Exhibit 10.9
EMPLOYMENT AGREEMENT
Employment Agreement ("Agreement") dated as of June 1, 1998 between
Muse Technologies, Inc., a Delaware corporation (the "Company"), and Xxxx
Xxxxxxx (the "Executive").
ARTICLE I
EMPLOYMENT
The Company hereby employs the Executive, and the Executive accepts
employment with the Company, upon the following terms and conditions:
1.1 Employment. The Company hereby employs the Executive, and the
Executive agrees to serve, as the Vice President of Sales and Marketing of the
Company and its subsidiaries (the "Subsidiaries") during the term of this
Agreement. Subject to the Board of Directors of the Company and the Board of
Directors of each Subsidiary, the Executive shall actively manage, and have
responsibility for and supervision over, the business activities and affairs of
the Company and the Subsidiaries with respect to sales and marketing, and he
shall manage, supervise and direct its and their officers, employees and agents
with respect to sales and marketing. The Executive agrees to devote his full
business time and attention and best efforts to the affairs of the Company and
the Subsidiaries during the term of this Agreement.
1.2 Term. The Employment of the Executive by the Company under the
terms and conditions of this Agreement will commence as of June 1, 1998 and
continue until May 31, 2001 (the "Term") unless terminated sooner in accordance
with the provisions of Article IV.
ARTICLE II
COMPENSATION
2.1 (a) Annual Salary. During the Term the Company shall pay to the
Executive an annual salary of $150,000 (the "Base Salary") payable in equal
installments every two weeks. The Board of Directors shall review the
performance of the Executive annually and thereafter, at the sole discretion of
the Board of Directors, determine whether the Executive is entitled to an
increase in the Base Salary.
(b) Commission Plan. In addition to any other compensation to be
received pursuant to this Agreement, the Executive shall be entitled to receive
commissions ("Commissions") pursuant to the Sales Compensation Plan and
Territory Assignment (attached as Annex A hereto).
2.2 Stock Options. The Executive will be eligible to receive grants of
stock options under the Company's Stock Option Plan as the Board of Directors
shall determine. As of the date of this Agreement, subject to the terms of the
Stock Option Plan, the Executive shall be entitled to receive stock options
under the Company's Stock Option Plan exercisable for 30,000, 37,500 and 50,000
shares of common stock of the Company and vesting on June 1, 1999, June 1, 2000
and June 1, 2001, respectively, at an exercise price per share of $7.50, in the
event the Executive's employment with the Company has not been terminated prior
to each such vesting date, as the case may be.
2.3 Reimbursement of Expenses. The Executive shall be entitled to
receive prompt reimbursement of all reasonable expenses incurred by the
Executive in performing services hereunder, including all expenses of travel,
entertainment and living expenses while away from
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Albuquerque, NM on business at the request of, or in the service of, the Company
or any Subsidiary, provided that such expenses are incurred and accounted for in
accordance with the policies and procedures and approved operating budget
established by the Company.
2.4 Benefits. The Executive shall be entitled to participate in and be
covered by all health, insurance, pension and other employee plans and benefits
established by the Company (collectively referred to herein as the "Company
Benefit Plans") for its executive employees generally, subject to meeting
applicable eligibility requirements. Additionally, the Company shall reimburse
the Executive for the annual cost of a life insurance policy on the life of the
Executive which provides for payment of an aggregate of at least five hundred
thousand dollars to the Executive's designated beneficiaries.
2.5 Fringe Benefits. Upon completion of the Company's initial public
offering (the "IPO"), the Executive shall be entitled to receive a five-year
relocation loan from the Company (for purpose of relocating to Albuquerque, NM)
in an aggregate amount of up to $75,000 at an interest rate of five percent (5%)
per annum (the "Loan"). The Loan shall be secured by the Executive's vested
stock options at the time of the IPO having a value equal to the principal
amount of the Loan (the "Vested Stock Options"). The value of the Vested Stock
Options shall be determined according to the price per share of the Company's
common stock, par value $.015 per share, offered to the public at the IPO less
the exercise price therefor.
2.6 Vacations and Holidays. During the Term, the Executive shall be
entitled to an annual vacation leave of a minimum of four weeks at full pay. The
Executive shall also be entitled
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to such holidays as are established by the Company for all employees and such
other religious holidays as is customary pursuant to the Executive's religious
practice.
