EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of the 1st day of March
8, 1995, by and between Xxxx X. Xxxxxxxx, an individual residing at 000 Xxxx
00xx. Xxxxxx, Xxx Xxxx, XX 00000 ("Employee"), and QuietPower Systems, Inc., a
Delaware corporation (the "Company"), with principal offices at 0000 Xxxxxxxx,
Xxxxx 0000, Xxx Xxxx, XX 00000.
WHEREAS, the Company is engaged in the business of research, consultation,
marketing, engineering and distribution of active noise control products and
technology to the electric and gas utility industries (the "Business"); and
WHEREAS, Employee is a key employee of the Company and has a significant
degree of managerial, technical and marketing expertise in the Company's field
of business; and
WHEREAS, the Company wishes to employ Employee, and Employee wishes to
work for the Company, in the capacity of Vice President, Applications
Engineering.
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties hereto agree as follows:
1. TERM OF AGREEMENT
This Agreement shall be effective from the effective date of the Company's
intended $1.0 to $1.5 million private placement through Redstone Securities, or
the effective date of such other offering of securities in the amount of at
least $1.0 million ("Effective Date") and shall continue in effect through the
third anniversary of the Effective Date (the "Term"). The Agreement shall
automatically be renewed for successive one year periods (each such period also
a "Term") unless at least one hundred eighty (180) days prior to the end of the
Term either party hereto gives written
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notice to the other party of its intention not to renew this Agreement. The
Agreement may also be terminated at any time in accordance with the terms and
conditions of Subsection 11.1 hereof.
2. EMPLOYMENT
2.1 Position. The Company hereby employs Employee in a professional and
technical capacity with the title of Vice President, Applications Engineering of
the Company, and Employee hereby accepts such employment and undertakes and
agrees to serve in such capacity. As Vice President, Applications Engineering of
the Company, Employee shall have such powers, perform such duties and fulfill
such responsibilities consistent with his positions.
2.2 Scope of Service. During the term of this Agreement, except as may be
mutually agreed upon by Employee and the Company, Employee will not be
transferred or otherwise required to change his residence or to render his
services hereunder other than in the New York, or New York metropolitan areas,
except that Employee agrees to make such business trips necessary in the
performance of services under this Agreement.
3. COMPENSATION.
3.1 Base Salary
(a) In consideration of the services rendered hereunder, the Company
shall pay Employee during the term of this Agreement a base salary of NINETY
EIGHT THOUSAND FIVE HUNDRED DOLLARS ($98,500) per annum ("Base Salary"). Such
Base Salary shall increase by a percentage each year equal to the percentage
increase, if any, in the Consumer Price Index published by the U.S. Department
of Labor, Bureau of Labor Statistics, for the New York, NY areas (now known as
the "CPI - U for all urban consumers"). The Compensation Committee of the Board
of Directors (the "Committee") shall conduct an annual review of Employee's
performance. The Base Salary may be subject to temporary or permanent increase
by the Committee if it shall determine that economic conditions and Employee's
performance so warrant.
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(b) The Base Salary for each such year shall be payable by the
Company to Employee in equal monthly installments on the last business day of
each month.
3.2 Incentive Compensation
(a) Yearly Bonus. Annually the Committee shall provide a bonus plan
to the Employee. Compensation under the bonus plan, attached hereto on Schedule
A, shall be contingent upon the Company meeting certain milestones related to
revenues, earnings or other important Company objectives.
(b) Additional Discretionary Bonus. The Committee may, in its sole
discretion, pay Employee such other bonus or bonuses during any full or partial
fiscal year of the Company which encompasses any part of the term of this
Agreement as the Committee deems appropriate in is sole discretion based on
Employee's and the Company's performance during that portion of the term of this
Agreement.
(c) Stock Options. The Committee may, in its sole discretion, grant
options to purchase the Company's stock as stipulated by its 1993 Stock Option
Plan.
3.3 Fringe Benefits. In addition to the compensation provided for above,
so long as Employee is employed by the Company under this Agreement, he shall be
entitled to receive all other fringe benefits as are from time to time generally
provided to senior officers by the Company (other than termination or severance
pay, which is provided for in this Agreement).
