EXHIBIT 10.2.4
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is entered into as of April 6,
1999, by and between CONDOR SYSTEMS, INC., a California corporation (the
"Company"), and XXXX XXXXXXXX, an individual resident of the State of California
(the "Employee").
WHEREAS, the Company, WDC Acquisition Corp. and the Shareholders of the
Company (as defined in the Merger Agreement) have entered into that certain
Agreement and Plan of Merger (the "Merger Agreement") dated as of March 8, 1999
pursuant to which WDC Acquisition Corp. will merge with and into the Company at
the Effective Time (as defined in the Merger Agreement);
WHEREAS, the Company wishes to assure that it will have the benefit of
the knowledge and experience of Employee, who has been the Vice President of
Advanced Program Development of the Company; and
WHEREAS, Employee is willing to enter into an agreement to such end
upon the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements herein contained, the parties hereto agree as follows:
1. Employment. The Company hereby employs the Employee, and the
Employee hereby accepts such employment with the Company, upon the terms and
conditions hereinafter set forth.
2. Term of Employment. Unless earlier terminated as provided in
Section 5, the Employee shall be employed by the Company under this Agreement
commencing on the date of the Effective Time (as defined in the Merger
Agreement) and ending on the second anniversary thereof (the "Employment
Period"). On the second and each succeeding anniversary of the Effective Time,
the Employment Period shall automatically be extended for one additional year
unless, not later than 30 days prior to such anniversary, the Employee or the
Company shall have given notice of his or its intention not to extend the
Employment Period. This Agreement will have no force and effect (i) until or
unless the Effective Time occurs and (ii) until or unless the stockholders of
the Company shall have approved this Agreement pursuant to Section 8 of this
Agreement. Upon its effectiveness, this Agreement will supercede the Employment
Agreement dated November 1996 between the Company and the Employee, which shall
remain in effect, in accordance with its terms, until superceded by this
Agreement.
3. Title and Duties.
(a) The Employee shall have the title and position of Vice
President of Advanced Program Development of the Company. In addition
to the foregoing, the Company's Board of Directors (the "Board") may,
in the exercise of its business judgement, elect the Employee to such
other office or offices as it may determine during the Employment
Period.
(b) In such capacities, Employee shall report to the Chief
Executive Officer of the Company. Employee's responsibilities shall be
as specified by the Board or the Chief Executive Officer but, in
general, the Employee shall have such authority and such
responsibilities as are consistent with the foregoing positions.
(c) Throughout the Employment Period, the Employee shall devote
substantially all of his time, energy, skill and best efforts to the
performance of his duties hereunder in a manner which will faithfully
and diligently further the business and interests of the Company.
Subject to the preceding sentence, the Employee may serve, or continue
to serve, on the boards of directors of other entities and may engage
in appropriate civic or charitable activities as long as such
activities do not interfere or conflict with the performance of the
Employee's duties pursuant to this agreement, and provided that any
board of directors position is disclosed to the Board in writing at
least 10 days in advance of Employee's election to such board of
directors position.
4. Compensation.
(a) Base Salary. The Company shall pay the Employee as
compensation a salary at the beginning rate of $185,000 per year ("Base
Salary"), payable in accordance with the ordinary compensation
practices of the Company. The Compensation Committee of the Board shall
annually review the Base Salary for possible increase, in its sole
discretion.
(b) Bonus. Employee shall be eligible to receive an annual bonus
(the "Bonus") of up to 100% of Base Salary for each calendar year in
accordance with the following:
(i) For an amount up to 75% of Base Salary:
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(A) If EBITDA, as hereunder defined, for any calendar
year is less than the Floor EBITDA for such year, the
Company will pay the Employee no bonus.
(B) If EBITDA for any calendar year is equal to the
Target EBITDA for such year, the Company shall pay the
Employee a bonus of 30% of the actual Base Salary paid to
the Employee during such calendar year;
(C) If EBITDA for any calendar year is equal to or
greater than the Ceiling EBITDA for such year, the Company
shall pay the Employee a total of 75% of the actual Base
Salary paid to the Employee during such calendar year;
(D) If EBITDA for any calendar year is greater than the
Floor EBITDA for such year but is less than the Target
EBITDA for such year, the Company will pay the Employee a
bonus calculated by linear interpolation, as described in
Attachment I. If EBITDA for any calendar year is greater
than the Target EBITDA for such year but is less than the
Ceiling EBITDA for such year, the Company will pay the
Employee a bonus calculated by linear interpolation, as
described in Attachment I;
(ii) For an amount equal to 25% of Base Salary:
(A) For any calendar year, if the employee achieves the
Major Business Objectives for such year, the company will
pay the Employee a bonus (in addition to any bonus paid by
the company to Employee pursuant to Section 4(b)(i) of this
Agreement) of 25% of the actual Base Salary paid to the
employee during such calendar year. Therefore, if the
Employee achieves his Major Business Objectives for any
calendar year and the Company achieves Target EBITDA for
such year, Employee is eligible for a total bonus of 55% of
the actual Base Salary paid to the Employee during such
Calendar year.
