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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is dated as of June 23rd, 1999, by and
between EDAC TECHNOLOGIES CORPORATION, a Wisconsin corporation ("Edac"), and
XXXXXX X. XXXXXXXXX ("Xx. Xxxxxxxxx").
RECITAL
Edac desires to employ Xx. Xxxxxxxxx and Xx. Xxxxxxxxx is willing to make
his services available to Edac on the terms and conditions set forth below.
AGREEMENTS
In consideration of the premises and the mutual agreements which follow,
the parties agree as follows:
1. Employment. Edac hereby employs Xx. Xxxxxxxxx and Xx. Xxxxxxxxx hereby
accepts employment with Edac on the terms and conditions set forth in this
Agreement.
2. Term. The initial term of Xx. Xxxxxxxxx'x employment hereunder shall
commence on the date hereof and continue for a period of [three] years, subject
to earlier termination as set forth in this Agreement. The term of Xx.
Xxxxxxxxx'x employment will automatically be extended one year on each
anniversary of the date of this Agreement unless either party notifies the other
to the contrary at least 90 days prior to any such anniversary. The term of
employment is referred to in this Agreement as the "Employment Term."
3. Duties. Xx. Xxxxxxxxx shall serve as the Executive Vice President and
Chief Financial Officer of Edac and will, under the direction of the Board of
Directors (the "Board"), faithfully and to the best of his ability, perform the
duties of such positions as determined by the Chief Executive Officer and the
Board from time to time. Xx. Xxxxxxxxx shall perform those duties normally
associated with the offices of Executive Vice President and Chief Financial
Officer. Xx. Xxxxxxxxx shall also perform such additional duties and
responsibilities which may from time to time be reasonably assigned or delegated
by the Chief Executive Officer or the Board. Xx. Xxxxxxxxx agrees to devote his
entire business time, effort, skill and attention to the proper discharge of
such duties while employed by Edac.
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4. Compensation.
(a) Base Salary. Xx. Xxxxxxxxx shall receive a base salary of
$150,000 per year, payable in regular and equal installments in accordance with
Edac's payroll practices as in effect from time to time (the "Base Salary"). Xx.
Xxxxxxxxx'x Base Salary shall be reviewed annually by the Compensation Committee
of the Board (the "Compensation Committee") to determine appropriate increases,
if any, in the Base Salary, but the Base Salary shall not be reduced below the
amount stated above without Xx. Xxxxxxxxx'x written consent.
(b) Bonus. For each of Edac's fiscal years during the Employment
Term, Xx. Xxxxxxxxx shall be eligible to receive a cash bonus (the "Cash
Bonus"). The amount of the Cash Bonus for each fiscal year shall be determined
by the Compensation Committee by evaluating Xx. Xxxxxxxxx'x achievements in
meeting the mutually agreed upon objectives during the fiscal year. The Cash
Bonus shall be paid to Xx. Xxxxxxxxx, subject to appropriate tax withholding, as
soon as practicable after the close of the fiscal year but, in any event, no
later than March 15.
(c) Stock Options. The Board strongly endorses the concept that it is
in the best interests of Edac and its shareholders to have executives whose
financial interests are closely-aligned with those of Edac's shareholders. An
effective method of achieving this objective is to reward selected executives
with stock options based on their contributions in meeting long-term (two to
five years) and short-term objectives which improve shareholder value. The
objectives and options to be awarded Xx. Xxxxxxxxx shall be established by the
Compensation Committee and management.
5. Fringe Benefits. During the Employment Term, Xx. Xxxxxxxxx shall
receive all normal benefits available to every Edac employee, plus the following
fringe benefits:
(a) Vacation. Xx. Xxxxxxxxx shall be entitled to three weeks of paid
vacation annually.
(b) Automobile. Edac shall provide Xx. Xxxxxxxxx with the use of a
Company-owned or leased automobile. In addition, Edac shall pay, or reimburse
Xx. Xxxxxxxxx for his payment of, the ordinary and reasonable expenses incurred
in the normal operation of such automobile.
