EXHIBIT 10.54
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement ("Agreement") is dated as of July
10, 1999, between Inference Corporation, a Delaware corporation (the "Company"),
and Xxxx Xxxx (the "Executive").
WHEREAS, the Company has determined that it is in the best interests
of the Company and its stockholders to reinforce and encourage the continued
attention and dedication of certain key members of the Company's management,
including the Executive, to their assigned duties without distraction in
uncertain circumstances arising from the possibility of a change in control of
the Company.
WHEREAS, the Company also has determined that it is in the best
interests of the Company and its stockholders to minimize the personal
considerations of certain key members of management in their evaluation of any
offers for a change in control of the Company.
WHEREAS, the Company has determined that the loss of the Executive's
services would have a detrimental effect on an effort to effect a change in
control of the Company (in the event the Company determines to effect such a
change in control of the Company).
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and conditions contained herein, the parties hereto agree as follows:
ARTICLE I
TERMINATION
I.1 Definitions. For purposes of this Article I, the following
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definitions shall be applicable to the terms set forth below:
(a) Cause. "Cause" shall mean only the following: (i) the
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Executive's death or Disability; (ii) the willful and continued failure by the
Executive to substantially perform his duties hereunder (other than such failure
resulting from the Executive's incapacity due to physical or mental illness)
after demand for substantial performance is delivered by the Company that
specifically identifies the manner in which the Company believes the Executive
has not substantially performed his duties; (iii) willful misconduct by the
Executive which is materially injurious to the Company; (iv) conviction of a
felony under the laws of the State of California; (v) habitual drunkenness by
the Executive; or (vi) a willful, material breach of this Agreement by the
Executive. For purposes of this Agreement, no act, or failure to act, on the
Executive's part shall be considered "willful" unless done, or omitted to be
done, by the Executive in bad faith and without a reasonable belief that such
action or omission by the Executive was in the best interests of the Company.
Notwithstanding anything to the contrary in the foregoing, no termination or
other action shall be considered to be for Cause under this Agreement unless the
Executive first shall have received at least 5 days written notice setting forth
the reasons for the Company's intention to terminate or take other action.
(b) Change of Control "Change in Control" means and shall be
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deemed to have occurred with respect to the Company if: (i) there shall be
consummated (A) any consolidation, merger or other business combination of the
Company with another corporation or entity and as a result of such
consolidation, merger or other business combination less than 50% of the
outstanding voting securities of the surviving or resulting corporation or
entity shall be owned in the aggregate by the shareholders of the Company, other
than affiliates (within the meaning of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), of any party to such consolidation, merger, or
other business combination, as the same shall have existed immediately prior to
such consolidation, merger, or other business combination; or (B) any sale,
lease, exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company; (ii)
the shareholders of the Company approve any plan or proposal for the liquidation
or dissolution of the Company; (iii) any "Person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than the shareholders of
the Company as of the date hereof, shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of 30% or more of the Company's
outstanding Common Stock; or (iv) a change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Exchange Act shall have occurred.
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(c) Good Reason. "Good Reason" shall mean each of the following:
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(i) the failure of the Company to vest the Executive, without the Executive's
consent, with the powers and authority of the Executive's position of employment
as contemplated herein, or any removal of the Executive from, without the
Executive's consent, to a position of employment consistent with the position
and status of Executive the position of CFO and the most senior financial
executive position in the company, reporting directly to the Chief Executive
Officer; (ii) a reduction by the Company, without the Executive's consent, in
the Executive's annual base salary as it may exist from time to time; (iii) a
failure by the Company, without the Executive's consent, to continue any Company
Benefit Plans in which the Executive presently is entitled to participate, as
the same may be modified from time to time; (iv) a failure, without the
Executive's consent, by the Company to continue the Executive as a participant
in any Company Benefit Plans on at least the same basis as he presently
participates in such plans; (v) the requirement by the Company, without
Executive's consent, that the Executive be based anywhere other than within 25
miles of the Executive's present office location, except for required travel on
the Company's business to an extent substantially consistent with the
Executive's present business travel obligations; (vi) a failure by the Company
to comply with any material provisions of this Agreement which has not been
cured within thirty (30) days after notice of such noncompliance has been given
by the Executive to the Company, or if such failure is not capable of being
cured in such time, a cure shall not have been diligently initiated by the
Company within such thirty-day period; or (vii) a failure by the Company to
obtain from any successor, before the succession takes place, an agreement to
assume and perform this Agreement; provided, however, that any of the foregoing
actions shall not be considered to be Good Reason if such action is undertaken
by the Company for Cause.
I.2 Severance Benefits Received Upon Termination.
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(a) If at any time the Executive's employment is terminated by
the Company for Cause, the Company shall pay the Executive, in cash, his base
salary through the end of the month during which such termination occurs plus
credit for any accrued vacation. All benefits will remain in effect until the
termination occurs.
(b) Subject to the other provisions contained in this Agreement,
the Company may terminate this Agreement for any reason other than Cause upon
thirty (30) days' written notice to Executive. The effective date of termination
("Effective Date") shall be considered to be thirty (30) days subsequent to
written notice of termination; however, the Company may elect to have Executive
leave the Company immediately.
(c) If at any time the Executive's employment is terminated by
the Company without Cause or (ii) at any time the Executive's employment is
terminated by the Executive for Good Reason, then the Company shall:
(1) Pay to the Executive within four business days
following the date of termination his base salary through the end of the month
during which such termination occurs plus credit for any vacation earned but not
taken; and
(2) Pay to the Executive in a lump sum within seven
business days following the date of termination, an amount equal to three (3)
months of the Executive's annual base salary in effect as of the date of
termination. If the Executive is not employed full-time within three (3) months
of the termination date, the Company shall continue the Executive's monthly
salary for up to three (3) months or until the Executive's commencement of full
time employment with a new employer, which ever occurs first; and
(3) Health Benefits. The Company shall provide the
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Executive with the same level of health coverage and benefits as in effect for
the Executive on the day immediately preceding the day of the Executive's
termination of employment; provided, however, that (i) the Executive constitutes
a qualified beneficiary, as defined in Section 4980(g)(l) of the Internal
Revenue Code of 1986, as amended; and (ii) Executive elects continuation
coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended ("COBRA"), within the time period prescribed pursuant to COBRA. The
Company shall continue to reimburse Executive for continuation coverage until
the earlier of (i) the date Executive is no longer eligible to receive
continuation coverage pursuant to COBRA or (ii) six (6) months from the
termination of Executive's employment; and
(4) Pay to the Executive in lump sum within four business
days following the date of termination the Retention Bonus in the amount
specified in Section I.4, to the extent not already paid; and
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(5) Continue to vest the Executive with the Retention Stock
in the amount specified in Section I.5 until the Retention Stock is fully vested
and exercisable.
I.3 Severance Benefits Received Upon Change of Control
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If at any time the Executive's employment is terminated by the Company due to a
Change of Control or if the Executive is not offered a like position with the
same compensation, benefits, position and responsibilities due to a Change of
Control, the Company shall:
(1) Pay to the Executive in a lump sum within seven business
days following the date of termination, an amount equal to one (1) times the
Executive's annual base salary in effect as of the date of termination plus one
half (1/2) the Executive's annual bonus; and
(2) Health Benefits. The Company shall provide the Executive
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with the same level of health coverage and benefits as in effect for the
Executive on the day immediately preceding the day of the Executive's
termination of employment; provided, however, that (i) the Executive constitutes
a qualified beneficiary, as defined in Section 4980(g)(l) of the Internal
Revenue Code of 1986, as amended; and (ii) Executive elects continuation
coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended ("COBRA"), within the time period prescribed pursuant to COBRA. The
Company shall continue to reimburse Executive for continuation coverage until
the earlier of (i) the date Executive is no longer eligible to receive
continuation coverage pursuant to COBRA or (ii) twelve months from the date
Executive's employment with the Company terminated.
