EXHIBIT 10.32
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), dated as of March 1, 1999
is entered into by and between C3, Inc, a North Carolina corporation with its
principal office at 0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxxxx, XX 00000
(the "Company") and Xxxxxx X. Xxxxxx an individual currently residing at X.X.
Xxx 000, Xxxxxxx, XX 00000 ("Employee").
Statement of Purpose
The Company wishes to obtain the services of the Employee on the terms
and conditions and with the benefits set forth in this Agreement. Employee
desires to be employed by the Company on such terms and conditions and to
receive such additional consideration as set out herein.
Therefore, in consideration of the mutual covenants contained in this
Agreement, the grant of certain options to purchase common stock of the Company
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and Employee agree as follows:
1. Employment. The Company hereby agrees to employ Employee, and
Employee hereby accepts such employment, on the terms and conditions
set forth in this Agreement.
2. Term of Employment. The term of Employee's employment under this
Agreement shall commence as of the date of this Agreement and shall
continue on and through February 28, 2000. Termination of employment
shall be governed by Paragraph 7 of this Agreement, and unless
terminated by either party as provided in Paragraph 7, this
Agreement shall automatically, at the expiration of each existing
term, renew for successive one year terms.
3. Position and Duties. The Employee shall serve as President and COO
of the Company. Employee will, under the direction of CEO of the
Company, faithfully and to the best of his ability perform the
duties as set out in the minutes of the June 10, 1998 Board of
Directors meeting and such additional duties as may be reasonably
assigned by the CEO and Board of Directors, Employee agrees to
devote his entire working time, energy and skills to the Company
while so employed.
4. Compensation and Benefits. Employee shall receive compensation and
benefits for the services performed for the Company under this
Agreement as follows:
A) BASE SALARY. Employee shall receive a base salary of $125, 000
per year, payable in regular and equal semi-monthly
installments ("Base Salary").
B) EMPLOYEE BENEFITS. Employee shall receive such benefits as are
made available to the other employees of the Company,
including, but not limited to, life, medical and disability
insurance, retirement benefits and such vacation as is provided
to the other employees of the Company (the "Employee
Benefits").
C) INCENTIVE COMPENSATION. Employee shall participate in such
incentive plans as may be approved by the Board of Directors
from time-to-time.
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5. Reimbursement of Expenses. The Company shall reimburse Employee for
all reasonable out-of-pocket expenses incurred by Employee
specifically and directly related to the performance of the Employee
of the services under the Agreement.
6. Withholding. The Company may withhold from any payments or benefits
under this Agreement all federal, state or local taxes or other
amounts as may be required pursuant to applicable law, government
regulation or ruling.
7. Termination of Employment.
A) DEATH OF EMPLOYEE. If the Employee shall die during the Term,
this Agreement and the employment relationship hereunder will
automatically terminate on the date of death, which shall be
the last day of the Term.
B) TERMINATION FOR JUST CAUSE. The Company shall have the right to
terminate the Employee's employment under this Agreement at any
time for Just Cause, which termination shall be effective
immediately. Termination for "Just Cause" shall include
termination for the Employee's personal dishonesty, gross
incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform
stated duties, willful violation of any law, rule, regulation
(other than traffic violations or similar offenses), written
Company policy or final cease-and-desist order, conviction of a
felony or of a misdemeanor involving moral misappropriation of
the Company's assets (determined on a reasonable basis),
disability or material breach of any other provision of this
Agreement, provided that the Employee has received written
notice from the Company of such material breach and such breach
remains uncured thirty days after the delivery of such notice.
For purposes of this subsection, the term "disability" means
the inability of Employee, due to the condition of his
physical, mental, or emotional health, to satisfactorily
perform the duties of his employment hereunder for a continuous
three month period; provided further that if the Company
furnishes long term disability insurance for the Employee, the
term "disability" shall mean that continuous period sufficient
to allow for the long term disability payments to commence
pursuant to the Company's long term disability insurance
policy. In the event the Employee's employment under this
Agreement is terminated for Just Cause, the Employee shall have
no right to receive compensation or other benefits under this
Agreement for any period after such termination.
