EXHIBIT 10.2
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Second Amended and Restated Employment Agreement ("Agreement")
is dated effective as of February 9, 2005, between Xxxxxxx.xxx, Inc., a
Delaware corporation ("Company"), and Xxxxxxxxx X. Xxxxx ("Executive"). In
consideration of the mutual covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
EMPLOYMENT
1.1 Term. The Company hereby employs Executive, and Executive hereby
accepts such employment, for a term commencing as of September 25, 2003 and
ending on the third anniversary of such date, unless sooner terminated in
accordance with the provisions of Article IV.
1.2 Duties. During the Term, Executive shall be employed by the
Company as its Chief Financial Officer, reporting to the Chief Executive
Officer. As such, Executive shall faithfully perform for the Company the duties
and have the powers customary for such positions. The Executive shall devote
substantially all of his business time and effort to the performance of
Executive's duties hereunder, and shall work primarily at the Company's main
business offices.
1.3 Termination of Prior Agreement. Immediately upon execution of
this Agreement, that certain First Amended and Restated Employment Agreement by
and between Executive and the Company dated as of August 12, 2004 shall
terminate and shall be of no further force or effect.
ARTICLE II
COMPENSATION
2.1 Salary. The Company shall pay Executive during the Term a salary
at the rate of Two Hundred Ten Thousand Dollars ($210,000.00) per annum (the
"Annual Salary"), in accordance with the customary payroll practices of the
Company applicable to senior executives, provided the payments are no less
frequent than bi-weekly. The Annual Salary shall be reviewed annually by the
Board of Directors of the Company (the "Board") or such committee of the Board
as they shall designate for such purpose from time to time. Any adjusted Annual
Salary shall thereupon be the "Annual Salary" for the purposes hereof. The
Executive's Annual Salary shall not be decreased below Two Hundred Ten Thousand
Dollars ($210,000.00) without his prior written consent at any time during the
Term.
2.2 Incentive Compensation. In addition, beginning in January 2004,
Executive will be eligible to participate in an executive bonus plan established
by the Compensation Committee of the Board of Directors with an annual bonus
potential of up to
thirty-three percent (33%) of Annual Salary. Such bonus will be based 50% on
actual EBITDA compared to targeted EBITDA and 50% on the Compensation
Committee's assessment of Executive's performance for the year.
2.3 Benefits. Except as otherwise provided herein, during the Term
Executive shall participate in any group life, medical or disability insurance
plans, retirement plans, fringe benefit programs and similar benefits that may
be available to other employees of the Company generally, on the same terms as
such other employees, to the extent that Executive is eligible under the terms
of such plans or programs as they may be in effect from time to time.
2.4 Expenses. The Company shall pay or reimburse Executive for all
ordinary and reasonable out-of-pocket expenses actually incurred (and, in the
case of reimbursement, paid) by Executive during the Term in the performance of
Executive's services under this Agreement, provided that Executive submits
reasonable proof of such expenses, with the properly completed forms as
prescribed from time to time by the Company.
2.5 Paid Time Off and Holidays. During the Term, Executive shall
accrue annual paid time off of up to seventeen (17) days at full pay, or such
greater paid time off benefits as may be provided for by the Company's paid time
off policies. Executive shall be entitled to such holidays as are established by
the Company for all employees.
2.6 Automobile Allowance. During the Term, the Company shall provide
Executive with an automobile allowance of Five Hundred Dollars ($500.00) per
month (the "Automobile Allowance").