4. BUSINESS EXPENSES
Employee is authorized to incur, and the Company shall pay and reimburse
him for, all reasonable and necessary business expenses incurred in the
performance of his duties hereunder including expenses for entertainment, travel
and other items in accordance with guidelines adopted by the Board or Committee.
The Company will pay and reimburse Employee for all such expenses upon the
presentation by Employee, from time to time, of an itemized account of such
expenditures and proper documentation thereof as evidence that such expenses
have been incurred.
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5. VACATION
In addition to the usual national public holidays, Employee shall be
entitled to a vacation of four (4) weeks during each year during which time he
shall be remunerated in full. Any vacation time up to a maximum of two (2) weeks
which if not used in one year may be carried over to the next succeeding year,
but not beyond.
6. SICKNESS
Without prejudice to the Company's rights pursuant to Section 11
hereinafter, Employee shall receive his usual rate of remuneration in respect of
any period when he is absent from work due to sickness, disability or injury for
a period of up to sixty (60) days in any continuous period of three hundred
sixty five (365) days. Any payment thereafter shall be at the discretion of the
Company.
7. CONFIDENTIALITY
7.1 Nondisclosure. During his employment by the Company and for two (2)
years thereafter, Employee agrees to keep confidential, except as the Company
may otherwise consent in writing, and not to disclose, publish, disseminate or
make use of any inventions, trade secrets, confidential information, knowledge,
data or other information of the Company relating to products, processes,
know-how, programs, designs, formulas, test data, customer lists, customer
requirements, business operations or techniques, corporate or business plans,
marketing plans and strategies, pricing strategies, or other subject matter
pertaining to the Business of the Company or any business of its clients,
customers, consultants, licensees or affiliates, which Employee may produce,
obtain or otherwise acquire during the course of his employment. Employee
further agrees not to deliver, reproduce or in any way allow any such
inventions, trade secrets, confidential information, knowledge, data or other
information, or any documentation relating thereto, to be
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delivered or used by any third parties without specific direction or consent of
a duly authorized representative of the Company.
7.2 Exceptions to Confidentiality. The obligation set forth in Section 7.1
hereof shall immediately cease for any invention, trade secret, confidential
information, knowledge, data or other information of the Company, as described
therein, at the time that any such invention, trade secret, confidential
information, knowledge, data or other information of the Company, as described
therein, at the time that any such invention, trade secret, confidential
information, knowledge, data or other information (i) enters the public domain
through no wrongful act of Employee, (ii) is lawfully received by Employee from
a third party without similar restrictions thereon regarding nondisclosure, or
(iii) disclosure of such information is compelled by judicial or other
governmental action provided that the Employee notifies the Company of such
action and cooperates with the Company (at the Company's expense) in obtaining
any available protective order or the equivalent; provided, however, that no
exceptions to the obligations set forth in Section 7.1 shall apply to any
invention, trade secret, confidential information, knowledge, data or other
information produced, obtained or otherwise acquired by Employee in connection
with any contract between the Company and any client, customer, consultant,
licensee or affiliate to the extent that such exception would in any way
conflict with or decrease the scope of any confidentiality or nondisclosure
obligations set forth in such contract.
7.3 Documents. Upon the termination of this Agreement or at any time upon
the Company's request, Employee shall deliver forthwith to the Company all
memoranda, notes, records, reports and other documents (including all copies
thereof) relating to all confidential matters, as described in Subsection 7.1
hereof, and to the Business of the Company which Employee may then possess or
have under his control.
7.4 Breach of Contract. Employee represents and warrants that his
performance of all of the terms of this Agreement does not and will not breach
any agreement not to compete or any agreement to keep in confidence proprietary
information, knowledge or data acquired by him in
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confidence or in trust prior to his employment with the Company. Employee agrees
not to enter into any agreement, either written or oral, in conflict herewith.