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(c) Reimbursement for Reasonable Business Expenses. Edac shall pay or
reimburse Xx. Xxxxxxxxx for reasonable expenses incurred by him in connection
with the performance of his duties pursuant to this Agreement, including, but
not limited to, travel expenses, expenses in connection with trade shows,
seminars, professional conventions or similar professional functions and other
reasonable business expenses.
6. Termination of Employment.
(a) Termination for Death, Disability or Cause. Xx. Xxxxxxxxx'x
employment hereunder shall automatically terminate upon his death. In addition,
Edac shall be entitled to terminate Xx. Xxxxxxxxx'x employment at any time upon
his "Disability." For purposes of this Agreement, "Disability" shall mean a
physical or mental sickness or injury which renders Xx. Xxxxxxxxx incapable of
performing the services required of him as an employee of Edac and which does or
may be expected to continue for more than three months during any twelve-month
period. Edac and Xx. Xxxxxxxxx shall determine the existence of a Disability and
the date upon which it occurred. In the event of a dispute regarding whether or
when a Disability occurred, the matter shall be referred to a medical doctor
selected by Edac and Xx. Xxxxxxxxx. If they fail to agree upon such a medical
doctor, Edac and Xx. Xxxxxxxxx shall each select a medical doctor and the two
doctors so selected shall together select a third medical doctor who shall make
the determination. The determination by the selected medical doctor shall be
conclusive and binding upon the parties hereto.
If it becomes apparent that the Disability renders Xx. Xxxxxxxxx
unable to discharge his responsibilities and is supported by medical evidence
that his return cannot be determined, Edac may, in its discretion, terminate or
modify this Agreement once it is established that Xx. Xxxxxxxxx will not return
to full-time status.
Edac may also terminate Xx. Xxxxxxxxx'x employment under this
agreement for "Cause," effective immediately upon delivery of notice to Xx.
Xxxxxxxxx. "Cause" shall mean:
(i) the willful and continued failure of Xx. Xxxxxxxxx to
perform substantially Xx. Xxxxxxxxx'x duties with Edac or its affiliates (other
than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered to Xx.
Xxxxxxxxx by the Board which specifically identifies the manner in which the
Board believes that Xx. Xxxxxxxxx has not substantially performed his duties and
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after Xx. Xxxxxxxxx is given a reasonable period of time to rectify or eliminate
such failure;
(ii) the willful engaging by Xx. Xxxxxxxxx in illegal conduct or
gross misconduct which is materially and demonstrably injurious to Edac; or
(iii) the commission by Xx. Xxxxxxxxx of fraud or dishonesty with
respect to Edac or a material misrepresentation by Xx. Xxxxxxxxx to Edac's
shareholders or directors.
Notwithstanding anything herein to the contrary, no act or failure to act, on
the part of Xx. Xxxxxxxxx, shall be considered "willful" unless it is done, or
omitted to be done, by Xx. Xxxxxxxxx in bad faith or without reasonable belief
that Xx. Xxxxxxxxx'x action or omission was in the best interests of Edac. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of a more senior officer of Edac
or based upon the advice of counsel for Edac shall be conclusively presumed to
be done, or omitted to be done, by Xx. Xxxxxxxxx in good faith and in the best
interests of Edac. The cessation of employment of Xx. Xxxxxxxxx shall not be
deemed to be for Cause unless and until there shall have been delivered to Xx.
Xxxxxxxxx a copy of a resolution duly adopted by the Board at a meeting of the
Board called and held for such purpose (after reasonable notice is provided to
Xx. Xxxxxxxxx and Xx. Xxxxxxxxx is given an opportunity, together with counsel,
to be heard before the Board), finding that, in the good faith opinion of the
Board, Xx. Xxxxxxxxx is guilty of the conduct described in subparagraph (i),
(ii) or (iii) above, and specifying the particulars thereof in detail.
