EMPLOYMENT AGREEMENT
Exhibit
10.9
This
EMPLOYMENT AGREEMENT (“Agreement”), effective July 1, 2006, is entered into by
and between SYS Technologies, a California corporation, with its principal
office at 0000 Xxxxxx Xxxxxx Xxxx, Xxxxx 000, Xxx Xxxxx,
Xxxxxxxxxx 00000 (“Company”), and Xxx Xxxxxxx, (“Employee”), collectively the
“Parties.” The Parties hereto desire to enter into an employment arrangement and
in order to accomplish that purpose and in consideration of the terms, covenants
and conditions hereinafter set forth, the Parties hereby enter into this
Agreement.
SECTION
1
EMPLOYMENT;
TERM; DUTIES
1.1 Employment.
Upon
the terms and conditions hereinafter set forth, the Company employs Employee,
and Employee hereby accepts employment, as President and Chief Operating
Officer, Public Safety, Security, and Industrial Systems Group.
1.2 Term.
Employee’s employment hereunder shall be for a term (the “Term”) commencing on
the date this Agreement is effective and ending on June 30, 2008, unless the
Agreement terminates sooner pursuant to Section 4 below; provided, however,
that
the Agreement shall renew automatically for successive periods of one (1) year
unless the Company or Employee provides written notice to the other Party of
a
desire to change, modify, amend or terminate the Agreement at least thirty
(30)
days prior to the then-current expiration date of the Agreement. If the Company
elects not to renew this Agreement at the conclusion of the Term, Employee
will
be eligible for severance benefits pursuant to and in accordance with
subsections 4.2 or 4.4.
1.3 Duties.
During
the Term, Employee shall perform such duties for the Company as are prescribed
by applicable job specifications, the Bylaws of the Company and such other
or
additional duties, consistent with such Bylaws, as may be assigned to him/her
from time to time by the Chief Executive Officer (“CEO”), or the Board of
Directors of the Company. Employee shall devote his/her best efforts, attention
and energies to the performance of his/her duties hereunder. This employment
is
full-time and exclusive. Employee may not work for any other company or
enterprise during the Term of this Agreement such that such employment would
conflict or interfere with his/her obligations to the Company under this
Agreement. Employee must advise the CEO in writing prior to undertaking any
employment in addition to his/her employment with the Company.
SECTION
2
COMPENSATION
2.1 Base
Salary.
For all
services rendered by Employee hereunder and all covenants and conditions
undertaken by both Parties pursuant to this Agreement, the Company shall pay,
and Employee shall accept, as compensation, an annual base salary (“Base
Salary”) of Two Hundred Thousand Dollars ($200,000). This Base Salary shall be
payable in accordance with the normal payroll practices of Company, less
required deductions pursuant to state and federal law, and less any amounts
to
be deducted pursuant to agreement between the Parties.
2.2 Incentive
Compensation.
The
Employee shall also be paid such bonuses and/or other compensation as may be
determined from time to time by the CEO, or the Board of Directors as they,
in
their sole discretion, may determine based upon the performance of the employee
and/or of the Company.
2.3 Performance
and Salary Review.
Employee's performance will be reviewed periodically, usually on an annual
basis. Adjustments to salary or other compensation, if any, will be made by
the
CEO, or the Board of Directors as is then appropriate.
SECTION
3
BENEFITS/BUSINESS
EXPENSES
3.1 Benefits.
During
the Term, Employee shall be entitled to participate in such life, health,
accident, disability and hospitalization insurance plans, pension plans and
retirement plans as the Company makes available to the employees of the Company
as a group.
3.2 Business
Expenses.
Employee will be reimbursed for all reasonable, out-of-pocket business expenses
incurred in the performance of his/her duties on behalf of Company. To obtain
reimbursement, expenses must be submitted promptly with appropriate supporting
documentation in accordance with Company’s policies and procedures.
SECTION
4
TERMINATION;
RESIGNATION; CHANGE OF CONTROL; DEATH; DISABILITY
4.1 Termination
of Employment With Cause.