2.7 Relocation Costs. The Company shall pay or reimburse Executive
for all reasonable relocation expenses incurred by Executive arising from his
move from Menlo Park, California to Orange County, California to assume his
responsibilities with the Company, up to a maximum of One Hundred Thousand
Dollars ($100,000), including travel to facilitate the move of his family, the
moving of his household goods to Orange County and broker and escrow fees on the
sale of his residence in Menlo Park, California. The Company shall also provide
Executive temporary housing in Orange County (not to exceed $3,000 per month)
for a period not to exceed four months, unless extended by the Company. In
addition, to the extent Executive is liable for income tax on the receipt of
reimbursement for such relocation costs, the Company shall reimburse him for
such income taxes paid, including income taxes on the reimbursed taxes
themselves, so that Executive is made whole. Executive shall provide reasonable
proof of such reimbursable amounts. In the event that Executive's employment by
the Company is terminated by Executive prior to September 15, 2004, Executive
shall return to the Company all amounts reimbursed or paid on Executive's behalf
pursuant to this Section 2.7.
2.8 COBRA Expenses. The Company shall reimburse Executive for COBRA
expenses (for Executive and his family) incurred during the transition from his
previous employer until he is eligible for benefits from the Company under its
benefit plans (medical and dental).
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ARTICLE III
NONDISCLOSURE AND NON-SOLICITATION
3.1 Proprietary Information.
(a) The Executive recognizes that Executive's relationship
with the Company is one of high trust and confidence by reason of Executive's
access to and contact with the trade secrets and confidential and proprietary
information of the Company including, without limitation, information not
previously disclosed to the public regarding current and projected revenues,
expenses, costs, profit margins and any other financial and budgeting
information; marketing and distribution plans and practices; business plans,
opportunities, projects and any other business and corporate strategies; product
information; names, addresses, terms of contracts and other arrangements with
customers, suppliers, agents and employees of the Company; confidential and
sensitive information regarding other employees, including information with
respect to their job descriptions, performance strengths and weaknesses, and
compensation; and other information not generally known regarding the business,
affairs and plans of the Company (collectively, the "Proprietary Information").
The Executive acknowledges and agrees that Proprietary Information is the
exclusive property of the Company and that Executive shall not at any time,
either during Executive's employment with the Company or thereafter disclose to
others, or directly or indirectly use for Executive's own benefit or the benefit
of others, any of the Proprietary Information. For purposes of this Article III,
the "Company" shall mean the Company and each of its subsidiaries.
(b) The Executive acknowledges that the unauthorized use or
disclosure of Proprietary Information would be detrimental to the Company and
would reasonably be anticipated to materially impair the Company's value.
(c) The Executive's undertakings and obligations under this
Section 3.1 will not apply, however, to any Proprietary Information which: (i)
is or becomes generally known to the public through no action on Executive's
part, (ii) is generally disclosed to third parties by the Company without
restriction on such third parties, (iii) is approved for release by written
authorization of the Board, (iv) is known to Executive other than as a result of
work performed for the Company, or (v) is required to be disclosed by law or
governmental or court process or order.
(d) Upon termination of Executive's employment with the
Company or at any other time upon reasonable request, Executive will promptly
deliver to the Company all notes, memoranda, notebooks, drawings, records,
reports, written computer code, files and other documents (and all copies or
reproductions of such materials) in Executive's possession or under Executive's
control, whether prepared by Executive or others, which contain Proprietary
Information. The Executive acknowledges that this material is the sole property
of the Company.
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3.2 Absence of Restrictions upon Disclosure and Competition.
(a) The Executive hereby represents that, except as Executive
has disclosed in writing to the Company on Exhibit A attached hereto, Executive
is not bound by the terms of any agreement with any previous employer or other
party to refrain from using or disclosing any trade secret or confidential or
proprietary information in the course of Executive's employment with the Company
or to refrain from competing, directly or indirectly, with the business of such
previous employer or any other party.
(b) The Executive further represents that Executive's
performance of all the terms of this Agreement and as an employee of the Company
does not and will not breach any agreement to keep in confidence proprietary
information, knowledge or data acquired by Executive in confidence or in trust
prior to his employment with the Company, and Executive will not disclose to the
Company or induce the Company to use any confidential or proprietary information
or material belonging to any previous employer or others.
