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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of January 1, 2000 (this
"Agreement"), by and between Xxxxxx Xxxxx (the "Executive") and XYBERNAUT
CORPORATION, a Delaware corporation (the "Company").
WHEREAS, the Executive has been employed by the Company as a Vice
President, Government Affairs of the Company; and
WHEREAS, the Company desires to continue the employment of the
Executive as the Company's Vice President, Government Affairs and the Executive
desires to be employed by the Company in the aforementioned capacity, all upon
the terms and provisions, and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
Section 1. Definitions. As used in this Agreement the following
terms shall have the meanings set forth in this Section 1:
(a) "Affiliate" of any Person means any stockholder or
person or entity controlling, controlled by under common control with such
Person, or any director, officer or key executive of such Person or any of their
respective relatives. For purposes of this definition, "control," when used with
respect to any Person, means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings that correspond to the foregoing.
(b) "Cause" shall mean (i) the Company being subjected to
any criminal liability under any applicable law as a result of any action or
inaction on the part of the Executive; (ii) the conviction or admission of the
Executive of, or plea by the Executive of nolo contendere to, a felony or crime;
(iii) if the Executive is chronically addicted to any narcotic or other illegal
or controlled substance or repeatedly abuses any alcoholic product or any
prescription stimulants or depressant, as determined by a physician designated
by the Company; (iv) the Executive committing fraud, or stealing or
misappropriating any asset or property of the Company, including, without
limitation, any theft or embezzlement or the usurpation of a corporate
opportunity; (v) a breach of a material term or provision of this Agreement by
the Executive, which is not cured within ten (10) days after written notice of
such breach; (vi) the violation of any of the Company's written policies which
are from time to time in effect; or (vii) the failure of the Executive to follow
the lawful directives of the President of the Company or the Board of Directors
of the Company.
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(c) "Change of Control" shall mean the occurrence of the
following: (i) a Person or group of Persons, other than any current member of
the Board of Directors, obtain beneficial ownership of at least thirty percent
(30%) of the outstanding capital stock of the Company; (ii) a change in the
membership of more than fifty percent (50%) of the current Board of Directors in
any twelve (12) month period. "Common Stock" shall mean the common stock, par
value $.01 per share, of the Company, and any other class of common stock of the
Company created after the date of this Agreement in accordance with the
Company's Certificate of Incorporation and applicable law.
(d) "Competing Business" shall mean any business, enterprise
or other Person that as one of its businesses or activities, is engaged in the
business of manufacturing, selling, marketing, licensing or distributing
wearable computers or the solutions associated therewith or any other business
or activity that is engaged in by the Company or any Affiliate of the Company.
(e) "Confidential and Proprietary Information" shall mean
any and all (i) confidential or proprietary information or material not in the
public domain about or relating to the business, operations, assets or financial
condition of the Company or any Affiliate of the Company or any of the Company's
or any such Affiliate's trade secrets, including, without limitation, research
and development plans or projects; data and reports; computer materials such as
programs, instructions and printouts; formulas; product testing information;
business improvements, processes, marketing and selling strategies; strategic
business plans (whether pursued or not); budgets; unpublished financial
statements; licenses; pricing, pricing strategy and cost data; information
regarding the skills and compensation of executives; the identities of clients
and potential clients; intellectual property strategies and any work on any
patents, trademarks and tradenames, prior to any filing or the use thereof in
commerce; pricing, timing, sales terms, service plans, methods, practices,
strategies, forecasts, know-how and other marketing techniques, source codes,
object codes, algorithms, the nature of any patents or patent applications; and
(ii) information, documentation or material not in the public domain by virtue
of any action by or on the part of the Executive, the knowledge of which gives
or may give the Company or any Affiliate of the Company an advantage over any
Person not possessing such information. For purposes hereof, the term
Confidential and Proprietary Information shall not include any information or
material (i) that is known to the general public other than due to a breach of
this Agreement by the Executive or (ii) was disclosed to the Executive by a
Person who the Executive did not reasonably believe was bound to a
confidentiality or similar agreement with the Company.
(f) "Discretionary Bonus" shall have the meaning given to
that term in Section 4(c) hereof.
(g) "Employment Term" shall have the meaning given to that
term in Section 2 hereof.
(h) "Good Reason" shall mean a (i) substantial change to or
reduction in the duties or responsibilities of the Executive such that the
responsibilities of the Executive are no longer commensurate with the
Executive's office with the Company as set forth herein; (ii) the occurrence of
a Change of Control; (iii) a change in the Executive's office from that of Vice
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President, Government Affairs which is not concurred in by the Executive within
three (3) months of its occurrence; or (iv) the breach of a material term or
provision of this Agreement by the Company which is not cured by the Company
within ten (10) business days after written notice of said breach is received by
the Company from the Executive.
(i) "Incapacity" shall mean any illness or mental or
physical incapacity or disability which prevents the Executive from performing
his duties or obligations hereunder for a continuous period of ninety (90)
consecutive days or for shorter periods aggregating one hundred twenty (120)
days within any consecutive twelve (12) month period.
(j) "Inventions" shall mean inventions, discoveries,
concepts and ideas, whether patentable or not, patents, patent applications,
copyrights and other intellectual property, including, without limitation,
processes, methods, formulae and techniques, and improvements thereof or
know-how related thereto, concerning any business activity of the Company or any
Affiliate of the Company, with which the Executive becomes, directly or
indirectly, involved as a result in whole or in part, directly or indirectly, of
the Executive's employment by the Company, or any Affiliate of the Company, and
whether conceived of solely by the Executive or jointly with the efforts of
others.
(k) "Person" shall mean, without limitation, any natural
person, corporation, partnership, limited liability company, joint stock
company, joint venture association, trust or other similar entity or firm.
(l) "Salary" shall have the meaning given to that term in
Section 4(a) hereof.
(m) "Without Cause" shall mean the termination of the
Executive's employment hereunder by the Company, other than termination by the
Company due to the Executive's death or Incapacity or based upon Cause.
Section 2. Employment and Term. The Company hereby employs the
Executive as the Vice President, Government Affairs of the Company and the
Executive hereby accepts such employment in that capacity, upon the terms and
provisions, and subject to the conditions, set forth in this Agreement, for a
term of three (3) years, commencing on January 1, 2000, and terminating on
December 31 2003, unless earlier terminated as provided in this Agreement (the
"Employment Term").
Section 3. Executive's Duties. (a) The Executive shall be Senior
Vice President, Government Affairs of the Company responsible for overseeing, if
directed so by the Company's CEO and President or Vice Chairman, the Company's
business dealings with the United States federal government and state government
including contractual relationships with the federal and state governments. The
Executive shall perform such other duties as may be assigned to the Executive by
the Company's President or the Board of Directors of the Company.
(b) The Executive shall devote all of his business time,
effort, skill and attention exclusively to the business, operations and affairs
of the Company and to the furtherance of the interests, business and prospects
of the Company. The Executive shall
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perform the Executive's duties and obligations hereunder diligently,
competently, faithfully and to the best of his ability.
(c) The Executive agrees to execute policy statements and
agreements that the Company may, from time to time, require all of its senior
executive officers to execute.
Section 4. Compensation; Salary, Options, Bonus. (a) In
consideration of the performance of all of the duties and obligations to be
performed by the Executive hereunder, the Company agrees to pay, and the
Executive agrees to accept, for the Employment Term, a salary (the "Salary") at
an annual rate of $140,000, payable in accordance with the Company's regular
payroll practices as from time to time in effect, less all withholdings and
other deductions required to be deducted in accordance with any applicable
federal, state, local or foreign law, rule or regulation.
