EXECUTIVE EMPLOYMENT AGREEMENT
THIS
AGREEMENT,
effective as of July 2, 2007 (the “Agreement”),
by
and between PARADIGM
HOLDINGS INC.,
a
Wyoming corporation having its principal offices at 0000 Xxx Xxxx Xxxxxx, Xxxxx
Xxxxx, Xxxxxxxxx, XX 00000 (the “Company”),
and
Xx. Xxx Xxxxxxxx (the “Executive”).
WHEREAS,
the
Company desires to employ and retain the Executive for the term specified herein
in order to advance the business and interests of the Company on the terms
and
conditions set forth herein; and
WHEREAS,
the
Executive desires to provide his services to the Company in such capacities,
on
and subject to the terms and conditions hereof;
NOW,
THEREFORE,
the
parties hereto, intending to be legally bound, agree as follows:
1. Employment
and Term.
Subject
to all of the terms and conditions hereof, the Company does hereby employ and
agree to employ the Executive as a Vice President for and during the Employment
Term, as defined below, and the Executive does hereby accept such employment.
The term of employment shall commence on July 2, 2007 (the “Effective
Date”)
and
shall continue until July 2, 2008 unless earlier terminated as herein provided
(the “Employment
Term”),
and
thereafter shall be renewed for additional terms of one (1) year, unless either
party provides the other with notice, as provided for herein, at least thirty
(30) days prior to the date the Employment Term would otherwise renew, of that
party’s intention not to so renew such term.
2. Duties
of Executive.
The
Executive shall, during the Employment Term hereunder, perform the executive
and
administrative duties, functions and privileges incumbent with the position
of
Vice President and such other duties as reasonably determined by the Board
of
Directors and the Chief Executive Officer of the Company, from time to time.
The
Executive shall report to the Chief Executive Officer (CEO) or other Executive
as designated by the CEO of the Company. The Executive agrees to serve the
Company faithfully, conscientiously and to the best of his ability, and to
devote substantially all of his business time to the business and affairs of
the
Company (and, if requested by the Board of Directors, any subsidiary or
affiliate of the Company) so as to promote the profit, benefit and advantage
of
the Company and, if applicable, any subsidiaries or affiliates of the Company.
The Executive agrees to accept the compensation to be made to him under this
Agreement as full and complete compensation for the services required to be
performed by, and the covenants of, the Executive under this
Agreement.
Location
and Travel.
The
Executive acknowledges that significant domestic and international travel may
be
required as part of his duties hereunder; and the Executive agrees to undertake
such travel as may be reasonably required by the business of the Company from
time to time.
3. Compensation.
3.1. Base
Salary.
The
Executive shall be paid Base Salary (as defined herein) at the annual rate
of
Two Hundred Thousand ($200,000) per year. All compensation shall be made in
accordance with the standard payroll practices of the Company, and whichever
compensation rate is applicable at a particular time is referred to herein
as
the “Base
Salary.”
3.2. Regular
Benefits.
The
Executive shall be entitled to participate in any health insurance, accident
insurance, hospitalization insurance, life insurance, pension, or any other
similar plan or benefit provided by the Company to its executives or employees
generally, including, but not limited to any stock option plan, if and to the
extent that the Executive is eligible to participate in accordance with the
provisions of any such insurance, plan or benefit generally (such benefits,
collectively, the “Regular
Benefits”).
3.3. Vacation.
The
Executive shall be entitled to vacation as provided in the Company’s policies,
such vacation to be taken at times mutually agreeable to the Executive and
the
Company. The Executive shall further be entitled to the number of paid holidays,
and leaves for illness or temporary disability in accordance with the policies
of the Company for its senior executives.
3.4. Term
Life Insurance.
The
Company shall have the right from time to time to purchase, modify or terminate
insurance policies on the life of the Executive for the benefit of the Company
in such amount as the Company shall determine in its sole discretion. In
connection therewith the Executive shall, at such time or times and at such
place or places as the Company may reasonably direct, submit himself to such
physical examinations and execute and deliver such documents as the Company
may
reasonably deem necessary or desirable; provided, however, that the eligibility
of the Executive for, or the availability of, such insurance shall not be deemed
to be a condition of continued employment hereunder. The Executive makes no
representation to the Company as to his current or future eligibility for
insurance.
3.5. Expense
Reimbursement.
