Exhibit 10.1
Employment Agreement between the Company and Xxx X. Xxxx
February 12, 1997 Personal & Confidential
Xx. Xxx Xxxx
19153 Xxxxxx Xxxxx Ct.
Gaithersburg, Md. 20879
Dear Xxx:
This will confirm our agreement, retroactive to January 1,
1997, to supersede your existing employment agreement, dated December 16, 1996,
with Microlog Corporation (the "Corporation") and to provide that the terms of
your continued employment with the Corporation shall be as set forth in this
letter. Please confirm your acceptance of these terms by signing at the space
provided on the last page of this letter.
1. Duties and Responsibilities.
You are to be employed as the Chief Development Officer of the
Corporation. You will report to the Board of Directors and will perform such
duties as the Board of Directors may from time to time reasonably direct.
However, you acknowledge and agree that the general management and direction of
the Corporation, its employees and affairs will be vested in the chief executive
officer, and you will work cooperatively with the chief executive officer in the
performance of your duties. Your powers as an officer of the Corporation will be
set forth in resolutions of the Board of Directors and/or amendments to the
Bylaws of the Corporation regarding the duties and powers of the Chief
Development Officer. During the term of this Agreement, there shall be no
material increase or decrease in your duties and responsibilities otherwise than
as provided herein, unless the parties otherwise agree in writing. The
Corporation agrees that you may, in the course of your activities on behalf of
the Corporation, present yourself as a president emeritus of the Corporation.
2. Compensation.
Your compensation for each year during the term of this
Agreement shall be equal to the following: (a) the sum of $80,000 for 1997,
$84,000 for 1998 and $88,200 for 1999 (the "Base Amount"), plus (b) the sum of
$93,779.70 per annum for 1997, 1998 and 1999 (the "Additional Amount").
The parties acknowledge that the Additional Amount was
determined by computing the present value of a hypothetical stream of payments
of $6,666.67 per month that would commence upon conclusion of your employment
hereunder and continue for five years, paid in installments over the term of
this Agreement. However, the parties agree that the Additional Amount represents
an agreed amount for purposes of this Agreement, and that any issues or disputes
that may arise hereafter concerning the determination of the Additional Amount
or the calculation thereof shall in no way affect the Additional Amount payable
hereunder.
Both the Base Amount and the Additional Amount will be payable
in 24 substantially equal semi-monthly installments, less normal withholdings
and deductions, subject to reduction pursuant to Section 5 below. You will be
entitled to paid vacation in accordance with the Corporation's standard vacation
policy for employees. You shall be entitled to participate in all benefit plans
which are generally available to the Corporation's employees, and those
available to executive officers of the Corporation, but not including
participation in the incentive stock option plan or executive bonus plan. The
Board reserves the right to address in the future whether, and under what
conditions, it may choose to grant you a bonus, in the Board's discretion.
The Corporation shall continue the existing lease of a company
car for your business and personal usage so long as you remain a full-time
employee of the Corporation. Such lease will be at the Corporation's expense so
long as you remain a full-time employee of the Corporation, and the Corporation
will continue to pay all lease charges and related costs such as fuel,
maintenance, insurance, and excess mileage charges. At the expiration of such
lease in approximately 16 months, the Corporation will cease to be obligated to
provide you with a company car or pay any such expenses.
If the Board of Directors elects to purchase a policy of key
man insurance on your life, you will cooperate fully with the Corporation on
matters relating to such insurance. The Corporation will be the beneficiary of
any such key man life insurance, unless otherwise agreed with you in writing.
3. Board Membership.
You are presently serving as a director of the Corporation
with a term expiring in 1998. You and the Corporation agree that no commitment
has been made by either party concerning your standing for re-election, or being
nominated by the Board of Directors for re-election, at the expiration of your
current term of office as a director of the Corporation. In the event that you
are nominated for re-election in 1998, it will be with the understanding that in
the event you cease to serve as a full time employee of the Corporation prior to
completion of your term as a director, you will, upon request of the Board,
resign as a director.
