AMENDED EMPLOYMENT AGREEMENT
----------------------------
EMPLOYMENT AGREEMENT dated as of December 8, 1997, by and between
XXXXXX TECHNOLOGIES, INC., a North Carolina corporation with its principal
offices located at 000 Xxxxx Xxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 (the
"Company"), and XXXXXXX X. XXXXXX, residing at 00 Xxxxxxxx Xxxxxx, Xxx Xxxxx,
Xxx Xxxx 00000 (the "Executive").
WHEREAS, the Company wishes to continue the employment of the
Executive upon the terms and conditions set forth in this Agreement as of
January 1, 1998; and
WHEREAS, the Executive is willing to continue to serve in the employ
of the Company upon the terms and conditions set forth in this Agreement as of
January 1, 1998; and
WHEREAS, the Company and the Executive wish to amend the original
Employment Agreement dated December 8, 1997 and replace it with this Amended
Employment Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and agreements hereinafter set forth, the Company and the Executive
agree as follows:
1. Employment and Duties.
(a) The Company hereby employs the Executive to render full-time
exclusive services to the Company during the Term (as defined in Section 2
hereof) as President, Chief Executive Officer and Chairman of the Board of
Directors of the Company. The Company agrees that the Executive shall have
such power and authority as should reasonably be required to fulfill all
duties in an efficient manner.
(b) The Executive hereby accepts such employment and agrees to
devote his full time, attention and best efforts exclusively to performing the
duties described above. During the Term of this Agreement, the Company will
use its best efforts to have the Executive elected to the Board of Directors
of the Company and its subsidiaries, and elected Chairman of the Company's
(and any subsidiaries) Board of Directors. In the event the Executive is
employed with the Company until December 31, 2002, the Company will, in good
faith, discuss the possibility of a renewable employment agreement with terms
(including Salary) at least as favorable to the Executive as in effect on
December 30, 2002.
(c) The Company acknowledges and agrees that the Executive shall
be permitted to fulfill his part-time consulting obligations to Xxxxxx
Aerospace, Inc. (or its successors or assigns) so long as the obligations do
not interfere with Executive's duties hereunder, and shall be permitted to
engage in activities with not-for-profit, educational and/or governmental
entities which are, in the opinion of the Executive, consistent with the
Company's interests and prospects.
2. Term. This Agreement shall become effective on the date hereof
(the "Effective Date") for a period commencing on the Effective Date and
terminating on December 31, 2002, subject to the earlier termination at any
time during the Executive's period of employment, as hereinafter provided (the
"Term").
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3. Compensation.
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(a) The Company shall pay the Executive a salary, commending
January 1, 1998, for the services to be rendered by him pursuant to this
Agreement at the initial annual rate of $200,000. The Executive's annual rate
of payment is herein called "Salary". The Salary shall be payable in periodic
installments commencing on or after January 1, 1998 in accordance with the
Company's regular payroll practices as in effect from time to time. On January
1 of each year of the Term, beginning with January 1, 1999, the Salary shall
automatically increase by an amount of 10% of the then current Salary. The
Company may withhold from any amounts payable under this Agreement all
federal, state, local or other taxes that the Company is required to withhold
pursuant to any law or regulation.
(b) During the Term, the Executive shall be entitled to an annual
bonus equal to two (2%) percent of the Company's pre-tax profits calculated
without regard to this bonus. Payment of the bonus, if any, shall be made
within fifteen (15) days after the audit for the relevant fiscal year has been
completed. Each payment shall be accompanied by a financial statement of the
Company and a schedule calculating such bonus. Pre-tax profits of the Company
shall be determined in accordance with generally accepted accounting
principles consistently applied. In calculating pre-tax profits, there shall
be adjustments for gains (and losses) on non-recurring transactions, to wit:
the up-front payment to the Company of a license fee; the costs and expenses
associated with the Company's acquisition of any business or interests; or
non-cash expenses/deductions for goodwill or stock-based compensation. In
calculating Executive's bonus if he shall have been employed for less than
twelve (12) months during any fiscal year of the Company, pre-tax profits
shall be calculated from the beginning of the Company's fiscal year to the
completion of the quarter during which termination of employment occurred and
Executive's bonus shall be pro-rated for the period of Executive's employment.
