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EXHIBIT 10.54
EXECUTIVE RETENTION AGREEMENT
EXECUTIVE RETENTION AGREEMENT ("Agreement") dated as of January 31, 2000
(the "Effective Date") by and between Xxxxxx Micro Inc., a Delaware corporation
(the "Company"), and XXXXX X. XXXXXX ("Executive").
WHEREAS, Executive is presently employed by the Company in a key
management capacity; and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its stockholders
that appropriate steps be taken to reinforce and encourage the continued
attention of key management personnel, including Executive, to their assigned
duties without the distraction that may arise from personal uncertainties
associated with any potential change in employment status, with any change in
the Company's Chief Executive Officer or with any pending or threatened change
in control of the Company; and
WHEREAS, the Board has also determined that it is in the best interests
of the Company and its stockholders to encourage Executive's continued
availability to the Company in the event of a change in the Company's Chief
Executive Officer or a change in control of the Company.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration including, but not limited to, Executive's
continuing employment with the Company, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1
TERM OF AGREEMENT
SECTION 1.01. Initial Term. The term of this Agreement shall commence on
the Effective Date and shall expire December 31, 2001 (the "Initial Term"),
subject to Sections 1.02 and 1.03.
SECTION 1.02. Extensions. As of each December 31 beginning in 2000 and
each later date which is one year prior to the scheduled expiration date of this
Agreement as it may be extended from time to time pursuant to Sections 1.02 and
1.03 (any such date a "Renewal Date"), provided Executive is actively employed
by the Company on each such scheduled expiration date, the remaining term of
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this Agreement shall automatically be extended by one year (each such additional
one-year period following the Initial Term or any Extended Term, as the case may
be, a "Successive Period") unless, at least sixty days prior to any such Renewal
Date, the Company has provided Executive with written notice of the Company's
intent that the term of this Agreement not be so extended; provided, however,
that Executive's rights under Section 2.05 shall be unaffected by any
termination of this Agreement prior to January 2, 2003.
SECTION 1.03. Automatic Extension Upon Change in Control or Change in
CEO. In the event that any Change in Control or a Change in CEO occurs during
the Initial Term or any Successive Period, upon the effective date of such
Change in Control or Change in CEO the term of this Agreement shall
automatically be extended for a period of 24 months from the effective date of
such Change in Control or Change in CEO, as the case may be (an "Extended
Term"). The 24-month extension described in this Section 1.03 shall take effect
regardless of whether, before or after the effective date of a Change in Control
or Change in CEO, Executive or the Company has given written notice of intent
not to extend the term of the Agreement pursuant to Section 1.02 or there has
occurred a termination of Executive's employment, provided the term of the
Agreement has not yet expired as of such effective date.
ARTICLE 2
CERTAIN BENEFITS
SECTION 2.01. Certain Events. (a) A "Qualifying Event" means any of the
following events:
(i) The involuntary termination of Executive's employment by the
Company during the 24-month period following either any Change in
Control or a Change in CEO, other than (x) for Cause, or (y) by reason
of Executive's death or Disability; or
(ii) Executive's voluntary termination of employment for Good
Reason during the 24-month period following either any Change in Control
or a Change in CEO, provided that Executive's termination occurs within
(x) six months after a Qualifying Nonrenewal or (y) 90 days after the
occurrence of any other event constituting Good Reason.
(b) A "Nonqualifying Event" means the involuntary termination of
Executive's employment by the Company other than during the 24-month period
following either any Change in Control or a Change in CEO, other than (x) for
Cause, or (y) by reason of Executive's death or Disability.
(c) A "Constructive Event" means, other than during the 24-month period
following either any Change in Control or a Change in CEO, Executive's
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voluntary termination of employment for Good Reason within 90 days after the
occurrence of an event constituting Good Reason.
SECTION 2.02. Right to Certain Benefits. (a) In the event that a
Qualifying Event, a Nonqualifying Event, a Constructive Event or other
termination of employment occurs during the term of this Agreement, Executive
shall be entitled to receive from the Company the Severance Benefits as
described in Section 2.03 or the relevant Separation Benefits as described in
Section 2.04, as the case may be.
(b) (i) In the event that a Change in Control occurs during the term of
this Agreement all stock options, stock appreciation rights, restricted stock,
or other awards (collectively, "Awards") then held by Executive pursuant to the
provisions of any of the Company's stock or option plans or any successor plans
(each, a "Stock Plan") shall become immediately vested, nonforfeitable and
exercisable as of the date of the Change in Control and remain exercisable until
the earlier of (x) the expiration date of such Award, any termination of
employment notwithstanding, and (y) if applicable, the first anniversary of the
last day of the Continuation Period (such earlier date, the "Termination Date").
Subject to the provisions above upon a subsequent Change in Control, all Awards
granted after a Change in Control to Executive shall vest pursuant to the terms
of each such Award and its related Stock Plan; provided, however, that each such
Award shall continue to vest through any Continuation Period, and shall
terminate on the Termination Date.
(ii) In the event that a Change in CEO occurs during the term of
this Agreement all Awards held by Executive, whether granted before or after
such Change in CEO, shall vest pursuant to the terms of each such Award and its
related Stock Plan; provided, however, that each such Award shall continue to
vest through any Continuation Period, and shall terminate on the Termination
Date.
(iii) In the event that a Constructive Event or a Nonqualifying
Event occurs during the term of this Agreement all Awards held by Executive
shall continue to vest through the Payment Period, and shall terminate on the
earlier of (x) the expiration date of such Award, any termination of employment
notwithstanding, and (y) the first anniversary of the last day of the Payment
Period.
