Exhibit 10.34
January 21, 1997
Xxxx X. Xxxxxxxx
0000 Xxxx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Re: Change of Employment Status
Dear Xxxx:
The purpose of this letter is to memorialize the Agreement between
yourself and Xxx Research Corporation ("Xxx" or the "Company") regarding your
upcoming change in employment status and your subsequent termination of
employment. Subject to the Board's approval at the next meeting, your signature
on the enclosed copy of this letter will constitute a binding Agreement between
you and Xxx relative to your continued employment and the termination of that
employment on the following terms and conditions:
1. LOA Status. Effective April 30, 1997, you will commence a fully
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paid Leave of Absence ("LOA") from Xxx. The commencement date may be adjusted
upon mutual agreement. The term of the LOA will be fifteen (15) months unless
sooner terminated as set forth below. From now until the commencement of your
LOA, and during the LOA, if necessary, you agree to work with the President of
Xxx on making an orderly transition of your current duties and responsibilities
to others at Xxx.
2. Duties and Position While on LOA. During the LOA period, you will
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hold the title and position of a "non-officer" Vice President, that is, you will
no longer hold a corporate officer position at Xxx. Accordingly, you will not
be authorized
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January 21, 1997
Page 2
to make commitments with third parties on behalf of Xxx, speak in an official
capacity to the press or securities analysts or others about Xxx'x business or
prospects, or bind Xxx contractually, unless given prior written authorization
to do so by the Chief Executive Officer (the "CEO") of the Company. During the
LOA term, you will report directly to the CEO and you will have no active duties
or responsibilities other than those specifically assigned by the CEO.
Regardless of whether the Company uses your services, however, you agree to make
yourself available to discharge such duties and perform such services as may be
assigned to you. During the LOA term, you agree that you will not engage in any
other significant business activity, whether or not competitive with Xxx.
3. Compensation. During the LOA term, Xxx will continue to pay your
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annual salary on a biweekly basis. During the LOA term, your salary shall not
be subject to any downward adjustment. You will be entitled to participate in
Xxx'x Executive Deferred Compensation Plan, Performance Based Restricted Stock
Plan, Performance Plus Plan, and any other bonus or profit sharing plan
available to non-officer vice presidents of Xxx, in the same manner as any other
non-officer vice president (under a VP-A designation). You will also be
entitled to continue your participation in Xxx'x 401(k) Plan and Stock Purchase
Plan. Following termination of the LOA for any reason, your vested benefits
under Xxx'x 401(k) Plan and Stock Purchase Plan and any other plan described in
this paragraph 3 in which you then participate will be distributed to you in
accordance with applicable provisions of such plans governing distributions;
provided, however, that notwithstanding any provisions contained in such plans
to the contrary, at the conclusion of the LOA term, you will be permitted to
receive one or more distributions from the
Xxxx X. Xxxxxxxx
January 21, 1997
Page 3
Performance Based Restricted Stock Plan in either cash or Xxx stock, at your
election, and to withdraw all or any portion of the funds credited to your
account in the Deferred Compensation Plan, without imposition of any penalty for
early withdrawal or for any other reason. Your current monthly car allowance
will be paid through the LOA term. You will be entitled to receive reimbursement
for all authorized Company related expenses (airfare, accommodations, mileage,
parking, meals, etc.) incurred during the LOA term, in accordance with Xxx'x
reimbursement policy as it applies to other non-officer vice presidents of Xxx
with a VP-A designation. During the LOA term, you will not accrue any vacation
or holiday credits, or any other paid time off benefits. In lieu of the
sabbatical you are entitled to take after April 25, 1997, you will receive a
cash distribution equal to the amount of your base salary that would have been
payable to you during the sabbatical, less applicable withholding.
4. Benefits. During the LOA term, you will be entitled to receive
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the same medical, dental, disability and life insurance benefits received by
other non-officer vice presidents with a VP-A designation at Xxx, to the extent
that you satisfy the eligibility requirements of such plans and programs, and
subject to the terms and conditions thereof. Following any termination of this
Agreement, other than a termination under paragraph 6(a) below, your
participation in such plans will cease and you will then be entitled to
participate in the Company's group medical and dental plans for retired board
members and executives, on the terms and conditions contained in the plans
described in Attachment A.
5. Stock Options. Your outstanding stock options will continue to
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vest according to the applicable vesting schedules
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January 21, 1997
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during the LOA term, and any option exercises during the LOA term must be made
in accordance with your current stock option agreements. Unless otherwise
specifically provided for herein, you must exercise any vested options within
ninety 90 days following any termination of the LOA. Failure to do so will cause
any vested options to lapse. No additional stock options will be granted to you
during the LOA term.
