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Exhibit 10.16
EMPLOYMENT AGREEMENT
Employment Agreement dated and effective as of July 1, 1997 (this
"AGREEMENT"), between ILLINOIS SUPERCONDUCTOR CORPORATION, a Delaware
corporation (with its successors and assigns, referred to as the "COMPANY"),
and XXXXXXX X. XXXXX ("XXXXX").
PRELIMINARY STATEMENT
Xxxxx is currently employed as a vice-president, chief financial
officer, treasurer and secretary of the Company. The Company desires to
continue to employ Xxxxx, and Xxxxx wishes to continue to be employed by the
Company, upon the terms and conditions set forth below. In order to specify
such terms and conditions, Xxxxx and the Company agree as follows:
AGREEMENT
1. EMPLOYMENT FOR TERM. The Company hereby employs Xxxxx and Xxxxx
hereby accepts employment with the Company for the period beginning on July 1,
1997 and ending on the earlier of (i) June 30, 1998, and (ii) the day which is
the 210th day following the day on which a chief financial officer (other than
Xxxxx) elected to such position by the Company's Board of Directors (the
"BOARD") commences full-time employment with the Company, or upon the earlier
termination of the Term pursuant to Section below (the "TERM"). The 210 day
period described above is referred to as the "CFO TRANSITION PERIOD". The end
of the Term for any reason shall end Xxxxx'x employment under this Agreement,
but shall not terminate Xxxxx'x or the Company's other obligations set forth in
this Agreement.
2. POSITION AND DUTIES. Commencing at 5:00 p.m. on July 7, 1997 (the
"EFFECTIVE TIME"), and thereafter during the Term, Xxxxx shall serve as the
Company's senior vice-president of corporate development. Xx. Xxxxx shall also
continue to serve as the chief financial officer, secretary and treasurer of
the Company until such time as a chief financial officer (other than Xxxxx) is
elected to such position by the Board (the "CFO COMMENCEMENT DATE"), at which
time Xxxxx hereby agrees that he shall resign from such positions. During the
Term, Xxxxx shall also hold such additional positions and titles as the Board
or the president of the Company may determine from time to time, and the
Company shall provide Xxxxx office space, mail, telephone and voice mail
services substantially similar to those currently provided to Xxxxx. During
the Term and until the CFO Commencement Date, Xxxxx shall devote substantially
all of his business time and best efforts to his duties as an employee of the
Company. Following the CFO Commencement Date and for the remainder of the
Term, Xxxxx shall devote such time and attention to his duties as an employee
of the Company as the chairman of the Board may request from time to time.
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3. COMPENSATION.
(A) BASE SALARY. The Company shall pay Xxxxx a base salary during the
Term of not less than $115,500 per annum, payable at least monthly on the
Company's regular pay cycle for professional employees.
(B) OTHER AND ADDITIONAL COMPENSATION. Section establishes a minimum
salary during the Term, and shall not preclude the Board from awarding Xxxxx a
higher salary or any bonuses or stock options in the discretion of the Board
during the Term at any time.
4. EMPLOYEE BENEFITS. During the Term, Xxxxx shall be entitled to the
employee benefits, including vacation, health and other insurance benefits, and
deferred compensation arrangements, made available by the Company to any other
employee of the Company.
5. EXPENSES. The Company shall reimburse Xxxxx for actual
out-of-pocket expenses incurred by him in the performance of his services for
the Company (in accordance with the Company's policy for such reimbursements
applicable to the Company's executive officers on the same terms generally
offered to such officers), upon the receipt of appropriate documentation of
such expenses.
6. TERMINATION.
(A) GENERAL. The Term shall end immediately upon Xxxxx'x death. The
Company may end the Term at any time with "Cause" (as defined in Section 7(a)
below) in the reasonable discretion of the Board (but subject to the Company's
obligations under this Agreement).
(B) NOTICE OF TERMINATION. Promptly after it ends the Term, the
Company shall give Xxxxx notice of the termination, including a statement of
the Cause for termination. The Company's failure to give notice under this
Section 6(b) shall not, however, affect the validity of the Company's
termination of the Term.
7. SEVERANCE RELATED COVENANTS.
(A) "CAUSE" DEFINED. "Cause" means willful malfeasance or willful
misconduct by Xxxxx in connection with his employment; Xxxxx'x gross
negligence in performing any of his duties under this Agreement; Xxxxx'x
conviction of, or entry of a plea of guilty to, or entry of a plea of nolo
contendere with respect to, any crime other than a traffic violation or
infraction which is a misdemeanor; Xxxxx'x willful and continuing breach of
any written policy applicable to all employees adopted by the Company
concerning conflicts of interest, political contributions, standards of
business conduct or fair employment practices, procedures with respect to
compliance with securities laws or any similar matters,
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or adopted pursuant to the requirements of any government contract or
regulation; or material and continuing breach by Xxxxx of any of his
agreements in this Agreement.