SECTION 2.03. Benefits upon a Qualifying Event. Subject to Executive's
execution of an agreement in substantially the form set forth as Exhibit A
hereto, with such changes in the Competitor Companies named therein as the Board
shall reasonably determine (the "Release") and except to the extent provided in
Section 5.07 and Section 5.09, Executive shall be entitled to the following
benefits (the "Severance Benefits") upon a Qualifying Event:
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(a) The Company shall pay Executive a lump sum, in cash, equal to
Executive's earned but unpaid Base Salary and other earned but unpaid cash
entitlements for the period through and including the date of termination of
Executive's employment, including unused earned and accrued vacation pay and
unreimbursed documented business expenses (collectively, "Accrued
Compensation"). In addition, Executive shall be entitled to any other benefits
earned or accrued by Executive for the period through and including the date of
termination of Executive's employment under any other employee benefit plans and
arrangements maintained by the Company, in accordance with the terms of such
plans and arrangements, except as modified herein (collectively, "Accrued
Benefits").
(b) The Company, through the second anniversary of the Qualifying Event
(the "Continuation Period"), shall pay Executive cash compensation in equal
installments over 24 months at the times and in accordance with the applicable
Company payroll system, in an amount equal to two (2) times the sum of the
amounts set forth in Clauses (i) and (ii) below:
(i) Executive's Base Salary at its highest annual rate in effect
during the period beginning on the date of the Change in Control or
Change in CEO, as the case may be, to which such Qualifying Event
relates, and ending on the date of such Qualifying Event; and
(ii) the Executive's annual target bonus opportunity for the
year in which Executive's employment terminates (the "Bonus Amount").
(c) The Company shall also pay Executive, at the times and in the manner
provided above, an amount in cash equal to Executive's target bonus opportunity
for the year in which Executive's employment terminates times a fraction, the
numerator of which is the number of days in such year ending on the date of such
Qualifying Event and the denominator of which is 365 (the "Basic Bonus Amount").
(d) In addition, Executive shall be entitled to the benefits set forth
below (collectively, the "Additional Benefits") through and in respect of the
Continuation Period:
(i) Continue to receive Executive's automobile allowance, if
any, as in effect immediately prior to the Qualifying Event;
(ii) Continue to participate in the Company's Medical Plans,
provided that the Company shall reimburse Executive for Executive's
total actual premium costs incurred for such period including, without
limitation, 102% of such total premium costs as are incurred by
Executive
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for "Continuation Coverage" (within the meaning of Section 4980B(f)(2)
of the Code) for the last 18 months of such Period;
(iii) Reimbursement for the documented costs, including
laboratory and test fees, of an annual physical examination in an amount
not to exceed $1,500;
(iv) Reimbursement for the documented costs of annual gift and
income tax preparation services and advice in an amount not to exceed
$2,000 (the "Tax Preparation Benefits"); and
(v) Participation in the Company's Supplemental Executive
Deferred Compensation Plan up to the full amount of employee
contributions permitted; provided, however, that the Company will not be
required to make any matching contributions with respect to Executive's
contributions during the Continuation Period.
SECTION 2.04. Separation Payments. Subject to Executive's execution of a
Release and except to the extent provided under Section 5.07 and Section 5.09,
Executive shall be entitled to the benefits set forth below (the "Separation
Benefits") upon termination of employment under the following circumstances:
(a) Upon a Nonqualifying Event, Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits;
(iii) An amount equal to the greater of (x) Executive's Base
Salary at its highest annual rate during the one year period prior to
such Nonqualifying Event and (y) the sum of (A) 50% of such Base Salary
plus (B) the product of 1/12 of such Base Salary times Executive's full
and partial years of employment with the Company ("Years of Service")
(such greater amount, the "Basic Termination Benefit"), which such
Benefit shall be payable in cash in equal installments at the times and
in accordance with the applicable Company payroll system over a period
of months equal to the greater of (C) 12 and (D) the sum of 6 plus
Executive's Years of Service (the greater of (C) and (D), the "Payment
Period");
(iv) An amount, in cash, payable in equal installments over the
Payment Period and at the times and in accordance with the applicable
Company payroll system, equal to the Basic Bonus Amount; and
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(v) The Additional Benefits, paid over, or in respect of, the
Payment Period, as appropriate.
(b) Upon a Constructive Event, Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits;
(iii) An amount, in cash, equal to the sum of (x) the Basic
Termination Benefit, (y) the Bonus Amount, and (z) the Basic Bonus
Amount, payable in equal installments at the times and in the manner
provided in Section 2.04(a)(iv); and
(iv) The Additional Benefits, paid over, or in respect of, the
Payment Period, as appropriate.
(c) Upon Executive's voluntary termination of employment other than for
Good Reason or Retirement, Executive shall be entitled to:
(i) The Accrued Compensation; and
(ii) The Accrued Benefits.
(d) Upon termination of Executive's employment by reason of Retirement,
Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits; and
(iii) The Tax Preparation Benefit through and in respect of the
year in which Retirement occurs.
(e) Upon termination of Executive's employment by reason of death or
Disability, Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits;
(iii) The Basic Bonus Amount; and
(iv) The Tax Preparation Benefit through and in respect of the
year in which death or Disability occur.
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(f) Upon termination of the Executive's employment for Cause, Executive
shall be entitled to:
(i) The Accrued Compensation; and
(ii) The Accrued Benefits.
SECTION 2.05. Retention Payments. (a) In the event that Executive is
employed by the Company on January 1, 2002, Executive shall be entitled to a
lump sum cash retention payment equal to 150% of the sum of (i) Executive's Base
Salary and (ii) Executive's target annual bonus, each as in effect for the 2001
fiscal year (such sum, the "2002 Retention Bonus").
(b) In the event that Executive is employed by the Company on January 1,
2003, Executive shall be entitled to a lump sum cash retention payment equal to
50% of the sum of (i) Executive's Base Salary and (ii) Executive's target annual
bonus, each as in effect for the 2002 fiscal year (such sum, the "2003 Retention
Bonus").
(c) In the event Executive's employment is terminated prior to January
1, 2002 by the Company other than for Cause or by the Executive for Good Reason
or due to Executive's death or Disability, Executive shall be entitled to an
amount equal to the 2002 Retention Bonus multiplied by a fraction, the numerator
of which is the number of days elapsed from and including January 1, 2000 and
ending on the date of such termination and the denominator of which is 731.