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(iii) Definitions. for purposes of this Section 4:
(A) "EBITDA" means, for each calendar year, the EBITDA
number achieved by the Company, as determined annually for
purposes of this Agreement by the Compensation Committee of
the Board.
(B) "Floor EBITDA" means, for any applicable calendar
year, a projected EBITDA established annually for purposes
of this Agreement by the Compensation Committee of the
Board, together with the Employee; provided that the 1999
Floor EBITDA shall be $19,000,000.
(C) "Target EBITDA" means, for any applicable calendar
year, a projected EBITDA established annually for purposes
of this Agreement by the Compensation Committee of the
Board, together with the Employee; provided that the 1999
Target EBITDA shall be $20,000,000.
(D) "Ceiling EBITDA" means, for any applicable calendar
year, a projected EBITDA established annually for purposes
of this Agreement by the Compensation Committee of the
Board, together with the Employee; provided that the 1999
Ceiling EBITDA shall be $21,000,000.
(E) "Major Business Objectives" means, for any applicable
calendar year, the major business objectives of the Employee
as determined annually by the Compensation Committee of the
Board.
(c) Reimbursement of Expenses. The Company shall pay or reimburse
the Employee for all reasonable travel and other expenses incurred by
the Employee in the performance of his obligations under this
agreement, provided that the Employee properly accounts therefor in
accordance with the policies and procedures of the Company.
(d) Vacation. The Employee shall be entitled to a number of paid
vacation days in each calendar year as determined by the Company from
time to time for its employees in accordance with Company policy
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(prorated for any calendar year in which the Employee is employed under
this Agreement for less than the entire year).
(e) Employee Benefits. During the Employment Period, Employee
shall be eligible, on the same basis as he is currently eligible, for
employee benefits (including fringe benefits, vacation, automobile
allowance, pension and life, health, accident and disability insurance)
no less favorable than those benefits for which he is eligible
immediately prior to the Effective Time, except for the Company's ESOP
and other stock-based plans.
(f) Withholding. All payments under this Agreement shall be
subject to withholding for applicable taxes.
5. Termination. The Employee's employment by the Company shall be
terminated upon the occurrence of any of the following:
(a) By Employee Without Cause. The Employee may terminate his
employment under this Agreement upon at least 120 days' prior notice to
the Board of the Company. Upon termination of his employment and upon
experiencing a qualifying event, COBRA coverage shall be made available
to the Employee in compliance with federal law.
(b) By Employee for Good Reason. The Employee may terminate his
employment under this Agreement after the Effective Time, upon at least
30 days' prior notice to the Board of the Company, for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean the occurrence of
the following:
(i) the occurrence of a "Change in Control." For purposes of
this Agreement, a "Change in Control" shall mean the occurrence of
(x) the consolidation, reorganization or merger of the Company
with or into another corporation or corporations or other legal
entitie(s) not controlled by any entity that is an affiliate of
the Company immediately following the Effective Time, or (y) the
conveyance of all or substantially all of the stock or assets of
the Company to another person or entity not controlled by any
entity that is an affiliate of the Company immediately following
the Effective Time; provided that a Change in Control shall not be
deemed to occur upon the occurrence of an initial public offering
of the Company's capital stock ("IPO"); or
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(ii) the Employee's duties, authority or responsibilities as
Vice President of Advanced Program Development of the Company,
whether managerial or supervisory, are materially diminished
without the prior consent of the Employee.
(c) By the Company for Cause. The Company may terminate the
Employee's employment for Cause. "Cause" for purposes of this Agreement
shall mean Employee's (i) personal dishonesty; (ii) willful misconduct;
(iii) breach of fiduciary duty; (iv) failure to perform designated
duties or willful refusal to implement decisions of the Board made in
good faith; (v) willful violation, for financial gain, of any law, rule
or regulation; or (vi) material breach of any provision of this
Agreement; provided, however, that prior to any proposed Board action
pursuant to subparagraph (iv) the Board shall give the Employee
reasonable opportunity to respond and, if appropriate, to otherwise
perform as directed.