3.3 Prohibition on Solicitation of Customers. During the Term and
for a period of eighteen (18) months thereafter, Executive agrees not to,
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 will 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.
3.4 Prohibition on Solicitation of Employees, Agents or Independent
Contractors. During the Term and for a period of eighteen (18) months
thereafter, Executive agrees not to 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 ninety (90) 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.
3.5 Other Obligations. The Executive acknowledges that the Company
from time to time may have agreements with other persons, which impose
obligations or restrictions on the Company regarding inventions made during the
course of work under such agreements or regarding the confidential nature of
such work. The Executive agrees to be bound by all such obligations and
restrictions which are made known to Executive and to take all reasonable action
necessary to discharge the obligations of the Company under such agreements.
3.6 Rights and Remedies upon Breach. The Executive acknowledges and
agrees that any material breach by him of any of the provisions of Article III
(the "Restrictive Covenants") would result in irreparable injury and damage for
which money damages may not provide an adequate remedy. Therefore, if Executive
materially breaches any of the provisions of Article III, the Company shall have
the following rights and remedies, each of which rights and remedies shall be
independent of the other and severally enforceable, and all of which rights
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and remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity (including, without
limitation, the recovery of damages): the right and remedy to have the
Restrictive Covenants specifically enforced (without posting bond and without
the need to prove damages) by any court having equity jurisdiction, including,
without limitation, the right to an entry against Executive of restraining
orders and injunctions (preliminary, mandatory, temporary and permanent) against
violations, threatened or actual, and whether or not then continuing, of such
covenants.
ARTICLE IV
TERMINATION
4.1 Definitions. For purposes of this Agreement, the following
definitions shall apply to the terms set forth below:
(a) Cause. "Cause" shall mean:
(i) habitual neglect or insubordination (defined as a
refusal to execute or carry out directions from the Board which are consistent
with Executive's title and position) where Executive has been given written
notice of the acts or omissions constituting such neglect or insubordination and
Executive has failed to cure such conduct, where susceptible to cure, within
thirty (30) days following notice;
(ii) conviction of any felony or any crime involving
moral turpitude;
(iii) participation in any fraud against the Company;
(iv) willful breach of Executive's material duties to
the Company, including but not limited to theft from the Company and failure to
fully disclose personal pecuniary interest in a transaction involving the
Company;
(v) intentional damage to any property of the Company;
(vi) conduct by Executive which in the good faith,
reasonable determination of the Board demonstrates gross unfitness to serve
including, but not be limited to, gross neglect, non-prescription use of
controlled substances, any abuse of controlled substances whether or not by
prescription, or habitual drunkenness, intoxication, or other impaired state
induced by consumption of any drug, including alcohol; or
(vii) material breach by the Executive of the
Restrictive Covenants.
(b) Change in Control. "Change in Control" means a change in
ownership or control of the Company effected through any of the following
transactions:
(i) a merger, consolidation or other reorganization
unless securities representing 75% or more of the total combined voting power of
the voting securities
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of the successor corporation are immediately thereafter beneficially owned,
directly or indirectly and in substantially the same proportion, by the persons
who beneficially owned the Company's outstanding voting securities immediately
prior to such transaction;
(ii) a sale, transfer or other disposition of all or
substantially all of the Company's assets; or
(iii) a transaction or series of related transactions
approved or recommended by the Board of Directors of the Company (or a committee
of the Board) resulting in the acquisition, directly or indirectly, by any
person or related group of persons (other than (a) a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company or (b) General Atlantic Partners, LLC or any affiliate thereof), of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934, as amended) of either (A) securities possessing more than
50% of the total combined voting power of the Company's outstanding securities
or (B) securities possessing total combined voting power sufficient to elect a
majority of the Board of Directors of the Company, from a person or persons;
provided, however, if the transaction or series of related transactions approved
or recommended by the Board of Directors of the Company (or a committee of the
Board) includes a proposed tender offer to be followed by a second-step merger
to acquire any shares that were not tendered, then a "Change in Control" for
purposes of this Agreement shall only be deemed to have occurred if and when one
of the following has also occurred: (1) the consummation the second-step merger
of the Company with the other entity, (2) sixty (60) days have passed since the
closing of the tender offer or (3) ten (10) days have passed since the proposed
tender offer has been abandoned or terminated pursuant to its terms.