(d) In the event Executive's employment is terminated in 2002 by the
Company other than for Cause or by the Executive for Good Reason or due to
Executive's death or Disability, Executive shall be entitled to an amount equal
to the 2003 Retention Bonus multiplied by a fraction, the numerator of which is
the number of days in 2002 ending on the date of such termination and the
denominator of which is 365.
(e) The payments to be made pursuant to the provisions of this Section
2.05 shall be in addition to any amount payable to Executive with respect to
Executive's target bonus opportunity for such year or any right to receive the
Basic Bonus Amount, as the case may be.
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ARTICLE 3
CERTAIN TAX REIMBURSEMENT PAYMENTS
SECTION 3.01. Gross-Up Payment. If any portion of the Severance Benefits
or any other payment under this Agreement, or under any other agreement with, or
plan of the Company, including but not limited to stock options and other
long-term incentives (in the aggregate "Total Payments") would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
Executive shall be entitled under this paragraph to an additional amount (the
"Gross-Up Payment") such that after payment by Executive of all of Executive's
applicable Federal, state and local taxes, including any Excise Tax, imposed
upon such additional amount, Executive will retain an amount equal to the Excise
Tax imposed on the Total Payments.
For purposes of this Section 3.01, Executive's applicable Federal, state
and local taxes shall be computed at the maximum marginal rates, taking into
account the effect of any loss of personal exemptions resulting from receipt of
the Gross-Up Payment.
SECTION 3.02. Determinations. All determinations required to be made
under this Article 4, including whether a Gross-Up Payment is required under
Section 3.01, and the assumptions to be used in determining the Gross-Up
Payment, shall be made by PricewaterhouseCoopers LLP, or such other firm as the
Company may designate in writing prior to a Change in Control (the "Accounting
Firm"), which shall provide detailed supporting calculations both to the Company
and Executive within twenty business days of the receipt of notice from
Executive that there has been a Qualifying Event, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the Person effecting the Change in Control or is
otherwise unavailable, Executive may appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company.
SECTION 3.03. Subsequent Redeterminations. Executive agrees (unless
requested otherwise by the Company) to use reasonable efforts to contest in good
faith any subsequent determination by the Internal Revenue Service that
Executive owes an amount of Excise Tax greater than the amount determined
pursuant to Section 3.02; provided, that Executive shall be entitled to
reimbursement by the Company of all fees and expenses reasonably incurred by
Executive in contesting such determination. In the event the Internal Revenue
Service or any court of competent jurisdiction determines that Executive owes an
amount of Excise Tax that is either greater or less than the amount previously
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taken into account and paid under this Article 3, the Company shall promptly pay
to Executive, or Executive shall promptly repay to the Company, as the case may
be, the amount of such excess or shortfall. In the case of any payment that the
Company is required to make to Executive pursuant to the preceding sentence (a
"Later Payment"), the Company shall also pay to Executive an additional amount
such that after payment by Executive of all of Executive's applicable Federal,
state and local taxes, including any interest and penalties assessed by any
taxing authority, on such additional amount, Executive will retain an amount
equal to the total of Executive's applicable Federal, state and local taxes,
including any interest and penalties assessed by any taxing authority, arising
due to the Later Payment. In the case of any repayment of Excise Tax that
Executive is required to make to the Company pursuant to the second sentence of
this Section 3.03, Executive shall also repay to the Company the amount of any
additional payment received by Executive from the Company in respect of
applicable Federal, state and local taxes on such repaid Excise Tax, to the
extent Executive is entitled to a refund of (or has not yet paid) such Federal,
state or local taxes.
ARTICLE 4
SUCCESSORS AND ASSIGNMENTS
SECTION 4.01. Successors. The Company will require any successor
(whether by reason of a Change in Control, direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform the
obligations under this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place.
SECTION 4.02. Assignment by Executive. This Agreement shall inure to the
benefit of and be enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees, and
legatees. If Executive should die or become disabled while any amount is owed
but unpaid to Executive hereunder, all such amounts, unless otherwise provided
herein, shall be paid to Executive's devisee, legatee, legal guardian or other
designee, or if there is no such designee, to Executive's estate. Executive's
rights hereunder shall not otherwise be assignable.
ARTICLE 5
MISCELLANEOUS
SECTION 5.01. Notices. Any notice required to be delivered hereunder
shall be in writing and shall be addressed
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if to the Company, to:
Xxxxxx Micro Inc.
0000 Xxxx Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Attn: General Counsel;
if to Executive, to Executive's last known address as reflected on the
books and records of the Company
or such other address as such party may hereafter specify for the purpose by
written notice to the other party hereto. Any such notice shall be deemed
received on the date of receipt by the recipient thereof if received prior to 5
p.m. in the place of receipt and such day is a business day in the place of
receipt. Otherwise, any such notice shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
SECTION 5.02. Legal Fees and Expenses. The Company shall pay all legal
fees, costs of litigation, prejudgment interest, and other expenses which are
reasonably incurred by Executive as a result of (i) the Company's refusal to
provide Severance Benefits or other amounts payable in accordance herewith upon
a Nonqualifying Event or a Constructive Event, (ii) the Company's (or any third
party's) contesting the validity, enforceability, or interpretation of the
Agreement, (iii) any conflict between the parties pertaining to this Agreement,
(iv) Executive's contesting any determination by the Internal Revenue Service
pursuant to Section 3.03, or (v) Executive's pursuing any claim under Section
5.15 hereof.
SECTION 5.03. Arbitration. Executive shall have the right and option to
elect (in lieu of litigation) to have any dispute or controversy arising under
or in connection with this Agreement settled by arbitration, conducted before a
panel of three arbitrators sitting in a location selected by Executive within 50
miles from the location of Executive's principal place of employment with the
Company, in accordance with the rules of the American Arbitration Association
then in effect. Executive's election to arbitrate, as herein provided, and the
decision of the arbitrators in that proceeding, shall be binding on the Company
and Executive. Judgment may be entered on the award of the arbitrator in any
court having jurisdiction. All expenses of such arbitration, including the fees
and expenses reasonably incurred by Executive, shall be borne by the Company.