8. OWNERSHIP OF INVENTIONS AND IDEAS
Employee acknowledges that the Company shall be the sole owner of all the
fruits and proceeds of Employee's services hereunder, including, but not limited
to, all inventions, developments, discoveries and other improvements, whether
patentable or not patentable, which Employee, in connection with and during the
course of his employment, may develop, create or first actually reduce to
practice during the term of this Agreement and for ninety (90) days thereafter,
either alone or in combination with others, free and clear of any claims by
Employee (or any successor or assignee of Employee) of any kind or character
whatsoever. Employee shall disclose such inventions and ideas to the Company
promptly and in writing. Employee agrees that he shall, at the request of the
Board of Directors, execute such assignments, certificates or other instruments
as the Board of Directors from time to time deems reasonably necessary or
desirable to evidence, establish, maintain, perfect, protect, enforce or defend
the Company's right, title and interest in or to any such properties.
9. NON-COMPETITION
During his employment by the Company and for twelve (12) months
thereafter, Employee shall not compete with the Company in any activity relating
to the Business of the Company as conducted by the Company during the term of
this Agreement; provided, however, that Employee shall be permitted to resume
activities of substantially the same type as those activities conducted by
Employee prior to his employment by the Company. For purposes of the preceding
sentence, competition shall include, without limitation, direct or indirect
competition by Employee, whether as an owner, officer, director, employer,
partner, consultant, advisor, contractor, principal, agent, licensor, employee
or affiliate of a person, firm, venture or corporation that so competes with
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Company and shall apply only as to any clients or customers with whom Employee
shall have had contact on or before the date his employment ceases and for whom
Company has provided services within one (1) year of such date. Without the
prior written approval of the Board of Directors, Employee further agrees that
during his employment by the Company and for twelve (12) months thereafter he
will not hire, contract with or solicit for employment or contract any employee
of the Company or any former employee of the Company who left such employment
less than six (6) months earlier, unless such employee was terminated by the
Company on the grounds described in Section 11.1 (a) (iii) hereof.
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10. SPECIFIC PERFORMANCE
10.1 Damages. The parties hereby declare that the rights of the Company
under Sections 7 through 9 hereof are of unique nature, the loss of which may
cause irreparable harm, and that it may be impossible to measure in money the
damages which will accrue to the Company by reason of the loss of such rights or
a failure by Employee to perform or adhere to any of the obligations under
Sections 7 through 9 hereof.
10.2 Equitable Relief. In the event of any breach or threatened breach of
Sections 7 through 9 hereof, the Company shall be entitled, as a matter of
right, to a final order, from a court of competent jurisdiction, of injunctive
and other equitable relief, and if the Company shall institute any action or
proceeding to enforce by specific performance or other equitable relief the
provisions hereof, Employee hereby waives the claim or defense thereto that the
Company has an adequate remedy at law, and Employee shall not urge in any such
action or proceeding the claim or defense that such remedy at law exists.
10.3 Remedies at Law. This Section 10 shall not limit or constrain the
right of the Company to pursue and recover damages at law for breaches of this
Agreement, including breaches of Sections 7 through 9 hereof.
11. TERMINATION
11.1 Termination of Employment
(a) The Company shall have the right to terminate this Agreement
upon thirty (30) days prior written notice to Employee (except for any
continuing rights and obligations expressly provided for in this Section 11) on
the earliest to occur of the following events:
(i) willful failure by Employee substantially to perform the
duties and obligations of his employment;
(ii) commission by Employee of willful misconduct, actionable
negligence, fraud, acts of dishonesty, disloyalty or
breach of
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trust against the Company which cause harm to the
Company, or other illegal or improper acts or omissions;
or
(iii) termination of Employee by the Company for any reason
(b) The Company shall have the right to terminate this Agreement
upon prior written notice to Employee in the event of Employee's permanent
disability. For the purpose of this Section 11, permanent disability shall mean
Employee's inability, whether mental or physical, to perform the regular duties
of his employment on a full-time basis for three (3) consecutive months. If the
Company and Employee are unable to agree whether he is so disabled, the question
shall be decided by a panel of three (3) physicians, one (1) to be designated by
the Company, one (1) by Employee and one (1) by the first two (2) so designated.
The determination of the panel shall be final and binding upon the parties. The
Company shall pay the costs of the panel.
(c) In the event of Employee's death, this Agreement shall terminate
without notice.
