EMPLOYMENT AGREEMENT
Exhibit 10.10
This
EMPLOYMENT AGREEMENT (“Agreement”), effective July 1, 2007, is entered into by
and between SYS Technologies, a California corporation, with its principal
office at 0000 Xxxxxx Xxxxxx Xxxx, Xxxxx 000, Xxx Xxxxx,
Xxxxxxxxxx 00000 (“Company”), and Xxxxx Xxxxx, (“Employee”),
collectively the “Parties.” The Parties hereto desire to enter into
an employment arrangement and in order to accomplish that purpose and in
consideration of the terms, covenants and conditions hereinafter set forth,
the
Parties hereby enter into this Agreement.
SECTION
1
EMPLOYMENT;
TERM; DUTIES
1.1 Employment. Upon
the terms and conditions hereinafter set forth, the Company employs Employee,
and Employee hereby accepts employment, as President and Chief Executive Officer
(“CEO”).
1.2 Term. Employee’s
employment hereunder shall be for a term (the “Term”) commencing on the date
this Agreement is effective and ending on June 30, 2009, unless the Agreement
terminates sooner pursuant to Section 4 below; provided, however, that the
Agreement shall renew automatically for successive periods of one (1) year
unless the Company or Employee provides written notice to the other Party of
a
desire to change, modify, amend or terminate the Agreement at least thirty
(30)
days prior to the then-current expiration date of the Agreement. If
the Company elects not to renew this Agreement at the conclusion of the Term,
Employee will be eligible for severance benefits pursuant to and in accordance
with subsections 4.2 or 4.4.
1.3 Duties. During
the Term, Employee shall perform such duties for the Company as are prescribed
by applicable job specifications, the Bylaws of the Company and such other
or
additional duties, consistent with such Bylaws, as may be assigned to him/her
from time to time by the Board of Directors of the Company. Employee
shall devote his/her best efforts, attention and energies to the performance
of
his/her duties hereunder. This employment is full-time and
exclusive. Employee may not work for any other company or enterprise
during the Term of this Agreement such that such employment would conflict
or
interfere with his/her obligations to the Company under this
Agreement. Employee must advise the Board in writing prior to
undertaking any employment in addition to his/her employment with the
Company.
SECTION
2
COMPENSATION
2.1 Base
Salary. For all services rendered by Employee hereunder and all
covenants and conditions undertaken by both Parties pursuant to this Agreement,
the Company shall pay, and Employee shall accept, as compensation, an annual
base salary (“Base Salary”) of Two Hundred Ninety One Thousand Five Hundred and
Twelve Dollars ($291,512). This Base Salary shall be payable in
accordance with the normal payroll practices of Company, less required
deductions pursuant to state and federal law, and less any amounts to be
deducted pursuant to agreement between the Parties.
2.2 Incentive
Compensation. The Employee shall also be paid such bonuses and/or
other compensation as may be determined from time to time by the Board of
Directors as they, in their sole discretion, may determine based upon the
performance of the employee and/or of the Company.
2.3 Performance
and Salary Review. Employee's performance will be reviewed periodically,
usually on an annual basis. Adjustments to salary or other
compensation, if any, will be made by the Board of Directors.
SECTION
3
BENEFITS/BUSINESS
EXPENSES
3.1 Benefits. During
the Term, Employee shall be entitled to participate in such life, health,
accident, disability and hospitalization insurance plans, pension plans and
retirement plans as the Company makes available to the employees of the Company
as a group.
3.2 Business
Expenses. Employee will be reimbursed for all reasonable,
out-of-pocket business expenses incurred in the performance of his/her duties
on
behalf of Company. To obtain reimbursement, expenses must be
submitted promptly with appropriate supporting documentation in accordance
with
Company’s policies and procedures.
SECTION
4
TERMINATION;
RESIGNATION; CHANGE OF CONTROL; DEATH; DISABILITY
4.1 Termination
of Employment With Cause. If (a) Employee fails to meet the
performance standards established for his/her position and does not remedy
such
shortcomings within 30 days after written notice from the Company of such
failure; or (b) Employee breaches any material provision of this Agreement;
or (c) Employee has been convicted of any felony; or (d) Employee
commits any act of fraud, misappropriation of funds or embezzlement; or
(e) Employee fails to report to work for three (3) consecutive
business days without informing his/her superior; or (f) Employee commits
any act, or fails to take any action, the effect of which is to bring the
Company into disrepute with any of its customers, including, but not limited
to
a material violation of the Company Code of Ethics, the Company shall have
the
right, upon written notice to the Employee, to immediately terminate his/her
employment (“Termination With Cause”) hereunder, without any further liability
or obligation to him/her hereunder or otherwise in respect of his/her
employment, other than its obligation to pay unpaid Base Salary and unused
personal time accrued as of the date of termination.
4.2 Termination
of Employment Without Cause. Notwithstanding any provision to the
contrary herein, the Company may at any time, in its sole and absolute
discretion and for any or no reason, terminate the employment of the Employee
hereunder; PROVIDED, that if such termination is not a Termination With Cause,
as defined by subsection 4.1, and such termination is not caused by the
death or Disability of the Employee, the Company shall pay and/or provide the
Employee as follows:
4.2.1 All
accrued but unpaid Base Salary.
4.2.2 Reimbursement
of normal incidental employee expenses as of the date of the termination as
and
when such amount is due and payable hereunder in accordance with
subsection 3.2.
4.2.3 Company
shall pay eighteen (18) severance payments (“Severance Payments”) payable
monthly to Employee equivalent to one-twelfth (1/12) of the Base Salary in
effect as of the date of such termination (the “Termination Date”) for a period
of eighteen months from the Date of Termination (the “Severance Period”),
provided that Employee and the Company execute an appropriate mutual general
release before Employee has any entitlement to the Severance
Payments. Company will also pay the premiums on the COBRA insurance
coverages during the Severance Period, provided that Employee qualifies for
such
coverages and timely elects COBRA coverage. The Company may, at its
option, pay for and acquire insurance which will provide the Severance Payments
and such benefits during the Severance Period.
4.2.4 All
stock
options issued to Employee or earned but not yet issued prior to the Termination
Date shall immediately become fully vested.
4.2.5 Accrued
but unused personal leave shall be paid out in accordance with legal
requirements. No personal leave or other benefits shall continue to
accrue during the Severance Period.
4.2.6 Notwithstanding
the foregoing, if any amounts due to Employee pursuant to this Agreement are
determined to be “Parachute Payments” as such term is defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”),
and the regulations promulgated thereunder, then the total compensation paid
to
Employee pursuant to this Agreement, together with any other payment or the
value of any benefit received or to be received by Employee which is treated
as
a Parachute Payment shall not exceed 2.99 times Employee’s Base Amount (as such
term is defined in Section 280G of the Code). In the event a
reduction of the payments set forth in this Agreement is required pursuant
to
this Section, Employee may select the compensation which will be reduced in
order to fall within the 2.99 times Base Amount limitation.
4.3 Resignation.
4.3.1 If
Employee resigns (except as set forth in subsections 4.3.2 or 4.4 below),
this Agreement shall immediately terminate and the Company shall have no further
liability or obligation to Employee hereunder, including any severance payments,
or otherwise in respect of his/her employment, other than its obligation to
pay
unpaid Base Salary and unused personal leave accrued as of the date of
resignation.
4.3.2 Resignation
with Cause. If Employee resigns his/her employment because
(a) his/her position or duties are modified by the Company to such an
extent that his/her duties are substantially no longer consistent with the
position for which he/she was employed pursuant to this Agreement, or
(b) there has been a material breach by the Company of a material term of
this Agreement which continues uncured following fourteen (14) days after
written notice by Employee to the Company of such breach, then Employee will
be
entitled to the severance benefits set forth in subsection 4.2, consistent
with the terms of said provision.
4.4 Change
In Control. In the event of a Change in Control (as that term is
defined below), Company shall immediately take all necessary measures,
consistent with the Company’s Stock Option Plans, to accelerate the vesting of
any unvested options held by the Employee under such Plans so that such options
will be treated as vested options during the Change in Control. In
addition, employment separation, as provided in this section, that occurs as
a
result of a Change in Control shall result in Severance Payments on the same
terms set forth in subsection 4.2 above, except that the Severance Period shall
be twenty four (24) months. Such Change In Control Severance Payments
will be made in the event of:
(a) Employee’s
involuntary dismissal or discharge by the Company, other than pursuant to
subsections 4.1, 4.3.1, or 4.5, or
(b) Employee’s
voluntary resignation, other than pursuant to subsection 4.3, following (i)
a
change in his/her position with the Company (or Parent or Subsidiary employing
Employee) which materially reduces his/her duties and responsibilities or the
level of management to which he/she reports, (ii) a reduction in Employee’s
level of compensation as of the date of the Change in Control (including base
salary and fringe benefits), or (iii) a relocation of Employee’s place of
employment by more than fifty (50) miles, provided and only if such change,
reduction, or relocation is effected by the Company without Employee’s express
consent.
4.4.1 For
purposes of this Agreement, a “Change in Control” shall mean: (i) the
acquisition, by one person or a group, of stock of the Company that causes
such
person or group to own more than 50% of the total fair market value or total
voting power of the stock of such Company; (ii) either: (1) the
acquisition, by one person or a group, of ownership of 35% or more of the total
voting power of the stock of the Company; or (2) the replacement of a
majority of the members of the Board with directors whose appointment or
election is not endorsed by the existing Board; AND (iii) the acquisition of
assets from the Company that have a total gross fair market value of 40% or
more
of the total gross fair market value of all assets of the Company prior to
the
acquisition.
4.5 Termination
Due to Death or Disability. This Agreement will immediately terminate upon
Employee’s death. This Agreement will terminate upon Employee’s
Disability (as defined below), when consistent with state and federal
law. In the event of Employee’s termination due to death or
Disability, Employee, or Employee’s heirs, personal representatives or estate,
as the case may be, will be entitled to receive only the standard entitlements
and those benefits available under any applicable Company plan or insurance
policy, subject to such plan or policy requirements, along with accrued unpaid
Base Salary and personal time. All other Company obligations to
Employee pursuant to this Agreement will become automatically terminated and
completely extinguished. In addition, neither Employee nor Employee’s
heirs, personal representatives or estate will be entitled to receive Severance
Payments or other benefits described in subsection 4.2 above.
4.5.1 For
the
purpose of this Agreement only, the Company will not deem this Agreement
terminated due to Employee’s Disability unless: (i) he or she is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months; (ii) he or she is, by reason of any medically determinable physical
or
mental impairment that can be expected to result in death or can be expected
to
last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under an
accident and health plan covering employees of the Company; or (iii) the
Employee is determined to be totally disabled by the Social Security
Administration. For purposes of this Section 4.5.1(i) and (ii),
whether Employee satisfies the definition of Disabled shall be determined in
good faith by the Board of Directors of the Company.
4.6 Catch-Up
Payments for Certain Key Employees. The Company shall delay any
payments required under this Section 4 for six months following Employee’s
termination if Employee is deemed a “key employee,” as that term is defined
under Code Section 409A. If payments under Section 4 are delayed,
then on the day following the end of the six-month period the Company shall
make
a catch-up payment equal to the total amount of such payments that would have
been made during the six-month period but for the application of Code Section
409A, plus interest calculated at the one-year Treasury Xxxx rate.
SECTION
5
INVENTIONS;
CONFIDENTIAL/TRADE SECRET INFORMATION; NON-DISCLOSURE; UNFAIR COMPETITION;
CONFLICT OF INTEREST
5.1 Inventions. All
processes, technologies and inventions relating to the business of the Company
(collectively, “Inventions”), including new contributions, improvements, ideas,
discoveries, trademarks and trade names, conceived, developed, invented, made
or
found by the Employee, alone or with others, during his/her employment by the
Company, whether or not patentable and whether or not conceived, developed,
invented, made or found on the Company’s time or with the use of the Company’s
facilities or materials, shall be the property of the Company and shall be
promptly and fully disclosed by Employee to the Company. The Employee
shall perform all necessary acts (including, without limitation, executing
and
delivering any confirmatory assignments, documents or instruments requested
by
the Company) to assign or otherwise to vest title to any such Inventions in
the
Company and to enable the Company, at its expense, to secure and maintain
domestic and/or foreign patents or any other rights for such
Inventions. This Agreement and this subsection does not apply to
an Invention which qualifies fully as a nonassignable Invention under
Section 2870 of the California Labor Code.