SECTION 5.04. Unfunded Agreement. The obligations of the Company under
this Agreement represent an unsecured, unfunded promise to pay benefits to
Executive and/or Executive's beneficiaries, and shall not entitle Executive or
such beneficiaries to a preferential claim to any asset of the Company.
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SECTION 5.05. Non-Exclusivity of Benefits. Unless specifically provided
herein, neither the provisions of this Agreement nor the benefits provided
hereunder shall reduce any amounts otherwise payable, or in any way diminish
Executive's rights as an employee of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans (qualified or
nonqualified), programs, policies, or practices provided by the Company, for
which Executive may qualify. Vested benefits or other amounts which Executive is
otherwise entitled to receive under any plan, policy, practice, or program of
the Company (i.e., including, but not limited to, vested benefits under any
qualified or nonqualified retirement plan), at or subsequent to the date of
termination of Executive's employment shall be payable in accordance with such
plan, policy, practice, or program except as expressly modified by this
Agreement.
SECTION 5.06. Employment Status. Nothing herein contained shall
interfere with the Company's right to terminate Executive's employment with the
Company at any time, with or without Cause, subject to the Company's obligation
to provide such Severance Benefits or Separation Benefits, as the case may be,
and other amounts as may be required hereunder.
SECTION 5.07. Mitigation. (a) In no event shall Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to Executive under any of the provisions of this Agreement, nor
except as provided below, shall the amount of any payment hereunder be reduced
by any compensation earned by Executive as a result of employment by another
employer.
(b) Notwithstanding any other provision of this Agreement to the
contrary, including, without limitation, Section 5.07(a), in the event that
either (i) the Qualifying Event entitling Executive to the payments described in
Section 2.03 of this Agreement is the result of (A) an involuntary termination
of Executive's employment by the Company during the 24-month period following a
Change in CEO or (B) Executive's voluntary termination of employment for Good
Reason during the 24-month period following a Change in CEO, or (ii) Executive
becomes entitled to receive the Separation Benefits described in Section 2.04 of
this Agreement, and if Executive is subsequently employed by any party or
becomes self-employed following such termination of employment, where, in either
case, Executive becomes eligible to receive Base Salary and an annual bonus
opportunity comparable in the aggregate to such compensation Executive received
from the Company immediately prior to such termination, then all cash payments
pursuant to Section 2.03(b), Section 2.04(a)(iii) or Section 2.04(b)(iii)(x) and
(y), as the case may be, shall automatically cease on the first of the month
immediately following the month in which Executive becomes entitled to such
compensation; provided, however, that no other Severance Benefits or Separation
Benefits (including the right to receive any remaining unpaid portion of the
Basic Bonus Amount) shall be affected or reduced nor shall the period of
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time during which any of Executive's Awards may vest or be exercised as provided
in Section 2.02(b) be affected or reduced.
SECTION 5.08. No Set-Off. The Company's obligations to make all payments
and honor all commitments under this Agreement shall be absolute and
unconditional and, except as provided in Section 5.09, shall not be affected by
any circumstances including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Company may have against Executive.
SECTION 5.09. Entire Agreement. This Agreement represents the entire
agreement between the Executive and the Company and its affiliates with respect
to Executive's employment and/or severance rights, and supersedes all prior
discussions, negotiations, and agreements concerning such rights, including, but
not limited to, any prior severance agreement made between Executive and the
Company; provided, however, that any amounts payable to Executive hereunder
shall be reduced by any amounts paid to Executive as required by any applicable
local law in connection with any termination of Executive's employment.
SECTION 5.10. Tax Withholding. Notwithstanding anything in this
Agreement to the contrary, the Company shall withhold from any amounts payable
under this Agreement all federal, state, city, or other taxes as are legally
required to be withheld.
SECTION 5.11. Waiver of Rights. The waiver by either party of a breach
of any provision of this Agreement shall not operate or be construed as a
continuing waiver or as a consent to or waiver of any subsequent breach hereof.
SECTION 5.12. Severability. In the event any provision of the Agreement
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of the Agreement, and the Agreement shall
be construed and enforced as if the illegal or invalid provision had not been
included.
SECTION 5.13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without
reference to principles of conflict of laws.
SECTION 5.14. Counterparts. This Agreement may be signed in several
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were on the same instrument.
SECTION 5.15. Claim Review Procedure. If Executive is denied benefits
under this Agreement, Executive may request, in writing, a review of the denial
by the Company or its designee within 60 days of receiving written notice of the
denial. The Company shall respond in writing to a written request for review
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within 90 days of receipt of such request. Neither the claim procedure set forth
in this Section 5.15 nor Executive's failure to adhere to such procedure shall
derogate from Executive's right to enforce this Agreement through legal action,
including arbitration as provided in Section 5.03.
SECTION 5.16. Indemnification. The Company shall indemnify Executive
(and Executive's legal representatives or other successors) to the fullest
extent permitted by the Certificate of Incorporation and By-Laws of the Company,
as in effect at such time or on the Effective Date, or by the terms of any
indemnification agreement between the Company and Executive, whichever affords
or afforded greater protection to Executive, and Executive shall be entitled to
the protection of any insurance policies the Company may elect to maintain
generally for the benefit of its directors and officers (and to the extent the
Company maintains such an insurance policy or policies, Executive shall be
covered by such policy or policies, in accordance with its or their terms, to
the maximum extent of the coverage available for any Company officer or
director), against all costs, charges and expenses whatsoever incurred or
sustained by Executive or Executive's legal representatives at the time such
costs, charges and expenses are incurred or sustained, in connection with any
action, suit or proceeding to which Executive (or Executive's legal
representatives or other successors) may be made a party by reason of
Executive's being or having been a director, officer or employee of the Company,
or any Subsidiary or Executive's serving or having served any other enterprise
as a director, officer, employee or fiduciary at the request of the Company.
ARTICLE 6
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth below.
"Accounting Firm" has the meaning accorded such term in Section
3.02.
