.93) or (b) the
aggregate principal amount of all advances made by the Company under this Note
and outstanding on the date of payment, whichever is less.
EXECUTIVE EMPLOYMENT AGREEMENT. This Note is issued pursuant to the
terms and conditions of the Executive Employment Agreement, dated as of April 1,
1995, between the Company and Maker, as amended (the "Employment Agreement").
INTEREST. Interest shall accrue on the principal balance until final
maturity with interest compounded semi-annually at the rate of Four and 94/100
percent (4.94%) per annum.
PAYMENTS OF PRINCIPAL AND INTEREST. Principal, together with accrued
interest, shall be payable in accordance with the terms of the Employment
Agreement.
PREPAYMENT. Maker may prepay all or any portion of the principal due
under this Note without premium or penalty.
PENALTY INTEREST. In the event Maker fails to pay principal and
interest when due in the manner provided herein, the principal balance of this
Note and accrued but unpaid interest thereon shall thereafter bear interest at a
rate equal to fifteen percent (15%) per annum, until payment in full of the
amount owed. Notwithstanding the foregoing, the interest paid under this Note
shall never be greater than the maximum rate of interest permitted under
applicable law.
LIABILITY AND WAIVER. Maker hereby waives diligence, presentment,
demand, protest and notice of any kind whatsoever. The nonexercise by the holder
of this Note of its rights hereunder in any particular instance shall not
constitute a waiver thereof in that or any subsequent instance.
COSTS OF COLLECTION. Maker agrees to pay all costs of collection and
reasonable attorneys' fees in case of any default in any payment required under
this Note.
APPLICABLE LAW. This Note shall be governed by and construed in
accordance with the laws of the state of Washington.
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COLLATERAL. This Note is secured by 60,000 shares of Common Stock
issued by the Company, together with all proceeds thereof (the "Collateral").
Except for the Collateral, this Note shall be nonrecourse to Maker.
/s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx
