EXHIBIT 10.42
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is
dated as of February 13, 2004, by and between EDAC TECHNOLOGIES CORPORATION, a
Wisconsin corporation ("Edac"), and Xxxxxxxx Xxxxxx ("Xx. Xxxxxx").
RECITAL
Edac and Xx. Xxxxxx are parties to an Amended and Restated Employment
Agreement dated as of February 13, 2003 (the "Employment Agreement");
Edac and Xx. Xxxxxx each desire to amend and restate the Employment
Agreement on the terms and conditions set forth below.
AGREEMENTS
In consideration of the premises and the mutual agreements which
follow, the parties agree as follows:
1. Employment. Edac hereby employs Xx. Xxxxxx and Xx. Xxxxxx
hereby accepts employment with Edac on the terms and conditions set forth in
this Agreement.
2. Term. The initial term of Xx. Xxxxxx'x employment hereunder
shall commence on the date hereof and continue for a period of twelve months,
subject to earlier termination as set forth in this Agreement. The term of Xx.
Xxxxxx'x employment will automatically be extended for successive periods of 90
days unless either party notifies the other in writing to the contrary at least
30 days prior to any the end of the then current term of this Agreement. The
term of employment is referred to in this Agreement as the "Employment Term."
3. Duties. Xx. Xxxxxx shall serve as the President and Chief
Executive Officer of Edac and will, under the direction of the Board of
Directors (the "Board"), faithfully and to the best of his ability, perform the
duties of such positions as determined by the Board from time to time. As the
President and Chief Executive Officer, Xx. Xxxxxx shall be responsible for
managing the business and affairs of Edac in a professional manner with the
primary objective of enhancing shareholder value and ensuring that Edac's
customers, employees and suppliers are treated in a manner consistent with
Edac's Corporate Mission Statement. Without limiting the generality of the
foregoing, Xx. Xxxxxx shall supervise the operations of Edac and perform those
duties normally associated with the offices of President and Chief Executive
Officer. Xx. Xxxxxx shall also perform such additional duties and
responsibilities which may from time to time be reasonably assigned or delegated
by the Board. It is understood and acknowledged that Xx. Xxxxxx will be employed
on less than a full time basis, but that he will devote a sufficient part of his
business time, effort, skill and attention to perform his duties while employed
by Edac.
4. Compensation.
(a) Base Salary. Xx. Xxxxxx shall receive a base salary
of $15,000 per month, payable in regular and equal installments in accordance
with Edac's payroll practices as in effect from time to time (the "Base
Salary").
(b) Stock Options. Pursuant to Edac's 2000-B Employee
Stock Option Plan (the "Plan"), and as set forth in the Employment Agreement,
Edac granted to Xx. Xxxxxx options to purchase 140,000 shares of Edac's common
stock, all of which have vested.
(c) Directors' and Officers' Insurance. Xx. Xxxxxx will
be named as an insured under Edac's policies of directors' and officers'
liability insurance in such a manner as to provide Xx. Xxxxxx with the same
rights and benefits thereunder as are accorded to Edac's other executive
officers and directors.
5. Reimbursement for Reasonable Business Expenses. Edac shall pay
or reimburse Xx. Xxxxxx for reasonable expenses incurred by him in connection
with the performance of his duties pursuant to this Agreement, including, but
not limited to, travel expenses, expenses in connection with trade shows,
seminars, professional conventions or similar professional functions and other
reasonable business expenses.
6. Termination of Employment.
(a) Termination for Death, Disability, Change of Control,
Voluntary Termination or Cause. Xx. Xxxxxx'x employment hereunder shall
automatically terminate upon his death. In addition, Edac shall be entitled to
terminate Xx. Xxxxxx'x employment at any time upon his "Disability." For
purposes of this Agreement, "Disability" shall mean a physical or mental
sickness or injury which renders Xx. Xxxxxx incapable of performing the services
required of him as an employee of Edac and which does or may be expected to
continue for more than three months during any twelve-month period. Edac and Xx.
Xxxxxx shall determine the existence of a Disability and the date upon which it
occurred. In the event of a dispute regarding whether or when a Disability
occurred, the matter shall be referred to a medical doctor selected by Edac and
Xx. Xxxxxx. If they fail to agree upon such a medical doctor, Edac and Xx.