(b) In consideration of the Executive's execution and
delivery of this Agreement, upon the execution and delivery of this Agreement
the Company shall grant to the Executive, effective as of the date hereof, the
right to purchase 150,000 (one hundred fifty thousand) shares of Common Stock at
the closing price on January 3, 2000 that shall vest over three (3) years, in
increments of fifty thousand (50,000) shares each year on December 31 of each
year commencing on December 31, 2000 through December 31, 2002; provided that
the Employee remains employed by the Company as of that date. The grant of
options to the Employee shall be the Company's stock option plan in effect at
the time of grant.
(c) The Company may, in its sole and absolute discretion, pay
a discretionary bonus to the Employee for each full year of the Employment Term
that the Executive is employed by the Company, based upon the performance of the
Executive during such year as well as the Company's overall performance during
such year (the "Discretionary Bonus"). It is acknowledged and agreed that the
Company has made no representation, warranty or guaranty that the Discretionary
Bonus will be paid for any particular year.
(d) All options granted to the Executive pursuant to this
Agreement or referred to herein, to the extent permitted by applicable law,
shall be transferable and assignable. Any unvested options granted to the
Executive hereunder shall fully vest upon a Change of Control or upon a
termination of this Agreement by the Executive for Good Reason.
Section 5. Benefits, Vacation. (a) During the Employment Term,
the Executive shall be entitled to such insurance and health and medical
benefits as are generally made available to the senior executives of the
Company, as a group, pursuant to such plans as are from time to time maintained
by the Company; provided, however, that the Executive shall be required to
comply with the conditions of coverage attendant to such plans.
(b) During each contract year of the Employment Term, the
Executive shall be entitled to four (4) weeks of vacation. The Executive shall
take vacation at such time or times as the Executive desires, subject to the
concurrence of the Company based upon the then current business needs and
activities of the Company. Vacation shall accrue if unused during the term of
employment.
(c) During the Employment Term, the Executive shall be
eligible to
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participate in the profit sharing and other benefit plans that the Company from
time to time makes available to the senior executives of the Company as a group,
subject to the terms, provisions and conditions of such plans, including,
without limitation, any vesting periods and eligibility criteria.
Section 6. Business Expenses, etc. (a) The Executive shall be
entitled to reimbursement for ordinary, necessary and reasonable business
expenses actually incurred by the Executive during the Employment Term in the
performance of the Executive's duties hereunder, if supported by such reasonable
documentation as may be required by the Company in accordance with the Company's
policies.
(b) The Company shall also provide the Executive with a
non-accountable expense allowance of $1,875 per month during each month of the
Employment Term. The Executive shall be responsible for all taxes (including,
without limitation, withholding taxes) and other charges which may be payable in
connection with such allowances
Section 7. Termination of Employment Term. (a) In the event of
the death of the Executive during the Employment Term, the Executive's
employment hereunder shall automatically terminate as of the date of death;
provided, however, that the Executive or the Executive's legal representative,
as the case may be, shall be entitled to receive, and the Company shall pay, (i)
any accrued and unpaid Salary for a three (3) month period from the date of
termination, less any amounts received by the Executive under any disability
insurance policy maintained by the Company; and (ii) reimbursement of business
expenses which are properly owing to the Executive pursuant to Section 6(a)
hereof, through the date of termination.
(b) In the event of the Executive's Incapacity, the Company
may, in its sole discretion, terminate the Executive's employment hereunder upon
written notice to the Executive; provided, however, that the Executive or the
Executive's legal representative, as the case may be, shall be entitled to
receive, and the Company shall pay, (i) any accrued and unpaid Salary for a
three (3) month period from the date of termination, less any amounts received
by the Executive under any disability insurance policy maintained by the
Company; and (ii) reimbursement of business expenses which are properly owing to
the Executive pursuant to Section 6(a) hereof, through the date of termination.
(c) The Company shall have the right to terminate the
Executive's employment under this Agreement at any time for Cause upon written
notice to the Executive. In the event the Executive's employment hereunder is
terminated by the Company for Cause, the Company shall only be obligated to pay
accrued and unpaid Salary through the date of termination and the Company shall
pay any accrued and unreimbursed business expenses which are properly owing to
the Executive pursuant to Section 6 hereof through the date of termination.