(d) Employee shall have the right to terminate this Agreement upon
thirty (30) days prior written notice to Company in the event Company fails to
make a Base Salary payment to Employee within fifteen (15) days after written
notification from Employee that such payment is due in accordance with the terms
of Section 3 hereof. Upon such termination, Employee shall be released from all
obligations imposed by the terms and conditions of this Agreement with the
exception of those imposed by Sections 7 through 9 hereof. Company agrees to
make a good faith effort to make Base Salary payments to Employee to the extent
salary payments due and payable on a comparable basis are made to any other
employee of the Company.
(e) The Base Salary, incentive compensation and fringe benefits
provided to Employee under Section 3 of this Agreement, to the extent not then
accrued, shall terminate on the date of termination of this agreement, except
for any continuing rights and obligations set forth in Subsection 11.2 hereof or
expressly provided for in the Company's fringe benefit plans or programs, as
described in Section 3.3. Any accrued and unpaid bonus for any fiscal year of
the
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Company or portion thereof which occurs on or before the date of termination of
this Agreement shall continue to be due and payable as provided in Subsection
3.2 hereof.
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11.2 Termination Payments
(a) If this Agreement is terminated pursuant to Subsections 11.1 (a)
(i) or 11.1 (a) (ii) hereof, no severance or termination pay whatsoever shall be
due Employee. Employee however shall receive any unpaid Base Salary payments
accrued prior to the date of termination.
(b) If this Agreement is terminated pursuant to Subsection 11.1 (c)
hereof due to Employee's death, his estate or designated beneficiary (which
beneficiary Employee may designate by filling a written notice with the Company
that shall be effective when filed and that may be altered or revoked by
Employee at any time) shall receive payments totalling five hundred thousand
dollars ($500,000). Company shall purchase and maintain "Key Man Insurance"
containing customary terms and conditions on Employee in an amount which would
be sufficient to cover such termination payments. Company shall have all
incidents of ownership in such insurance policy but the proceeds of such
insurance shall be payable to the Employee's designated beneficiary.
(c) If this Agreement is terminated pursuant to Subsection 11.1 (b)
hereof due to Employee's permanent disability, Employee shall receive the amount
of any benefits payable under any group disability insurance program
administered and offered to Employee by the Company.
(d) If this Agreement is terminated pursuant to Subsection
11.1(a)(iii) or 11.1(d) hereof, Company must pay Employee an amount equal to the
lesser of Employee's annual Base Salary on the date of such termination or the
total Base Salary due Employee during the remainder of the Term in effect on the
date of termination; provided, however, that such amount shall not be less than
the total of Employee's Base Salary payments for a one hundred eighty day
period. Company may elect to pay this amount (i) as a lump sum within sixty (60)
days of the date of termination or (ii) ratably in monthly installments during
the lesser of the remainder of the Term in effect on the date of termination or
six months.
(e) If the Company elects not to renew this Agreement pursuant to
Section 1 hereof, the Company shall pay Employee a severance payment equal to
Employee's Base Salary payments for a one hundred eighty day period.
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Company may elect to pay this amount (i) as a lump sum on the last day of the
Term or (ii) ratably in monthly installments during the three-month period
following the last day of the Term.
(f) Employee shall not be required to mitigate the amount of any
termination payment provided for in this Subsection 11.2 hereof by seeking other
employment or by other means.
12. MISCELLANEOUS
12.1 Assignment. This Agreement and the rights of Employee hereunder are
personal to Employee, and neither this Agreement nor any right or interest
herein or arising hereunder shall be subject to voluntary or involuntary
alienation, assignment or transfer by Employee nor may Employee, his estate or
designated beneficiary use this Agreement or any right of payment hereunder as a
pledge or collateral for any loan; provided, however, that this Agreement shall
be binding upon and shall inure to the benefit of the successors and assigns of
the Company.
12.2 Governing Law. This Agreement shall be governed by, and shall be
construed and interpreted in accordance with, the laws of the State of New York
without giving effect to the doctrine of conflict of laws.