If
(a) Employee fails to meet the performance standards established for
his/her position and does not remedy such shortcomings within 30 days after
written notice from the Company of such failure; or (b) Employee breaches
any material provision of this Agreement; or (c) Employee has been
convicted of any felony; or (d) Employee commits any act of fraud,
misappropriation of funds or embezzlement; or (e) Employee fails to report
to work for three (3) consecutive business days without informing his/her
superior; or (f) Employee commits any act, or fails to take any action, the
effect of which is to bring the Company into disrepute with any of its
customers, including, but not limited to a material violation of the Company
Code of Ethics, the Company shall have the right, upon written notice to the
Employee, to immediately terminate his/her employment (“Termination With Cause”)
hereunder, without any further liability or obligation to him/her hereunder
or
otherwise in respect of his/her employment, other than its obligation to pay
unpaid Base Salary and unused personal time accrued as of the date of
termination.
4.2 Termination
of Employment Without Cause.
Notwithstanding any provision to the contrary herein, the Company may at any
time, in its sole and absolute discretion and for any or no reason, terminate
the employment of the Employee hereunder; PROVIDED, that if such termination
is
not a Termination With Cause, as defined by subsection 4.1, and such
termination is not caused by the death or Disability of the Employee, the
Company shall pay and/or provide the Employee as follows:
4.2.1 All
accrued but unpaid Base Salary.
4.2.2 Reimbursement
of normal incidental employee expenses as of the date of the termination as
and
when such amount is due and payable hereunder in accordance with
subsection 3.2.
4.2.3 Company
shall pay twelve (12) severance payments (“Severance Payments”) payable monthly
to Employee equivalent to one-twelfth (1/12) of the Base Salary in effect as
of
the date of such termination (the “Termination Date”) for a period
of twelve months from the Date of Termination (the “Severance Period”),
provided that Employee and the Company execute an appropriate mutual general
release before Employee has any entitlement to the Severance Payments. Company
will also pay the premiums on the COBRA insurance coverages during the Severance
Period, provided that Employee qualifies for such coverages and timely elects
COBRA coverage. The Company may, at its option, pay for and acquire insurance
which will provide the Severance Payments and such benefits during the Severance
Period.
4.2.4 All
stock
options issued to Employee or earned but not yet issued prior to the Termination
Date shall immediately become fully vested.
4.2.5 Accrued
but unused personal leave shall be paid out in accordance with legal
requirements. No personal leave or other benefits shall continue to accrue
during the Severance Period.
4.2.6 Notwithstanding
the foregoing, if any amounts due to Employee pursuant to this Agreement are
determined to be “Parachute Payments” as such term is defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”),
and the regulations promulgated thereunder, then the total compensation paid
to
Employee pursuant to this Agreement, together with any other payment or the
value of any benefit received or to be received by Employee which is treated
as
a Parachute Payment shall not exceed 2.99 times Employee’s Base Amount (as such
term is defined in Section 280G of the Code). In the event a reduction of
the payments set forth in this Agreement is required pursuant to this Section,
Employee may select the compensation which will be reduced in order to fall
within the 2.99 times Base Amount limitation.
4.3 Resignation.
4.3.1 If
Employee resigns (except as set forth in subsections 4.3.2 or 4.4 below),
this Agreement shall immediately terminate and the Company shall have no further
liability or obligation to Employee hereunder, including any severance payments,
or otherwise in respect of his/her employment, other than its obligation to
pay
unpaid Base Salary and unused personal leave accrued as of the date of
resignation.
4.3.2 Resignation
with Cause.
If
Employee resigns his/her employment because (a) his/her position or duties
are modified by the Company to such an extent that his/her duties are
substantially no longer consistent with the position for which he/she was
employed pursuant to this Agreement, or (b) there has been a material
breach by the Company of a material term of this Agreement which continues
uncured following fourteen (14) days after written notice by Employee to the
Company of such breach, then Employee will be entitled to the severance benefits
set forth in subsection 4.2, consistent with the terms of said
provision.
4.4 Change
In Control.