(d) The Company shall have the right to terminate the
Executive's employment hereunder Without Cause at any time upon ten (10) days'
prior written notice to the Executive. If the Company terminates the Executive's
employment hereunder Without Cause, the Company shall (i) continue to pay Salary
to the Executive provided for hereunder for a period equal to the greater of (x)
eighteen (18) months from the date of termination and (y) the remaining period
of the Employment Term and (ii) pay any unreimbursed business expenses
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which are properly owing to the Executive pursuant to Section 6(a) hereof
through the date of termination.
(e) The Executive shall have the right to terminate his
employment with the Company hereunder for Good Reason, upon not less than thirty
(30) days prior written notice to the Company. Should the Executive terminate
his employment hereunder for Good Reason, the Company shall be obligated to make
the payments to the Executive provided for in Section 7(d) hereof upon the
termination of the Executive's employment by the Company Without Cause.
(f) Except as may be required pursuant to applicable law (for
example, in the case of COBRA) upon the termination of the Executive's
employment, the Company shall not be obligated to provide any benefits to the
Executive which were provided at any time during the Employment Term.
(g) The failure of the Company to continue the employment of
the Executive upon expiration of the entire three (3) year Employment Term shall
not be considered a termination of employment for purposes of this Agreement.
Section 8. Inventions. Any Inventions originated or conceived by
the Executive related to the Company's business during his employment by the
Company or any Affiliate of the Company or with the use or assistance of the
facilities, materials or personnel of the Company or any Affiliate of the
Company, either solely or jointly with others, during the Employment Term shall
be the sole and exclusive property of the Company. The Executive hereby
irrevocably assigns and transfers to the Company and agrees to transfer and
assign to the Company all of his right, title and interest in and to all
Inventions, and to applications for patents and patents granted upon such
Inventions and to all copyrightable material related thereto developed by the
Executive or under his supervision. The Executive agrees for himself and his
heirs and personal representatives, upon the request of the Company and at the
Company's expense, to do such acts, to execute such documents and instruments
and to participate in such legal proceedings as from time to time may be
necessary or required to apply for, secure, maintain, reissue, extend or defend
the worldwide rights of the Company in the Inventions. The Executive here grants
to the Company a power of attorney, which is irrevocable and coupled with an
interest, to execute any such documents and instruments if the Executive is
unable or fails to do so, after the request by the Company as provided in the
immediately preceding sentence. The Executive shall have no right to receive any
royalties or other payments from the Company with respect to any Inventions.
Section 9. Restrictions Respecting Competing Businesses,
Confidential Information, etc. The Executive acknowledges and agrees that by
virtue of the Executive's position and involvement with the business and affairs
of the Company, the Executive will develop substantial expertise and knowledge
with respect to all aspects of the Company's business, affairs and operations
and will have access to all significant aspects of the business and operations
of the Company and to Confidential and Proprietary Information. The Executive
acknowledges and agrees that the Company will be damaged if the Executive were
to breach any of the provisions of this Section 9 or if the Executive were to
disclose or make unauthorized use of any Confidential and Proprietary
Information. Accordingly, the Executive expressly
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acknowledges and agrees that the Executive is voluntarily entering into this
Agreement and that the terms, provisions and conditions of this Section 9 are
fair and reasonable and necessary to adequately protect the Company.