Xxxxxx shall each select a medical doctor and the two doctors so selected shall
together select a third medical doctor who shall make the determination. The
determination by the selected medical doctor shall be conclusive and binding
upon the parties hereto.
If it becomes apparent that the Disability renders Xx. Xxxxxx unable to
discharge his responsibilities and is supported by medical evidence that his
return cannot be determined, Edac may, in its discretion, terminate or modify
this Agreement once it is established that Xx. Xxxxxx will not return to
full-time status.
Edac may also terminate Xx. Xxxxxx'x employment under this agreement
for "Cause," effective immediately upon delivery of notice to Xx. Xxxxxx.
"Cause" shall mean:
(i) the willful and continued failure of Xx.
Xxxxxx to perform substantially Xx. Xxxxxx'x duties with Edac or its affiliates
(other than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered to Xx.
Xxxxxx by the Board which specifically identifies the manner in which the Board
believes that Xx. Xxxxxx has not substantially performed his duties and after
Xx. Xxxxxx is given at least 10 days to rectify or eliminate such failure;
(ii) the willful engaging by Xx. Xxxxxx in
illegal conduct or gross misconduct which is materially and demonstrably
injurious to Edac;
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(iii) the commission by Xx. Xxxxxx of fraud or
dishonesty with respect to Edac which is materially and demonstrably injurious
to Edac or a material misrepresentation by Xx. Xxxxxx to Edac's shareholders or
directors; or
(iv) a material breach of the terms of this
Agreement that is demonstratively injurious to Edac, which material breach is
not cured by Xx. Xxxxxx within 10 days of written notice by Edac to Xx. Xxxxxx
specifying the material breach in reasonable detail.
Edac may also terminate Xx. Xxxxxx'x employment under this Agreement
upon a "Change of Control" effective immediately upon delivery of notice to Xx.
Xxxxxx. "Change of Control" shall mean: (i) the acquisition of beneficial
ownership (as defined in Rule 13d-3 under the Securities Act of 1934, as
amended) of securities representing more than 50% of the combined voting power
of Edac's then outstanding securities, or (ii) the acquisition of all or
substantially all of the assets and business of Edac.
Edac, at any time after August 15, 2004 but prior to August 30, 2004,
may also terminate Xx. Xxxxxx'x employment under this Agreement, effective 30
days following the delivery of notice to Xx. Xxxxxx, if Edac does not achieve
its budgeted net income for the six months ended June 30, 2004.
If Xx. Xxxxxx'x employment terminates due to his Disability, death, a
Change of Control, or the failure of Edac to achieve its budgeted net income for
the six months ended June 30, 2004, or if Xx. Xxxxxx voluntarily terminates his
employment (other than for Good Reason) or if Xx. Xxxxxx is terminated by Edac
for Cause, Xx. Xxxxxx shall be entitled to receive his Base Salary and vested
fringe benefits prorated to the date of termination. If either Edac or Xx.
Xxxxxx elects not to renew this Agreement pursuant to Section 2 hereof, Xx.
Xxxxxx shall be entitled to receive his Base Salary and vested fringe benefits
to the end of the then-current Employment Term.
In the event of termination for Cause, Xx. Xxxxxx shall forfeit any
stock options that he may have at such time. If Xx. Xxxxxx'x employment
terminates for any other reason, Xx. Xxxxxx'x stock options shall lapse in
accordance with section 4 of the Plan.
(b) Termination Without Cause or for Good Reason.
Notwithstanding anything in this Agreement to the contrary, (i) if Xx. Xxxxxx'x
employment is terminated by Edac for any reason other than for Cause,
Disability, death, a Change of Control, or the failure of Edac to achieve its
budgeted net income for the six months ended June 30, 2004, or (ii) if this
Agreement is terminated by Edac for what Edac believes is Cause or Disability,
and it is ultimately determined that Xx. Xxxxxx was wrongfully terminated, or
(iii) if this Agreement is terminated by Xx. Xxxxxx for Good Reason, Xx. Xxxxxx
shall, as full and liquidated damages for such termination, receive a severance
payment equal to his Base Salary for the then remaining Employment Term of this
Agreement (excluding any additional renewals thereof) (the "Severance"). The
Company shall pay the Severance in a single installment payable within 30 days
following the termination of Xx. Xxxxxx'x employment.