6. Termination. Your employment during the LOA term will be "at
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will," meaning that either you or Xxx will have the right to terminate your
employment at any time in your or Xxx'x discretion, subject to the provisions of
this paragraph 6. Except as described in this paragraph 6, no severance or
other payments will be payable by Xxx to you or any other person upon
termination of the LOA and your employment. The LOA and your employment with
Xxx will continue for fifteen (15) months unless sooner terminated in accordance
with subparagraphs (a) through (d) below.
(a) Xxx may terminate your employment for cause at any time upon the
occurrence of the events described in Attachment B, hereto, by delivering to you
prior written notice of termination supported by a statement of the reasons for
termination. Upon termination for cause, all of your duties will immediately
cease, and all of Xxx'x obligations under this Agreement and all of the
compensation and benefits described in paragraphs 3 and 4 above (and all
reimbursements for expenses incurred after your receipt of notice) will cease.
In the event of such termination, the Company will pay you, no later than ten
days following the date of termination, a lump sum equal to your accrued salary
through the date of termination, and all accrued vacation pay, if any. Your
vested benefits under the plans described in
Xxxx X. Xxxxxxxx
January 21, 1997
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paragraph 3 will be distributed to you in accordance with the applicable
provisions thereof.
(b) Xxx may terminate your employment other than for cause at any time
by giving you 90 days advance notice in writing. In such case, all of your
duties will cease following the notice period, and Xxx will have the option to
(i) continue providing the compensation and benefits described in paragraphs 3
and 4 above for the remainder of the LOA term, or (ii) accelerate payment of all
remaining salary, accrued vacation pay, accrued bonuses, if any, and any other
fixed payments that can be accelerated, and pay the same to you in a lump sum
disbursement. Any payments that are not fixed will continue to be paid in
accordance with paragraph 3 during the term of the LOA, unless you and Xxx agree
otherwise. Upon such termination, Xxx will continue to provide all medical
benefits for the remainder of the original 15-month LOA term and, thereafter,
you will be entitled to participate in the Company's group medical and dental
plans for retired board members and executives, on the terms and conditions
contained in the plans described in Attachment A. No termination of your
employment under this paragraph 6(b) will affect your eligibility to participate
in or otherwise prevent your participation in such group medical and dental
plans. Notwithstanding termination hereunder, your stock options will continue
to vest during the remainder of the original 15-month LOA term and will be
exercisable, to the extent vested, for a period of ninety (90) days thereafter.
(c) You may terminate your employment at any time by giving 30 days
advance notice in writing. In such case, all of your duties and all of Xxx'x
obligations under this Agreement and
Xxxx X. Xxxxxxxx
January 21, 1997
Page 6
all of the compensation and benefits described in paragraphs 3 and 4 above (and
all reimbursements for expenses incurred following the notice period), will
cease following the notice period, except that you will then be entitled to
participate in the Company's medical and dental plans for retired board members
and executives, on the terms and conditions contained in the plans described in
Attachment A. No later than the date of termination, Xxx will pay you a lump sum
equal to your accrued salary, accrued vacation and unreimbursed expenses through
the date of termination, but you shall not be entitled to receive any bonus, car
allowance or any other payments from Xxx. Upon termination, the vesting of all
of your outstanding stock options shall be accelerated to the extent they would
have vested during the remainder of the original 15-month LOA term, and such
vested options shall be exercisable for ninety (90) days after such termination.
(d) Your employment with Xxx will terminate in the event of your
death. Upon your death during the term of the LOA, Xxx will pay your estate all
salary due or accrued as of the date of death, and all accrued vacation pay and
accrued bonuses, if any, and all expense reimbursements then due and payable.
Subject to paragraph 14 hereof, Xxx will have no obligation to pay any
severance, death benefit or any other compensation or payments to your estate,
administrators, heirs, personal representatives or executors upon your death.
Distributions, if any, under any benefit plans in which you were a participant
on the date of death will be made in accordance with the provisions of such
plans.
7. Successors and Assigns. Any successor to all or substantially all
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of Xxx'x business and/or assets shall be required to assume the obligations
under this Agreement in the same manner
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January 21, 1997
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and to the same extent as Xxx would be required to perform such obligations in
the absence of a succession. You will not assign any of your rights hereunder.
8. Release and Covenant Not to Sue. In exchange for the sums and
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benefits paid to you under this Agreement, and for other good and valuable
consideration, the sufficiency of which you acknowledge, you agree to waive and
release and promise never to assert any and all claims which you now, in the
past or in the future may have against Xxx and its predecessors, subsidiaries,
related entities, officers, directors, shareholders, agents, attorneys,
employees, successors, or assigns (collectively, the "Releasees"), whether
presently known or unknown, suspected or unsuspected, arising from or related to
your LOA, your employment with Xxx and/or the termination of the LOA or your
employment with Xxx.
