EXHIBIT 10.1
EMPLOYMENT AGREEMENT
OF
XXXXXXX X. LEADER
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of October 26,
1998, is entered into by and between Xxxxxxx X. Leader, residing at 0000 Xxxxxxx
Xxxxx, XxXxxx, Xxxxxxxx 00000 (the "Employee"), and Xxxxxxx Research
Corporation, a Delaware Corporation, having its principal place of business at
0000 Xxxxx Xxxxxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxxxx 00000 ("Company").
W I T N E S S E T H:
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The Company desires to obtain the services of the Employee and the
Employee is willing to render services to the Company upon the terms and
conditions herein set forth.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein and other good and valuable consideration, the parties agree as follows:
1. DUTIES. The Employee shall be employed on a full-time basis as
President and Chief Operating Officer of the Company and shall perform such
other duties as a president and chief operating officer of a company would
normally perform (subject to the direction of the Chief Executive Officer and
Board of Directors of the Company), including, but not limited to, the duties
set forth on the job description contained in Exhibit "A" attached hereto. The
Employee shall perform such other employment duties as the Board of Directors or
Chief Executive Officer may, from time to time, reasonably prescribe. The
Employee will work from the Company's Arlington, Virginia, office with the
understanding he will make frequent trips to corporate headquarters in
Huntsville, Alabama.
2. EXCLUSIVE EMPLOYMENT. The Employee shall render his services
exclusively to the Company during the term of his employment and shall use his
best efforts, judgement and energy to improve and advance the business and
interests of the Company in a manner consistent with the duties of his position.
3. NONDEFERRED COMPENSATION.
(a) BASE SALARY. The Employee shall receive, as compensation
for his services hereunder, an annual salary of $250,000.00 (the "Base Salary").
The Base Salary shall be paid at least bi-weekly or on a more frequent basis or
schedule as determined by the Company. The Base Salary may be increased on an
annual or more frequent basis if such increase is approved in the discretion of
the Board of Directors.
(b) DISCRETIONARY BONUSES. In addition to the Base Salary, the
Employee may be awarded performance bonuses in accordance with Company policies.
4. STOCK OPTIONS. Effective upon the date of the Employee's employment,
the Employee shall be awarded the following options:
(a) An incentive stock option issued pursuant to
the Company's 1997 Stock Option Plan for such number of shares of common stock
of the Company that is equal to the quotient of $300,000 divided by the fair
market value per share of the common stock of the Company on November 2, 1998
(the "Grant Date") rounded down to the nearest whole number of shares. This
option shall vest in accordance with the provisions of the 1997 Stock Option
Plan as follows: (i) one-third of the shares covered by the option may be
exercised after two years; (ii) one-third of the shares covered by the option
may be exercised after three years; and (iii) one-third of the shares covered by
the option may be exercised after four years. The option expires after five
years. The incentive stock option shall be subject to all of the terms and
provisions of the 1997 Stock Option Plan.
(b) A non-statutory stock option issued pursuant
to the Company's 1997 Stock Option Plan for such number of shares of the common
stock of the Company that is equal to the difference between 90,000 shares and
the number of shares of common stock covered by the incentive stock option
granted pursuant to subsection (a) above. These options shall vest as follows:
(i) after one year, 20,000 shares; (ii) after two years, the difference between
20,000 shares and one-third of the shares subject to the incentive stock option
granted under subsection (a) above; (iii) after three years, the difference
between 20,000 shares and one-third of the shares subject to the incentive stock
option granted under subsection (a) above; (iv) after four years, the difference
between 20,000 shares and one-third of the shares subject to the incentive stock
option granted under subsection (a) above; and (v) after six years, the balance
of the shares covered by the non-statutory stock option. The non-statutory stock
option expires after six years. The non-statutory stock option shall be subject
to all of the terms and provisions of the 1997 Stock Option Plan.
(c) A stock option issued pursuant to the Xxxxxxx
TXEN Corporation 1998 Stock Option Plan for 10,000 shares of common stock of
Xxxxxxx TXEN Corporation. This option shall vest as follows: (i) one-third after
two years; (ii) one-third after three years; and (iii) one-third after four
years. The option expires after five years. The Xxxxxxx TXEN Corporation option
shall be subject to all of the terms and provisions of the Xxxxxxx TXEN
Corporation 1998 Stock Option Plan. The Xxxxxxx TXEN Corporation option shall
have an exercise price equal to the price at which the common stock of Xxxxxxx
TXEN Corporation is initially offered for sale to the public and as shown on the
cover of the prospectus included in the registration statement which is declared
effective by the Securities and Exchange Commission. Notwithstanding the
foregoing, in the event Xxxxxxx TXEN Corporation does not complete an initial
public offering of its common stock within four months of the date of this
Agreement, then the Company will issue to Employee a stock option for 10,000
shares pursuant to the Company's 1997 Stock Option Plan. Such option shall have
the same terms as to vesting and expiration as stated above, but the exercise
price for such option shall be the fair market value per share of the Company's
common stock on the date Xxxxxxx TXEN Corporation determines not to complete an
initial public offering of the common stock of Xxxxxxx TXEN Corporation. Such
option shall be subject to all the terms and provisions of the Company's 1997
Stock Option Plan.