(c) Good Reason. "Good Reason" shall mean, unless otherwise
consented to in writing by Executive:
(i) assignment of the Executive to a position,
responsibilities or duties of a materially lesser status or degree of
responsibility than his position, responsibilities or duties as of September 25,
2003;
(ii) relocation of the Executive outside of the Los
Angeles/Orange County area;
(iii) a reduction by the Company of the Executive's
Annual Salary;
(iv) a failure by the Company to continue in effect,
without substantial change, any benefit plan or arrangement in which the
Executive was participating or the taking of any action by the Company which
would adversely affect the Executive's participation in or materially reduce his
benefits under any benefit plan (unless such failure, action or changes apply
equally to substantially all other management employees of Company); or
(v) any material breach by the Company of any provision
of this Agreement without the Executive having committed any material breach of
Executive's obligations hereunder.
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Notwithstanding the foregoing, (x) Good Reason shall not be deemed to exist
unless notice of termination on account thereof (specifying a termination date
no later than thirty (30) days from the date of such notice) is given no later
than sixty (60) days after the time at which the event or condition purportedly
giving rise to Good Reason first occurs or arises (or when Executive first
becomes aware of such circumstances); and (y) the Company shall have thirty (30)
days from the date notice of such a termination is given to cure such event or
condition if curable and, if the Company does so fully cure such event or
condition, such event or condition shall not constitute Good Reason hereunder.
4.2 Termination upon Death or Disability. If Executive dies during
the Term, the Term shall terminate as of the date of death, and the obligations
of the Company to or with respect to Executive shall terminate in their entirety
upon such date except as otherwise provided under this Section 4.2. If Executive
becomes disabled for purposes of the long-term disability plan of the Company
for which Executive is eligible, or, in the event that there is no such plan, if
Executive by virtue of ill health or other disability is unable to perform
substantially and continuously the material duties assigned to him for more than
180 consecutive or non-consecutive days out of any consecutive 12-month period,
then the Company shall have the right, to the extent permitted by law, to
terminate the employment of Executive upon notice in writing to Executive. If
Executive is given such notice of termination for disability, the Term shall
terminate as of the date of such notice, and the obligations of the Company to
Executive shall terminate in their entirety upon such date except as otherwise
provided under this Section 4.2. Upon termination of employment due to death or
disability, Executive (or Executive's estate or beneficiaries in the case of the
death of Executive) shall be entitled to receive any Annual Salary and other
benefits earned and accrued under this Agreement prior to the date of
termination (and reimbursement under this Agreement for expenses incurred prior
to the date of termination) and Executive (or, in the case of Executive's death,
Executive's estate and beneficiaries) shall have no further rights to any other
compensation or benefits hereunder on or after the termination of employment, or
any other rights hereunder, except as otherwise provided in the plans and
policies of the Company.
4.3 Termination for Cause; Termination of Employment by Executive
without Good Reason. The Company may terminate Executive's employment hereunder
for Cause immediately, and Executive may terminate his employment for any or no
reason on at least thirty (30) days' and not more than sixty (60) days' written
notice given to the Company. If during the Term the Company terminates Executive
for Cause, or Executive terminates his employment and the termination by
Executive is not covered by Section 4.2 or 4.4, Executive shall receive any
Annual Salary and other benefits earned and accrued under this Agreement prior
to the termination of employment (and reimbursement under this Agreement for
expenses incurred prior to the termination of employment) and Executive shall
have no further rights to any other compensation or benefits hereunder on or
after the termination of employment, or any other rights hereunder, except as
otherwise provided in the plans and policies of the Company.