In the
event of a Change in Control (as that term is defined below), Company shall
immediately take all necessary measures, consistent with the Company’s Stock
Option Plans, to accelerate the vesting of any unvested options held by the
Employee under such Plans so that such options will be treated as vested options
during the Change in Control. In addition, employment separation, as provided
in
this section, that occurs as a result of a Change in Control shall result in
Severance Payments on the same terms set forth in subsection 4.2 above, except
that the Severance Period shall be eighteen (18) months. Such Change In Control
Severance Payments will be made in the event of:
(a) Employee’s
involuntary dismissal or discharge by the Company, other than pursuant to
subsections 4.1, 4.3.1, or 4.5, or
(b) Employee’s
voluntary resignation, other than pursuant to subsection 4.3, following (i)
a
change in his/her position with the Company (or Parent or Subsidiary employing
Employee) which materially reduces his/her duties and responsibilities or the
level of management to which he/she reports, (ii) a reduction in Employee’s
level of compensation as of the date of the Change in Control (including base
salary and fringe benefits), or (iii) a relocation of Employee’s place of
employment by more than fifty (50) miles, provided and only if such change,
reduction, or relocation is effected by the Company without Employee’s express
consent.
4.4.1 For
purposes of this Agreement, a “Change in Control” shall mean: (i) the
acquisition, by one person or a group, of stock of the Company that causes
such
person or group to own more than 50% of the total fair market value or total
voting power of the stock of such Company; (ii) either: (1) the
acquisition, by one person or a group, of ownership of 35% or more of the total
voting power of the stock of the Company; or (2) the replacement of a
majority of the members of the Board with directors whose appointment or
election is not endorsed by the existing Board; AND (iii) the acquisition of
assets from the Company that have a total gross fair market value of 40% or
more
of the total gross fair market value of all assets of the Company prior to
the
acquisition.
4.5 Termination
Due to Death or Disability.
This
Agreement will immediately terminate upon Employee’s death. This Agreement will
terminate upon Employee’s Disability (as defined below), when consistent with
state and federal law. In the event of Employee’s termination due to death or
Disability, Employee, or Employee’s heirs, personal representatives or estate,
as the case may be, will be entitled to receive only the standard entitlements
and those benefits available under any applicable Company plan or insurance
policy, subject to such plan or policy requirements, along with accrued unpaid
Base Salary and personal time. All other Company obligations to Employee
pursuant to this Agreement will become automatically terminated and completely
extinguished. In addition, neither Employee nor Employee’s heirs, personal
representatives or estate will be entitled to receive Severance Payments or
other benefits described in subsection 4.2 above.
4.5.1 For
the
purpose of this Agreement only, the Company will not deem this Agreement
terminated due to Employee’s Disability unless: (i) he or she is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months; (ii) he or she is, by reason of any medically determinable physical
or
mental impairment that can be expected to result in death or can be expected
to
last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under an
accident and health plan covering employees of the Company; or (iii) the
Employee is determined to be totally disabled by the Social Security
Administration. For purposes of this Section 4.5.1(i) and (ii), whether Employee
satisfies the definition of Disabled shall be determined in good faith by the
Board of Directors of the Company.
4.6 Catch-Up
Payments for Certain Key Employees.
The
Company shall delay any payments required under this Section 4 for six months
following Employee’s termination if Employee is deemed a “key employee,” as that
term is defined under Code Section 409A. If payments under Section 4 are
delayed, then on the day following the end of the six-month period the Company
shall make a catch-up payment equal to the total amount of such payments that
would have been made during the six-month period but for the application of
Code
Section 409A, plus interest calculated at the one-year Treasury Xxxx
rate.
SECTION
5
INVENTIONS;
CONFIDENTIAL/TRADE SECRET INFORMATION; NON-DISCLOSURE; UNFAIR COMPETITION;
CONFLICT OF INTEREST
5.1 Inventions.
All
processes, technologies and inventions relating to the business of the Company
(collectively, “Inventions”), including new contributions, improvements, ideas,
discoveries, trademarks and trade names, conceived, developed, invented, made
or
found by the Employee, alone or with others, during his/her employment by the
Company, whether or not patentable and whether or not conceived, developed,
invented, made or found on the Company’s time or with the use of the Company’s
facilities or materials, shall be the property of the Company and shall be
promptly and fully disclosed by Employee to the Company. The Employee shall
perform all necessary acts (including, without limitation, executing and
delivering any confirmatory assignments, documents or instruments requested
by
the Company) to assign or otherwise to vest title to any such Inventions in
the
Company and to enable the Company, at its expense, to secure and maintain
domestic and/or foreign patents or any other rights for such Inventions. This
Agreement and this subsection does not apply to an Invention which
qualifies fully as a nonassignable Invention under Section 2870 of the
California Labor Code.