ARTICLE III
CONFIDENTIALITY AND NONDISCLOSURE
3.1 Confidentiality. The Executive will not during his employment by
the Company or thereafter at any time disclose, directly or indirectly, to any
person or entity or use, or permit the use of, any trade secrets or confidential
information relating to the Company or any Subsidiary (the "Confidential
Information") except as required by law. "Confidential Information" shall
include, but shall not be limited to, the terms of any agreement for the
development or commercialization of any hardware or software or technology
related thereto, the terms of any license, marketing, sales or distribution
agreement relating to any of the foregoing, and all information denominated as
"Confidential" and made available only on a restricted basis; provided however,
that "Confidential Information" shall not include information which comes into
the public domain through no fault of the Executive or which the Executive
obtains after the termination of employment with the Company or otherwise from a
third party who, to the knowledge of the Executive, has the right to disclose
such information.
3.2 Return of Company Material. The Executive shall promptly deliver to
the Company on termination of the Executive's employment with the Company, for
whatever the reason, or at any time the Company may so request, all Company or
Subsidiary memoranda, notes, records, reports, manuals, drawings, computer
software, and all documents containing Confidential Information
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belonging to the Company, including all copies of such materials which the
Executive may then possess or have under the Executive's control irrespective of
the format of such materials.
3.3 Non-Competition. During the Term and for up to a one-year period
thereafter (the "Non-Compete Period") the Executive will not, directly or
indirectly, without the consent of the Board of Directors of the Company: (i)
own, manage, operate, join, control, or participate in or be connected with, as
an officer, employee partner, stockholder, director, adviser, consultant, or
agent (whether paid or unpaid), any business, which is at the time engaged in
any activities which compete with the business of the Company or any Subsidiary;
the foregoing provision being also intended to prohibit the Executive from
acquiring or holding in excess of 5% of any issue of stock or securities of any
Company which has any securities listed on a national securities exchange or
quoted in the daily listing of over-the-counter market securities; (ii) utilize
any employees of the Company to perform any service which conflicts with their
full-time employment with the Company or otherwise take actions which result in
the termination of any employee's relationship with the Company; provided,
however, that notwithstanding any other provision contained in this Agreement,
in the event of termination of the Executive for any reason, the restrictions
contained in this Section 3.3 shall be effective only for so long as the
Company, in its sole discretion, continues to pay the Executive his then monthly
Base Salary in advance during the Non-Compete Period.
3.4 Right to Injunctive and Equitable Relief As a result of the
Executive's position as an executive officer and principal shareholder of the
Company, the Executive's obligations not to disclose or use Confidential
Information and to refrain from the activities described in this Article III are
of a special and unique character which gives them a peculiar value, and which
is supported
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by valuable consideration. The Company cannot be reasonably or adequately
compensated in damages in an action at law in the event the Executive breaches
such obligations. Therefore, the 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. Furthermore, the obligations of the Executive and
the rights and remedies of the Company under this Article III 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.
ARTICLE IV
TERMINATION
4.1 Termination by the Company. The Board of Directors may terminate
the Executive's employment hereunder as follows:
(a) Upon the death of the Executive, whereupon this Agreement shall
immediately terminate;
(b) Upon a determination of Permanent Disability; "Permanent
Disability" shall mean a physical or mental incapacity as a result of which the
Executive becomes totally unable to continue the performance of his duties
hereunder for a period of 180 consecutive days or an aggregate of 270 days in
any 24 month period. A determination of Permanent Disability shall be subject to
the certification of a qualified medical doctor agreed to by the Company and the
Executive or, in the event of the Executive's incapacity to designate a doctor,
the Executive's legal
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representative. In the absence of agreement between the Company and the
Executive, each party shall nominate a qualified medical doctor and the two
doctors so nominated shall select a third doctor, who shall make the
determination as to the occurrence and continuance of a Permanent Disability; or
(c) For cause. "Cause" shall mean only the following:
(i) the willful and, after written notice and a reasonable
opportunity to cure, continued failure by the Executive to follow the reasonable
directions of the Board not inconsistent with this Agreement (other than such
failure resulting from the Executive's incapacity due to physical or mental
illness);
(ii) willful and, after written notice and a reasonable
opportunity to cure, continued misconduct by the Executive that materially
adversely affects the Company;
(iii) commission of a felony or guilty plea or plea of nolo
contendre to a crime or offense relating to the performance of the Executive's
duties to the Company;
(iv) willful theft from the Company;
(v) a willful violation of any law, rule or regulation, or the
imposition of a final order issued by any regulatory authority against the
Company, which, in any event, prohibits the Executive from holding an executive
position with the Company or any Subsidiary;
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(vi) the Executive's habitual drunkenness or habitual use of
illegal substances, after notice to cease and the opportunity provided by the
Company to enter into and successfully complete a reputable rehabilitation
program at the expense of the Company; or
(vii) the Executive fails to substantially perform any material
term or provision of this Agreement.