"Accrued Benefits" has the meaning accorded such term in Section
2.03.
"Accrued Compensation" has the meaning accorded such term in
Section 2.03.
"Additional Benefits" has the meaning accorded such term in
Section 2.03.
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"Affiliate" and "Associate" have the respective meanings
accorded to such terms in Rule 12b-2 under the Exchange Act as in effect
on the Effective Date.
"Awards" has the meaning accorded such term in Section 2.02.
"Base Salary" means, at any time, the then-regular annual rate
of pay which Executive is receiving as annual salary.
"Basic Bonus Amount" has the meaning accorded such term in
Section 2.03.
"Basic Termination Benefit" has the meaning accorded such term
in Section 2.04.
"Beneficial Ownership." A Person shall be deemed the "Beneficial
Owner"of, and shall be deemed to "beneficially own," securities pursuant
to Rule 13d-3 under the Exchange Act as in effect on the Effective Date.
"Board" has the meaning accorded such term in the second
"Whereas" clause of this Agreement.
"Bonus Amount" has the meaning accorded such term in Section
2.03.
"Cause" means the occurrence of any one or more of the
following:
(a) A demonstrably willful and deliberate material act or failure to act
by Executive (other than as a result of incapacity due to physical or mental
illness) which is committed in bad faith, without reasonable belief that such
action or inaction is in the best interests of the Company, and which act or
inaction is not remedied within fifteen business days of written notice from the
Company;
(b) Executive's gross negligence in the performance of Executive's
duties hereunder; or
(c) Executive's conviction for committing an act of fraud, embezzlement,
theft, or any other act constituting a felony involving moral turpitude.
Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for the reasons set forth in clause (a) or (b) of this
definition unless and until there shall have been delivered to Executive a copy
of a resolution duly adopted by the affirmative vote (which cannot be delegated)
of not
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less than three-quarters of the entire membership of the Board at a meeting of
the Board called and held for such purpose (and after reasonable notice to
Executive an opportunity for Executive, together with Executive's counsel, to be
heard before the Board), finding that, in the good faith opinion of the Board,
Executive is guilty of conduct set forth above in such clauses (a) or (b) of
this definition and specifying the particulars thereof in detail.
"Change in CEO" means the first appointment or election after
the Effective Date of a Chief Executive Officer of the Company not
serving in such position immediately prior to such appointment or
election.
"Change in Control" means, and shall be deemed to have occurred
upon any occurrence of any of the following events:
(a) Any Person (other than an Excluded Person) acquires,
together with all Affiliates and Associates of such Person,
Beneficial Ownership of securities representing 25% or more of
the combined voting power of the Voting Stock then outstanding,
unless such Person acquires Beneficial Ownership of 25% or more
of the combined voting power of the Voting Stock then
outstanding solely as a result of an acquisition of Voting Stock
by the Company which, by reducing the Voting Stock outstanding,
increases the proportionate Voting Stock beneficially owned by
such Person (together with all Affiliates and Associates of such
Person) to 25% or more of the combined voting power of the
Voting Stock then outstanding; provided, that if a Person shall
become the Beneficial Owner of 25% or more of the combined
voting power of the Voting Stock then outstanding by reason of
such Voting Stock acquisition by the Company and shall
thereafter become the Beneficial Owner of any additional Voting
Stock which causes the proportionate voting power of Voting
Stock beneficially owned by such Person to increase to 25% or
more of the combined voting power of the Voting Stock then
outstanding, such Person shall, upon becoming the Beneficial
Owner of such additional Voting Stock, be deemed to have become
the Beneficial Owner of 25% or more of the combined voting power
of the Voting Stock then outstanding other than solely as a
result of such Voting Stock acquisition by the Company;
(b) During any period of 24 consecutive months (not
including any period prior to the Effective Date), individuals
who at the beginning of such period constitute the Board (and
any new Director, whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of
at least two-thirds of the Directors then still in office who
either were
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Directors at the beginning of the period or whose election or
nomination for election was so approved), cease for any reason
to constitute a majority of Directors then constituting the
Board;
(c) A reorganization, merger or consolidation of the
Company is consummated, in each case, unless, immediately
following such reorganization, merger or consolidation, (i) more
than 50% of, respectively, the then outstanding shares of common
stock of the corporation resulting from such reorganization,
merger or consolidation and the combined voting power of the
then outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners of the Voting Stock outstanding immediately
prior to such reorganization, merger or consolidation, (ii) no
Person (but excluding for this purpose any Excluded Person and
any Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or indirectly,
25% or more of the voting power of the outstanding Voting Stock)
beneficially owns, directly or indirectly, 25% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors and (iii) at least a
majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or
consolidation were members of the Board at the time of the
execution of the initial agreement providing for such
reorganization, merger or consolidation;
(d) The shareholders of the Company approve (i) a
complete liquidation or dissolution of the Company or (ii) the
sale or other disposition of all or substantially all of the
assets of the Company, other than to any corporation with
respect to which, immediately following such sale or other
disposition, (A) more than 50% of, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly,
by all or substantially all of the individuals and entities who
were the beneficial owners of the Voting Stock outstanding
immediately prior to such sale or other disposition of assets,
(B) no Person (but excluding for this purpose any Excluded
Person and any Person beneficially owning, immediately prior to
such sale or other disposition, directly or
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indirectly, 25% or more of the voting power of the outstanding
Voting Stock) beneficially owns, directly or indirectly, 25% or
more of, respectively, the then outstanding shares of common
stock of such corporation or the combined voting power of the
then outstanding voting securities of such corporation entitled
to vote generally in the election of directors and (C) at least
a majority of the members of the board of directors of such
corporation were members of the Board at the time of the
execution of the initial agreement or action of the Board
providing for such sale or other disposition of assets of the
Company; or
(e) The occurrence of any transaction or event that the
Board, in its sole discretion, designates a "Change in Control".