The determination of pre-tax profits by the Company's independent accounting
firm shall be final and binding upon the parties.
(c) The Executive shall be entitled to participate in and receive
the benefits under any pension plans or bonus plans of the Company or of any
subsidiary and shall be included in, at no cost to Executive, the Company's
health plan (including hospitalization, medical and major medical), life,
prescription drug, accident and disability insurance plans or programs and any
other employee benefit or fringe benefit plans, perquisites or arrangements
which the Company makes available generally to other employees of the Company.
(d) The Executive shall be entitled to a $400 per month automobile
allowance (payable on the first day of each month commencing January 1, 1998)
for the Term of this Agreement.
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(e) The Executive shall be entitled to five (5) weeks paid
vacation each calendar year (commencing in 1998 ).
(f) The Executive shall be entitled to reimbursement for all
reasonable travel, entertainment, conference expenses, organization dues and
other expenses incurred by the Executive in connection with his service under
the Agreement.
(g) For a period through April 15, 2000, the Company shall provide
the Executive with a term life insurance policy in the amount of at least $7.5
million.
4. Termination of Employment.
-------------------------
(a) (1) The Executive's employment hereunder shall terminate
automatically as of the date of his death or upon the Executive's becoming
eligible for benefits under the Company's long term disability plan as in effect
from time to time, or if no disability plan is in effect, upon the Executive
becoming permanently disabled. For purposes of this Agreement, the Executive
shall be deemed to be permanently "disabled" if he has been unable to perform
his duties for six (6) consecutive months or any nine (9) months in any twelve
(12) month period, all as conclusively determined in good faith by the Board
of Directors of the Company.
(2) Upon termination of the Executive's employment under
circumstances described in Section 4(a)(1) above, the Company shall promptly
pay and provide to the Executive (or, in the event of his death, to his
surviving spouse or such other beneficiary as the Executive may designate in
writing, or if there is neither, to his estate):
(i) his earned but unpaid Salary and bonus and accrued
vacation pay as of the date of termination of his employment with the Company;
(ii) the benefits, if any, to which he is entitled as a
former employee under the Company's employee benefit plans and programs and
compensation plans and programs in which he was a participant;
(iii) any reimbursements due to him under Section 3(f).
the benefits, if any, to which he is entitled as a former employee under the
Company's employee benefit plans and programs and compensation plans and
programs in which he was a participant; and
(iv) an amount of Salary at the then current rate equal to
the Salary payable for a period of three (3) months or such shorter period
commencing when non-taxable disability insurance payments of at least sixty
(60%) percent of Executive's Salary become payable to Executive.
(b) (i) The Company may, at any time at its option, terminate the
Executive's employment for "Cause" (as hereinafter defined) within 30 days
following its
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knowledge of an event which gives the Company the right to terminate the
Executive for Cause. In the event of termination for Cause, the Executive shall
receive the earned Salary and benefits (except he shall not receive any bonus
earned but not yet paid) described in Sections 4(a)(2)(i), (ii) and (iii) and no
other compensation. For purposes of this Agreement, the term "Cause" means (i)
any act of fraud or embezzlement in respect of the Company or its funds,
properties or assets, or (ii) conviction of the Executive of a felony under the
laws of the United States or any state thereof unless such acts were committed
with the knowledge and approval of the Company's independent members of the
Board of Directors and counsel in the reasonable, good faith belief that such
actions were in the best interests of the Company and its stockholders and would
not violate criminal law; or (iii) willful misconduct or gross negligence by the
Executive in connection with the performance of his duties that has caused or is
highly likely to cause a material adverse effect , its business or its results
of operations; or (iv) intentional dishonesty by the Executive in the
performance of his duties hereunder which has a material adverse effect on the
Company.
(ii) If the Company elects to terminate the Executive's
employment for Cause, it shall deliver a notice to the Executive setting forth
the termination date and describing with reasonable detail, the action or
omission of the Executive constituting the basis for the termination (the
"Termination Notice").
(c) The Company may terminate the Executive's employment in its
sole discretion for any reason on not less than thirty (30) days written
notice to the Executive.
(d) The Executive may terminate his employment by written notice
to the Board of Directors of the Company, under circumstances where the
Company has committed a material breach of its obligations under this
Agreement and such termination shall be effective if, in the case of the first
such breach, such breach continues for a period of thirty (30) days following
such notice or, in any subsequent breach, on the fifth (5th) day such written
notice is delivered to the Board of Directors.
(e) (i) In the event of termination by the Company pursuant to
Section 4(c), or termination by the Executive pursuant to Section 4(d), the
Executive shall receive (A) the Salary and benefits described in Sections 4(a)
(2) (i), (ii) and (iii), and (B) his then Salary for a period through December
31, 2002, when due and payable.
(ii) In the event the Company and the Executive, by
December 31, 2002, do not reach an agreement to extend/renew an employment
arrangement for a period following December 31, 2002, the Executive shall
receive on December 31, 2002, a payment (the "Payment") equal to the amount of
Executive's annual Salary as of December 30, 2002, provided, however, so long as
the Company is willing to enter into an extension/renewal of this Agreement
(or a similar type of agreement) for a period of at least three (3) years
following December 31, 2002 on terms substantially similar to the terms of this
Agreement in effect on December 31, 2002, the Company shall not be obligated to
pay the Executive the Payment if an agreement between the Company and the
Executive is not achieved.
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(f) The Company and the Executive hereby stipulate that the
damages which may be incurred by the Executive following the Company's breach
of this Agreement (including termination of employment under circumstances
which do not follow the procedures and obligations set forth herein) are not
capable of accurate measurement as of the date first above written and that
such stipulated amounts set forth above payable to Executive constitute
reasonable damages under the circumstances, and do not require mitigation by
the Executive.
5. Covenants and Representations.
-----------------------------
(a) The Executive has not, and unless authorized or instructed in
writing by the Board of Directors of the Company the Executive shall not,
except as required in the conduct of the Company's business, use or disclose
to others, any of the Company's inventions or discoveries or its secret or
confidential information, knowledge or data (oral, written, or in
machine-readable form) which the Executive may have obtained or will obtain
during the course of or in connection with the Executive's employment,
including, without limitation, such inventions, discoveries, information,
knowledge, know-how or data relating to machines, equipment, products,
services, systems, software, research and/or development, designs,
compositions, formulae, processes, manufacturing procedures or business
methods, information relating to present and prospective marketing, sales and
advertising programs and agreements with representatives or prospective
representatives of the Company, present or prospective sources of supply or
any other business arrangements of the Company, including but not limited to,
customers, customer lists, costs, prices and earnings, whether or not
developed by the Executive, by others in the Company or obtained by the
Company from third parties, and irrespective of whether or not such
inventions, discoveries, information, knowledge, know-how or data have been
identified by the Company as secret or confidential, unless and until, and
then only to the extent that, such inventions, discoveries, information,
knowledge, know-how or data become available to the public otherwise than by
the Executive's act or omission.