The Employee's right to compensation and other benefits from the
Company under this agreement shall cease upon the Company's terminating the
Employee's employment under this agreement for Cause. The provisions of this
Section 5(c) shall take precedence over the provisions of Section 5(a)
notwithstanding any prior notice by the Employee to the Company under Section
5(a).
(d) By the Company Without Cause. The Company may terminate the
Employee's employment under this agreement without Cause therefor at
any time.
6. Severance Pay
(a) In the event that the Employee's employment under this
Agreement is terminated pursuant to the provisions of Section 5(b) or
5(d), or if the employee's Employment Period is not renewed by the
Company pursuant to Section 2, as severance pay the Employee shall be
paid a total of $500,000. Such severance pay shall be paid in a lump
sum to an escrow account at a bank designated by the Company, and
thereafter shall be paid to the Employee in eight equal installments on
the last business day of each of the eight fiscal quarters following
the fiscal quarter during which Employee's employment is terminated,
beginning with such fiscal quarter; provided that the escrow agreement
will provide that all payments of Employee's severance pay will cease
if Employee breaches any of the provisions of Section 7 of this
Agreement. Employee shall also be entitled to continued eligibility to
participate in all health, medical and dental
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benefit plans of the Company for which Employee was eligible
immediately prior to the effective time of the termination of
Employee's employment, or comparable coverage, for two years, or, if
sooner, until comparable health insurance coverage is available to
Employee in connection with subsequent employment or self-employment.
In addition, the termination of the Employee's employment shall not
accelerate vesting of any unvested Options or Stock Appreciation Rights
(as such terms are defined in the 1999 Management Incentive Plan) held
by the Employee.
(b) In the event that the Employee's employment under this
Agreement is terminated upon the death or disability of the Employee,
then the Employee will not be entitled to the severance benefits set
forth in Section 6(a); however, the Company will pay to the Employee or
the Employee's spouse (if she is then living) the Employee's
then-current Base Salary in accordance with the Company's normal pay
practices until the earlier of (i) the end of the sixth calendar month
following Employee's termination of active service, or (ii) such time
as the Employee's spouse (or a trust for her benefit) has received
proceeds from the life or disability insurance policy, as the case may
be, described in Section 4(e). Any Base Salary paid after the death or
disability of the Employee pursuant to clause (i) above shall be repaid
to the Company upon the receipt of the insurance proceeds described in
clause (ii) by the Employee's spouse (or by a trust for her benefit).
The Company shall also pay to Employee or Employee's spouse the pro
rata portion of Employee's bonus for the year during which the death or
disability of the employee occurs which payment shall not be subject to
repayment. As of the date of the death or disability of Employee, all
benefits for the Employee pursuant to section 4(c), (d) and (e) of this
Agreement shall cease. Options and Stock Appreciation Rights (as such
terms are defined in the Company's 1999 Management Incentive Plan) held
by the Employee shall expire on the dates upon which such Options and
Stock Appreciation Rights would have expired had it not been for the
termination of Employee's employment or service. The Employee shall
have the right to exercise such Options and Stock Appreciation Rights
prior to such expiration to the extent such were exercisable at the
date of such termination of employment or service and shall not have
been exercised. In addition, the termination of the Employee's
employment shall not accelerate vesting of any unvested Options or
Stock Appreciation Rights held by the Employee.