4. Term of Employment.
Your term of employment under this Agreement shall be from
January 1, 1997 through December 31, 1999, unless earlier terminated as provided
below. The Board of Directors may terminate your employment at any time with or
without cause, and your employment shall terminate automatically in the event of
your total incapacitation or death.
If your employment is terminated by the Board of Directors
"for cause" at any time prior to the expiration of the term of your employment
under this Agreement, you shall have no right to receive compensation or any
other benefits from the Corporation for any period after termination for cause
other than such vested retirement benefits to which you may be entitled under
any qualified employee pension plan maintained by the Corporation, and any
deferred compensation to which you may be entitled under prior deferred
compensation agreements. The term "termination for cause" shall mean termination
by the Corporation because of your gross incompetence, willful and intentional
misconduct, breach of fiduciary duty in connection with your services involving
personal profit, intentional failure to perform the duties of your office,
willful violation of any law, rule or regulation other than minor traffic
violations or similar offenses, or material breach of any provision of this
Agreement. In no event, however, will a termination be deemed to be "for cause"
unless, prior to such termination, the Board of Directors, after giving you
reasonable notice, and the opportunity to be heard, shall have duly adopted a
resolution approved by at least two thirds of its members finding that you have
been guilty of specific conduct as described above, and further finding that the
effect of such conduct has been materially adverse to the interests of the
Corporation. In the event that you do not agree with such findings, the issue of
whether the termination shall be "for cause" will be subject to binding
arbitration under the "Employment Dispute Resolution" rules of the American
Arbitration Association.
If your employment is terminated by the Board of Directors for
any reason other than "for cause" at any time prior to the expiration of the
term of your employment under this Agreement, you would be entitled to receive
the following: (a) all semi-monthly payments of the Base Amount, plus all
benefits or their equivalent value, for a period of one year following the date
of such termination or until the end of the term of this Agreement, whichever
occurs first, (b) the Additional Amount, for the remainder of the term of this
Agreement and, for any portion of such period during which you are not entitled
to receive the Base Amount, the Additional Amount shall be increased by $2,000
per month, and (c) such vested retirement benefits to which you may be entitled
under any qualified employee pension plan maintained by the Corporation, plus
any deferred compensation to which you may be entitled under prior deferred
compensation agreements.
You agree that, following expiration of the term of this
Agreement, you shall not be entitled to any further employment or consulting
arrangements with the Corporation, and that no such arrangement that may be
entered into shall be binding upon the Corporation unless approved by the
Corporation's Board of Directors and set forth in writing signed by an
authorized officer of the Corporation. The parties agree that it is the present
expectation that you will retire following expiration of the term of this
Agreement.
The separate letter agreement which the Corporation previously
entered into with you regarding severance payments in the event of termination
of your employment following a change in control is hereby terminated in its
entirety.
5. Full and Part-Time Status.
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Your employment hereunder shall be on a full-time basis,
except as set forth below.
You shall have the right, upon 30 days notice to the
Corporation (or such shorter period as may be necessitated by your health or
personal circumstances), to assume part-time status under this Agreement. In
such event, you may elect to work such number of hours and days per week as you
may specify in a written notice to the Corporation, which shall not be less than
20 hours per week, except with the consent of the Corporation. If you elect
part-time status, the Base Amount portion of your compensation and bonuses (but
not the Additional Amount or benefits) shall be reduced proportionately based
upon the ratio (the "Compensation Ratio") of the number of hours you elect to
work to 40 hours per week. You may at any time during the term of this Agreement
increase your work commitment (but the Compensation Ratio shall not exceed 1.00,
regardless of the number of hours actually worked per week), or further reduce
your work commitment within the parameters set forth above in this paragraph.