(b) (i) The Executive agrees to disclose immediately to the
Company or any persons designated by it and to assign to the Company at its
option, or its successors or assigns, all inventions made, discovered,
conceived or first reduced to practice by the Executive, solely or jointly
with others, at any time during the time while employed by the Company which
inventions are made, discovered or conceived either in the course or such
employment and a period of one (1) year thereafter, or with the use of the
Company's time, material, facilities or funds, or which relate to or are
suggested by any subject matter with which the Executive's employment by the
Company may bring the Executive into contact, or which relate to any
investigations or obligations undertaken by the Company; and the Executive
hereby grants and agrees to grant the right to the Company and its nominees to
obtain, for its own benefit and in its own name (entirely at its expense)
patents and patent applications including original, continuation, reissue,
utility and design patents, and applications, patents of addition,
confirmation patents, registration patents, xxxxx patents, utility models,
etc., and all other types of patents and the like, and all renewals and
extensions of any of them for those inventions in any and all countries; and
the Executive shall assist the Company without further charge during the
period of the Executive's employment and thereafter, through counsel
designated by the Company to execute, acknowledge, and deliver all
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such further papers, including assignments, applications for Letters Patent (of
the United States or of any foreign country), oaths, disclaimers or other
instruments and to perform such further acts, including giving testimony or
furnishing evidence in the prosecution or defense of appeals, interferences,
suits and controversies relating to any of the aforesaid inventions,
applications and patents as may be deemed necessary by the Company or its
nominees to effectuate the vesting or perfecting in the Company or its
nominees of all right, title and interest in and to said inventions,
applications and patents.
(ii) The Executive agrees to disclose immediately to the
Company or any persons designated by it and to assign to the Company, at its
option, or its successors or assigns, all works of authorship, including all
writings, manuals, computer programs, software and hardware, written or
created by the Executive solely or jointly with others, at anytime during the
course of his employment by the Company, which works are made or conceived
either in the course of such employment, or with the use of the Company's
time, material, facilities or funds, or which relate to or are suggested by
any subject matter with which the Executive's employment by the Company may
bring the Executive into contact or which relate to any investigations or
obligations undertaken by the Company; and the Executive hereby agrees that
all such works are works made for hire, of which the Company is the author and
the beneficiary of all rights and protections afforded by the law of copyright
in any and all countries; and the Executive will assist the Company without
further charge during the term of his employment and thereafter, through
counsel designated by the Company, to execute, acknowledge, and deliver all
such further papers, including assignments, applications for copyright
registration (in the United States or in any foreign country), oaths,
disclaimers or other instruments, and to perform such further acts, including
giving testimony or furnishing evidence in the prosecution or defense of
appeals, interferences, suits and controversies relating to any of the
aforesaid works, as may be deemed necessary by the Company or its nominees to
effectuate the vesting or perfecting in the Company or its nominees of all
rights and interest in and to said works and copies thereof, including the
exclusive rights of copying and distribution.
(iii) Executive agrees to submit to the Board of
Directors of the Company, within a reasonable length of time prior to
dissemination, the text of any speech, professional paper, article or similar
communication created by Executive which relates to the Company's present or
future business or research and development endeavors. The Company will
determine whether any Confidential Information is contained in the
communication, and will notify Executive if the dissemination of the
communication is permitted under the terms of this Agreement.
(c) As a matter of record, Executive represents that there are no
inventions, patented or unpatented, which the Executive has made or conceived
prior to his employment by the Company, and no works of authorship, patented
or unpatented, which the Executive has made or conceived prior to his
employment by the Company.
(d) (i) The Executive shall not during the "Non-Competition
Period," (i) engage in business of the type conducted (or proposed to be
conducted) by the Company or its
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subsidiaries or solicit business of the type conducted (or proposed to be
conducted) by the Company from any person, firm or entity which was a licensee,
customer or prospective customer of the Company at any time within two (2) years
prior to the end of the Term, induce or attempt to induce any such licensee or
customer of the Company to reduce its business with the Company, solicit (or
attempt to solicit) any employees of the Company to leave the employ of the
Company or offer or cause to be offered employment to any person who was
employed by the Company at any time during the two (2) years prior to the end of
the Term; (ii) engage in, represent or be connected with, as a shareholder,
member of a limited liability entity, partner or owner, or as an officer,
director, employee, sales representative, proprietor, consultant, associate,
agent, co-venturer, investment adviser or otherwise, any business or activity
competing with the business of the Company or its subsidiaries or affiliates or
any part thereof as conducted by them (or proposed to be conducted) during the
Term in any geographic location where the Company conducts business at the time
of the termination of the employment. The term "Non-Competition Period" as used
herein means a period commencing on the date hereof and ending eighteen (18)
months after the end of the Term. For purposes of determining whether the
Executive is permitted to be a shareholder of a corporation, the Executive's
ownership of less than 3% of the issued and outstanding securities of a
company whose securities are publicly-traded in any U.S. or non-U.S.
securities exchanges shall be permitted.