(c) If the Employee terminates his employment pursuant to Section
5(a) and continues to provide services to the Company, or if the
Employee's Employment under this Agreement is terminated pursuant to
Section 5(c), the Company shall continue to pay the Employee his
then-
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current Base Salary in equal monthly installments until the
termination of his active service with the Company if the Employee
resigns pursuant to Section 5(a), or until the date of his termination
if the Employee's employment is terminated pursuant to Section 5(c). As
of the effective date of Employee's termination pursuant to Section
5(a) or Section 5(c), Employee shall be entitled to no bonus or
benefits pursuant to this Agreement, and the Employee's right to
exercise any Option or Stock Appreciation Right Shall terminate, and
such Option or Stock Appreciation Right shall expire, on the day of
such termination of employment or service. In addition, the Company or
its designee shall have the right to purchase all or a portion of the
vested Options and/or Shares (as defined in the 1999 Management
Incentive Plan) acquired upon the exercise of Options by the Employee
at a per share price equal to the lower of (i) the price paid by
Employee for such Shares which have been issued or which are issuable
under vested but unexercised Options and (ii) the fair market value (as
determined in accordance with Section 2.07 of the Investors Agreement
dated as of April 1999 by and between the Company and the several
Shareholders (as defined therein) from time to time parties thereto) of
such Shares which have been issued or which are issuable under vested
but unexercised Options on the date of purchase, less the exercise
price in the case of vested Options. The Company or its designee shall
also have the right to purchase all or a portion of any other Shares,
including Rollover Shares (as defined in the 1999 Management Incentive
Plan), previously purchased by the Employee, at a per share price equal
to the fair market value (as determined in accordance with Section 2.07
of the Investors Agreement dated as of April 1999 by and between the
Company and the several Shareholders (as defined therein) from time to
time parties thereto) of the Shares on the date of purchase. If the
Company elects to exercises its right under this Section 6(c), the
Company shall deliver written notice (a"Purchase Notice") to the
Employee to such effect within 30 days of a termination of Employee's
employment. For purposes of this Section 6(c), the "date of purchase"
shall mean the third business day following the receipt of notice by
the Employee that the purchase right is to be exercised. Payment of the
purchase price may be made in cash or by certified check; provided that
if the terms of any agreement to which the Company is a party, or any
of the indentures governing any debt securities issued by the Company
or any of its subsidiaries would prohibit the Company from effecting
such payment, payment may be effected through a promissary note having
such commercially reasonable terms and interest rate as may be
determined by the Company in its reasonable discretion, provided that
in any event such note shall become due at such time as the
prohibitions described above shall lapse.
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(d) The provisions of this Section 6 and Section 7 of this
Agreement shall survive any termination of this Agreement.
7. Non-Competition and Non-Solicitation
(a) Subject to Section 7(b) below, in consideration of his
employment hereunder and in view of the confidential position to be
held by the Employee hereunder, during the Employment Period and
through the two-year period commencing on the effective date of the
termination of Employee's employment hereunder, the Employee shall not,
directly or indirectly, be employed by, or act as a consultant or
lender to or in association with, or as a director, officer, employee,
partner, owner, joint venturer, member or otherwise of any person,
firm, corporation, partnership, limited liability company, association
or other entity that engages in the same business as, or competes with,
any business actually conducted by the Company or any or its
subsidiaries (other than beneficial ownership of up to 2% of the
outstanding voting stock of a publicly traded company that is or owns
such a competitor);
(b) In the event that the employee is terminated by the Company
for Cause or resigns without Good Reason, during the Employment Period
and through the one-year period commencing on the effective date of the
termination of Employee's employment hereunder, the Employee shall not,
directly or indirectly, be employed by, or act as a consultant or
lender to or in association with, or as a director, officer, employee,
partner, owner, joint venturer, member or otherwise of any person,
firm, corporation, partnership, limited liability company, association
or other entity that engages in the same business as, or competes with,
any business actually conducted by the Company or any of its
subsidiaries (other than beneficial ownership of up to 2% of the
outstanding voting stock of a publicly traded company that is or owns
such a competitor);
(c) In consideration of his employment hereunder and in view of
the confidential position to be held by the Employee hereunder, during
the Employment Period and through the one-year period commencing on the
effective date of the termination of Employee's employment hereunder,
the Employee will not (i) induce or attempt to induce any employee of
the Company or any of its subsidiaries to leave the employ of the
Company or such subsidiary, or in any way interfere with the
relationship between the Company or any of it subsidiaries and any
employee thereof, (ii) hire directly or indirectly any person who is
then an employee of the Company or any of its subsidiaries, or (iii)
induce or attempt to induce any customer,
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supplier, licensee or other business relation of the Company or any of
its subsidiaries to cease doing business with the Company or such
subsidiary, or in any way interfere with the relationship between any
such customer, supplier, licensee or business relation and the Company
or such subsidiary; provided, however, that the Employee will cease to
be bound by this Section 7(c) on the six-month anniversary of the
effective date of the termination of Employee's employment hereunder if
his employment is terminated without Cause;
(d) The Employee expressly agrees that the character, duration and
geographic scope of the provisions of this Section 7 are reasonable in
light of the circumstances as they exist on the date hereof. If any
competent court shall determine that the character, duration or
geographic scope of such provisions is unreasonable, then it is the
intention and the agreement of the Employee and the Company that this
Agreement shall be construed by the court in such a manner as to impose
only those restrictions on the Employee's conduct that are reasonable
in the light of the circumstances and that are necessary to assure to
the Company the benefits of this Section 7.