5. NO CONFLICTS. The Employee affirms and represents that he is under
no obligation to any former employer, and that his employment by the Company
will not violate any covenants or agreements entered into by the Employee.
6. TRAVEL. The Employee will undertake such travel as may be required
in the performance of his duties. The reasonable travel expenses of the Employee
shall be reimbursed in accordance with the Company's reimbursement policy in
effect from time to time.
7. TERM OF EMPLOYMENT. The Employee's employment shall commence
November 2, 1998. This Agreement shall have a term of two years unless earlier
terminated as provided in Section 8 below. After the initial term of two years
and if this agreement is not earlier terminated, this agreement shall be
extended on a year-to-year basis.
8. TERMINATION. Notwithstanding the foregoing, the term of
employment and the Employee's employment with the Company shall be terminated
upon one or more of the following events:
(i) the death of the Employee;
(ii) the disability of the Employee (disability is defined as
the inability of the Employee after reasonable accommodation by the Company to
perform substantially his duties by reason of accident or sickness which
continues for ninety (90) days within a consecutive twelve (12) month period);
(iii) upon sixty (60) days' prior written notice given by
either party to the other party which termination may be with or without cause;
provided that by mutual written agreement the actual date of employment
termination may occur before expiration of such sixty (60) day notice period.
(iv) immediately by the Company upon a determination by the
Board of Directors that the Employee (A) and has breached the terms of this
Agreement, provided that five (5) days' notice has been given Employee of such
event and the Employee has not cured such event within such five (5) day period;
(B) has refused or failed to carry out any instruction of the Board of
Directors, the Chief Executive Officer, or their respective designees, provided
that five (5) days' notice has been given Employee of such event and the
Employee has not cured such event within such five (5) day period; (C) has
demonstrated gross negligence or repeated acts of ordinary negligence in the
execution of his duties; (D) has neglected his duties, provided that five (5)
days' notice has been given Employee of such event and the Employee has not
cured such event within such five (5) day period; (E) has been convicted of a
felony or an illegal act involving moral turpitude or fraud; or (F) has
committed dishonesty, breach of fiduciary duty, or other behavior constituting
grounds for termination for good cause under the laws of the State of Alabama.
Upon termination of employment, the Employee shall be entitled
to receive his Base Salary for the month in which employment terminates,
prorated to the date of termination and, if applicable, the severance pay set
forth below. Vested and unexercised stock options which are currently
exercisable may be exercised by the Employee prior to termination if such
options have not previously lapsed.
If the Employee is terminated by the Company within five (5) years from
the date hereof pursuant to Section 8(iii), the Company shall pay to the
Employee as additional compensation beginning from the date of termination of
employment his Base Salary prorated for a period of six (6) months and paid in
equal installments over such six (6) month period in accordance with the regular
pay practices of the Company. [For example, if the Employee's Base Salary were
$250,000 and his employment terminated 60 days after notice under Section 8(iii)
during the first five years of employment, he would receive $125,000 payable at
$20,833.33 per month for six (6) months following termination of employment.]
If, however, the Employee becomes employed anytime following termination of his
employment with the Company and before full payment of the additional
compensation due under this paragraph, the obligation of the Company to pay the
Employee the balance due of such additional compensation shall terminate and the
Company shall have no further obligation to pay the additional compensation
herein set forth.
Except as provided by this Section 8, the Employee shall not be
entitled to any other compensation or benefits upon termination of employment
and all obligations of the Company to the Employee shall cease upon termination
of employment.
9. WELFARE BENEFIT PLANS. The Employee shall be entitled to participate
in all benefit plans and programs that may be provided by the Company for its
key executive employees and/or to its employees generally, in accordance with
the provisions of any such plans.
10. ASSIGNMENT. The rights and obligations of the Company under this
Agreement may be assigned by the Company to the successors in interest of the
Company or of that part of the business of the Company to which this Agreement
applies or to its affiliates. This Agreement may not be assigned by the
Employee.
11. APPLICABLE LAW; JURISDICTION. This Agreement shall be governed by,
construed and enforced in accordance with the internal substantive laws and not
the choice of law rules of the State of Alabama.
12. ENTIRE AGREEMENT. The foregoing contains the entire agreement
between the parties relating to the subject matter of this Agreement, and may
not be altered or amended except by an instrument in writing signed by both
parties hereto. This Agreement supersedes all prior understandings and
agreements (oral or written) relating to employment of the Employee by the
Company. The parties acknowledge that any prior oral or written agreements
between the Company and the Employee, if any, are hereby terminated. No oral
amendments to this Agree ment and no course of dealing or performance shall be
effective to add to, delete from or vary the terms of this Agreement.
13. COMPANY POLICIES. As an employee of the Company, the Employee shall
be subject to the policies, procedures, rules and regulations generally
applicable to all employees as the same may be published and amended from time
to time.
14. WITHHOLDINGS. Any compensation due the Employee shall be subject to
payroll taxes and other withholdings as may be required by law.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officer and the Employee has hereunto set his
hand as of the date first above written.
XXXXXXX RESEARCH CORPORATION
By: Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx, Chief Executive Officer
Xxxxxxx X. Leader
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Xxxxxxx X. Leader, Employee