I.4 Retention Bonus
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(1) If the Executive is actively employed by the Company on
April 30, 2000, the Executive shall receive a cash bonus of $22,500.
I.5 Retention Stock
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(1) On July 8, 1999 the Board of Directors approved a stock
grant of 7,500 options that completely vest one year from the grant date (July
8, 1999), if the Executive is actively employed on July 31, 2000. You will
continue to be eligible for additional stock grants at the end of the fiscal
year when we review all the executives.
I.6 2/nd/ Half FYOO Bonus Plan
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(1) The Company shall modify the 2/nd/ half of FY00 operating
plan to set goals that are more achievable. The executive bonus plans will be
tied to the new plan and provide a reasonable opportunity to achieve bonus
targets for the 2/nd/ half of FY00.
I.7 No Obligation to Mitigate Damages; No Effect on Other Contractual
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Rights.
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(a) The Executive shall not be required to mitigate damages or
the amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the date of termination.
(b) The provisions of this Agreement, and any payment or benefit
provided for hereunder, shall not reduce any amounts otherwise payable, or in
any way diminish the Executive's existing rights, or rights which would accrue
solely as a result of the passage of time, under any Company Benefit Plan,
employment agreement or other contract, plan or arrangement.
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ARTICLE II
CONFIDENTIALITY AND NONDISCLOSURE
II.1 Confidentiality. Executive will not during Executive's
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employment by the Company or thereafter at any time disclose, directly or
indirectly, to any person or entity or use for Executive's own benefit any trade
secrets or confidential information relating to the Company's business,
operations, marketing data, business plans, strategies, employees, negotiations
and contracts with other companies, or any other subject matter pertaining to
the business of the Company or any of its clients, customers, consultants, or
licensees, known, learned, or acquired by Executive during the period of
Executive's employment by the Company (collectively "Confidential Information"),
except as may be necessary in the ordinary course of performing Executive's
particular duties as an employee of the Company.
II.2 Return of Confidential Material. Executive shall promptly
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deliver to the Company on termination of Executive's employment with the
Company, whether or not for Cause and whatever the reason, or at any time the
Company may so request, all memoranda, notes, records, reports, manuals,
drawings, blueprints, Confidential Information and any other documents of a
confidential nature belonging to the Company, including all copies of such
materials which Executive may then possess or have under Executive's control.
Upon termination of Executive's employment by the Company, Executive shall not
take any document, data, or other material of any nature containing or
pertaining to the proprietary information of the Company.
II.3 Prohibition on Solicitation of Customers. During the term of
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Executive's employment with the Company and for a period of one (1) year
thereafter Executive shall not, directly or indirectly, either for Executive or
for any other person or entity, solicit any person or entity to terminate such
person's or entity's contractual and/or business relationship with the Company,
nor shall Executive interfere with or disrupt or attempt to interfere with or
disrupt any such relationship. None of the foregoing shall be deemed a waiver
of any and all rights and remedies the Company may have under applicable law.
II.4 Prohibition on Solicitation of Employees, Agents or Independent
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Contractors After Termination. During the term of Executive's employment with
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the Company and for a period of one (1) year following the termination of
Executive's employment with the Company, Executive will not solicit any of the
employees, agents, or independent contractors of the Company to leave the employ
of the Company for a competitive company or business. However, Executive may
solicit any employee, agent or independent contractor who voluntarily terminates
his or her employment with the Company after a period of 120 days have elapsed
since the termination date of such employee, agent or independent contractor.
None of the foregoing shall be deemed a waiver of any and all rights and
remedies the Company may have under applicable law.