5.2 Confidential/Trade
Secret Information/Non-Disclosure.
5.2.1 Confidential/Trade
Secret Information Defined.
During
the course of Employee’s employment, Employee will have access to various
confidential/trade secret information of the Company. “Confidential/trade secret
information” is information that is not generally known to the public and, as a
result, is of economic benefit to the Company in the conduct of its business.
Employee and the Company agree that the term “confidential/trade secret”
includes but is not limited to all information developed or obtained by the
Company, including its affiliates, and predecessors, and comprising the
following items, whether or not such items have been reduced to tangible form
(e.g., physical writing, computer hard drive, disk, tape, etc.): all methods,
techniques, processes, ideas, research and development, product designs,
engineering designs, plans, models, production plans, business plans, add-on
features, trade names, service marks, slogans, forms, pricing structures, menus,
business forms, marketing programs and plans, layouts and designs, financial
structures, operational methods and tactics, cost information, the identity
of
and/or contractual arrangements with suppliers and/or vendors, accounting
procedures, and any document, record or other information of the Company
relating to the above. Confidential/trade secret information includes not only
information directly belonging to the Company which existed before the date
of
this Agreement, but also information developed by Employee for the Company,
including its affiliates and its predecessors and/or their employees during
the
term of Employee’s employment with the Company. It does not include any
information which (a) was in the lawful and unrestricted possession of
Employee prior to its disclosure to Employee by the Company or its affiliates
or
predecessors, (b) is or becomes generally available to the public by lawful
acts other than those of Employee after receiving it, or (c) has been
received lawfully and in good faith by Employee from a third party who is not
and has never been an employee of the Company or its affiliates or predecessors
and who did not derive it from the Company or its affiliates or
predecessors.
5.2.2 Restriction
on Use of Confidential/Trade Secret Information.
Employee agrees that his/her use of confidential/trade secret information is
subject to the following restrictions for an indefinite period of time so long
as the confidential/trade secret information has not become generally known
to
the public:
(a) Non-Disclosure.
Employee agrees that he/she will not publish or disclose, or allow to be
published or disclosed, confidential/trade secret information to any person
without the prior written authorization of the Company unless pursuant to
Employee’s job duties to the Company under this Agreement.
(b) Non-Removal/Surrender.
Employee agrees that he/she will not remove any confidential/trade secret
information from the offices of the Company or the premises of any facility
in
which the Company is performing services, except pursuant to his/her duties
under this Agreement. Employee further agrees that he/she shall surrender to
the
Company all documents and materials in his/her possession or control which
contain confidential/trade secret information and which are the property of
the
Company upon the termination of this Agreement, and that he/she shall not
thereafter retain any copies of any such materials.
5.2.3 Non-Solicitation
of Customers/Prohibition Against Unfair Competition.
Employee agrees that at no time after his/her employment with the Company will
he/she engage in competition with the Company while making any use of the
Company’s confidential/trade secret information. In addition, Employee agrees
that, for the duration of the severance payments as provided for in Section
4.2
or 4.4, he/she will not directly or indirectly accept or solicit, whether as
an
employee, independent contractor or in any other capacity, the business of
any
customer of the Company with whom Employee worked or otherwise had access to
the
Company’s confidential/trade secret information pertaining to its business with
that customer during the last two (2) years of his/her employment with the
Company.