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,
and no termination by the Company for "Cause" shall be effective unless the
Executive shall have been given written notice of the breaches of this Section
4.1(c), (i) and (ii) for a period of 30 days within which to cure any such
breach, if curable, provided that such curative period shall be permitted only
once in any 12 month period.
4.2 Termination by Executive for Good Reason. The Executive may
terminate his employment hereunder for Good Reason. For purposes of this
Agreement, the term "Good Reason" shall mean and shall be deemed to exist if,
without the prior written consent or written waiver of the Executive, (i) the
Executive is assigned duties or responsibilities that are inconsistent in any
material respect with the scope of the duties or responsibilities associated
with his titles or position, as set forth in this Agreement (or which he may
receive during the Term), (ii) the Company fails to provide the Executive the
Commissions as required under this Agreement, (iii) the Executive is asked by
the Company to take actions inconsistent with this Agreement or the Executive's
obligations to the public stockholders or regulatory agencies, (iv) the Company
fails to substantially perform any
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material term or provision of this Agreement, (v) the Executive's office
location is relocated to one that is more than one hundred (100) miles from the
location at which the Executive was based immediately prior to the relocation,
(vi) the Company fails to obtain the full assumption of this Agreement by a
successor entity (whether as a result of merger, reorganization or otherwise).
Termination by the Executive pursuant to this Section 4.2 shall be effective on
the date that is 30 days after the Executive first provides written notice to
the Board of the events specified in this Section 4.2(i-vi) unless earlier cured
by the Company.
4.3 Severance Payments.
(a) Termination for Cause. In the event of termination pursuant to
Section 4.1(c), the Executive shall receive no severance, and shall be entitled
to receive, in lieu of any other payments or benefits, his accrued but unpaid
salary at the rate provided in Section 2.1(a) (as increased from time to time by
the Board), plus any amounts earned but unpaid for any prior completed fiscal or
calendar year including any Commissions for such prior calendar year and any
discretionary bonuses for any prior calendar or fiscal year, and any
reimbursable expenses incurred prior to the date of termination (collectively,
the "Accrued Obligations").
(b) Termination as a Result of Death. In the event of termination
pursuant to Section 4.1(a), the Executive's estate or beneficiaries, as the case
may be, shall be entitled to receive, in addition to any other payments or
benefits hereunder, (i) the proceeds from any insurance policies paid for by the
Company in favor of the Executive's estate or beneficiaries, (ii) any Accrued
Obligations, and (iii)(A) if termination occurs between June 1, 1998 and
February 28, 1999, an amount equal to one-quarter of his Base Salary for one
year and any earned and unpaid Commissions
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through the date of termination or (B) if termination occurs between March 1,
1999 through the end of the term of this Agreement, an amount equal to his Base
Salary for one year and any earned and unpaid Commissions through the date of
termination. Such amounts shall be paid promptly in a lump sum in cash. In
addition, all options that are unvested at the date of termination shall vest,
and the restriction on any options or stock held by the Executive shall
terminate.
(c) Termination Without Cause or For Good Reason. In the event of
termination by the Company without Cause or by the Executive for Good Reason,
the Executive shall be entitled to receive (i) Accrued Obligations through the
date of termination, plus (ii)(A) if termination occurs between June 1, 1998 and
February 28, 1999, an amount equal to one-quarter of his Base Salary for one
year and any earned and unpaid Commissions through the date of termination or
(B) if termination occurs between March 1, 1999 through the end of the term of
this Agreement, an amount equal to his Base Salary for one year and any earned
and unpaid Commissions through the date of termination (each of the amounts in
subclauses (i) and (ii) payable in a lump sum in cash within 30 days after the
date of termination), (iii) continuation, at the Company's expense, if allowable
by law, of any group health (which may be provided by payment of COBRA
continuation coverage premiums), life insurance and long-term disability
coverage's at the levels in effect on the Executive's date of termination for a
period of twelve months following such date of termination, and (iv) all options
held by the Executive shall automatically vest, and the restriction on any
options or stock held by the Executive shall terminate.
(d) Voluntary Termination. If the Executive shall voluntarily
resign for other than Good Reason, he shall be entitled only to Accrued
Obligations through the effective date of such
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resignation or voluntary termination, and that any such amounts shall be
promptly paid in a lump sum in cash.
(e) Termination due to Permanent Disability. If the Executive's
employment hereunder is terminated as a result of Permanent Disability, in lieu
of any other payments or benefits (other than any such disability benefits he
may receive), he shall be paid a single lump sum in cash within thirty (30) days
of the date of his termination, an amount equal to (i) all Accrued Obligations,
(ii) all unpaid salary, whether or not accrued, remaining through the Term, plus
(iii) an amount equal to any Commissions earned and unpaid through the date of
termination. In addition the unvested portion of any options held by the
Executive on such date shall vest, and any restriction on any options or stock
held by the Executive shall terminate.
(f) General Release. Prior to the Executive's receipt of any
severance payment under this Section 4.3, the Executive shall issue a general
release to the Company in such form as the Company may reasonably require, which
release shall extinguish all actual or potential claims or causes of action he
has, may have had, or hereafter may have against the Company. The Company shall
simultaneously provide a release to the Executive in the form mutatis mutandis
given to the Company by the Executive.
(g) Other Payments Upon Termination. If notice of termination of
the Executive is given by the Executive or the Company, the Executive shall
continue to receive his Base Salary (as increased from time to time by the
Board), bonus payments and benefits as provided in Article II until the date of
termination, and shall also be entitled to reimbursement for reimbursable
expenses as set forth in Section 2.2.
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(h) Company's Option to Terminate Executive after Notice of
Termination. The Company, or, if notice is given by the Company, the Executive,
may, at any time during the period after notice of termination by the Executive
or the Company and before the date of termination specified in the notice given
in accordance with Section 4.1 or Section 4.2, as the case may be (the "Notice
Period"), elect to terminate this Agreement and the Executive's employment
hereunder immediately. In such event the Company shall pay the Executive an
amount equal to all Accrued Obligations he would have received or been entitled
to for the duration of the Notice Period at the rate provided in Article II.
Such amounts shall be paid within thirty (30) days after the election pursuant
to this Section 4.3(h). Nothing contained in this Section 4.3(h) shall be deemed
to reduce in any way any amounts due the Executive pursuant to any other term or
provision of this Article IV.
ARTICLE V
ASSUMPTION OF OBLIGATIONS BY SUCCESSOR TO COMPANY
5.1 Merger etc.; Change of Control
In the event of a future disposition of the properties and business
of the Company substantially as an entirety by merger, consolidation, sale of
assets, reorganization or otherwise, then the Company may elect:
(i) to assign this Agreement and all of its rights and obligations
hereunder to the acquiring, surviving or reorganized entity; provided that such
entity shall assume in writing all of the obligations of the Company hereunder;
and provided further, that the Company (in the event and
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so long as it remains in existence) shall remain liable for the performance of
its obligations hereunder in the event of a breach of this Agreement by the
acquiring, surviving or reorganized entity; or
(ii) in addition to its other rights of termination, to terminate
this Agreement upon at least 90 days' written notice and by paying the Executive
an amount equal to (a) all Accrued Obligations through the date of termination,
plus (b) an amount equal to his Base Salary for one year plus any Commissions
earned but unpaid through the date of termination, all such amounts pursuant to
subclauses (a) and (b) shall be payable in a single lump sum within 30 days
after the date of termination. In addition, upon the date of termination
hereunder, (A) all options which the Executive then holds which are not vested
shall immediately vest, (B) the restrictions on any stock held by the Executive
shall terminate, (C) the Executive, at the Company's expense, if allowable by
law, shall continue to be a participant in any group health (which may be
provided by payment of the COBRA continuation coverage premiums), life insurance
and long-term disability plans or programs maintained by the Company at the
level in effect on the Executive's date of termination for a period of twelve
months following his date of termination.
ARTICLE VI
GENERAL PROVISIONS
6.1 Notice. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt required, postage prepaid, as follows:
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If to the Company:
Muse Technologies, Inc.
0000 Xxxxxxxx, XX,
Xxxxxxxxxxx, XX 00000
Attn.: Chairman, Compensation Committee of the Board of
Directors
If to Executive:
Xxxx Xxxxxxx
---------------------
---------------------
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
6.2 No waivers. No provision of this Agreement may be modified, 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 or 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 or similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.