C) TERMINATION WITHOUT CAUSE. The Company may terminate the
Employee's employment other than for "Just Cause," as described
in Subsection (b) above, at any time upon written notice to the
Employee, which termination shall be effective immediately. In
the event the Company terminates Employee pursuant to this
Subsection (c), (i) the Employee will receive the Base Salary
for the remainder of the then existing term ("Termination
Compensation"), so long as the Employee complies with Sections
8, 9 and 10 of the Agreement and (ii) the Company shall take
such action as may be required to vest any unvested benefits of
the Employee under any employee stock-based or other benefit
plan or arrangement. Such amounts shall be payable at the times
such amounts would have been paid in accordance with Section 4.
In addition, Employee shall continue to participate in the same
group hospitalization plan, health care plan, dental care plan,
life or other insurance or death benefit plan, and any other
present or future similar group
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employee benefit plan or program for which officers of the
Company generally are eligible, on the same terms as were in
effect prior to the Employee's termination, either under the
Company's plans or comparable coverage, for all periods
Employee receives Termination Compensation. Notwithstanding
anything in this Agreement to the contrary, if Employee
breaches Sections 8, 9 or 10 of this Agreement, the Employee
will not be entitled to receive any further compensation or
benefits pursuant to this Section 7(c).
D) CHANGE OF CONTROL SITUATIONS. In the event of a Change of
Control of Company at any time after the date hereof, Employee
may voluntarily terminate employment with Company up until
twelve (12) months after the Change of Control for "Good
Reason" and, subject to Section 7(f), (y) be entitled to
receive in a lump sum (i) any compensation due but not yet paid
through the date of termination and (ii) in lieu of any further
salary payments from the date of termination to the end of the
then existing term, an amount equal to the Termination
Compensation times 2.99, and (z) shall continue to participate
in the same group employee benefit plans or programs for which
officers of the Company generally are eligible, or comparable
plans or coverage, for a period of two years following
termination of employment by the Employee, on the same terms as
were in effect either (A) at the date of such termination, or
(B) if such plans and programs in effect prior to the Change of
Control of Company are, considered together as a whole,
materially more generous to the offices of Company, then at the
date of Change of Control. Any equity based incentive
compensation (including but not limited to stock options, SARs,
etc.) shall fully vest and be immediately exercisable in full
upon a Change in Control, not withstanding any provision in any
applicable plan. Any such benefits shall be paid the Company to
the same extent as they were so paid prior to the termination
or the Change of Control of Company.
"Good Reason" shall mean the occurrence of any of the following
events without the Employee's express written consent:
(i) The assignment to the Employee of duties inconsistent
with the position and status of the Employee with the
Company immediately prior to the Change of Control;
(ii) A reduction by the Company in the Employee's pay grade
or base salary as then in effect, or the exclusion of
Employee from participation in the Company's benefit
plans in which he previously participated as in effect
at the date hereof or as the same may be increased from
time-to-time during the Term, or Company's failure to
increase (within twelve (12) months of the Employee's
last increase in base salary) the Employee's base
salary in an amount which at least equals, on a
percentage basis, the average percentage increase in
base salary for all executives entitled to participate
in Company's executive incentive plans for which the
Employee was eligible in the preceding 12 months; or
(iii) An involuntary relocation of the Employee more than
fifty (50) miles from the location where the Employee
worked immediately prior to
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the Change in Control or the breach by the Company of
any material provision of this Agreement; or
(iv) Any purported termination of the employment of
Employee by Company which is not effected in accordance
with this Agreement.