5.3 Conflict
of Interest. During Employee’s employment with Company,
Employee must not engage in any work, paid or unpaid, that creates an actual
conflict of interest with Company. Such work shall include, but is not limited
to, directly or indirectly competing with Company in any way, or acting as
an
officer, director, employee, consultant, controlling or 5% stockholder,
volunteer, lender, or agent of any business enterprise of the same nature as,
or
which is in direct competition with the business in which Company is now engaged
or in which Company becomes engaged during Employee’s employment with Company,
as may be determined by the Board of Directors in its sole discretion. If the
Board of Directors believes such a conflict exists during Employee’s employment,
the Board of Directors may ask Employee to choose to discontinue the other
work
or resign employment with Company. In addition, Employee agrees not to refer
any
client or potential client of Company to competitors of Company without
obtaining the Company’s prior written consent during Employee’s employment. Any
termination of Employee’s employment due to violation of this subsection is
considered “With Cause” for the purposes of section 4.1 above.
5.4 Non-Solicitation
During Employment.
Employee shall not during his/her employment interfere with or disrupt or
attempt to disrupt Employer’s business relationship with its customers or
suppliers or solicit any of the employees of Employer to leave the employ of
Employer.
5.5 Non-Solicitation
of Employees.
Employee agrees that, for the duration of the severance payments as provided
for
in Section 4.2 or 4.4, he/she shall not, directly or indirectly, ask or
encourage any of the Company’s employees to leave their employment with the
Company or solicit any of the Company’s employees for employment.
5.6 Breach
of Provisions.
If the
Employee breaches any of the provisions of this Section 5, or in the event
that
any such breach is threatened by the Employee, in addition to and without
limiting or waiving any other remedies available to the Company at law or in
equity, the Company shall be entitled to immediate injunctive relief in any
court, domestic or foreign, having the capacity to grant such relief, to
restrain any such breach or threatened breach and to enforce the provisions
of
this section 5. The Employee acknowledges and agrees that there is no adequate
remedy at law for any such breach or threatened breach and, in the event that
any action or proceeding is brought seeking injunctive relief, the Employee
shall not use as a defense thereto that there is an adequate remedy at law.
In
addition, if the Employee breaches any of the provisions of this section 5,
any and all Severance Payments and benefit obligations under this Agreement
or
otherwise will cease and be extinguished in their entirety and the Company
will
have no further obligations in that regard.
5.7 Reasonable
Restrictions.
The
parties acknowledge that the foregoing restrictions, as well as the duration
and
the territorial scope thereof as set forth in this section 5, are under all
of
the circumstances reasonable and necessary for the protection of the Company
and
its business.
5.8 Definition.
For
purposes of this section 5, the term “Company” shall be deemed to include
any subsidiary or affiliate of the Company.
SECTION
6
MISCELLANEOUS
6.1 Binding
Effect.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective legal representatives, heirs, distributees, successors
and
assigns; PROVIDED, that the rights and obligations of the Employee hereunder
shall not be assignable by him/her.
6.2 Notices.
Any
notice provided for herein shall be in writing and shall be deemed to have
been
given or made (a) when personally delivered or (b) when sent by
telecopier and confirmed within forty-eight (48) hours by letter mailed or
delivered to the party to be notified at its or his/hers address set forth
herein; or three (3) days after being sent by registered or certified mail,
return receipt requested, (or by equivalent xxxxxxx with delivery documentation
such as FEDEX or UPS) to the address of the other party set forth or to such
other address as may be specified by notice given in accordance with this
section 6.2:
| If to the Company: |
SYS Technologies
0000
Xxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx,
XX 00000
Tel:
(000) 000-0000
Fax:
(000) 000-0000
Attention:
Sr. Vice President, Corp. Admin.
|
|
| If to Employee: |
Name: Xxx
Xxxxxxx
Address:
, CA
Tel:
(___)
___-____
Fax: (___)
___-____
|
6.3 Severability.
If any
provision of this Agreement, or portion thereof, shall be held invalid or
unenforceable by a court of competent jurisdiction, such invalidity or
unenforceability shall attach only to such provision or portion thereof, and
shall not in any manner affect or render invalid or unenforceable any other
provision of this Agreement or portion thereof, and this Agreement shall be
carried out as if any such invalid or unenforceable provision or portion thereof
were not contained herein. In addition, any such invalid or unenforceable
provision or portion thereof shall be deemed, without further action on the
part
of the parties hereto, modified, amended or limited to the extent necessary
to
render the same valid and enforceable.