(a) The Executive hereby covenants and agrees that, during
the Employment Term and thereafter, unless otherwise authorized by the Company
in writing, the Executive shall not, directly or indirectly, under any
circumstance: (i) disclose to any other Person (other than in the regular course
of business of the Company) any Confidential and Proprietary Information, other
than pursuant to applicable law, regulation or subpoena or with the prior
written consent of the Company; (ii) act or fail to act so as to impair the
confidential or proprietary nature of any Confidential and Proprietary
Information; (iii) use any Confidential and Proprietary Information related to
the Company's business other than for the sole and exclusive benefit of the
Company; or (iv) offer or agree to, or cause or assist in the inception or
continuation of, any such disclosure, impairment or use of any Confidential and
Proprietary Information. Following the Employment Term, the Executive shall
return all documents, records and other items containing any Confidential and
Proprietary Information to the Company (regardless of the medium in which
maintained or stored), without retaining any copies, notes or excerpts thereof,
or at the request of the Company, shall destroy such documents, records and
items (any such destruction to be certified by the Executive to the Company in
writing).
(b) The Executive covenants and agrees that, while the
Executive is employed by the Company and for one (1) year after the Executive
ceases to be employed by the Company for any reason, the Executive shall not,
directly or indirectly, manage, operate or control, or participate in the
ownership, management, operation or control of, or otherwise become interested
in (whether as an owner, stockholder, partner, lender, consultant, executive,
officer, director, agent, supplier, distributor or otherwise) any Competing
Business or, directly or indirectly, induce or influence any Person that has a
business relationship with the Company, or any Affiliate of the Company, to
discontinue or reduce the extent of such relationship; provided that if the
Executive's employment with the Company was terminated pursuant to Section 7(d)
or 7(e) hereof, the Company shall continue to make the payments to the Executive
required by those Sections. For purposes of this Agreement, the Executive shall
be deemed to be directly or indirectly interested in a business if he is engaged
or interested in that business as a stockholder, director, officer, executive,
agent, partner, individual proprietor, consultant, advisor or otherwise, but not
if the Executive's interest is limited solely to the ownership of not more than
2% of the securities of any class of equity securities of a corporation or other
Person whose shares are listed or admitted to trade on a national securities
exchange or are quoted on NASDAQ or a similar means if NASDAQ is no longer
providing such information.
(c) While the Executive is employed by the Company and for
two (2) years after the Executive ceases to be an employed by the Company, the
Executive shall not, directly or indirectly, solicit to employ or employ for
himself or others any employee of the Company or any Affiliate of the Company
who was an employee of the Company or any Affiliate of the Company as of the
date of the termination of the Executive's employment with the Company or during
the preceding twelve (12) month period, or solicit any such employee to leave
such employee's employment or join the employ of another, then or at a later
time.
(d) The parties agree that nothing in this Agreement shall be
construed
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to limit or negate the common law of torts, confidentiality, trade secrets,
fiduciary duty and obligations where such laws provide the Company with any
broader, further or other remedy or protection than those provided herein.
(e) Because the breach of any of the provisions of this
Section 9 may result in immediate and irreparable injury to the Company for
which the Company may not have an adequate remedy at law, the Company shall be
entitled, in addition to all other rights and remedies, to a decree of specific
performance of the restrictive covenants contained in this Section 9 and to a
temporary and permanent injunction enjoining such breach, without posting a bond
or furnishing similar security.
Section 10. Severability. Each term and provision of this
Agreement is severable; the invalidity, illegality or unenforceability or
modification of any term or provision of this Agreement shall not affect the
validity, legality and enforceability of the other terms and provisions of this
Agreement, which shall remain in full force and effect. Since it is the desire
and intent of the parties that the provisions of this Agreement be enforced to
the fullest extent permissible under the laws and public policies applied in
each jurisdiction in which enforcement is sought, should any particular
provision of this Agreement be deemed invalid, illegal or unenforceable, the
same shall be deemed reformed and amended to delete that portion that is
adjudicated to be invalid, illegal or unenforceable and the deletion shall apply
only with respect to the operation of such provision and to the extent of such
provision and, to the extent that a provision of this Agreement would be deemed
unenforceable by virtue of its scope, but may be made enforceable by limitation
thereon, each party agrees that this Agreement shall be reformed and amended so
that the same shall be enforceable to the fullest extent permissible under the
laws and public policies applied in the jurisdiction in which enforcement is
sought.