For purposes of this Agreement, Xx. Xxxxxx shall have "Good Reason" to
terminate this Agreement (a) if, during the 12 month period from the date of
this Agreement to the first anniversary date hereof, any of the present
directors of the Company do not continue to be a director of the Company for any
reason, other than death, disability or vote by shareholders and a new director
is elected or appointed to fill such vacancy; (b) if, during the 12 month period
from
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the date of this Agreement to the first anniversary date hereof, the size of the
Board is increased by the Board, except as a result of shareholder action, and a
new director (or directors) is (are) appointed by the Board to fill the vacancy
or vacancies created by such increase; or (c) if the ability of Xx. Xxxxxx to
carry out his duties and responsibilities as President and Chief Executive
Officer of Edac as set forth in this Agreement is circumvented or undermined by
the actions of the Board in communicating directly with employees of Edac (other
than any such communications contemplated by applicable law, regulation or stock
market rule, or by any of Edac's policies or procedures established by the Board
in connection with the same).
7. Noncompetition. The parties agree that Edac's supplier,
customer, vendor and employee contacts and relations are established and
maintained at great expense and, by virtue of Xx. Xxxxxx'x employment with Edac,
Xx. Xxxxxx will have unique and extensive exposure to and personal contact with
Edac's suppliers, customers, vendors and employees and that he will be able to
establish a unique relationship with those individuals and entities that will
enable him, both during and after employment, to unfairly compete with Edac.
Further, the parties agree that the terms and conditions of the following
restrictive covenants are reasonable and necessary for the protection of Edac's
business, trade secrets and confidential information and to prevent great damage
or loss to Edac as a result of action taken by Xx. Xxxxxx. Xx. Xxxxxx
acknowledges that the noncompete restrictions and nondisclosure of confidential
information restrictions contained in this Agreement are reasonable and the
consideration provided for herein is sufficient to fully and adequately
compensate Xx. Xxxxxx for agreeing to such restrictions. Xx. Xxxxxx acknowledges
that he could continue to actively pursue his career and earn sufficient
compensation in the same or similar business without breaching any of the
restrictions contained in this Agreement. For purposes of this section 7 and
section 8 below, "Edac" shall refer to each of Edac Technologies Corporation and
each of its subsidiaries.
(a) During Term of Employment. Xx. Xxxxxx covenants and
agrees that, during his employment with Edac, he shall not, directly or
indirectly, either individually or as an employee, principal, agent, partner,
shareholder, owner, trustee, beneficiary, co-venturer, distributor, consultant
or in any other capacity, participate in, become associated with, provide
assistance to, engage in or have a financial or other interest in any business,
activity or enterprise which is competitive with Edac. The ownership of less
than a one percent interest in a corporation whose shares are traded in a
recognized stock exchange or traded in the over-the-counter market, even though
that corporation may be a competitor of Edac, shall not be deemed financial
participation in a competitor.
(b) Upon Termination of Employment. Xx. Xxxxxx agrees
that for a one-year period after Xx. Xxxxxx'x employment with Edac terminates
for any reason, he will not, directly or indirectly, either individually or as
an employee, agent, partner, shareholder, owner, trustee, beneficiary,
co-venturer, distributor, consultant or in any other capacity:
(i) Request or advise any of the customers,
vendors, suppliers, or other business contacts of Edac who currently have or
have had business relationships with Edac within two years preceding the date of
such action, to withdraw, curtail or cancel any of their business or relations
with Edac.
(ii) Induce or attempt to induce any employee,
sales representative, supplier, consultant or personnel of Edac to terminate his
or her relationship or breach his or her agreements with Edac.
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(iii) Participate in, become associated with,
provide assistance to, engage in or have a financial or other interest in any
business, activity or enterprise located within the Territory (as defined below)
which is competitive with the business of Edac or any successor or assign of
Edac and which conducts such competitive business within the Territory;
provided, however, that the ownership of less than 1% of the stock of a
corporation whose shares are traded in a recognized stock exchange or traded in
the over-the-counter market, even though that corporation may be a competitor of
Edac, shall not be deemed financial participation in a competitor. For purposes
of this Agreement, the term "Territory" shall mean the United States of America.
The Board may, in its sole discretion and at any time prior to the termination
of Xx. Xxxxxx'x employment by Edac, expand the Territory to include those
countries in which the Company or any of its subsidiaries does business.