6.4 Waiver.
No
waiver by a party hereto of a breach or default hereunder by the other party
shall be considered valid, unless expressed in a writing signed by such first
party, and no such waiver shall be deemed a waiver of any subsequent breach
or
default of the same or any other nature.
6.5 Entire
Agreement.
This
Agreement sets forth the entire agreement between the Parties with respect
to
the subject matter hereof, and supersedes any and all prior agreements between
the Company and Employee, whether written or oral, relating to any or all
matters covered by and contained or otherwise dealt with in this Agreement.
This
Agreement does not constitute a commitment of the Company with regard to
Employee’s employment, express or implied, other than to the extent expressly
provided for herein.
6.6 Amendment.
No
modification, change or amendment of this Agreement or any of its provisions
shall be valid, unless in writing and signed by the party against whom such
claimed modification, change or amendment is sought to be enforced.
6.7 Authority.
The
Parties each represent and warrant that it/he or she has the power, authority
and right to enter into this Agreement and to carry out and perform the terms,
covenants and conditions hereof.
6.8 Attorneys’
Fees.
The
Parties shall each be responsible for their own attorneys’ fees.
6.9 Titles.
The
titles of the sections of this Agreement are inserted merely for
convenience and ease of reference and shall not affect or modify the meaning
of
any of the terms, covenants or conditions of this Agreement.
6.10 Applicable
Law; Choice of Forum.
Any
proceeding between the parties arising out of or relating to this Agreement
shall be brought in the appropriate forum in San Diego County, California.
This Agreement, and all of the rights and obligations of the parties in
connection with the employment relationship established hereby, shall be
governed by and construed in accordance with the substantive laws of the State
of California without giving effect to principles relating to conflicts of
law.
6.11 Arbitration.
6.11.1 Scope.
To the
fullest extent permitted by law, Employee and Company agree to the binding
arbitration of any and all controversies, claims or disputes between them
arising out of or in any way related to this Agreement, the employment
relationship between Company and Employee and any disputes upon termination
of
employment, including but not limited to breach of contract, tort,
discrimination, harassment, wrongful termination, demotion, discipline, failure
to accommodate, family and medical leave, compensation or benefits claims,
constitutional claims; and any claims for violation of any local, state or
federal law, statute, regulation or ordinance or common law. For the purpose
of
this agreement to arbitrate, references to “Company” include all parent,
subsidiary or related entities and their employees, supervisors, officers,
directors, agents, pension or benefit plans, pension or benefit plan sponsors,
fiduciaries, administrators, affiliates and all successors and assigns of any
of
them, and this agreement to arbitrate shall apply to them to the extent
Employee’s claims arise out of or relate to their actions on behalf of
Company.
6.11.2 Arbitration
Procedure.
To
commence any such arbitration proceeding, the party commencing the arbitration
must provide the other party with written notice of any and all claims forming
the basis of such right in sufficient detail to inform the other party of the
substance of such claims. In no event shall this notice for arbitration be
made
after the date when institution of legal or equitable proceedings based on
such
claims would be barred by the applicable statute of limitations. The arbitration
will be conducted in San Diego, California, by a single neutral arbitrator
and in accordance with the then-current rules for resolution of employment
disputes of the American Arbitration Association (“AAA”). The parties are
entitled to representation by an attorney or other representative of their
choosing. The arbitrator shall have the power to enter any award that could
be
entered by a judge of the trial court of the State of California, and only
such
power, and shall follow the law. The award shall be binding and the Parties
agree to abide by and perform any award rendered by the arbitrator. The
arbitrator shall issue the award in writing and therein state the essential
findings and conclusions on which the award is based. Judgment on the award
may
be entered in any court having jurisdiction thereof. Company shall bear the
costs of the arbitration filing and hearing fees and the cost of the
arbitrator.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first above written.
|
Dated:
|
November 10, 2006 | /s/ Xxx Xxxxxxx | |
|
Name:
Xxx Xxxxxxx
|
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|
SYS
Technologies, Inc.
|
|||
|
Dated:
|
November 10, 2006 |
By: /s/
Xxx Xxxxxxx
|
|
|
Name:
Xxx Xxxxxxx
Title:
Sr.
Vice President, Corp. Admin.
|
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