The
Company shall reimburse the Executive for all expenses reasonably incurred
by
him in connection with the performance of his duties hereunder and the business
of the Company upon the submission to the Company of appropriate receipts
therefor, in accordance with the expense reimbursement policy of the Company.
In
addition, the company will reimburse the Executive for travel in accordance
with
the Company’s rules governing travel. The Company shall reimburse based on
submitted and approved expense reports for these items.
4. Termination
and Severance Arrangements.
4.1. Termination
by the Company.
The
Company may terminate this Agreement at any time on or after July 2, 2007 by
providing at least thirty (30) days advance written notice to the Executive.
In
the event that the Company terminates this Agreement (a) other than in
connection with a Change of Control, in which event Section 6 shall apply,
and
(b) other than for Cause, in which event Section 5.3 shall apply, the Company
shall, notwithstanding such termination, in consideration for all of the
undertakings and covenants of the Executive contained herein, continue to pay
to
the Executive the Base Salary and the Regular Benefits for a period that is
the
greater of (i) the remainder of the initial Employment Term or (ii) six (6)
months from the date of such termination. In no event, however, shall the
continuation of such payments during such post-termination period be deemed
to
be employment hereunder for purposes of calculating any bonus due to the
Executive or for purposes of determining the vesting or exercise period of
any
stock options granted hereunder, or otherwise.
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4.2. Termination
by Executive.
The
Executive may terminate his employment for Good Reason and receive the payments
and benefits specified in Section 5.1 in the same manner as if the Company
had
terminated his employment without Cause. For purposes of this Agreement,
“Good
Reason”
will
exist if any one or more of the following occur:
4.2.1. Failure
by the Company to honor any of its material obligations under this Agreement,
including, without limitation, its obligations under Section 4 (Compensation),
Section 10 (Indemnification)
and
Section 12.5 (Successor
Obligations).
4.3. Termination
for Cause.
Notwithstanding the Employment Term, the Company may terminate the Executive
for
Cause, as defined below, upon a resolution duly adopted by the affirmative
vote
of not less than a majority of the entire membership of the Board of Directors
(excluding the Executive, if a director). In the event that the employment
of
the Executive is terminated by the Company for Cause, no severance or other
post-termination payment shall be due or payable by the Company to the Executive
(except solely such Base Salary or other payments as may have been accrued
but
not yet paid prior to such termination). For purposes hereof, “Cause”
shall
mean: (a) the conviction of Executive with respect to any felony or misdemeanor
involving theft, fraud, dishonesty or misrepresentation; (b) any material
misappropriation, embezzlement or conversion of the Company’s or any of its
subsidiary’s or affiliate’s property by the Executive; (c) willful misconduct by
the Executive in respect of the material duties or obligations of the Executive
under this Agreement; or (d) a material breach by the Executive of any of his
material obligations hereunder; in the case of (c) or (d) of this paragraph,
after written notice thereof and a reasonable opportunity of thirty (30) days
to
cure the same, provided that the same is not caused by the physical disability
including mental disease or defect of the Executive, in which event Section
5.4
shall apply;
4.4. Death
or Disability.
In the
event that the employment of the Executive by the Company is terminated by
reason of the death of the Executive or by reason of medical or psychiatric
disability which prevents the Executive from satisfactorily performing a
material portion of his duties for ninety (90) consecutive calendar days (a
“Disability”),
the
Company shall, promptly upon such termination, pay the Executive an amount
equal
to six (6) months of Base Salary, in a single lump sum.
5. Parachute
Provisions.
5.1. Change
of Control.
For
purposes of this Agreement, a “Change
of Control”
shall
be deemed to have occurred upon the occurrence of any one or more of the
following events.