If Xx. Xxxxxxxxx'x employment terminates due to his Disability or
death, or Xx. Xxxxxxxxx voluntarily terminates his employment or is terminated
by Edac for Cause, Xx. Xxxxxxxxx shall be entitled to receive his Base Salary
and vested fringe benefits prorated to the date of termination. In addition, in
the event of a termination due to Xx. Xxxxxxxxx'x death or Disability, Xx.
Xxxxxxxxx shall also receive a prorated Cash Bonus for the year of termination.
The amount of the prorated Cash Bonus shall be determined by the Compensation
Committee and paid as soon as possible after such determination.
(b) Termination Without Cause. Notwithstanding anything in this
Agreement to the contrary, if Xx. Xxxxxxxxx'x employment is terminated by Edac
for any reason other than for Cause, Disability or death, or if this Agreement
is terminated by Edac for what Edac believes is Cause or Disability, and it is
ultimately determined that Xx. Xxxxxxxxx was wrongfully
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terminated, Xx. Xxxxxxxxx shall, as full and liquidated damages for such
termination, receive a severance payment equal to 24 months of Base Salary plus
two times the average of the three highest annual bonus payments Xx. Xxxxxxxxx
received during the five fiscal years prior to the termination or, if he was
employed less than five fiscal years at the time of termination, the average of
the annual bonuses paid to Xx. Xxxxxxxxx during his employment.
7. Noncompetition. The parties agree that Edac's supplier, customer,
vendor and employee contacts and relations are established and maintained at
great expense and, by virtue of Xx. Xxxxxxxxx'x employment with Edac, Xx.
Xxxxxxxxx will have unique and extensive exposure to and personal contact with
Edac's suppliers, customers, vendors and employees and that he will be able to
establish a unique relationship with those individuals and entities that will
enable him, both during and after employment, to unfairly compete with Edac.
Further, the parties agree that the terms and conditions of the following
restrictive covenants are reasonable and necessary for the protection of Edac's
business, trade secrets and confidential information and to prevent great damage
or loss to Edac as a result of action taken by Xx. Xxxxxxxxx. Xx. Xxxxxxxxx
acknowledges that the noncompete restrictions and nondisclosure of confidential
information restrictions contained in this Agreement are reasonable and the
consideration provided for herein is sufficient to fully and adequately
compensate Xx. Xxxxxxxxx for agreeing to such restrictions. Xx. Xxxxxxxxx
acknowledges that he could continue to actively pursue his career and earn
sufficient compensation in the same or similar business without breaching any of
the restrictions contained in this Agreement. For purposes of this section 7 and
section 8 below, "Edac" shall refer to each of Edac Technologies Corporation and
each of its subsidiaries.
(a) During Term of Employment. Xx. Xxxxxxxxx covenants and agrees
that, during his employment with Edac, he shall not, directly or indirectly,
either individually or as an employee, principal, agent, partner, shareholder,
owner, trustee, beneficiary, co-venturer, distributor, consultant or in any
other capacity, participate in, become associated with, provide assistance to,
engage in or have a financial or other interest in any business, activity or
enterprise which is competitive with Edac or any successor or assign of Edac.
The ownership of less than a one percent interest in a corporation whose shares
are traded in a recognized stock exchange or traded in the over-the-counter
market, even though that corporation may be a competitor of Edac, shall not be
deemed financial participation in a competitor.
(b) Upon Termination of Employment. Xx. Xxxxxxxxx agrees that for a
two-year period after Xx. Xxxxxxxxx'x employment with Edac terminates for any
reason, he will not, directly or indirectly, either individually or
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as an employee, agent, partner, shareholder, owner, trustee, beneficiary,
co-venturer, distributor, consultant or in any other capacity:
(i) Request or advise any of the customers, vendors, suppliers,
or other business contacts of Edac who currently have or have had business
relationships with Edac within two years preceding the date of such action, to
withdraw, curtail or cancel any of their business or relations with Edac.
(ii) Induce or attempt to induce any employee, sales
representative, supplier, consultant or personnel of Edac to terminate his or
her relationship or breach his or her agreements with Edac.
(iii) Participate in, become associated with, provide assistance
to, engage in or have a financial or other interest in any business, activity or
enterprise which is competitive with the business of Edac or any successor or
assign of Edac and which conducts such competitive business within the United
States; provided, however, that the ownership of less than 1% of the stock of a
corporation whose shares are traded in a recognized stock exchange or traded in
the over-the-counter market, even though that corporation may be a competitor of
Edac, shall not be deemed financial participation in a competitor.
8. Confidential Information. The parties agree that Edac's customers,
business connections, customer lists, procedures, operations, techniques,
customer profiles and other aspects of its business are established at great
expense and protected as confidential information and provide Edac with a
substantial competitive advantage in conducting its business. The parties
further agree that, by virtue of Xx. Xxxxxxxxx'x employment with Edac, he will
have access to, and be entrusted with, secret, confidential and proprietary
information, and that Edac would suffer great loss and injury if Xx. Xxxxxxxxx
would disclose this information or use it to compete with Edac. Therefore, Xx.
Xxxxxxxxx agrees that during the term of his employment, and for a period ending
on the earlier of (a) two years after the termination of his employment with
Edac or (b) the date on which the information referred to in this section
becomes publicly known through no fault of Xx. Xxxxxxxxx, he will not, directly
or indirectly, either individually or as an employee, agent, partner,
shareholder, owner, trustee, beneficiary, co-venturer, distributor, consultant
or in any other capacity, use or disclose, or cause to be used or disclosed, any
secret, confidential or proprietary information acquired by Xx. Xxxxxxxxx during
his employment with Edac whether owned by Edac prior to or discovered and
developed by Edac subsequent to Xx. Xxxxxxxxx'x employment, and regardless of
the fact that Xx. Xxxxxxxxx may have participated in the discovery and the
development of that information.
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9. Law of Torts and Trade Secrets. The parties agree that nothing in this
Agreement shall be construed to limit or negate the statutory or common law of
torts or trade secrets where it provides Edac with broader protection than that
provided herein.
10. Waiver. The failure of either party to insist, in any one or more
instances, upon performance of the terms or 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, covenant or condition.
11. Notices. Any notice to be given hereunder shall be deemed sufficient
if addressed in writing, and delivered by registered or certified mail or
delivered personally, in the case of Edac, to its principal business office, and
in the case of Xx. Xxxxxxxxx, to his address appearing on the records of Edac,
or to such other address as he may designate in writing to Edac.
12. Severability. If any provision of this Agreement is held to be invalid
or unenforceable for any reason whatsoever, it is agreed such invalidity or
unenforceability shall not affect any other provision of this Agreement and the
remaining covenants, restrictions and provisions hereof shall remain in full
force and effect and any court of competent jurisdiction may so modify the
objectionable provision as to make it valid, reasonable and enforceable.
Furthermore, the parties specifically acknowledge that the provisions of
sections 7(a), 7(b)(i), 7(b)(ii) and 7(b)(iii) are each separate and independent
agreements.
13. Amendment. This Agreement may only be amended by an agreement in
writing signed by all of the parties hereto.
14. Benefit. This Agreement shall be binding upon and inure to the benefit
of and shall be enforceable by and against Edac, its successors and assigns and
Xx. Xxxxxxxxx, his heirs, beneficiaries and legal representatives. It is agreed
that the rights and obligations of Xx. Xxxxxxxxx may not be delegated or
assigned.
15. Entire Agreement. Except for the Change of Control Agreement between
Xx. Xxxxxxxxx and Edac, if any, the provisions of which will control in the
event of a conflict with the provisions of this Agreement, this Agreement
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
among the parties with respect to such subject matter.
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The parties have executed or caused this Agreement to be executed as of the
day, month and year first above written.
EDAC TECHNOLOGIES CORPORATION
BY /s/ Xxxxxx Xxxxxxxxx
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Its Chairman Compensation Committee
Edac Board
/s/ Xxxxxx X. Xxxxxxxxx
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Xxxxxx X. Xxxxxxxxx
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