8. Confidential Information. The parties agree that Edac's
customers, business connections, customer lists, procedures, operations,
techniques, customer profiles and other aspects of its business are established
at great expense and protected as confidential information and provide Edac with
a substantial competitive advantage in conducting its business. The parties
further agree that, by virtue of Xx. Xxxxxx'x employment with Edac, he will have
access to, and be entrusted with, secret, confidential and proprietary
information, and that Edac would suffer great loss and injury if Xx. Xxxxxx
would disclose this information or use it to compete with Edac. Therefore, Xx.
Xxxxxx agrees that during the term of his employment, and for a period ending on
the earlier of (a) two years after the termination of his employment with Edac
or (b) the date on which the information referred to in this section becomes
publicly known through no fault of Xx. Xxxxxx, he will not, directly or
indirectly, either individually or as an employee, agent, partner, shareholder,
owner, trustee, beneficiary, co-venturer, distributor, consultant or in any
other capacity, use or disclose, or cause to be used or disclosed, any secret,
confidential or proprietary information acquired by Xx. Xxxxxx during his
employment with Edac whether owned by Edac prior to or discovered and developed
by Edac subsequent to Xx. Xxxxxx'x employment, and regardless of the fact that
Xx. Xxxxxx may have participated in the discovery and the development of that
information, except for any such information disclosed to Xx. Xxxxxx by a third
party who was not under any obligation of confidence or secrecy to the Company
at the time of such disclosure.
9. Law of Torts and Trade Secrets. The parties agree that nothing
in this Agreement shall be construed to limit or negate the statutory or common
law of torts or trade secrets where it provides Edac with broader protection
than that provided herein.
10. Waiver. The failure of either party to insist, in any one or
more instances, upon performance of the terms or conditions of this Agreement
shall not be construed as a waiver or a relinquishment of any right granted
hereunder or of the future performance of any such term, covenant or condition.
11. Notices. Any notice to be given hereunder shall be deemed
sufficient if addressed in writing, and delivered by registered or certified
mail or delivered personally, in the case of Edac, to its principal business
office, and in the case of Xx. Xxxxxx, to his address appearing on the records
of Edac, or to such other address as he may designate in writing to Edac.
12. Severability. If any provision of this Agreement is held to be
invalid or unenforceable for any reason whatsoever, it is agreed such invalidity
or unenforceability shall not affect any other provision of this Agreement and
the remaining covenants, restrictions and
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provisions hereof shall remain in full force and effect and any court of
competent jurisdiction may so modify the objectionable provision as to make it
valid, reasonable and enforceable. Furthermore, the parties specifically
acknowledge that the provisions of sections 7(a), 7(b)(i), 7(b)(ii) and
7(b)(iii) are each separate and independent agreements.
13. Amendment. This Agreement may only be amended by an agreement
in writing signed by all of the parties hereto.
14. Benefit. This Agreement shall be binding upon and inure to the
benefit of and shall be enforceable by and against Edac, its successors and
assigns and Xx. Xxxxxx, his heirs, beneficiaries and legal representatives. It
is agreed that the rights and obligations of Xx. Xxxxxx may not be delegated or
assigned.
15. Entire Agreement. Except as provided under Section 17 hereof, this
Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings among the parties with respect to such subject matter (including,
without limitation, the Consulting Agreement, dated as of July 18, 2002, the
Employment Agreement, dated as of August 13, 2002, and the Amended and Restated
Employment Agreement, dated as of February 13, 2003, each by and between Edac
and Xx. Xxxxxx).
16. Miscellaneous. This Agreement shall be governed by and
construed in accordance with the laws of the State of Connecticut, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect.
17. Release. Xx. Xxxxxx and Edac are parties to a Mutual Release
dated as of August 13, 2002. Such Mutual Release remains in all respects in full
force and effect and is not, in any manner, superseded by this Agreement.
The parties have executed or caused this Agreement to be executed as of
the day, month and year first above written.
EDAC TECHNOLOGIES CORPORATION
BY /s/ Xxxxxx X. Xxxxx
--------------------------------
Xxxxxx X. Xxxxx
Its Chairman
/s/ Xxxxxxxx Xxxxxx
-----------------------------------
Xxxxxxxx Xxxxxx
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