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5.1.1. Any
“person” or “group” (as such terms are used in connection with Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange
Act”))
but
excluding the Executive or any employee benefit plan of the Company (a) is
or
becomes the “beneficial owner” (as defined in Rule l3d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company’s outstanding
securities then entitled to vote for the election of directors, or (b) acquires
by proxy or otherwise fifty percent (50%) or more of the combined voting
securities of the Company having the right to vote for the election of directors
of the Company, for any merger or consolidation of the Company, or for any
other
matter; provided, however, that a Change of Control shall not be deemed to
have
occurred solely by reason of the public ownership of fifty percent (50%) or
more
of the Common Stock of the Company;
5.1.2. There
shall be consummated without the written consent of the Executive (a) any
consolidation, merger or recapitalization of the Company or any similar
transaction involving the Company, whether or not the Company is the continuing
or surviving corporation, (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 or (c) the adoption of a plan of complete
liquidation of the Company (whether or not in connection with the sale of all
or
substantially all of the Company’s assets) or a series of partial liquidations
of the Company that is de
jure
or
de
facto
part of
a plan of complete liquidation of the Company; provided that the divestiture
of
less than substantially all of the assets of the Company in one transaction
or a
series of related transactions, whether effected by sale, lease, exchange,
spin-off, sale of the stock or merger of a Subsidiary or otherwise, or a
transaction solely for the purpose of reincorporating the Company in another
jurisdiction, shall not constitute a Change in Control.
5.2. Rights
on Change in Control.
If
within one year after, or ninety (90) days prior to, a Change in Control of
the
Company, the Company shall terminate the Executive’s employment other than by
reason of the Executive’s death or Disability or for Cause, the Company shall
pay to the Executive as compensation for services rendered, not later than
the
fifth business day after the date of termination:
5.2.1. The
Executive’s Base Salary through the date of termination, any Regular Benefits
and incentive compensation for the fiscal year in which the termination occurs
in accordance with any arrangements then existing with the Executive and
proportionate to the period of the fiscal year which has expired prior to the
termination; and
5.2.2. A
lump
sum severance payment equal to six (6) months of Base Salary.
6. Proprietary
Rights.
6.1. Non
Competition.
The
Executive covenants and agrees that for so long as he shall be employed by
the
Company and for a period of eighteen (18) months from the date of the
termination of such employment for any reason (such period of time the
“Restricted
Period”)
the
Executive shall not directly or indirectly, own, manage, control, operate invest
in or become principal employee of, director of, or consultant to, any business,
entity or venture which is competitive with the business of the Company as
conducted at such time; provided, however, that it shall not be a violation
of
this Agreement for the Executive to have beneficial ownership of less than
five
percent (5%) of the outstanding amount of any class of securities of any
enterprise (but without otherwise participating in the activities of such
enterprise) if such securities are listed on a national securities exchange
or
quoted on an inter-dealer quotation system.
4
6.2. Confidentiality.
The
Executive recognizes and acknowledges that certain confidential business and
technical information used by the Executive in connection with his duties
hereunder that includes, without limitation, certain confidential and
proprietary information relating to the designing, development, construction
and
marketing of computer hardware, is a valuable and unique asset of the Company.
Executive agrees that he shall at all times maintain the confidentiality of
the
proprietary information and trade secrets of the Company, and that he shall
during the Restricted Period refrain from disclosing any such information to
the
disadvantage of the Company.
6.2.1. During
the Restricted Period the Executive shall not, directly or indirectly
(a) solicit, in competition with the Company, any person who is a customer
of any business conducted by the Company, or (b) in any manner whatsoever
induce, or assist others to induce, any supplier of the Company to terminate
its
association with such entity or do anything, directly or indirectly, to
interfere with the business relationship between the Company and any of its
current or prospective suppliers.
6.2.2. During
the Restricted Period the Executive shall not, directly or indirectly, solicit
or induce any employee of the Company to terminate his or her employment for
any
purpose, including without limitation, in order to enter into employment with
any entity which competes with any business conducted by the
Company
6.3. Ownership
by Company.
The
Executive acknowledges and agrees that any of his work product created, produced
or conceived in connection with his association with the Company shall be deemed
work for hire and shall be deemed owned exclusively by the Company. The
Executive agrees to execute and deliver all documents required by the Company
to
document or perfect the Company’s proprietary rights in and to the Executive’s
work product.
6.4. Remedies.
It is
expressly understood and agreed that, in the event of the breach or threatened
breach by the Executive of the terms and provisions of this Section 7 of this
Agreement, then the Company shall be entitled, if it so elects, to institute
and
prosecute any proceedings in any court of competent jurisdiction, either in
law
or equity, for such relief as it deems appropriate, including without limiting
the generality of the foregoing, any proceedings, to obtain damages for any
breach of Section 7 of this Agreement, or to enforce the specific performance
thereof by the Executive.
7. Market
Standoff Agreement.