(B) TERMINATION PAYMENTS. The Company and Xxxxx agree that, unless
Xxxxx'x employment with the Company is terminated for either of the reasons set
forth in Section 6(a) above, upon the earlier of (i) Xxxxx'x resignation as an
employee and officer of the Company, or (ii) the expiration of the Term prior
to the last day of the CFO Transition Period, the Company will pay to Xxxxx an
amount equal to the then-current base salary which Xxxxx would have received
during the unexpired portion of the CFO Transition Period as if he had remained
employed with the Company for the unexpired portion of the CFO Transition
Period. If Xxxxx resigns as an employee and officer of the Company prior to
the CFO Commencement Date, then for purposes of the preceding sentence the CFO
Transition Period shall be deemed to be a period of 210 days. The amount
payable to Xxxxx pursuant to this Section 7(b) shall be paid by the Company to
Xxxxx within thirty (30) days of the last day of Xxxxx'x employment with the
Company.
(C) TERMINATION FOR ANY OTHER REASON. If the Company ends the Term for
Cause, or if the Term ends as a result of Xxxxx'x death, then the Company shall
have no obligation to pay Xxxxx any amount, whether for salary, benefits,
bonuses, or other compensation or expense reimbursements of any kind, accruing
after the end of the Term, and such rights shall, except as otherwise required
by law, be forfeited immediately upon the end of the Term.
(D) OPTION MATTERS. If the Term expires or ends for any reason other
than termination by the Company for Cause, the Company and Xxxxx agree that
notwithstanding any term or provision of any agreement between Xxxxx and the
Company to the contrary, (i) all options held by Xxxxx to acquire shares of the
common stock of the Company at the time of termination shall immediately become
vested, and shall be immediately exercisable by Xxxxx (or, in the event of his
death or disability, by his heirs, beneficiaries or personal representative),
and (ii) Xxxxx (or his heirs, beneficiaries or personal representative, as the
case may be) shall have the right to exercise such vested options, and all
other options previously vested in Xxxxx prior to the date of termination, for
a period of 365 days following such end of the Term. Xxxxx and the Company
agree that except as set forth above, all option agreements referred to above
shall remain in full force and effect in accordance with their terms.
8. CONFIDENTIALITY, OWNERSHIP, AND COVENANTS OF NON-COMPETITION AND
NON-SOLICITATION.
(A) "COMPANY INFORMATION" AND "INVENTIONS" DEFINED. "COMPANY
INFORMATION" means all information, knowledge or data of or pertaining to (i)
the Company, and (ii) any other person, firm, corporation or business
organization with which the Company may do business during the Term, that is
not in the public domain (and whether relating to methods, processes,
techniques, discoveries, pricing, marketing or any other matters).
"INVENTIONS" collectively refers to any and all inventions, trade secrets,
ideas, processes, formulas, source
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and object codes, data, programs, other works of authorship, know-how,
improvements, discoveries, developments, designs, and techniques regarding any
of the foregoing.
(B) CONFIDENTIALITY. Except as provided in the next two sentences,
Xxxxx covenants and agrees that all Company Information shall be kept secret
and confidential at all times during and after the end of the Term and shall
not be used or divulged by him outside the scope of his employment as
contemplated by this Agreement, except as the Company may otherwise expressly
authorize by action of the Board. In the event that Xxxxx is requested in a
judicial, administrative or governmental proceeding to disclose any of the
Company Information, Xxxxx will promptly so notify the Company so that the
Company may seek a protective order or other appropriate remedy and/or waive
compliance with this Agreement. If disclosure of any of the Company
Information is required, Xxxxx may furnish the material so required to be
furnished, but Xxxxx will furnish only that portion of the Company Information
that legally is required.
(C) OWNERSHIP. Xxxxx hereby assigns to the Company all of Xxxxx'x
right (including patent rights, copyrights, trade secret rights, and all other
rights throughout the world), title and interest in and to Inventions, whether
or not patentable or registrable under copyright or similar statutes, made or
conceived or reduced to practice or learned by Xxxxx, either alone or jointly
with others, during the course of the performance of services for the Company.
Xxxxx shall also assign to, or as directed by, the Company, all of Xxxxx'x
right, title and interest in and to any and all Inventions, the full title to
which is required to be in the United States government by a contract between
the Company and the United States government or any of its agencies. The
provisions of Sections 8(a), 8(b) and this Section 8(c) are not intended to
supersede or limit the effect of any prior confidentiality or proprietary
rights agreements previously executed by Xxxxx.
(D) PERIOD DEFINED. "NON-COMPETITION PERIOD" means the period
beginning on the day following the date of termination of Xxxxx' employment
with the Company and ending on the first anniversary of the day following the
date of termination of Xxxxx' employment with the Company.
(E) COVENANTS OF NON-COMPETITION AND NON-SOLICITATION. Xxxxx
acknowledges that his services pursuant to this Agreement are unique and
extraordinary, that the Company will be dependent upon Xxxxx for the
development and growth of its business and related functions, and that he will
continue to develop personal relationships with significant customers of the
Company and to have control of confidential information concerning, and lists
of customers of, the Company. Xxxxx further acknowledges that the business of
the Company is international in scope and cannot be confined to any particular
geographic area of the United States. For the foregoing reasons, Xxxxx
covenants and agrees that during the Non-Competition Period Xxxxx shall not,
directly or indirectly, engage in, be financially interested in, represent,
render any advice or services to, or be employed by, any other business
(conducted for profit or not for profit) that is engaged in the development or
production of (i) high temperature superconducting materials, (ii) radio
frequency filter devices, or (iii) fault current limiter devices, in any such
case for or related to uses which are
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or could reasonably deemed to be competitive with the current or currently
contemplated business of the Company in the world. For the reasons
acknowledged by Xxxxx at the beginning of this Section 8(e), Xxxxx additionally
acknowledges, covenants, and agrees that, during the Non-Competition Period,
Xxxxx shall not, directly or indirectly, whether on his own behalf or on behalf
of any other person or entity, in any manner (A) solicit the business of or
otherwise contact in any commercial capacity any person or entity that is, or
is reasonably anticipated to become, at the date of termination to become, a
customer, supplier, or contractor of the Company for the purpose of obtaining
business of the type performed by the Company, or (B) solicit for employment
any persons who were officers or employees of the Company upon the date of
termination of his employment hereunder, or at any time during a ninety-day
period preceding such date, or aid any competitive business organization in any
attempt to hire any such officers or employees of the Company. Notwithstanding
the foregoing, this Section (e) shall terminate and be of no further force or
effect if the Company fails to make any payment or otherwise perform any
obligation owed to Xxxxx pursuant to Sections 3, 4, 5 and 7(b) above.
(F) EQUITABLE REMEDIES. Xxxxx acknowledges, covenants and agrees that,
in the event he shall violate any provisions of this Section , the Company will
not have an adequate remedy at law and will therefore be entitled to enforce
each such provision by temporary or permanent injunctive or mandatory relief
obtained in an action or proceeding without the necessity of posting any bond
of any kind whatsoever, and without prejudice to any other remedies that may be
available at law or in equity. The foregoing restrictions shall not preclude
Xxxxx from the ownership of not more than three percent (3%) of the voting
securities of any corporation whose voting securities are registered under
Section 12(g) of the Securities Exchange Act of 1934, even if its business
competes with that of the Company.
9. SUCCESSORS AND ASSIGNS.
(A) XXXXX. This Agreement is a personal contract, and the rights and
interests that the Agreement accords to Xxxxx may not be sold, transferred,
assigned, pledged, encumbered, or hypothecated by him. Except as contemplated
in Section 7(c) above, Xxxxx shall not have any power of anticipation,
alienation or assignment of the payments contemplated by this Agreement, all
rights and benefits of Xxxxx shall be for the sole personal benefit of Xxxxx,
and no other person shall acquire any right, title or interest under this
Agreement by reason of any sale, assignment, transfer, claim or judgment or
bankruptcy proceedings against Xxxxx. Except as so provided, this Agreement
shall inure to the benefit of and be binding upon Xxxxx and his personal
representatives, distributees and legatees.
(B) THE COMPANY. This Agreement shall be binding upon the Company and
inure to the benefit of the Company and of its successors and assigns,
including (but not limited to) any corporation that may acquire all or
substantially all of the Company's assets or business or into or with which the
Company may be consolidated or merged. This Agreement shall continue in full
force and effect in the event that the Company sells all or substantially all
of its assets, merges or consolidates, otherwise combines or affiliates with
another business, dissolves and liquidates, or otherwise sells or disposes of
substantially all of its assets. The
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Company's obligations under this Agreement shall cease, however, if the
successor to, the purchaser or acquiror either of the Company or of all or
substantially all of its assets, or the entity with which the Company has
affiliated, shall assume in writing the Company's obligations under this
Agreement (and deliver an executed copy of such assumption to Xxxxx), in which
case such successor or purchaser, but not the Company, shall thereafter be the
only party obligated to perform the obligations that remain to be performed on
the part of the Company under this Agreement.
10. ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the parties concerning Xxxxx'x employment with the Company during the
Term and supersedes all prior negotiations, discussions, understandings and
agreements, whether written or oral, between Xxxxx and the Company relating to
the subject matter of this Agreement.
11. AMENDMENT OR MODIFICATION, WAIVER. No provision of this Agreement
may be amended or waived unless such amendment or waiver is agreed to in
writing signed by Xxxxx and by a duly authorized officer of the Company other
that Xxxxx. No waiver by any party to this Agreement of any breach by another
party of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same time, any prior time or any subsequent time.
12. NOTICES. All notices, demands or other communications of any kind
to be given or delivered under this Agreement shall be in writing and shall be
deemed to have been properly given if (a) delivered by hand, (b) delivered by a
nationally recognized overnight courier service, (c) sent by registered or
certified United States Mail, return receipt requested and first class postage
prepaid, or (d) facsimile transmission followed by a confirmation copy
delivered by a nationally recognized overnight courier service. Such
communications shall be sent to the parties at their respective addresses as
follows:
If to Xxxxx: Xxxxxxx X. Xxxxx
000 00xx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
If to the Company: Illinois Superconductor Corporation
000 Xxxxxxxx Xxxxx
Xx. Xxxxxxxx, Xxxxxxxx 00000
Attention: Chairman of the Board
with a copy to: Xxxxx X. Xxxxxx, Esq.
Xxxxxxxxx & Xxxxxx
00 X. XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
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Either party may change such address for delivery to the other party by
delivery of a notice in conformity with the provisions of this section
specifying such change. Notice shall be deemed to have been properly given (i)
on the date of delivery, if delivery is by hand, (ii) three (3) days after the
date of mailing if sent by certified or registered mail, (iii) one (1) day
after date of delivery to the overnight courier if sent by overnight courier,
or (iv) the next business day after the date of transmission by facsimile.
13. SEVERABILITY. If any provision of this Agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this Agreement or the application
of such provision to such person or circumstances other than those to which it
is so determined to be invalid and unenforceable shall not be affected, and
each provision of this Agreement shall be validated and shall be enforced to
the fullest extent permitted by law. If for any reason any provision of this
Agreement containing restrictions is held to cover an area or to be for a
length of time that is unreasonable or in any other way is construed to be too
broad or to any extent invalid, such provision shall not be determined to be
entirely null, void and of no effect; instead, it is the intention and desire
of both the Company and Xxxxx that, to the extent that the provision is or
would be valid or enforceable under applicable law, any court of competent
jurisdiction shall construe and interpret or reform this Agreement to provide
for a restriction having the maximum enforceable area, time period and such
other constraints or conditions (although not greater than those contained
currently contained in this Agreement) as shall be valid and enforceable under
the applicable law.
14. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
15. HEADINGS. All descriptive headings of sections and paragraphs in
this Agreement are intended solely for convenience of reference, and no
provision of this Agreement is to be construed by reference to the heading of
any section or paragraph.
16. WITHHOLDING TAXES. All salary, benefits, reimbursements and any
other payments to Xxxxx under this Agreement shall be subject to all applicable
payroll and withholding taxes and deductions required by any law, rule or
regulation of and federal, state or local authority.
17. APPLICABLE LAW: JURISDICTION. The laws of the State of Illinois
shall govern the interpretation, validity and performance of the terms of this
Agreement, without reference to rules relating to conflicts of law. Any suit,
action or proceeding against Xxxxx with respect to this Agreement, or any
judgment entered by any court in respect thereof, may be brought in any court
of competent jurisdiction in the State of Illinois, as the Company may elect in
its sole discretion, and Xxxxx hereby submits to the nonexclusive jurisdiction
of such courts for the purpose of any such suit, action, proceeding or
judgment.
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18. INTERPRETATION AND CONSTRUCTION. Each of the parties to this
Agreement has been represented by their own counsel, each has reviewed and
approved this Agreement as executed, and neither party shall be charged with
the responsibility of having drafted any provision of this Agreement so as to
cause any rule of strict construction to be applied against such party.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
ILLINOIS SUPERCONDUCTOR CORPORATION
By: /s/ Xxx X. Xxxxx
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Xxx X. Xxxxx
President
/s/ XXXXXXX X. XXXXX
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XXXXXXX X. XXXXX
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