Section 11. Assignment. This Agreement and the rights and
obligations of the parties hereto shall be binding upon and inure to the benefit
of each of the parties hereto, the heirs, executors, administrators and legal
representatives of the Executive and the successors and permitted assigns of the
Company. Neither this Agreement nor any rights or benefits hereunder may be
assigned by the Executive or the Company without the prior written consent of
the other party hereto, except that the Company may assign any of its rights or
obligations hereunder to any other Person which purchases all or substantially
all of the Common Stock or assets of the Company or is the successor to the
Company by merger, consolidation, recapitalization or other similar transaction.
Section 12. Amendment; Entire Agreement. This Agreement may not
be modified, amended, altered or supplemented except by a written agreement
executed by the parties hereto. This Agreement contains the entire agreement and
understanding of the parties hereto with respect to the subject matter of this
Agreement and supersedes all prior and/or contemporaneous agreements and
understandings of any kind and nature (whether written or oral) between the
parties with respect to such subject matter, all of which are merged herein.
Section 13. Waivers. Waiver by either party of either breach of
or failure to comply with any provision of this Agreement by the other party
shall not be construed as, or constitute, a continuing waiver of such provision,
or a waiver of any other breach of, or failure to comply with, any other
provision of this Agreement, and shall be limited to the specific matter
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and instance for which it is given. No waiver of any such breach or failure or
of any term or condition of this Agreement shall be effective unless in a
written instrument and signed by the waiving party and delivered, in the manner
required for notices hereunder, to the affected party.
Section 14. Notices. All notices, consents, directions,
approvals, instructions, requests and other communications required or permitted
by the terms of this Agreement to be given to any person shall be in writing,
and shall be delivered personally or sent by certified mail, return receipt
requested (postage prepaid) or by telecopy, to the parties at the following
addresses or telecopy numbers, as applicable:
If to the Executive:
Xxxxxx Xxxxx
Xybernaut Corporation
00000 Xxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Telecopier: (000) 000-0000
If to the Company:
Xybernaut Corporation
00000 Xxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: President
Telecopier: (000) 000-0000
and a copy to Xybernaut Corporation, Chief Financial Officer
With a copies to:
Xxxxxx Xxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxx Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
or to such other address as a party may have furnished to the other parties in
writing in accordance herewith. Any notice, consent, direction, approval,
instruction, request or other communication given in accordance with this
Section 14 shall be effective after it is received by the intended recipient.
Section 15. Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
VIRGINIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN THAT STATE,
WITHOUT REGARD OR REFERENCE TO ITS
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PRINCIPLES OF CONFLICTS OF LAWS. THIS AGREEMENT SHALL BE CONSTRUED AND
INTERPRETED WITHOUT REGARD TO ANY PRESUMPTION AGAINST THE PARTY CAUSING THIS
AGREEMENT TO BE DRAFTED. EACH OF THE PARTIES UNCONDITIONALLY AND IRREVOCABLY
CONSENT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF
VIRGINIA AND THE FEDERAL DISTRICT COURT FOR THE NORTHERN DISTRICT OF VIRGINIA
WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, AND EACH OF THE PARTIES WAIVE ANY RIGHT TO CONTEST THE VENUE OF
SAID COURTS OR TO CLAIM THAT SAID COURTS CONSTITUTE AN INCONVENIENT FORUM. EACH
OF THE PARTIES UNCONDITIONALLY AND IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT.
Section 16. Headings; Counterparts. The headings contained in
this Agreement are inserted for reference purposes only and shall not in any way
affect the meaning, construction or interpretation of this Agreement. This
Agreement may be executed in two (2) counterparts, each of which, when executed,
shall be deemed to be an original, but both of which, when taken together, shall
constitute one and the same document.
IN WITNESS WHEREOF, the Executive and the Company have executed
this Agreement as of the date first above written.
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Xxxxxx Xxxxx
XYBERNAUT CORPORATION
By:
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Name:
Title:
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