These claims include, but are not limited to:
(a) any and all claims relating to or arising from your position
and employment relationship with the Company, your change in status and the
termination of that employment relationship;
(b) any and all claims relating to, or arising from, your right to
purchase or actual purchase of shares of stock of the Company;
(c) any and all claims for wrongful discharge of employment;
breach of contract, both express and implied; breach of a covenant of good faith
and fair dealing, both express and
Xxxx X. Xxxxxxxx
January 21, 1997
Page 8
implied; negligent or intentional infliction of emotional distress; negligent or
intentional misrepresentation; negligent or intentional interference with
contract or prospective economic advantage; personal injury; violation of public
policy; and defamation;
(d) any and all claims for violation of any federal, state or
municipal statute, including, but not limited to, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act of 1967, the Americans with Disabilities Act of 1990, and the California
Fair Employment and Housing Act;
(e) any and all claims arising out of any other laws and
regulations relating to employment or employment discrimination; and
(f) any and all claims for attorneys' fees and costs.
You agree that the release set forth in this section shall be and remain in
effect in all respects as a complete general release as to the matters released.
It is understood and agreed that this release will have no effect upon any
Workers' Compensation claims, nor will it have any effect upon any long-term
disability claims that you may have against insurance carriers, nor does it
extend to any obligations incurred under this Agreement.
9. Acknowledgement of Waiver of Claims under ADEA. You acknowledge
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that you are waiving and releasing any rights you may have under the Age
Discrimination in Employment Act of 1967
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January 21, 1997
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("ADEA") and that this waiver and release is knowing and voluntary. You and the
Company agree that this waiver and release does not apply to any rights or
claims that may arise under ADEA after the effective date of this Agreement. You
acknowledge that the consideration given for this waiver and release Agreement
is in addition to anything of value to which you are already entitled. You
further acknowledge that you have been advised by this writing that (a) you
should consult with an attorney prior to executing this Agreement; (b) you have
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had at least twenty-one (21) days within which to consider this Agreement; (c)
you have had at least seven (7) days following the execution of this Agreement
to revoke the Agreement; and (d) this Agreement shall not be effective until the
revocation period has expired.
10. Civil Code Section 1542. You expressly waive and relinquish all
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rights and benefits afforded by any statute (such as Section 1542 of the Civil
Code of the State of California) which limits the effect of a release with
respect to unknown claims. You do so understanding and acknowledging the
significance of your release of unknown claims and your waiver of statutory
protection against a release of unknown claims (such as under Section 1542).
Section 1542 of the Civil Code of the State of California states as follows:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor."
Xxxx X. Xxxxxxxx
January 21, 1997
Page 10
Thus, notwithstanding the provisions of Section 1542 or of any similar statute,
and for the purpose of implementing a full and complete release and discharge of
the Releasees, you expressly acknowledge that this Agreement is intended to
include in its effect all claims which are known and all claims which you do not
know or suspect to exist in your favor at the time of execution of this
Agreement and that this Agreement contemplates the extinguishment of all such
claims.
11. Confidentiality. During the course of your employment with Xxx,
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you have had access to or have had possession of confidential and proprietary
information and materials of Xxx (including, but not necessarily limited to,
software or computer equipment, client or customer lists, telephone records or
lists, accounting procedures and Company forecasts and projections). You
acknowledge that all such information and materials constitute the protected
trade secrets of Xxx. You represent that you have held all such information and
materials confidential and will continue to do so during the LOA term and
thereafter, except as required by subpoena or other court order, provided that
you give Xxx sufficient advance notice to contest the subpoena or other court
order or seek a protective order.
You further agree not to disclose to others any information regarding
the terms of this letter, the benefits being paid under it or the fact of any
payments made, except that you may disclose this information to your immediate
family (spouse, children or parents), or to your attorney, accountant, or other
professional advisor to whom you must make the disclosure in order for them to
render professional services to you. You will instruct
Xxxx X. Xxxxxxxx
January 21, 1997
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all such persons, however, to maintain the confidentiality of this information.
12. Arbitration. Any dispute between Xxx and you arising out of or
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relating to the interpretation, enforcement, performance or alleged breach of
this Agreement will be submitted to binding arbitration in San Jose, California.
Arbitration shall take place before an experienced employment arbitrator
licensed to practice law in such state and selected in accordance with the Model
Employment Arbitration Procedures of the American Arbitration Association.
Arbitration shall be the exclusive remedy for any arbitrable dispute. Should
any party to this Agreement institute any legal action or administrative
proceeding against the other with respect to any claim waived by this Agreement
or pursue any arbitrable dispute by any method other than arbitration, the
responding party shall be entitled to recover from the initiating party all
damages, costs, expenses and attorneys' fees, except witness fees, costs of
appeal and other costs incurred as a result of that action. This agreement to
arbitrate is not applicable to your rights under the California Workers'
Compensation Law, which are governed under the applicable provisions of that
law, or to enforcement of the provisions of this Agreement and any other
agreement signed by you pertaining to confidential information, ownership of
inventions or any unauthorized actions or statements by you on behalf of Xxx.
If there is a breach or threatened breach of such provisions, Xxx shall be
entitled to an injunction restraining you from such breach or to pursue any
other available remedies at law or in equity.
13. Termination of Employment. Upon termination of the LOA term,
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your employment with Xxx shall terminate and the terms
Xxxx X. Xxxxxxxx
January 21, 1997
Page 12
and provision of paragraphs 5 and 6 shall govern your rights and obligations and
the rights and obligations of Xxx thereafter. Upon termination of employment,
you agree to return to the Company all the Company property and confidential and
proprietary information in your possession within five business days.
14. Indemnification. The Company shall indemnify you to the maximum
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extent permitted under the Company's By-laws and the General Corporate Law of
Delaware. The provisions of this paragraph shall inure to the benefit of your
estate, executor, administrator, heirs, legatees or devises.
15. Miscellaneous.
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(a) Choice of Law. The validity, interpretation, construction and
enforcement of this Agreement shall be governed by the laws of the State of
California.
(b) Severability. The invalidity or unenforce-ability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
(c) Employment Taxes. All payments made pursuant to this
Agreement will be subject to withholding of applicable income and employment
taxes.
(d) Waiver. A waiver by Xxx of a breach of any provision of this
Agreement by you shall not operate or be construed as a waiver of any subsequent
breach by you.
Xxxx X. Xxxxxxxx
January 21, 1997
Page 13
(e) Entire Agreement. This Agreement represents the entire
agreement and understanding between Xxx and you concerning your leave of absence
and separation from the Company, and supersedes and replaces any and all prior
agreements and understandings, whether written or oral, concerning your
relationship with Xxx and your compensation from Xxx, except for the terms and
provisions of any stock option agreements between you and Xxx. In the event of
any conflict between the terms and provisions of this Agreement and those of any
such stock option agreement, the terms and provisions of this Agreement shall
control.
(f) No Oral Modification. This Agreement may only be amended in a
writing signed by you and the Chief Executive Officer of the Company.
(g) Notice. All notices required or permitted to be given in this
Agreement shall be deemed properly given and received if sent by U.S. mail
postage prepaid or by registered mail or Federal Express to you at your address
at 0000 Xxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, or to my attention at
Xxx.
(h) Survival. Notwithstanding termination of this Agreement, the
LOA term or your employment with Xxx, the provisions of paragraphs 8, 9, 10, 11,
12 and 14 shall survive and continue in full force and effect.
To accept this Agreement, please sign, date and return the enclosed
copy of this letter to my attention.
Xxxx X. Xxxxxxxx
January 21, 1997
Page 14
Very truly yours,
Xxxxx X. Xxxxxxx
Chief Executive Officer and
Chairman of the Board
Read, Understood and Agreed
this ____ day of _____________.
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Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx
January 21, 1997
Page 15
ATTACHMENT B
Cause. "Cause" shall mean (i) a willful act of personal dishonesty knowingly
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taken by the Executive in connection with his responsibilities as an employee
and intended to result in his substantial personal enrichment, (ii) a willful
and knowing act by the Executive which constitutes gross misconduct, or any
refusal by the Executive to comply with a reasonable directive of the Board,
(iii) the willful breach by the Executive of a material provision of this
Agreement, or (iv) a material and willful violation of a federal or state law or
regulation applicable to the business of the Company. No act, or failure to
act, by the Executive shall be considered "willful" unless committed without
good faith, and without a reasonable belief that the act or omission was in the
Company's best interest. Termination for Cause shall not be deemed to have
occurred unless, by the affirmative vote of all of the members of the Board
(excluding the Executive, if applicable), at a meeting called and held for that
purpose (after reasonable notice to the Executive and his counsel after allowing
the Executive and his counsel to be heard before the Board), a resolution is
adopted finding that in the good faith opinion of such Board members the
Executive was guilty of conduct set forth in (i), (ii), (iii), or (iv) and
specifying the particulars thereof.