8. Stockholder Approval. This Agreement shall be effective upon
submission to and approval by stockholders of the Company holding more than 75%
of the voting power of all outstanding common stock of the Company. In
connection with such submission and approval, the Company represents that it has
provided each stockholder with the disclosure required by Treasury Regulation
Section 1.280G-1-Q&A 7(d).
9. Entire Agreement; Amendments. This Agreement (upon its
effectiveness), together with option and other agreements relating to stock of
the Company entered into substantially contemporaneously herewith or with the
Closing, contains the entire understanding of the parties with respect to the
matters set out herein, merging and superseding all prior and contemporaneous
agreements and understandings between the parties with respect to such matters.
This Agreement may be amended only by a written instrument duly executed by all
parties or their respective heirs, successors, assigns or legal personal
representatives.
10. No Conflicts; No Assignments.
(a) Employee represents and warrants to the Company that he is not
as of the date of this Agreement, and will not become during the
Employment Period, a party to any oral or written contract that
prohibits, or materially restricts or limits, or will prohibit or
materially restrict or
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limit the performance of his duties or the fulfillment of his
obligations as an employee and an officer of the Company or under this
Agreement.
(b) The Employee acknowledges that the services to be rendered by
him are unique and personal and, accordingly, that he shall not assign
any of his rights or delegate any of his duties or obligations under
this Agreement.
11. Waiver of Breach. Either party may, by written notice to the
other: (i) extend the time for the performance of any of the obligations or
other actions of the other, (ii) waive compliance with any of the covenants of
the other contained in this Agreement, and (iii) waive or modify performance of
any of the obligations of the other. However, mere forbearance or indulgence by
either party in any regard whatsoever shall not constitute a waiver of the
covenant or condition to be performed by the other party to which the same may
apply and, until complete performance of said covenant or condition, said party
shall be entitled to invoke any remedy available under this Agreement or by law
or in equity despite said forbearance or indulgence.
12. Gender Number. Whenever the context of this Agreement so required
the masculine gender shall include the feminine or neuter, the single number
shall include plural, and reference to one or more parties hereto shall include
all assignees of the party.
13. Headings. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
14. Arbitration; Governing Law. To the fullest extent permitted by
law, any dispute, claim or controversy of any kind including but not limited to,
tort, contract and statute arising under, in connection with or related to this
Agreement shall be resolved exclusively by binding arbitration in the State of
California, in accordance with the rules of the American Arbitration
Association. The Company and the Employee hereby waive any objection to personal
jurisdiction or venue in any forum located in the State of California. No claim,
lawsuit or action of any kind may be filed by either party to this Agreement;
arbitration is the exclusive dispute resolution mechanism between the parties.
Judgment may be entered on the arbitrator's award in any court of relevant
jurisdiction. This agreement shall be governed by and construed in accordance
with the laws of the State of California as such laws are applied to agreements
entered into and to be performed entirely within California by California
residents.
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15. Severability. In the event that any provision of this Agreement,
or the application thereof to any person or circumstance, is held by a court of
competent jurisdiction to be invalid, illegal or unenforceable in any respect in
any jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other provision of this Agreement in that jurisdiction or the
application of that provision to any other person or circumstance or in any
other jurisdiction, and this agreement shall then be construed in that
jurisdiction as if such invalid, illegal or unenforceable provision had not been
contained in this Agreement, but only to the extent of such invalidity,
illegality or unenforceability.
16. Further Assurances. Each party shall perform such further acts and
execute and deliver such further documents as may be reasonably necessary to
carry out the provisions of this Agreement.
17. Enforcement. In the event either party hereto fails to perform any
of its obligations under this Agreement or in the event a dispute arises
concerning the meaning or interpretation of any provision of this Agreement, the
defaulting party or the party not prevailing in such dispute as the case may be,
shall pay the reasonable costs and expenses incurred by the other party in
enforcing or establishing its rights hereunder, including without limitation,
court costs and reasonable attorney's fees.
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IN WITNESS WHEREOF, the Company and the Employee have duly executed and
delivered this Employment Agreement as of the day and year first above written.
CONDOR SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxxx
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Title: Chief Financial Officer
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EMPLOYEE:
/s/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx