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4.4 Termination by the Company without Cause; or by Executive for
Good Reason. The Company may terminate Executive's employment at any time for
any reason or no reason and Executive may terminate Executive's employment with
the Company for Good Reason. If during the Term the Company terminates
Executive's employment and the termination is not covered by Section 4.2 or 4.3,
or Executive terminates his employment for Good Reason, Executive shall receive:
(a) any Annual Salary and other benefits earned and accrued
under this Agreement prior to the termination of employment (and reimbursement
under this Agreement for expenses incurred prior to the termination of
employment);
(b) if such termination occurs prior to a Change in Control,
his Annual Salary payable in accordance with the Company's customary payroll
practices for nine (9) months following such termination;
(c) if such termination occurs following a Change in Control:
(i) a lump sum severance payment upon termination equal
to twelve (12) months Annual Salary and Automobile Allowance;
(ii) a pro-rata portion of any bonus Executive would
have received pursuant to Section 2.2 had Executive remained employed for the
full calendar year during which such termination occurred, based on the number
of days Executive was actually employed by the Company during the applicable
year; and
(iii) reimbursement for COBRA payments equal to
Executive's regular monthly contributions toward Executive's health benefits for
twelve (12) months following such termination date if Executive elects COBRA
benefits.
In order to be eligible to receive the benefits specified under
Sections 4.4(b) or (c), Executive must execute a general release of claims in a
form reasonably acceptable to the Company and Executive and signed by Executive.
Executive shall have no further rights to any other compensation or benefits
hereunder on or after the termination of employment, or any other rights
hereunder, except as otherwise provided in the plans and policies of the
Company.
In the event Executive is terminated by the Company pursuant to this
Section 4.4, Executive shall not have a duty to seek substitute employment and
the Company shall not have the right to offset any compensation due Executive
against any compensation or income received by Executive after the date of such
termination.
4.5 Benefit Limit. In the event that any payment or benefit
(including salary continuation payments) received or to be received by Executive
pursuant to this Agreement (collectively the `Payments") would constitute a
parachute payment within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), then the following limitation shall
apply:
The aggregate present value of those Payments shall be limited in
amount to the greater of the following dollar amounts (the "Benefit
Limit"):
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(a) 2.99 times Executive's Average Compensation, or
(b) the amount which yields Executive the greatest after-tax
amount of Payments under this Agreement after taking into account any
excise tax imposed under Code Section 4999 on those Payments.
The present value of the Payments will be measured as of the date of
the change of control and determined in accordance with the provisions of Code
Section 280G(d)(4).
Average Compensation means the average of Executive's W-2 wages from
the Company for the five (5) calendar years (or such fewer number of calendar
years of employment with the Company) completed immediately prior to the
calendar year in which the change of control is effected. Any W-2 wages for a
partial year of employment will be annualized, in accordance with the frequency
which such wages are paid during such partial year, before inclusion in Average
Compensation.
4.6 Resolution Procedure. For purposes of the foregoing Benefit
Limit, the following provisions will be in effect:
(a) In the event there is any disagreement between Executive
and the Company as to whether one or more Payments to which Executive becomes
entitled under this Agreement constitute parachute payments under Code Section
280G or as to the determination of the present value thereof, such dispute will
be resolved as follows:
(i) In the event temporary, proposed or final Treasury
Regulations in effect at the time under Code Section 280G (or applicable
judicial decisions) specifically address the status of any such Payment or the
method of valuation therefor, the characterization afforded to such Payment by
the Regulations (or such decisions) will, together with the applicable valuation
methodology, be controlling.
