EXHIBIT 10.1
EXECUTIVE OFFICER SEVERANCE AGREEMENT
This Executive Officer Severance Agreement (the "Agreement") is effective as
of March 30, 2001 ("Effective Date"), and is by and between _______________
(the "Executive"), an individual currently residing at ______________________
and Oak Technology, Inc., a Delaware corporation (the "Company"), with its
principal place of business at 000 Xxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000.
R E C I T A L S
A. The Company desires to employ Executive and Executive desires to
provide employment services to the Company, on all the terms and conditions set
forth herein.
B. The Board of Directors of the Company believes it to be in the best
interest of the Company and its stockholders to provide the Executive with
certain severance benefits should Executive's employment with the Company
terminate under certain circumstances, and the parties wish to provide
Executive with financial security and with sufficient incentive and
encouragement for Executive to remain with the Company
C. Certain capitalized terms used in the Agreement are defined in
Section 8 below.
A G R E E M E N T
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of Executive by the Company, the
parties agree as follows:
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1. Duties and Scope of Employment. The Company has appointed Executive as
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______________________ of Company. Executive shall have such other or
additional duties or positions with the Company, its subsidiaries or affiliates
as the Company shall determine from time to time. The Executive shall comply
with and be bound by the Company's operating policies, procedures and practices
from time to time in effect during his employment. Executive shall devote his
full time, skill and attention to his duties and responsibilities, and shall
perform them faithfully, diligently and competently, and the Executive will use
his best efforts to further the business of the Company and its affiliated
entities. In connection with his employment under this Agreement, Executive
shall be based at the Company's principal place of business which is currently
located in Sunnyvale, California, but Executive understands and agrees that he
may be required to perform services anywhere in the world, and will perform his
employment at such location or locations as may be determined by the Company
from time to time, subject to Section 8(b)(6).
2. Base Compensation. The Company will pay Executive a base annual salary
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at the rate of $____________ ("Base Compensation"). The Company will pay the
Base Compensation in accordance with normal Company payroll practices. The
Base Compensation shall be reviewed annually and may be increased from time to
time, in which case the "Base Compensation" will refer to the base salary
earned by Executive at the time in question.
3. Executive's Benefits. The Executive shall be eligible to participate in
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the employee benefit plans and any executive compensation programs maintained
by the Company that are applicable to other officers of the Company, including
(without limitation) retirement plans, savings or profit-sharing plans, stock
option, incentive or other bonus plans, life, disability, health, medical and
hospital, accident and other insurance programs, paid vacations, and similar
plans or programs that may exist, subject in each case to the generally
applicable terms and conditions of the applicable plan or program in question.
The following additional Executive benefits will be made available:
(a ) Bonus Eligibility and Payment. The target amount of Executive's
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fiscal year 2001 bonus will be $______________. Actual payments under the bonus
plan will be based on application of the terms of the published Executive Bonus
Plan and the achievement of performance targets for both Company and Executive.
4. Other Business Affiliations. Subject to the provisions of Paragraph 7
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hereof, Executive agrees that, without the approval of the Board of Directors
the Company, he shall not, during the term hereof, devote any time to any
business affiliation which would interfere with or derogate from his
obligations under this Agreement other than that with the Company and any of
its subsidiaries, parents or affiliates, other than assumption of positions as
a member of a Board of Directors with outside companies, for which Executive
shall be unrestricted in becoming a member, provided his fiduciary duties to
Company are at all times maintained.
5. Expenses. The Company shall reimburse Executive for all reasonable
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business expenses incurred in the performance of his duties hereunder on
behalf of the Company, upon submission of expense reports to the extent
necessary to substantiate the Company's federal income tax deductions for such
expenses under the Internal Revenue Code (as amended) and the Regulations there
under and according to such expense report regulations as may be established by
the Board of Directors of the Company.