A "Change of Control" shall be deemed to have occurred if (i)
any person or group of persons (as defined in Section 13(d)
and 14(d) of the Securities Exchange Act of 1934) together
with its affiliates, excluding employee benefit plans of
Company, becomes, directly or indirectly, the "beneficial
owner" (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934) of securities of Company representing 20% or more
of the combined voting power of Company's then outstanding
securities; or (ii) during the then existing term of the
Agreement, as a result of a proxy contest, merger,
consolidation or sale of assets, or as a result of any
combination for the foregoing individuals who at the beginning
of any year period during such term constitute the Company's
Board of Directors, plus new directors whose election by
Company's shareholders is approved by a vote of at least two
thirds of the outstanding voting shares of the Company, cease
for any reason during such year period to constitute at least
two thirds of the members of such Board of Directors; or (iii)
the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation or
entity which regardless of which entity is the survivor, other
than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or being converted into voting securities of the
surviving entity) at least 60% of the combined voting power of
the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; or
(iv) the shareholders of the Company approve a plan of
complete liquidation or winding-up of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets; or (v) any event
which the Company's Board of Directors determines should
constitute a Change of Control.
E) EMPLOYEE'S RIGHT TO PAYMENTS. In receiving any payments
pursuant to this Section 7, Employee shall not be
obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the
Employee hereunder, and such amounts shall not be reduced
or terminated whether or not the Employee obtains other
employment.
F) REDUCTION IN AGREEMENT PAYMENTS. Notwithstanding anything
in this Agreement to the contrary, if any of the payments
provided for under this Agreement (the "Agreement
Payments"), together with any other payments that the
Employee has the right to receive (such other payments
together with the Agreement Payments are referred to as
the "Total Payments"), would constitute a "parachute
payment" as defined in Section 280G(b)(2) of the Internal
Revenue Code of 1986, as amended (the "Code") (a
"Parachute Payment"), the Agreement Payments shall be
reduced by the smallest amount necessary so that no
portion of such Total Payments would be Parachute
Payments. In the event the Company shall make an Agreement
Payment to the Employee that would constitute a Parachute
Payment, the Employee shall return such payment to the
Company (together with interest at the rate set forth in
Section 1274(b)(2)(B) of the Code). For purposes of
determining whether and the extent to which the Total
Payments constitute
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the Parachute Payments, no portion of the Total Payments
the receipt of which Employee has effectively waived in
writing shall be taken into account.
8. Covenant Not to Compete. Employee agrees that during his employment
with the Company and for a period of one (1) year following the
termination of his employment with the Company, for whatever reason:
a) Employee shall not, directly or indirectly, own any
interest in, manage, operate, control, be employed by,
render advisory services to, or participate in the
management or control of any business that operates in the
same business as the Company, which Employee and the
Company specifically agree as the business of fabricating
(wafering, preforming, and faceting), marketing and
distributing moissanite gemstones or other diamond
simulants to the gem and jewelry industry (the
"Business"), unless Employee's duties, responsibilities
and activities for and on behalf of such other business
are not related in any way to such other business's
products which are in competition with the Company's
products at the time of termination. Employee's ownership
of less than one percent of the issued and outstanding
stock of a corporation engaged in the Business shall not
by itself be deemed to be a violation of this Agreement.
Employee recognizes that possible restriction on his
activities which may occur as a result of his performance
of his obligations under Paragraph 8(a) are substantial,
but that such restriction is required for the reasonable
protection of the Company.
b) Employee shall not, directly or indirectly, influence or
attempt to influence any customer of the Company to
discontinue its purchase of any product of the Company
which is manufactured or sold by the Company at the time
of termination of Employee's employment or to divert such
purchases to any other person, firm or employer.
c) Employee shall not, directly or indirectly, interfere
with, disrupt or attempt to disrupt the relationship,
contractual or otherwise between the Company and any of
its suppliers.
d) Employee shall not, directly or indirectly, solicit any
employee of the Company to work for any other person, firm
or employer.
9. Confidentiality. In the course of his employment with the Company,
Employee will have access to confidential information, records,
data, customer lists, lists of product sources, specifications,
trade secrets and other information which is not generally available
to the public and which the Company and Employee hereby agree is
proprietary information of the Company ("Confidential Information").
During and after his employment by the Company, Employee shall not,
directly or indirectly, disclose the Confidential Information,
except as is required in the course of his Employment under this
Agreement. All Confidential Information as well as records, files,
memoranda, reports, plans, drawings, documents, models, equipment
and the like, including copies thereof, relating to the Company's
business, which Employee shall prepare or use or come into contact
with during the course of his employment, shall be and remain the
Company's sole property, and upon termination of Employee's
employment with the Company, Employee shall return all such
materials to the Company.
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10. Proprietary Information. Employee shall assign to Company, its
successors or assigns all of the Employee's rights to copyrightable
works and inventions which, during the period of Employee's
employment by the Company or its successors in business, Employee
makes or conceives, either solely or jointly with others, relating
to any subject matter with which Employee's work for the Company is
or may be concerned ("Proprietary Information"). Employee shall
promptly disclose in writing to the Company such copyrightable works
and inventions and, without charge to the Company, to execute,
acknowledge and deliver all such further papers, including
applications for copyrights and patents for such copyrightable works
and inventions, if any, in all countries and to vest title thereto
in the Company, it's successors, assigns, or nominees. Upon
termination of Employee's employment hereunder, Employee shall
return to the Company or its successors or assigns, as the case may
be, any Proprietary Information. The obligation of Employee to
assign the rights to such copyrightable works and inventions shall
survive the discontinuance or termination of this Agreement for any
reason.
11. Severability. In the event that any provision of any paragraph of
this Agreement shall be deemed to be invalid or unenforceable for
any reason whatsoever, it is agreed such invalidity or
unenforceability shall not affect any other provision of such
paragraph of this Agreement, and the remaining terms, covenants,
restrictions, or provisions in such paragraph and in the Agreement
shall remain in full force and effect and any court of competent
jurisdiction may so modify the objectionable provision to make it
valid, reasonable and enforceable.
12. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of North Carolina. Each of the
parties hereto irrevocably submits to the exclusive jurisdiction of
the courts located in North Carolina for the purposes of any suit,
action or other proceeding contemplated hereby or any transaction
contemplated hereby.
13. Notices. Any notice to be given under this Agreement shall be deemed
sufficient if addressed in writing and delivered personally, be
telefax with receipt acknowledged, or by registered or certified
U.S. mail to the address first above appearing, or to such other
address as a party may designate by notice from time-to-time.
14. Amendment. This Agreement may be amended only by an agreement in
writing signed by each of the parties hereto.
15. Entire Agreement. This Agreement contains the entire agreement of
the parties with respect to Employee's employment with the Company
and supercedes any prior agreements between them, whether written or
oral.
16. Waiver. The failure of either party to insist in any one or more
instance, upon performance of the terms and conditions of this
Agreement, shall not be construed as a waiver or a relinquishment of
any right granted hereunder or of the future performance of any such
term or condition.
17. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or breach thereof, shall be settled by arbitration
in Raleigh, North Carolina in accordance with the expedited
procedures of the Rules of the American Arbitration Association, and
judgment upon the award may be rendered by the arbitrator and may be
entered in any court having jurisdiction thereof.
18. Benefit. This Agreement shall be binding upon and inure to the
benefit of and shall be enforceable by and against the Company, it's
successors and assigns, and
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Employee, his heirs, beneficiaries and legal representatives. It is
agreed that the rights and obligations of Employee may not be
delegated or assigned except as may be specifically agreed to by the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
C3, Inc.
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Xxxx X. Xxxxxx, CEO
/s/ Xxxxxx X. Xxxxxx
----------------------------
Xxxxxx X. Xxxxxx
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