(ii) In the event Treasury Regulations (or applicable
judicial decisions) do not address the status of any Payment in dispute, the
matter will be submitted for resolution to a nationally-recognized independent
accounting firm mutually acceptable to Executive and the Company ("Independent
Accountant"). The resolution reached by the Independent Accountant will be final
and controlling; provided, however, that if in the judgment of the Independent
Accountant the status of the payment in dispute can be resolved through the
obtainment of a private letter ruling from the Internal Revenue Service, a
formal and proper request for such ruling will be prepared and submitted, and
the determination made by the Internal Revenue Service in the issued ruling will
be controlling. All expenses incurred in connection with the retention of the
Independent Accountant and (if applicable) the preparation and submission of the
ruling request shall be borne by the Company.
4.7 Reduction of Benefits. To the extent the aggregate present value
of the Payments would exceed the Benefit Limit, the salary continuation payments
will first be reduced, and then the accelerated vesting of the options (based on
their parachute value under Code Section 280G) will be reduced, to the extent
necessary to assure that such Benefit Limit is not exceeded.
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ARTICLE V
GENERAL PROVISIONS
5.1 Severability. The Executive acknowledges and agrees that (i) he
has had an opportunity to seek advice of counsel in connection with this
Agreement and (ii) the Restrictive Covenants are reasonable in geographical and
temporal scope and in all other respects. If it is determined that any of the
provisions of this Agreement, including, without limitation, any of the
Restrictive Covenants, or any part thereof, is invalid or unenforceable, the
remainder of the provisions of this Agreement shall not thereby be affected and
shall be given full effect, without regard to the invalid portions.
5.2 Duration and Scope of Covenants. If any court or other
decision-maker of competent jurisdiction determines that any of Executive's
covenants contained in this Agreement, including, without limitation, any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographical scope of such provision, then, after such determination
has become final and unappealable, the duration or scope of such provision, as
the case may be, shall be reduced so that such provision becomes enforceable
and, in its reduced form, such provision shall then be enforceable and shall be
enforced.
5.3 Arbitration.
(a) Except as provided in Section 3.6, any controversy,
dispute, or claim between the parties to this Agreement, including any claim
arising out of, in connection with, or in relation to the formation,
interpretation, performance or breach of this Agreement shall be settled
exclusively by arbitration, before a single arbitrator experienced in employment
matters, in accordance with this section and the then most applicable rules of
the American Arbitration Association. Judgment upon any award rendered by the
arbitrator may be entered by any state or federal court having jurisdiction
thereof. Such arbitration shall be administered by the American Arbitration
Association. Arbitration shall be the exclusive remedy for determining any such
dispute, regardless of its nature. Notwithstanding the foregoing, either party
may in an appropriate matter apply to a court pursuant to California Code of
Civil Procedure Section 1281.8, or any comparable provision, for provisional
relief, including a temporary restraining order or a preliminary injunction, on
the ground that the award to which the applicant may be entitled in arbitration
may be rendered ineffectual without provisional relief.
(b) In the event the parties are unable to agree upon an
arbitrator, the parties shall select a single arbitrator from a list of nine
arbitrators drawn by the parties at random from the "Independent" (or "Gold
Card") list of retired judges or, at Executive's option, from a list of nine
persons from the Employment Panel provided by the American Arbitration
Association. If the parties are unable to agree upon an arbitrator from the list
so drawn, then the parties shall each strike names alternately from the list,
with the first to strike being determined by lot. After each party has used four
strikes, the remaining name on the list shall be the arbitrator. If such person
is unable to serve for any reason, the parties shall repeat this process until
an arbitrator is selected.