6.3 No Mitigation; No Offset. In the event of the Executive's
termination of employment, he shall be under no obligation to seek other
employment and there shall be no offset against any amounts due the Executive
hereunder on account of any remuneration the Executive may obtain from any
subsequent employment.
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6.4 Arbitration. Any and all disputes or controversies arising out of
or relating to this Agreement, other than injunctive relief pursuant to Section
3.4, shall be resolved by arbitration at the American Arbitration Association at
its New Mexico offices before a panel of three arbitrators under the then
existing rules and regulations of the American Arbitration Association. The
parties agree that in any such arbitration, the arbitrators shall not have the
power to reform or modify this Agreement in any way and to that extent their
powers are so limited. The determination of the arbitrators shall be final and
binding on the parties hereto and judgment on it may be entered in any court of
competent jurisdiction. Except as required by law, neither the Company nor the
Executive shall issue any press release or make any statement which is
reasonably foreseeable to become public with respect to any arbitration or
dispute between the parties without receiving the prior written consent of the
other party to the content of such press release or statement. In the event the
Executive prevails in such proceedings, as determined by the arbitrators, the
Company shall reimburse the Executive for all expenses (including, without
limitation, reasonable legal fees and expenses) incurred by the Executive in
connection with such proceeding or any other proceeding in which the Executive
prevails in contesting or defending any claim or controversy arising out of or
relating to this Agreement. All such amounts shall be paid promptly, but in any
event within ten (10) days after the Executive provides the Company with a
statement of such amounts to be recovered. In the event the Executive does not
prevail in such proceedings, as determined by the arbitrators, each party hereto
shall be responsible for their own expenses (including, without limitation,
legal fees and expenses) incurred in connection with such proceedings.
6.5 Indemnification. In addition to the indemnification provided under
the Company's Articles of Incorporation and By-Laws, the Company hereby agrees
to hold the Executive harmless
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and indemnify the Executive from and against, and to reimburse the Executive
for, any and all judgments, fines, liabilities, amounts paid in settlement and
expenses, including attorneys' fees, incurred directly or indirectly as a result
of or in connection with any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, whether or
not such action, suit or proceeding is by or in the right of the Company to
procure a judgment in its favor, including an action, suit or proceeding by or
in the right of any other corporation of any type or kind, domestic or foreign,
or any partnership, joint venture, trust, employee benefit plan or other
enterprise for which the Executive served in any capacity at the request of the
Company, to which the Executive is, was or at any time becomes a party, or is
threatened to be made a party, or a result of or in connection with any appeal
therein, by reason of the fact that the Executive is or was at any time a
director, officer, employee or agent of the Company; provided, however, that (i)
indemnification shall be paid pursuant to this paragraph if and only if the
Executive acted in good faith and in a manner reasonably believed by the
Executive to be in or not opposed to the best interests of the Company, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe the Executive's conduct was unlawful; and (ii) no indemnification shall
be payable pursuant to this paragraph if a court having jurisdiction in the
matter shall determine that such indemnification is not lawful.
6.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the New Mexico without regard to its
Conflicts of Laws provisions.
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6.7 Severability or Partial Invalidity. The invalidity or
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.
6.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
6.9 Entire Agreement. This Agreement constitutes the entire agreement
of the parties and supersedes all prior written or oral and all contemporaneous
oral agreements, understanding, 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 of 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 statements of its terms and that no
extrinsic evidence may be introduced in any judicial proceeding involving this
Agreement.
6.10 Assignment. Subject to the provisions of Article V hereof, this
Agreement and the rights, duties and obligations hereunder may not be assigned
or delegated by any party without the prior written consent of the other party.
Any such assignment or delegation without the prior written consent of the other
party shall be void and be of no effect. Notwithstanding the foregoing
provisions of this Section 6.10, the Company may assign or delegate its rights,
duties and obligations hereunder to any person or entity which succeeds to all
or substantially all of the business of the Company through merger,
consolidation, reorganization, or other business combination or by
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acquisition of all or substantially all of the assets of the Company; provided
that such person assumes the Company's obligations under this Agreement in
accordance with Section 5.1.
6.11 Beneficial Interests. This Agreement shall inure to the 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, if there be no such designee, to the Executive's estate.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
MUSE TECHNOLOGIES, INC.
A Delaware corporation
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
EXECUTIVE
/s/ Xxxx Xxxxxxx
-------------------------
Xxxx Xxxxxxx
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