12.3 Notices. Any notice which the Company is required or may desire to
give Employee shall be given by personal delivery or by registered or certified
mail, with postage prepaid, addressed to Employee at his address of record with
the Company, or at such other place as Employee may from time to time designate
to the Company in writing. Any notice which Employee is required or may desire
to give to the Company hereunder shall be given by personal delivery or by
registered or certified mail, with postage prepaid, addressed to the Company may
from time to time designate to Employee in writing. Such notice shall be deemed
given when delivered personally or, if mailed, given two (2) days after the date
of mailing.
12.4 Waiver. If either party should waive any breach of any provision of
this Agreement, such party shall not thereby be deemed to have waived any
proceeding or succeeding breach of the same or any other provision of this
Agreement.
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12.5 Entire Agreement; Modification; Severability. This Agreement
constitutes the entire agreement of these parties with respect to the subject
matter hereof, and all other prior or contemporaneous agreements of the parties
with respect to such subject matter, whether oral or written, are hereby merged
into this Agreement. This Agreement shall not be changed, modified or amended
other than by a further written agreement signed (i) by a duly authorized member
of the Company's Compensation Committee and (ii) by Employee. If, for any
reason, any immaterial part of this Agreement is declared by a court of
competent jurisdiction to be void or unenforceable, the remainder of this
Agreement shall not be affected thereby and shall remain in full force and
effect.
12.6 Counterparts. This Agreement may be signed in two counterparts, each
of which shall be deemed an original and both of which together shall constitute
one agreement.
12.7 Arbitration. Any and all disputes, claims and controversies between
the parties hereto concerning the validity, interpretation, performance,
termination or breach of this Agreement, which cannot be resolved by the parties
within ninety (90) days after such dispute, claim or controversy arises, shall,
at the option of either party, be referred to and finally settled by
arbitration. Such arbitration shall be initiated by the initiating party giving
notice (the "Arbitration Notice") to the other party (the"Respondent") that it
intends to submit such dispute, claim or controversy to arbitration. Each party
shall, within thirty (30) days of the date the Arbitration Notice is received by
the Respondent, designate a person to act as an arbitrator within the time
specified herein, the arbitration shall be conducted by the sole designated
arbitrator. The two arbitrators appointed by the parties shall, within thirty
(30) days after their designation, appoint a third arbitrator who shall act as
presiding arbitrator (the "Presiding Arbitrator"). If the two arbitrators
designated by the parties are unable to appoint a Presiding Arbitrator, the
Presiding Arbitrator shall be appointed according to the rules of the American
Arbitration Association as in effect on the date the notice of submission to
arbitration is given (the "Rules").
Such arbitration shall be held in New York, New York, in accordance with
the Rules, except as otherwise expressly provided herein. The arbitrators shall,
by majority vote, render a written decision stating reasons therefor in
reasonable detail within three (3) months after the
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appointment of all arbitrators. Each party shall bear its own costs and
attorney's fees. All other costs and expenses of arbitration shall be
apportioned between the parties by the arbitrators. The award of the arbitrators
shall be made in United States currency and shall be final and binding, and
judgement thereon may be rendered by any court having jurisdiction thereof, or
application may be made to such court for the judicial acceptance of the award
and an order of enforcement, as the case may be.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement with legal and binding effect as of the day and year first above
written.
/s/Xxxx X. Xxxxxxxx
-------------------------------------
Xxxx X. Xxxxxxxx ("Employee")
/s/Xxxxxxxx X. Xxxxxx
--------------------------------------
QuietPower Systems, Inc.,
a Delaware corporation ("Company")
/s/Xxxxxxx X. Xxxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxxx
Compensation Committee
of the Board of Directors of QuietPower
Systems, Inc. ("Committee")
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Amendment to Employment Agreement between Xxxx X. Xxxxxxxx and QuietPower
Systems, Inc. Dated March 8, 1995
SCHEDULE A
Base Salary: $150,000
Stock Options: To be granted from time to time at the Committee's sole
discretion. Vesting of such option grants shall occur at a
rate of 25% per year upon each anniversary of the grant.
Yearly Bonus: The bonus plan for 1995 shall be based upon the milestones
listed below. The bonus shall become payable in the amounts
stipulated below upon the achievement of these milestones. In
no event will the cumulative bonus exceed $50,000.
Milestone
---------
$25,000 upon reaching $1.7 million in revenues
$25,000 upon reaching $1.7 million in revenues
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