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(c) This agreement to resolve any disputes by binding
arbitration shall extend to claims against any parent, subsidiary or affiliate
of each party, and, when acting within such capacity, any officer, director,
shareholder, employee or agent of each party, or of any of the above, and shall
apply as well to claims arising out of state and federal statutes and local
ordinances as well as to claims arising under the common law. In the event of a
dispute subject to this paragraph the parties shall be entitled to reasonable
discovery subject to the discretion of the arbitrator. The remedial authority of
the arbitrator shall be the same as, but no greater than, would be the remedial
power of a court having jurisdiction over the parties and their dispute. The
arbitrator shall, upon an appropriate motion, dismiss any claim without an
evidentiary hearing if the party bringing the motion establishes that he, she or
it would be entitled to summary judgment if the matter had been pursued in court
litigation. In the event of a conflict between the applicable rules of the
American Arbitration Association and these procedures, the provisions of these
procedures shall govern.
(d) Any filing or administrative fees shall be borne initially
by the party requesting arbitration. The Company shall be initially responsible
for the costs and fees of the arbitrator, unless Executive wishes to contribute
(up to 50%) of the costs and fees of the arbitrator. The prevailing party in
such arbitration, as determined by the arbitrator, and in any enforcement or
other court proceedings, shall be entitled, to the extent permitted by law, to
reimbursement from the other party for all of the prevailing party's costs
(including but not limited to the arbitrator's compensation), expenses, and
attorneys' fees.
(e) The arbitrator shall render an award and written opinion,
and the award shall be final and binding upon the parties. If any of the
provisions of this Section 5.3, or of this Agreement, are determined to be
unlawful or otherwise unenforceable, in whole or in part, such determination
shall not affect the validity of the remainder of this Agreement, and this
Agreement shall be reformed to the extent necessary to carry out its provisions
to the greatest extent possible and to insure that the resolution of all
conflicts between the parties, including those arising out of statutory claims,
shall be resolved by neutral, binding arbitration. If a court should find that
this Section's arbitration provisions are not absolutely binding, then the
parties intend any arbitration decision and award to be fully admissible in
evidence in any subsequent action, given great weight by any finder of fact, and
treated as determinative to the maximum extent permitted by law.
(f) Unless mutually agreed by the parties otherwise, any
arbitration shall take place in Orange County, California.
5.4 Proprietary Information and Inventions. Contemporaneously with
the execution of this Agreement, Executive shall execute a Proprietary
Information and Inventions Agreement with the Company. The terms of said
agreement are incorporated by reference in this Agreement, and Executive agrees
to be bound thereby.
5.5 Covenant to Notify Management. Executive agrees to abide by the
ethics policies of the Company as well as the Company's other rules,
regulations, policies and procedures which he has received in writing. Executive
agrees to comply in full with all governmental laws and regulations as well as
ethics codes applicable to the business or profession. In the event that
Executive is aware or suspects the Company, or any of its officers
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or agents, of violating any such laws, ethics codes, rules, regulations,
policies or procedures, Executive agrees to bring all such actual and suspected
violations to the attention of the Company immediately so that the matter may be
properly investigated and appropriate action taken.
5.6 Assistance/Cooperation With Litigation. In connection with the
Company's participation in current or future litigation relating to events which
occur during Executive's employment or about which Executive has information,
Executive agrees to cooperate fully and devote such time as may be reasonably
required in the preparation, prosecution or defense of the Company's case or
cases, including, but not limited to, the execution of truthful declarations or
providing information and/or documents requested by the Company. The Company
shall reimburse Executive, promptly upon receipt of satisfactory evidence
thereof, for all reasonable expenses (not including any amount for Executive's
time) incurred by Executive in connection with such assistance and/or
cooperation with the Company with respect to such litigation.
5.7 Notices. All notices or deliveries authorized or required
pursuant to this Agreement shall be deemed to have been given when in writing
and when (i) deposited in the U.S. mail, certified, return receipt requested,
postage prepaid, or (ii) otherwise delivered by hand or by overnight delivery,
against written receipt, by a common carrier or commercial courier or delivery
service addressed to the parties at the following addresses or to such other
addresses as either may designate in writing to the other party:
to the Company: Xxxxxxx.xxx, Inc.