(ii) The foregoing prohibitions in Subsection (i) and (ii)
of this Section (e) shall bind the Executive (A) if the Agreement is
terminated for "Cause," and (B) if the Agreement is terminated for reasons
other than for "Cause" (Paragraph 4(b) hereof) only so long as the Company
pays him monthly, upon demand, a sum at least equal to fifty (50%) percent of
the Executive's monthly base pay at termination, as defined below, for each
month of the Non-Competition Period. The term "monthly base pay" means the
Executive's monthly portion of annual Salary, including bonus payable pursuant
to Paragraph 3(b) hereof and is subject to regular deductions for taxes,
social security payments, etc. If the Executive is being paid after his
termination of employment pursuant to the provisions of Subsection (a), (b) or
(e) of Section 4, no additional payments are required to be made pursuant to
this Subsection (ii) of Section (e) so long as the payments under subsections
(a), (b) or (e) of Section 4 are being made.
(f) All computer software, computer programs, source codes,
object codes, magnetic tapes, printouts, samples, notes, records, reports,
documents, customer lists, photographs, catalogs and other writings, whether
copyrightable or not, relating to or dealing with the Company's business and
plans, and those of others entrusted to the Company which are prepared or
created by the Executive or which may come into his possession at any time
during his employment, are the property of the Company, and upon termination
of his employment, the Executive agrees to return all such computer software,
computer programs, source codes, object codes, magnetic tapes, printouts,
samples, notes, records, reports, documents, customer lists, photographs,
catalogs and writings and all copies thereof to the Company.
(g) If any of the rights or restrictions contained or provided for
in this Agreement shall be deemed by a court of competent jurisdiction to be
unenforceable by reason of the extent, duration or geographical scope, the
parties hereto contemplate that the court shall reduce
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such extent, duration, geographical scope and enforce this Agreement in its
reduced form for all purposes in the manner contemplated hereby. Should any of
the provisions of this Agreement require judicial interpretation, it is agreed
that the court interpreting or construing this Agreement shall not apply a
presumption that any provision shall be more strictly construed against one
party by reason of the rule of construction that a document is to be construed
more strictly against the party who itself or through its agents prepared the
same, it being agreed that both parties and their respective agents have
participated in the preparation of this Agreement.
(h) The Executive agrees to cooperate with the Company with
respect to the Company obtaining life insurance on the life of the Executive
with the Company named as the beneficiary or disability insurance with respect
to Executive or both.
6. Indemnification and Attorneys' Fees. Subject to applicable laws,
during the Term and thereafter, the Company shall indemnify, hold harmless and
defend the Executive from all damages, claims, losses, and costs and expenses
(including reasonable attorney's fees) arising out of, in connection with, or
relating to all acts or omissions taken or not taken by him in good faith
while performing services for the Company, and shall further promptly
reimburse the Executive for all expenses (including attorney's fees) incurred
in enforcing the benefits of this Agreement. If and to the extent that the
Company maintains, at any time during the Term, an insurance policy covering
the officers and directors of the Company against claims and/or lawsuits, the
Company shall use its best efforts to cause the Executive to be covered under
such policy upon the same terms and conditions as other similarly situated
officers and directors during the Term and for a period of at least five (5)
years thereafter, provided, however, the cost of providing such coverage after
the Term shall not materially increase the cost to the Company of its general
officers and directors insurance.