Notwithstanding the foregoing, in no event shall a "Change in Control"
be deemed to have occurred (i) as a result of the formation of a Holding
Company, or (ii) with respect to Executive, if Executive is part of a
"group," within the meaning of Section 13(d)(3) of the Exchange Act as
in effect on the Effective Date, which consummates the Change in Control
transaction. In addition, for purposes of the definition of "Change in
Control" a Person engaged in business as an underwriter of securities
shall not be deemed to be the "Beneficial Owner" of, or to "beneficially
own," any securities acquired through such Person's participation in
good faith in a firm commitment underwriting until the expiration of
forty days after the date of such acquisition.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning accorded such term in the introductory
paragraph of this Agreement.
"Constructive Event" has the meaning accorded such term in
Section 2.01.
"Continuation Period" has the meaning accorded to such term in
Section 2.03.
"Disability" means Long-Term Disability, as such term is defined
in the Disability Plan.
"Disability Plan" means the long-term disability plan (or any
successor disability and/or survivorship plan adopted by the Company) in
which Executive participates, as in effect immediately prior to the
relevant event (subject to changes in coverage levels applicable to all
employees generally covered by such Plan).
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"Effective Date" has the meaning accorded such term in the
introductory paragraph of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excise Tax" has the meaning accorded such term in Section 3.01.
"Excluded Person" means (i) the Company; (ii) any of the
Company's Subsidiaries; (iii) any Holding Company; (iv) any employee
benefit plan of the Company, any of its Subsidiaries or a Holding
Company; (v) any Person organized, appointed or established by the
Company, any of its Subsidiaries or a Holding Company for or pursuant to
the terms of any plan described in clause (iv) or (vi) any Family
Stockholder as such term is defined in the Company's amended and
restated by-laws.
"Executive" has the meaning accorded such term in the
introductory paragraph of this Agreement.
"Extended Term" has the meaning accorded such term in Section
1.03.
"Good Reason" means, without Executive's express written
consent, the occurrence of any one or more of the following:
(a) The assignment to Executive of duties inconsistent
with Executive's authorities, duties, responsibilities and
status as an officer of the Company, or a reduction or
alteration thereof, in each case excluding any designated acting
or temporary authorities, responsibilities and status, from
those in effect as of the Reference Date; provided, however, an
insubstantial and inadvertent act that is remedied by the
Company promptly after receipt of notice thereof given by
Executive shall not constitute Good Reason;
(b) The Company's requiring Executive to be based at a
location in excess of 35 miles from Executive's principal job
location or office immediately prior to the Reference Date;
except for required travel on the Company's business to an
extent consistent with Executive's business travel obligations
immediately prior to the Reference Date;
(c) A reduction by the Company of Executive's Base
Salary or total annual target compensation from the highest
level at any time in the year prior to such reduction by more
than 10%;
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(d) The failure by the Company to keep in effect
compensation, retirement, health and welfare benefits, or
perquisite programs under which Executive receives benefits
substantially similar, in the aggregate, to the benefits under
such programs as exist immediately prior to the Reference Date
(other than pursuant to an equivalent reduction in such benefits
of all full-time domestic employees of the Company who are not
subject to a collective bargaining agreement); or the failure of
the Company to meet the funding requirements, if any, of any of
such programs;
(e) Any material breach by the Company of its
obligations under this Agreement or any failure of a successor
of the Company to assume and agree to perform the Company's
entire obligations under this Agreement, as required by Section
4.01 herein, provided that such successor has received at least
ten days written notice from the Company or Executive of the
requirements of Section 4.01; or
(f) The Executive's receipt from the Company at any time
during an Extended Term of written notice pursuant to Section
1.02 to the effect that the term of this Agreement will not be
extended (a "Qualifying Nonrenewal").
"Gross-Up Payment" has the meaning accorded such term in Section
3.01.
"Holding Company" means an entity that becomes a holding company
for the Company or its businesses as a part of any reorganization,
merger, consolidation or other transaction, provided that the
outstanding shares of common stock of such entity and the combined
voting power of the then outstanding voting securities of such entity
entitled to vote generally in the election of directors is, immediately
after such reorganization, merger, consolidation or other transaction,
beneficially owned, directly or indirectly, by all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the Voting Stock outstanding immediately prior to such
reorganization, merger, consolidation or other transaction in
substantially the same proportions as their ownership, immediately prior
to such reorganization, merger, consolidation or other transaction, of
such outstanding Voting Stock.
"Initial Term" has the meaning accorded such term in Section
1.01.
"Later Payment" has the meaning accorded such term in Section
3.03.
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"Medical Plans" means the medical care plans (or any successor
medical plans adopted by the Company) in which Executive participates,
as in effect immediately prior to the relevant event (subject to changes
in coverage levels applicable to all employees generally covered by such
Plans).
"Nonqualifying Event" has the meaning accorded such term in
Section 2.01.
"Payment Period" has the meaning accorded such term in Section
2.04.
"Person" means an individual, corporation, partnership,
association, trust or any other entity or organization.
"Qualifying Event" has the meaning accorded such term in Section
2.01.
"Qualifying Nonrenewal" has the meaning accorded such term in
clause (f) of the definition of Good Reason in this Article 6.
"Reference Date" means the later of (x) the Effective Date or
(y) the date 60 days prior to the date of the relevant event, if any,
set forth in the definition of Good Reason.
"Release" has the meaning accorded such term in Section 2.02.
"Release" has the meaning accorded such term in Section 2.03.
"Retirement" shall be determined under guidelines established
from time to time by the Human Resources Committee of the Board.
"Separation Benefits" has the meaning accorded such term in
Section 2.04.
"Severance Benefits" has the meaning accorded such term in
Section 2.03.
"Stock Plan" has the meaning accorded such term in Section 2.02.
"Subsidiary" of any Person means any other Person of which
securities or other ownership interests having voting power to elect a
majority of the board of directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person.
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"Successive Period" has the meaning accorded such term in
Section 1.02.
"Tax Preparation Benefits" has the meaning accorded such term in
Section 2.03.
"Termination Date" has the meaning accorded such term in Section
2.02.
"Total Payments" has the meaning accorded such term in Section
3.01.
"2002 Retention Bonus" has the meaning set forth in Section
2.05.
"2003 Retention Bonus" has the meaning set forth in Section
2.05.
"Voting Stock" means securities of the Company entitled to vote
generally in the election of members of the Board.
"Years of Service" has the meaning accorded such term in Section
2.04.
IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement, to be effective as of the day and year first written above.
EXECUTIVE Xxxxxx Micro Inc.
/s/ XXXXX X. XXXXXX By: /s/ Xxxxx X. Xxxxx
-------------------------------- ---------------------------------------
XXXXX X. XXXXXX Title: Chairman of the Board
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EXHIBIT A
RELEASE AND COVENANT
This letter sets forth the agreement of Xxxxxx Micro Inc. (the
"Company") and XXXXX X. XXXXXX ("Executive") relating to the termination of
Executive's employment with Company. Subject to the execution of this Agreement,
the parties hereto agree as follows:
Termination of Employment.
(A). Executive agrees and acknowledges that the termination of his
employment with Company shall be effective as of __________, ____ (the
"TERMINATION DATE").
(B). Executive acknowledges Executive's obligation to promptly return to
the Company all property of the Company in Executive's possession including,
without limitation, keys, SECUREID card, credit cards, cell phones, pagers,
computers, office equipment, documents and files and instruction manuals on or
before the Termination Date, or earlier if so requested by the Company. After
the Termination Date, the Company shall forward all mail addressed to Executive
to the most recent address provided by Executive to the Company pursuant to
Section 5.01 of the Executive Retention Agreement between the Executive and the
Company dated as of January __, 2000 to which this Agreement is Exhibit A (the
"Retention Agreement").
Mutual Releases.
1. In consideration of the foregoing and the benefits paid and payable
to Executive under the Retention Agreement, Executive hereby waives all claims
against Company, its affiliates and their respective officers, directors and
executives (hereinafter the "RELEASEES"), and releases and discharges the
Releasees from liability for any and all claims and damages that Executive may
have against them as of the date of this Agreement, whether known or unknown,
including, but not limited to, any claims arising out of his employment
relationship with Company or its affiliates or the termination of such
employment, or any violation of any federal, state or local fair employment
practice law, including Title VII of the Civil Rights Act, the Civil Rights Act
of 1991, the Age Discrimination in Employment Act as amended by the Older
Workers' Benefit Protection Act, or any other employee relations statute, rule,
executive order, law or ordinance, tort, express or implied contract, public
policy or other obligations; provided, however, that nothing herein shall be
deemed a waiver or release of Executive's right to enforce the obligations of
Company under this Agreement or
23
the Retention Agreement or Executive's rights to indemnification to the fullest
extent provided by law or in any applicable certificate of incorporation,
charter or similar document, by-laws or contract.
Executive acknowledges that Executive has had up to 21 days to consider
the terms of this Agreement and is hereby advised by Company to discuss the
terms of this Agreement with an attorney unrelated to Company prior to signing
this Agreement. Executive further acknowledges that Executive is entering into
this Agreement freely, knowingly, and voluntarily, with a full understanding of
its terms. Executive also acknowledges that Executive will have 7 days from the
date he signs this Agreement to revoke the Agreement by notifying the General
Counsel of the Company in writing.
2. In consideration of the performance by Executive of the covenants and
undertakings made herein by Executive, Company on behalf of itself and its
affiliates hereby waives all claims against Executive and releases and
discharges Executive from liability for any and all claims and damages that any
of them may have against Executive as of the date of this Agreement, whether
known or unknown, including Executive's employment relationship with Company or
its affiliates or the termination of such employment; provided, however, that
nothing herein shall be deemed a waiver or release of the right of Company or
its affiliates to enforce the obligations of Executive under this Agreement or
for any claims arising from a breach of Executive's fiduciary duty of loyalty to
the Company or its affiliates.
Waiver. Each of the Company and Executive hereby expressly waives and
relinquishes all rights and benefits under Section 1542 of the California Civil
Code which provides:
"Section 1542. General Release - Claim extinguished. 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."
Each of the Company and Executive understands and acknowledges that the
significance and consequences of this waiver of Section 1542 of the Civil Code
is that even if the Company and Executive, as the case may be, should eventually
suffer damages arising out of Executive's employment relationship with the
Company and its affiliates, or termination of such employment, such party will
not be permitted to make any claim for those damages except as expressly
permitted by this Agreement. Furthermore, each of the Company and Executive
acknowledges that such party intends these consequences even as to claims for
injuries and/or damages that may exist as of the date of this Agreement but
which
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Executive or the Company, as the case may be, does not know exist, and which, if
known, would materially affect such party's decision to execute this Agreement.
Cooperation. Executive agrees to cooperate fully with Company and to
provide such information as Company may reasonably request with respect to any
Company-related transaction, investment or other matter in which Executive was
involved in any way while employed by Company.
Confidentiality. Executive acknowledges Executive's obligation not to
disclose, during or after employment, any trade secrets or proprietary and/or
confidential data or records of the Company or its affiliates or to utilize any
such information for private profit. Each of the parties hereto agrees that such
party will not release, publish, announce or otherwise make available to the
public in any manner whatsoever any information or announcement regarding this
Agreement or the transactions contemplated hereby without the prior written
consent of the other party hereto, except as required by law or legal process,
including, in the case of the Company, filings with the Securities and Exchange
Commission. Executive agrees not to communicate with, including responding to
questions or inquiries presented by, the media, employees or investors of the
Company, its affiliates or any third party relating to the terms of this
Agreement, without first obtaining the prior written consent of the Company.
Notwithstanding the foregoing, Executive may make disclosure to his spouse,
attorneys and financial advisors of the existence and terms of this Agreement
provided that they agree to be bound by the provisions of this paragraph.