The
Executive hereby agrees that if so requested by the Company or by any
representative of any underwriters in connection with any registration of the
offering of any securities of the Company under the Securities Act, the
Executive shall not sell or otherwise transfer any securities of the Company
during the ninety-day period following the effective date of a registration
statement of the Company filed under the Securities Act.
5
8. Director’s
and Officer’s Liability Insurance.
To
protect Executive from any liability, loss, claims, damages, or costs, including
legal fees and costs, the Company shall purchase and maintain director’s and
officer’s liability insurance (the “D&O
Insurance”)
in an
amount not less than Two Million Dollars ($2,000,000), or in such amount as
is
later agreed upon by Executive and Company.
9. Indemnification.
As an
employee of the Company, the Executive shall be indemnified against all
liabilities, damages, fines, costs and expenses by the Company in accordance
with the indemnification provisions of the Company’s Certificate of
Incorporation and/or Bylaws as in effect on the date hereof, and otherwise
to
the fullest extent to which employees, officers and directors of a corporation
organized under the laws of the state of incorporation of the Company may be
indemnified pursuant to the laws of such state, as the same may be amended
from
time to time (or any subsequent statute of similar tenor and effect), subject
to
the terms and conditions of such statute.
10. Independent
Representation.
The
Executive acknowledges that he has had the opportunity to seek independent
counsel and tax advice in connection with the execution of this Agreement,
and
the Executive represents and warrants to the Company (a) that he has sought
such
independent counsel and advice as he has deemed appropriate in connection with
the execution hereof and the transactions contemplated hereby, and (b) that
he
has not relied on any representation of the Company as to tax matters, or as
to
the consequences of the execution hereof.
10.1. Neutral
Construction.
No
party may rely on any drafts of this Agreement in any interpretation of the
Agreement. Each party to this Agreement has reviewed this Agreement and has
participated in its drafting and, accordingly, no party shall attempt to invoke
the normal rule of construction to the effect that ambiguities are to be
resolved against the drafting party in any interpretation of this Agreement.
10.2. Attorney’s
Fees.
In the
event that either party hereto commences litigation against the other to enforce
such party’s rights hereunder, the prevailing party shall be entitled to recover
all costs, expenses and fees, including reasonable attorneys’ fees (including
in-house counsel), paralegals, fees, and legal assistants’ fees through all
appeals.
11. General.
11.1. No
Brokers.
Each of
the parties to this Agreement represents and warrants to the other that it
has
not utilized the services of any finder, broker or agent. Each of the parties
agrees to indemnify the other against any and all liabilities to any person,
firm or corporation claiming any fee or commission of any kind on account of
services rendered on behalf of such party in connection with the transactions
contemplated by this Agreement.
11.2. Applicable
Law.
This
document shall in all respects be governed by the laws of the State of Maryland.
The parties acknowledge that substantially all of the negotiations relating
to
this Agreement were conducted in Maryland, and that this Agreement has been
executed by both parties in Maryland. Any legal suit, action or proceeding
against any party hereto arising out of or relating to this Agreement shall
be
instituted in a federal or state court in Xxxxxxxxxx County, Maryland, and
each
party hereto waives any objection which it may now or hereafter have to the
laying of venue of any such suit, action or proceeding and each party hereto
irrevocably submits to the jurisdiction of any such court in any suit, action
or
proceeding.
6
11.3. Rights
Absolute.
The
Company’s obligation to pay the Executive the compensation specified herein
shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, any setoff, counterclaim, defense
or other right which the Company may have against the Executive or anyone else.
All amounts payable by the Company hereunder shall be paid without notice or
demand.
11.4. No
Offset.
Except
as expressly provided herein, the Company waives all rights it my now have
or
may hereafter have conferred upon it, by statute or otherwise, to terminate,
cancel or rescind this Agreement in whole or in part. The Executive shall not
be
required to mitigate the amount of any payment provided for in this Agreement
by
seeking other employment, and if Executive obtains such other employment, any
compensation earned by Executive pursuant thereto shall not be applied to
mitigate any payment made to Executive pursuant to this Agreement.
11.5. Successor
Obligations.
The
Company shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume by written agreement and to
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 had taken
place.
11.6. Survival.
The
parties hereto agree that the covenants contained in Section 7 hereof shall
survive any termination of employment by the Executive and any termination
of
this Agreement. In addition, the parties hereto agree that any compensation
or
right which shall have accrued to the Executive as of the date of any
termination of employment or termination hereof shall survive any such
termination and shall be paid when due to the extent accrued on the date of
such
termination.