6. Term and Termination.
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(a) Term of Agreement. Executive's employment with the Company under
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this Agreement shall continue from the Effective Date to and including March
30, 2002, and automatically renew thereafter for additional successive twelve
(12) month terms until the obligations of the parties hereunder are satisfied.
(b) Termination for Cause. The Board Of Directors may terminate this
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Agreement and the employment of Executive hereunder, with immediate effect,
including, without limitation, the termination of all compensation and benefits
(except as may be expressly provided in this Agreement), for Cause, as defined
hereunder. However, the Executive shall remain eligible for severance and other
benefits (if any) as may then be available under the Company's then existing
severance and benefit plans and policies at the time of Executive's
termination.
(c) Termination Not for Cause If the Executive's employment is
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terminated for any reason other than Cause, or Executive's employment is
terminated by Constructive Termination as defined in this Agreement, the
Executive shall be entitled to receive the severance benefits stated in Section
7(a) below.
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(d) Executive's Resignation. In the event Executive voluntarily
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resigns, and Executives has not notified the Company of his intent to exercise
his Constructive Termination rights under this Agreement, Executive shall give
the Board of Directors thirty (30) days written notice of resignation. Upon
such notice, the Board of Directors, at its discretion, may terminate the
relationship immediately, but in such event the Board of Directors obligation
to Executive shall be limited to compensation through the remainder of the
thirty (30) days resignation notice period.
(e) Return of Information. On termination of employment for any
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reason, Executive will return to the Company all originals and copies of all or
any part of: lists and sources of customers and suppliers; lists of employees;
proposals to clients or drafts of proposals; business plans and projections;
reports; job notes; specifications; and drawings pertaining to the Company or
its customers; or any and all other things, equipment and written materials
obtained by Executive during the course of employment from the Company or from
any client of the Company, unless Company provided in writing its waiver of the
forgoing.
7. Severance Benefits.
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(a) Termination Not for Cause. If the Board of Directors, or
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Executive's manager terminates Executive's employment for any reason other
than Cause, or Executive's employment is terminated by Constructive
Termination as defined in this Agreement, and Executive has notified Company
that he intends to trigger his rights under Constructive Termination, the
Executive shall be entitled to receive the following severance benefits:
(i) Severance Payments.
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Guaranteed Severance Payments. Subject to Executive entering into a
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Release of Claims (in a form substantially similar to the release of claims
attached as Exhibit A), Executive shall be entitled to receive severance
payments for six (6) months ("Severance Period") from the date of termination
at Executive's then current base salary, which may be greater than, but will
not be less than the Base Compensation (the "Guaranteed Severance Payment").
The Severance Period will commence upon the last day of Executive's
employment by Company as indicated in Executive's notification of termination
as specified in Section 7(a), or any extensions thereto mutually agreed upon
by Company and Executive in writing. The Guaranteed Severance Payment will be
paid to Executive in accordance with the Company's standard payroll practices.
Upon termination, Executive will also be entitled to receive a his then current
targeted bonus, in an amount that would be payable if 100% of the targets for
both Company and Executive had been achieved for the fiscal year of his
termination as described in Section 3(a).
(ii) Medical Benefits. The Company, at the Company's sole
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expense, shall provide Executive (and, if applicable, his eligible dependents)
with the same level of health coverage and benefits as in effect for Executive
and his eligible dependents for the Severance Period, commencing on the day
immediately preceding the day of the Executive's termination of employment (the
"Company-Paid Coverage"), at the end of the Severance Period Executive and his
eligible dependents shall be eligible to receive Company's standard medical
benefits provided to terminating employees.
(b ) Disability; Death. If the Company terminates the Executive's
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employment as a result of the Executive's Disability or if the Executive's
employment terminates due to the death of the Executive, then the Executive
shall not be entitled to receive severance or other benefits pursuant to this
Agreement, unless the Company has no benefit plan in place to account for death
and disability of employees, in which case Executive will be entitled to
receive the Guaranteed Severance Payment specified in Section 7(a)(i)(1).
Executive shall remain eligible for those severance and other benefits (if any)
as may then be available under the Company's then existing severance and
benefits plans and policies at the time of Executive's termination or death.
(c) Stock Options. All of Executive's options not otherwise forfeited
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due to lapse of time, in accordance with the Company's Stock Option Plan in
effect, will continue to vest during the Severance Period, including grants
made other than as provided herein. Executive will forfeit options that have
not vested as of the end of the Severance Period, and will have ninety (90)
days after the Severance Period to exercise the vested
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options in accordance with the Company's Stock Option Plan. During the
Severance Period Executive shall not be subject to Company's blackout
restrictions, but shall at all time adhere to Company's xxxxxxx xxxxxxx
policies, pursuant to Section 7(f) hereunder.
(d) Xxxxxxx Xxxxxxx. While Executive receives severance payments and
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benefits, Executive will no longer be deemed a Section 16(b) officer, and will
not be subject to the Company's blackout restrictions, but agrees to comply
with the Company's Xxxxxxx Xxxxxxx Policy , and all applicable SEC Regulations
governing the reporting and trading of Company's securities.
8. Definition of Certain Terms. The following terms referred to in this
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Agreement shall have the following meanings for the purposes of this Agreement
only:
(a) Cause. "Cause" shall mean: (i) any act of personal dishonesty
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taken by the Executive in connection with his responsibilities as
_______________ and intended to result in substantial personal enrichment of
the Executive; (ii) conviction of a felony resulting from any action or failure
to act by the Executive in the performance of Executive's duties, that is
injurious to the Company; (iii) a willful act by the Executive which
constitutes gross misconduct and which results in material injury to the
Company; (iv) continued violations by the Executive of the his material
obligations under this Agreement that are demonstrably willful and deliberate
on the Executive's part after there has been delivered to the Executive a
written demand for performance from the Company which describes the basis for
the Company's belief that the Executive has not substantially performed his
duties; and (v) the breach by Executive of the non-competition provisions of
this Agreement, or of the Company's standard form of confidentiality and
proprietary inventions agreement, which shall be supplemental hereto and
incorporated by reference herein.
(b) Constructive Termination. "Constructive Termination" shall mean
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any of the following: (1) any material reduction in compensation, including
bonus, unless such a reduction is applied, by resolution of the Board of
Directors, to all members of the Company's officers; (2) reduction of
Executive's title; (3) material reduction in Executive's responsibilities;
(4) material reduction in the number of Company employees in the organization
for which Executive is responsible, said reduction not being based on voluntary
resignation of Company employees, but through an internal reorganization, or
other shifting of personnel that is not under the control of Executive; (5) a
change in the Executive's reporting structure that would have him directly
report to a person other than the Company's (or its successors as a result of a
Change in Control) current CEO; or (6) a relocation of the Company's
headquarters, or a relocation of Executive's office or principle place of
business, that is more that 50 miles from Company's current Sunnyvale,
California location.
(c) Disability. "Disability" shall mean that Executive has been
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unable to perform his duties under this Agreement as the result of his
incapacity due to physical or mental illness, and such inability, at least
ninety (90) days after its commencement, is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable
to the Executive's legal representative (such Agreement as to acceptability not
to be unreasonably withheld). Termination resulting from Disability may only
be effected after at least 30 days' written notice by the Board of Directors of
its intention to terminate the Executive's employment. In the event that the
Executive resumes the performance of substantially all of his duties hereunder
before the termination of his employment becomes effective, the notice of
intent to terminate shall automatically be deemed to have been revoked.
(d) Change in Control. "Change in Control" except as may otherwise be
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provided in the Stock Option Agreement, means the occurrence of any of the
following:
(i) The consummation of a merger or consolidation of the Company with
or into another entity or any other corporate reorganization, if more than 50%
of the combined voting power of the continuing or surviving entity's securities
outstanding immediately after such merger, consolidation or other
reorganization is owned by persons who were not stockholders of the Company
immediately prior to such merger, consolidation or other reorganization;
(ii) The sale, transfer or other disposition of all or substantially
all of the Company's assets;
(iii) A change in the composition of the Board, as a result of which
fewer that one-half of the incumbent directors are directors who either (i) had
been directors of the Company on the date 24 months prior to the date of the
event that may constitute a Change in Control (the "original directors") or
(ii) were elected, or nominated for election, to the Board with the affirmative
votes of at least a majority of the aggregate of the original directors who
were still in office at the time of the election or nomination and the
directors whose election or nomination was previously so approved; or
(iv) Any transaction as a result of which any person is the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing at least 20% of the total voting power
represented by the Company's then outstanding voting securities. For purposes
of this Paragraph (iv), the term "person" shall have the same meaning as when
used in sections 13(d) and 14(d) of the Exchange Act but shall exclude:
(A) A trustee or other fiduciary holding securities under an
employee benefit plan of the Company or a subsidiary of the Company; and
(B) A corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as their
ownership of the common stock of the Company.
A transaction shall not constitute a Change in Control if its sole purpose
is to change the state of the Company's incorporation or to create a holding
company that will be owned in substantially the same proportions by the persons
who held the Company's securities immediately before such transactions.
9. No Breach of Duty. Executive represents that Executive's performance of
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this Agreement and as an employee of the Company does not and will not breach
any agreement or duty to keep in confidence proprietary information acquired by
Executive in confidence or in trust prior to employment with the Company.
Executive has not and will not enter into any agreement either written or oral
in conflict with this Agreement. Executive is not presently restricted from
being employed by the Company or entering into this Agreement.
10. Successors.
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(a) Company's Successors. Any successor to the Company (whether
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direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and assets shall assume the obligations under this Agreement and agree
expressly to perform the obligations under this Agreement in the same manner
and to the same extent as the Company would be required to perform such
obligations in the absence of a succession. For all purposes under this
Agreement, the term "Company" shall include any successor to the Company's
business and assets which executes and delivers the assumption agreement
described in this Section or which becomes bound by the terms of this Agreement
by operation of law.
(b) Executive's Successors. The terms of this Agreement, and all
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rights of the Executive hereunder, shall inure to the benefit of, and be
enforceable by, the Executive's personal or legal representatives, executors,
administrators, successors, heirs, devisees and legatees.
11. Notice.
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(a) General. Notices and all other communications contemplated by
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this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by U.S. registered or certified mail,
return receipt requested and postage prepaid. In the case of the Executive,
mailed notices shall be addressed to him at the home address that he most
recently communicated to the Company in writing. In the case of the Company,
mailed notices shall be addressed to its corporate headquarters, and all
notices shall be directed to the attention of its V.P. General Counsel.
(b) Notice of Termination. Any termination by the Company for Cause
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pursuant to Section 6(b) hereof shall be communicated by a notice of
termination to the Executive given in accordance with Section 12(a) of
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this Agreement. Such notice shall indicate the specific termination provision
in this Agreement relied upon, shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination under the
provision so indicated, and shall specify the termination date (which shall be
not more than 15 days after the giving of such notice).
12. Arbitration.
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(a) The Board of Directors and Executive agree that any dispute or
controversy arising out of, relating to, or in connection with this Agreement,
the interpretation, validity, construction, performance, breach, or termination
hereof, or any of the matters herein released, excepting claims under
applicable workers' compensation law and unemployment insurance claims, shall
be settled by binding arbitration to be held in Santa Xxxxx County, California
in accordance with the National Rules for the Resolution of Employment Disputes
then in effect of the American Arbitration Association (the "Rules"). The
arbitrator may grant injunctions or other relief in such dispute or
controversy. The decision of the arbitrator shall be final, conclusive and
binding on the parties to the arbitration. Judgment may be entered on the
arbitrator's decision in any court having jurisdiction. Executive and the
Board of Directors hereby waive any rights each may have to a jury trial. This
provision confers complete and total jurisdiction for final, binding
arbitration with full and complete relief for any and all covered disputes,
including all contract, tort, and statutory claims, and any other causes of
action unless otherwise prohibited by law. This arbitration provision will
survive after the termination of this Agreement.
(b) The arbitrator(s) shall apply California law to the merits of any
dispute or claim, without reference to conflicts of law rules. Executive hereby
consents to the personal jurisdiction of the state and federal courts located
in California for any action or proceeding arising from or relating to this
Agreement or relating to any arbitration in which the Parties are participants.
(c) EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES
ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE
AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH
THIS AGREEMENT, THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH
OR TERMINATION THEREOF, OR ANY OF THE MATTERS HEREIN TO BINDING ARBITRATION,
AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A
JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL
ASPECTS OF THIS SEVERANCE AGREEMENT AND RELEASE OF ALL CLAIMS.
13. Miscellaneous Provisions.
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(a) Waiver. No provision of this Agreement shall be modified, waived
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or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by the Executive and by an authorized officer of the Company
(other than the Executive). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of
the same condition or provision at another time.
(b) Whole Agreement. This Agreement constitutes the entire agreement
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of the parties with respect to the subject matter hereof and supersedes in its
entirety any and all prior undertakings and agreements of the Company and
Executive with respect to the subject matter hereof.
(c) Choice of Law. The validity, interpretation, construction and
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performance of this Agreement shall be governed by the internal substantive
laws but not the choice of law rules of the State of California.
(d) Severability. The invalidity or unenforceability of any provision
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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.
(e) No Assignment of Benefits. The rights of any person to payments
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or benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by
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operation of law, including (without limitation) bankruptcy, garnishment,
attachment or other creditor's process, and any action in violation of this
Section 14(e) shall be void.
(f) Employment Taxes. All payments made pursuant to this Agreement
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will be subject to withholding of applicable income and employment taxes.
(g) Counterparts. This Agreement may be executed in counterparts,
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each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year
first above written.
Oak Technology, Inc. Executive
By: By:
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Title: Title:
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Exhibit A
In consideration for Executive accepting the benefits under his
Executive Officer Severance Agreement dated March 30, 2001, Executive agrees to
release Company of all claims arising from his employment as set forth below.
Executive hereby forever waives for himself, his attorneys, heirs, executors,
administrators, successors and assigns any claim against Company, including its
subsidiaries, affiliates, insurers, shareholders, officers, directors and
employees (the "Parties Released"), for any action, loss, expense or any
damages arising from any occurrence from the beginning of time until the date
of the signing of this Agreement and arising or in any way resulting from
Executive's employment with Company or the termination thereof. The only
exceptions to the above waiver are claims by Employee under any worker's
compensation or unemployment statutes and any right arising under this
Agreement. Employee represents that he has no current intention to assert any
claim on any basis against the Parties Released. Company releases its claims
on intellectual property created by Employee after the date of execution of
this Agreement.
EXECUTIVE ACKNOWLEDGES THAT HE HAS BEEN GIVEN AT LEAST TWENTY-ONE (21) DAYS
WITHIN WHICH TO CONSIDER SIGNING THIS RELEASE. EXECUTIVE MAY REVOKE THIS
AGREEMENT BY WRITTEN NOTICE TO COMPANY WITHIN SEVEN DAYS FOLLOWING ITS
EXECUTION. THIS RELEASE SHALL NOT BECOME EFFECTIVE AND BINDING UNTIL SUCH
PERIOD HAS EXPIRED. EXECUTIVE WILL RETURN ALL CONSIDERATION AND BENEFITS
PROVIDED IN CONNECTION WITH THE GRANTING OF THIS RELEASE IF HE REVOKES THE
RELEASE.
In the event of breach of this Agreement by Company, Executive's exclusive
remedy for such breach shall be limited to the enforcement of the terms of this
Agreement.
COMPANY: EXECUTIVE:
Oak Technology Inc.
By: Name:
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Title:
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