No Disparagement. Executive and Company agree that no party hereto shall
make disparaging statements or representations, or otherwise communicate
disparagingly, directly or indirectly, in writing, orally, or otherwise, about
either of the parties hereto or the other Releasees or the employees, customers,
suppliers, competitors, vendors, stockholders or lenders of the Company or its
affiliates or any third party, nor take any action which may, directly or
indirectly, disparage or be damaging to either of the parties hereto or the
other Releasees, their businesses, or their reputations.
No Solicitation. Executive will not (i) directly or indirectly make
known to any person, firm, corporation, partnership or other entity, any list,
listing or other compilation or document, whether prepared or maintained by
Executive, the Company or any of the Company's affiliates, which contains
information that is confidential to the Company or any of its affiliates about
their customers ("the Company's Customers"), including but not limited to names
and addresses, or (ii) at any time through the end of the "Continuation Period"
(as defined in the Retention Agreement), call on or solicit, or attempt to call
on or solicit, in either case with the intent to divert business or potential
business from the Company or any of its affiliates, any of the Company's
Customers with whom Executive has become acquainted during his employment with
the Company or any of its
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25
affiliates, either for Executive's own benefit or for the benefit of any other
person, firm, corporation, partnership or other entity.
No Raid. Through the end of the Continuation Period, Executive will not,
and will use Executive's best efforts not to permit any person, firm,
corporation, partnership or other entity of which Executive is an officer or
control person to, (i) knowingly solicit, entice, or persuade any individual who
is an associate of the Company or any of its affiliates at any time during the
Continuation Period (each such individual, a "Company Associate") to leave the
services of the Company or any of its affiliates for any reason, or (ii) solicit
for employment, hire, or engage any present or future Company Associate as an
employee, independent contractor or consultant.
Noncompetition. Executive acknowledges that Executive has unique
knowledge of the Company and its affiliates and unique knowledge of the computer
and software sales and distribution industry. Based on his unique status,
Executive agrees that through the end of the Continuation Period, Executive will
not be employed or hired as an employee or consultant by, or otherwise directly
or indirectly provide services for, any of Tech Data, Merisel, Inacom, Pinacor,
Globelle, Gates Arrow, CHS Electronics, Hallmark, Xxxxxxxx Avnet, Daisytek,
Azerti, Azlan, Northamber, Tech Pacific, Synnex, Xxxx Micro, DSS and/or GE
Capital Information Technology Solutions-North America, Inc., and any subsidiary
or affiliate of these entities in a business or line of business conducted by
any such entity which competes with any line of business conducted by the
Company or any of its affiliates. Notwithstanding the foregoing, should
Executive be employed by an entity that is not a subsidiary or affiliate of one
of these entities at the time Executive commences such employment, but
subsequently becomes a subsidiary or affiliate of, or becomes merged into, one
of these entities on or before the end of the Continuation Period, he shall not
be deemed to be in breach of the provisions of this paragraph due to such
employment, provided that at the time Executive commenced his employment there
had been no public announcement of an agreement pursuant to which Executive's
employer would become a subsidiary or affiliate of, or merged into, one of these
entities or discussions that could lead to such an agreement and Executive had
no knowledge of the existence of any such agreement or discussions. Executive
further agrees that Executive will not own any interest in, provide financing
to, be connected with, or be a principal, partner or agent of any such
competitive distributor or aggregator; provided, Executive may own less than 1%
of the outstanding shares of any such entity whose shares are traded in the
public market.
Availability. Provided that the Company is not in breach of its
obligations under this Agreement, and subject to Executive's other commitments,
upon request of the Company or any of its affiliates during the Continuation
Period, Executive will make himself available for up to 15 hours in any calendar
month to
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provide reasonable assistance to the Company or any such affiliate and will use
reasonable efforts to arrange his commitments so as to make Executive available
for such assistance on a basis which is consistent with the requests of the
Company or any affiliates. Such assistance may include telephone conversations,
correspondence, attendance and participation in meetings, transfer of knowledge
or information regarding operational or other issues, litigation preparation and
trials. During such period, the Company shall reimburse Executive for any
out-of-pocket expense Executive may incur in connection with such assistance in
accordance with the Company's reimbursement policies. After the end of the
Continuation Period, Executive shall use reasonable efforts, subject to his
other commitments, to continue to provide such assistance as may be requested by
the Company and, in such event, shall be compensated at a rate per day (minimum
charge, one-half day) commensurate with the daily rate he was earning based on
his base salary immediately prior to the Termination Date.
The running of the periods prescribed in this Agreement shall be tolled
and suspended by the length of time Executive works in circumstances that a
court of competent jurisdiction subsequently finds to violate the terms of this
Agreement.
No Reliance. The parties hereto represent and acknowledge that, in
executing this Agreement, they do not rely and have not relied upon any
representation or statement, written or oral, made by either of the parties or
by either of the parties' agents, attorneys, or representatives with regard to
the subject matter, basis, or effect of this Agreement or otherwise, other than
those specifically stated in this written Agreement.
Assignment. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, administrators,
representatives, executors, successors, and assigns. This Agreement shall also
inure to the benefit of all the Releasees and their respective heirs,
administrators, representatives, executors, successors, and assigns. This
Agreement shall not be assignable by Executive.
No Waiver. Any waiver by either party of a breach of any provision of
this Agreement shall not operate as or be construed as a waiver of any
subsequent breach hereof, or as a waiver of a breach of any other provision.
Interpretation: Choice of Law. This Agreement shall be interpreted in
accordance with the plain meaning of its terms and not strictly for or against
any of the parties hereto. This Agreement and all provisions hereof shall be
governed by and construed under the laws of the State of California without
regard to the choice of law rules thereof.
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Acknowledgment. Executive acknowledges that Executive has carefully read
this Agreement, fully understands and accepts all of its provisions, and signs
it voluntarily of Executive's own free will. Executive further acknowledges that
Executive has been provided a full opportunity to review and reflect on the
terms of this Agreement and to seek the advice of legal counsel of Executive's
choice.
XXXXXX MICRO INC.
by
-----------------------------------
Agreed and Accepted Name:
Title:
----------------------------------
XXXXX X. XXXXXX
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