II.5. Right to Injunctive and Equitable Relief. Executive's
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obligations not to disclose or use Confidential Information and to refrain from
the solicitations described in this Article II are of a special and unique
character which gives them a peculiar value. The Company cannot be reasonably
or adequately compensated for damages in an action at law in the event Executive
breaches such obligations. Therefore, Executive expressly agrees that the
Company shall be entitled to injunctive and other equitable relief without bond
or other security in the event of such breach in addition to any other rights or
remedies which the Company may possess or be entitled to pursue. Furthermore,
the obligations of Executive and the rights and remedies of the Company under
this Article II are cumulative and in addition to, and not in lieu of, any
obligations, rights, or remedies created by applicable law relating to
misappropriation or theft of trade secrets or Confidential Information.
II.6 Survival of Obligations. Executive agrees that the terms of
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this Article II shall survive the term of this Agreement and the termination of
Executive's employment by the Company.
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ARTICLE III
ASSUMPTION OF OBLIGATIONS BY SUCCESSOR TO COMPANY
III.1 Assumption of Obligations. The Company will require any
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successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement in form and substance satisfactory to the
Executive, expressly, absolutely and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession or assignment had
taken place. Any failure of the Company to obtain such agreement prior to the
effectiveness of any such succession or assignment shall be a material breach of
this Agreement. As used in this Agreement, "Company" shall mean the Company as
herein before defined and any successor or assign to its business and/or assets
as aforesaid which executes and delivers the agreement becomes bound by all the
terms and provisions of this Agreement by operation of law. If at any time
during the term of this Agreement the Executive is employed by any corporation a
majority of the voting securities of which is then owned by the Company,
"Company" as used in this Agreement shall in addition include such employer. In
such event, the Company agrees that it shall pay or shall cause such employer to
pay any amounts owed to the Executive pursuant to this Agreement.
III.2 Beneficial Interests. This Agreement shall inure to the
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benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts are still
payable to him hereunder, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee, or other designee or, if there be no such designee, to the
Executive's estate.
ARTICLE IV
GENERAL PROVISIONS
IV.1 No Waivers. No provision of this Agreement may be modified,
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waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.
IV.2 Governing Law. This Agreement shall be governed by and
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construed in accordance with the laws of the State of California.
IV.3 Severability or Partial Invalidity. The invalidity or
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unenforceability of any provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
IV.4 Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
IV.5 Legal Fees and Expenses. Should any party institute any action
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or proceeding to enforce this Agreement or any provision hereof, or for damages
by reason of any alleged breach of this Agreement or of any provision hereof, or
for a declaration of rights hereunder, the prevailing party in any such action
or proceeding shall be entitled to receive from the other party all costs and
expenses, including reasonable attorneys' fees, incurred by the prevailing party
in connection with such action or proceeding.
IV.6 Notice Provisions. All notices must be written and executed by
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registered mail with a return receipt.
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IV.7 Entire Agreement. This Agreement constitutes the entire
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agreement of the parties and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings, and negotiations between the
parties with respect to the subject matter hereof. This Agreement is intended
by the parties as the final expression of their agreement with respect to such
terms as are included in this Agreement and may not be contradicted by evidence
of any prior or contemporaneous agreement. The parties further intend that this
Agreement constitutes the complete and exclusive statement of its terms and that
no extrinsic evidence may be introduced in any judicial proceeding involving
this Agreement.
IV.8 Arbitration. Any controversy, dispute, claim or other matter
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in question arising out of or relating to this Agreement shall be settled, at
the request of either party, by binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association ("AAA"),
and judgement upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof, subject to the following terms, conditions
and exceptions:
1.1 Notice of the demand for arbitration shall be filed in writing with
the other party and with the AAA. There shall be a panel of three (3)
arbitrators whose selection shall be made in accordance with the procedures then
existing for the selection of such arbitrators by the AAA.
1.2 Discovery as allowable under California Code of Civil Procedure
Sections 2001 et. seq. shall be allowed in arbitration.
1.3 The costs and fees of the arbitration shall be advanced by the Company
and shall be allocated by the arbitrators after judgement.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
INFERENCE CORPORATION, a Delaware corporation
By: __________________________________________________
Xxxxxxx Xxxxxx, President and Chief Executive
Officer
EXECUTIVE
__________________________________________________
Xxxx Xxxx
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