7. Miscellaneous.
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(a) Neither of the parties hereto shall have the right to assign
this Agreement or any rights or obligations hereunder without the prior
written consent of the other party; provided, however, that this Agreement
shall inure to the benefit or and be binding upon the successors and assigns
of the Company upon any sale of all or substantially all of the Company's
assets, or upon any merger or consolidation of the Company with or into any
other corporation, all as though such successors and assigns of the Company
and their respective successors and assigns were the Company. Insofar as the
Executive is concerned this Agreement, being personal, cannot be assigned.
(b) This Agreement and the relationships of the parties in
connection with the subject matter of this Agreement shall be construed and
enforced according to the laws of the State of New York without giving effect
to the conflicts of laws rules thereof.
(c) This Agreement contains the full and complete agreement or the
parties relating to the employment of the Executive hereunder and supersedes
all prior agreements, arrangements or understandings, whether written or oral,
relating thereto (including the original
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Employment Agreement dated December 8, 1997). This Agreement may not be amended,
modified or supplemented, and no provision or requirement hereof may be waived,
except by written instrument signed by the Party to be charged.
(d) Executive agrees that any violation by him of Section 5 of
this Agreement may cause the Company irreparable injury. Therefore, Executive
agrees that the Company shall be entitled, in addition to an other remedies it
may have under this Agreement or law, to injunctive and other equitable relief
to prevent or curtail any breach of this Agreement.
(e) Except for applications for equitable injunctive relief (which
the Company may obtain without the requirement to post any bond or
undertaking), any dispute or question arising from this Agreement or its
interpretation and any other remedies which the Company may be entitled to
seek and receive shall be settled by arbitration by one (1) arbitrator in
accordance with the commercial rules then in effect of the American
Arbitration Association. Hearings of the arbitrator shall be held in the
county of Nassau, State of New York, unless the parties agree otherwise.
Judgment upon an award rendered by the arbitrator may be entered in any court
of competent jurisdiction, including courts in the State of New York. Any
award so rendered shall be final and binding upon the parties hereto. All
costs and expenses of the arbitrator shall be paid as determined by such
arbitrator, and all costs and expenses of experts, witnesses and other persons
retained by the parties shall be borne by them respectively, subject to the
provisions of Section 6 hereof. In the event that injunctive relief is
requested, either of the parties shall have the right to seek provisional
remedies prior to an ultimate resolution by arbitration.
(f) All notices which either party hereto is required or permitted
to give to the other will be given by certified mail or by personal delivery,
addressed to such other at the address referred to above, or at such other
place as either may from time to time designate by notice to the other in
writing. Three days after the date of mailing of any such notice and the date
of actual delivery if made by personal delivery will be deemed to be the date
of delivery thereof.
(g) No waiver by either party of any breach or nonperformance of
any provision or obligation of this Agreement shall be deemed to be a waiver of
any preceding or succeeding breach of the same or any other provision of this
Agreement.
(h) The enumeration and headings contained in this Agreement are
for convenience of reference only and are not intended to have any substantive
significance in interpreting this Agreement.
(i) Unless the context otherwise requires, whenever used in this
Agreement the singular shall include the plural, the plural shall include the
singular, and the masculine gender shall include the neuter or feminine gender
and vice versa.
(j) Whenever any determination is to be made or action to be taken
on a date specified in this Agreement, if such date shall fall upon a
Saturday, Sunday or a legal holiday, the
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date for such determination or action shall be extended to the first business
day immediately thereafter.
(k) This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which
when so executed and delivered shall be an original document, but all of which
counterparts shall together constitute one and the same instrument. This
Agreement shall not be effective unless and until executed by all parties
hereto.
(l) All provisions hereof which by their nature shall survive the
termination of the Executive's employment, including, without limitation, the
provisions in Section 5, shall survive the termination of the Executive's
employment.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
XXXXXX TECHNOLOGIES, INC.
/s/ Xxxxxxx X. Xxxxxx
By:_____________________________
Authorized Board Member
/s/ Xxxxxxx X. Xxxxxx
_____________________________
XXXXXXX X. XXXXXX
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