11.7. Assignability.
All of
the terms and provisions contained herein shall inure to the benefit of and
shall be binding upon the parties hereto and their respective heirs, personal
representatives, successors and assigns. The obligations of the Executive
however, may not be assigned, and the Executive may not, without the Company’s
written consent, assign, transfer, convey, pledge, encumber, hypothecate or
otherwise dispose of this Agreement or any interest therein. Any such attempted
assignment or disposition shall be null and void and without effect. The Company
and the Executive agree that this Agreement and all of the Company’s rights and
obligations hereunder may be assigned or transferred by the Company to and
may
be assumed by and become binding upon and may inure to the benefit of any
affiliate of or successor to the Company. The term “successor” shall mean, with
respect to the Company or any of its subsidiaries, and any other corporation
or
other business entity which, by merger, consolidation, purchase of the assets,
or otherwise, acquires all or a material part of the assets of the Company.
Any
assignment by the Company of its rights and obligations hereunder to any
affiliate of or successor shall not be considered a termination of employment
for purposes of this Agreement. However, this Section 12.7 is subject to Section
6 in all respects.
7
11.8. Notices.
Any and
all notices required or desired to be given hereunder by any party shall be
in
writing and shall be validly given or made to another party if delivered either
personally, by facsimile transmission, same-day delivery service, overnight
expedited delivery service, or the United States Mail, certified or registered,
postage prepaid, return receipt requested. Notice shall be deemed effective
upon
receipt. In all instances, notice shall be sent to the parties at the following
addresses:
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If
to the Company:
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0000
Xxx Xxxx Xxxxxx, Xxxxx Xxxxx
|
|
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Xxxxxxxxx,
Xxxxxxxx 00000
|
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Fax: (000)
000-0000
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Attention:
Xxxxx X. XxXxxxxxxx
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If
to the Executive:
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Xxx
Xxxxxxxx
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00000
Xxxxx Xxxxxx
|
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Xxxxx,
Xxxxxxxx 00000
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Fax:
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Any
party
may change its address for the purpose of receiving notices by a written notice
given to the other party.
11.9. Modifications
or Amendments.
No
amendment, change or modification of this document shall be valid unless in
writing and signed by all of the parties hereto.
11.10. Waiver.
No
reliance upon or waiver of one or more provisions of this Agreement shall
constitute a waiver of any other provisions hereof.
11.11. Severability.
If any
provision of this Agreement as applied to either party or to any circumstances
shall be adjudged by a court of competent jurisdiction to be void or
unenforceable, the same shall in no way affect any other provision of this
Agreement or the validity or enforceability of this Agreement. If any court
construes any of the provisions to be unreasonable because of the duration
of
such provision or the geographic or other scope thereof, such court may reduce
the duration or restrict the geographic or other scope of such provision and
enforce such provision as so reduced or restricted.
11.12. Separate
Counterparts.
This
document may be executed in one or more separate counterparts, each of which,
when so executed, shall be deemed to be an original. Such counterparts shall,
together, constitute and shall be one and the same instrument.
11.13. Headings.
The
captions appearing at the commencement of the sections hereof are descriptive
only and are for convenience of reference. Should there be any conflict between
any such caption and the section at the head of which it appears, the
substantive provisions of such section and not such caption shall control and
govern in the construction of this document.
11.14. Further
Assurances.
Each of
the parties hereto shall execute and deliver any and all additional papers,
documents and other assurances, and shall do any and all acts and things
reasonably necessary in connection with the performance of their obligations
hereunder and to carry out the intent of the parties hereto.
11.15. Entire
Agreement.
This
Agreement constitutes the entire understanding and agreement of the parties
with
respect solely to the subject matter of this Agreement, and any and all prior
agreements or representations relating specifically to Executive’s employment
are hereby terminated and canceled in their entirety.
8
IN
WITNESS WHEREOF,
the
parties hereto have caused this Agreement to be duly executed this 2nd
Day of
July 2007, effective as of the date first above written.
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PARADIGM
HOLDINGS, INC.,
a
Wyoming corporation
|
|
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By: /s/
Xxxxxxx
Xxxxxxx
|
|
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Name: XXXXXXX
XXXXXXX, SVP & CFO
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/s/ Xxxxxx
Xxxxxxxx
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XXXXXX
XXXXXXXX
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