You shall have the right, upon reasonable notice to the
Corporation, to assume consulting status under this Agreement. You may make such
election for any reason, including as may be necessitated by your health or
personal circumstances. In such event, you shall perform such consulting as may
be reasonably requested by the Corporation during the remainder of the term of
the Agreement. If you assume consulting status under this Agreement, the Base
Amount portion of your compensation shall terminate, but the Additional Amount
shall continue to be paid for the remainder of the term of the Agreement and (so
long as your consulting status continues) shall be increased by $2,000 per month
for the remainder of the term of the Agreement, and all benefits provided in
this Agreement shall continue during the remaining term of this Agreement to the
extent permitted under the applicable benefit plans.
If you become totally incapacitated during the term of this
Agreement, the Base Amount portion of your compensation shall terminate.
Payments of the Additional Amount shall terminate one year after such incapacity
occurs or at the conclusion of the term of this Agreement, whichever occurs
earlier, and all benefits provided in this Agreement shall continue during the
remaining term of this Agreement to the extent permitted under the applicable
benefit plans. If you die during the term of this Agreement, the Base Amount
portion of your compensation and employee benefits shall terminate upon your
death. Payments of the Additional Amount shall terminate one year after your
death or at the conclusion of the term of this Agreement, whichever occurs
earlier. You may designate a recipient of any Additional Amount payments to be
made under this Agreement after your death by providing written notice to the
Corporation; in the event no designation is made, such payments shall be payable
to your estate.
In the event that you assume a part time status (or cease to
work entirely, as necessitated by your health or with the approval of the Board,
other than due to total incapacitation, which is addressed above), the
Corporation shall continue to pay its current share of premiums required for you
to participate in the Corporation's group health and hospitalization insurance
plan and supplemental health coverage, during the term of this Agreement. If,
consistent with the terms of those plans, the Corporation is unable or unwilling
to provide coverage to you under any of such plans, the Corporation shall
reimburse you for your reasonable actual out-of-pocket expenses in obtaining
similar coverage. In addition, to the extent permitted under the Corporation's
existing employee life insurance plan, you shall be allowed to continue your
existing life insurance at your expense.
7. Restrictive Covenants.
(a) During the term of this Agreement, and for a period of two
years after termination of this Agreement, you shall not at any time (i)
compete, directly or indirectly, on your own behalf or on behalf of any other
person or entity, with the Corporation or any of its affiliates within the
United States of America, its territories or the District of Columbia with
respect to the business of the Corporation or any of its affiliates as such
business shall be conducted on the date hereof or during the period of this
Agreement, (ii) solicit or induce, directly or indirectly, on your own behalf or
on behalf of any other person or entity, any employee of the Corporation or any
of its affiliates to leave the employ of the Corporation or any of its
affiliates; or (iii) solicit or induce, directly or indirectly, on your own
behalf or on behalf of any other person or entity, any customer of the
Corporation or any of its affiliates to reduce its business with the Corporation
or any of its affiliates.
(b) You shall not at any time, directly or indirectly, on your
own behalf or on behalf of any other person or entity, disclose any proprietary
information of the Corporation or any of its affiliates to any other person or
entity, and you shall not use any such proprietary information for your own
personal advantage or make
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such information available to others for use, unless such information shall have
come into the public domain other than through unauthorized disclosure.
(c) The ownership by you of not more than 10% of a
corporation, partnership or other enterprise shall not constitute a violation
hereof. You acknowledges that the restrictions contained in this Section 6 are
reasonable. If however, any portion of this Section 6 is found by a court of
competent jurisdiction to be invalid or unenforceable, but would be valid and
enforceable if modified, this Section 6 shall apply with such modifications
necessary to make this Section 6 valid and enforceable. Any portion of this
Section 6 not required to be so modified shall remain in full force and effect
and not be affected thereby. You agree that the Corporation shall have the right
of specific performance in the event of a breach by you of this Section 6.
Xxx, on behalf of Microlog, we are pleased with your desire to
continue your employment with the Corporation.
Yours truly,
Microlog Corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
President
Accepted:
/s/ Xxx X. Xxxx
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Xxx X. Xxxx
Date: 13 February 1997
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