000 Xxxxx Xxxx., 00xx Xxxxx
Xxxxx Xxxx, XX 00000
Attn: Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
to Executive: Xxxxxxxxx X. Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxx Xxxxx, XX 00000
5.8 Entire Agreement. This Agreement, along with the Proprietary
Information and Inventions Agreement by and between Executive and Company of
even date herewith and the stock option agreements described in Section 2.3,
contain the entire agreement between the parties with respect to the subject
matter hereof and thereof and supersedes all prior agreements, written or oral,
with respect thereto.
5.9 Waivers and Amendments. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms hereof may be waived,
only by a written instrument signed by the parties or, in the case of a waiver,
by the party waiving compliance. No delay on the part of any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any party of any such right, power or
privilege nor any single or partial exercise of any such right, power or
12
privilege, preclude any other or further exercise thereof or the exercise of any
other such right, power or privilege.
5.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
5.11 Assignment. This Agreement, and Executive's rights and
obligations hereunder, may not be assigned by Executive; any purported
assignment by Executive in violation hereof shall be null and void. In the event
of any sale, transfer or other disposition of all or substantially all of the
Company's assets or business, whether by merger, consolidation or otherwise, the
Company may assign this Agreement and its rights hereunder; provided that such
assignment shall not limit the Company's liability under this Agreement to
Executive.
5.12 Withholding. The Company shall be entitled to withhold from any
payments or deemed payments any amount of tax withholding required by law.
5.13 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors, permitted
assigns, heirs, executors and legal representatives.
5.14 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original but all such counterparts together shall constitute one and
the same instrument. Each counterpart may consist of two copies hereof each
signed by one of the parties hereto.
5.15 Survival. Anything contained in this Agreement to the contrary
notwithstanding, the provisions of Article III, Sections 5.2, 5.3, 5.5, 5.6,
5.10 and 5.17, and the other provisions of this Section 5 (to the extent
necessary to effectuate the survival of Article III, Sections 5.2, 5.3, 5.5,
5.6, 5.10 and 5.17), shall survive termination of this Agreement and any
termination of Executive's employment hereunder.
5.16 Headings. The headings in this Agreement are for reference only
and shall not affect the interpretation of this Agreement.
5.17 Indemnification; Directors and Officers Insurance. To the
fullest extent permitted by law, the Company shall indemnify, defend and hold
harmless Executive from and against all actual or threatened actions, suits or
proceedings, whether civil or criminal, administrative or investigative,
together with all attorneys' fees and costs, fines, judgments or settlements
imposed upon or incurred by Executive in connection therewith, that arise from
Executive's employment by, or serving as an officer of, the Company, so long as
Executive acted or refrained from acting legally and in good faith or reasonably
believed that his actions or refraining from acting were legal and performed or
omitted in good faith.
5.18 Cooperation and Consultation. Following any termination of
employment, for a period of three (3) months, Executive shall make himself
available to perform such acts and consult with the Company regarding such
matters as reasonably requested by the Company to ensure the orderly and
efficient transition of Executive's duties.
13
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
"EMPLOYER"
XXXXXXX.XXX, INC., a Delaware
corporation
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Xxxxxx Xxxxxxx,
Chief Executive Officer
"EXECUTIVE"
/s/ Xxxxxxxxx X. Xxxxx
----------------------------------------
Xxxxxxxxx X. Xxxxx
14
EXHIBIT A
NON-DISCLOSURE AND NON-COMPETITION AGREEMENT
Please list terms of any agreements with any previous employer or other
party which restrains you from using or disclosing any trade secret or
confidential or proprietary information in the course of your employment with
Xxxxxxx.xxx, Inc. or restrains you from competing directly or indirectly with
the business of such previous employer or any other party.
Date Signed by
Executive:
_____________________________ ___________________________
Signature of Executive
___________________________
Printed Name of Executive
Reviewed and accepted by
_____________________________
On __________________________
By: _________________________
A-1