5.2 Confidential/Trade
Secret Information/Non-Disclosure.
5.2.1 Confidential/Trade
Secret Information Defined. During the course of Employee’s
employment, Employee will have access to various confidential/trade secret
information of the Company. “Confidential/trade secret information”
is information that is not generally known to the public and, as a result,
is of
economic benefit to the Company in the conduct of its
business. Employee and the Company agree that the term
“confidential/trade secret” includes but is not limited to all information
developed or obtained by the Company, including its affiliates, and
predecessors, and comprising the following items, whether or not such items
have
been reduced to tangible form (e.g., physical writing, computer hard drive,
disk, tape, etc.): all methods, techniques, processes, ideas,
research and development, product designs, engineering designs, plans, models,
production plans, business plans, add-on features, trade names, service marks,
slogans, forms, pricing structures, menus, business forms, marketing programs
and plans, layouts and designs, financial structures, operational methods and
tactics, cost information, the identity of and/or contractual arrangements
with
suppliers and/or vendors, accounting procedures, and any document, record or
other information of the Company relating to the
above. Confidential/trade secret information includes not only
information directly belonging to the Company which existed before the date
of
this Agreement, but also information developed by Employee for the Company,
including its affiliates and its predecessors and/or their employees during
the
term of Employee’s employment with the Company. It does not include
any information which (a) was in the lawful and unrestricted possession of
Employee prior to its disclosure to Employee by the Company or its affiliates
or
predecessors, (b) is or becomes generally available to the public by lawful
acts other than those of Employee after receiving it, or (c) has been
received lawfully and in good faith by Employee from a third party who is not
and has never been an employee of the Company or its affiliates or predecessors
and who did not derive it from the Company or its affiliates or
predecessors.
5.2.2 Restriction
on Use of Confidential/Trade Secret Information. Employee agrees
that his/her use of confidential/trade secret information is subject to the
following restrictions for an indefinite period of time so long as the
confidential/trade secret information has not become generally known to the
public:
(a) Non-Disclosure. Employee
agrees that he/she will not publish or disclose, or allow to be published or
disclosed, confidential/trade secret information to any person without the
prior
written authorization of the Company unless pursuant to Employee’s job duties to
the Company under this Agreement.
(b) Non-Removal/Surrender. Employee
agrees that he/she will not remove any confidential/trade secret information
from the offices of the Company or the premises of any facility in which the
Company is performing services, except pursuant to his/her duties under this
Agreement. Employee further agrees that he/she shall surrender to the
Company all documents and materials in his/her possession or control which
contain confidential/trade secret information and which are the property of
the
Company upon the termination of this Agreement, and that he/she shall not
thereafter retain any copies of any such materials.
5.2.3 Non-Solicitation
of Customers/Prohibition Against Unfair Competition. Employee
agrees that at no time after his/her employment with the Company will he/she
engage in competition with the Company while making any use of the Company’s
confidential/trade secret information. In addition, Employee agrees
that, for the duration of the severance payments as provided for in Section
4.2
or 4.4, he/she will not directly or indirectly accept or solicit, whether as
an
employee, independent contractor or in any other capacity, the business of
any
customer of the Company with whom Employee worked or otherwise had access to
the
Company’s confidential/trade secret information pertaining to its business with
that customer during the last two (2) years of his/her employment with the
Company.
5.3 Conflict
of Interest. During Employee’s employment with Company, Employee must not
engage in any work, paid or unpaid, that creates an actual conflict of interest
with Company. Such work shall include, but is not limited to,
directly or indirectly competing with Company in any way, or acting as an
officer, director, employee, consultant, controlling or 5% stockholder,
volunteer, lender, or agent of any business enterprise of the same nature as,
or
which is in direct competition with the business in which Company is now engaged
or in which Company becomes engaged during Employee’s employment with Company,
as may be determined by the Board of Directors in its sole
discretion. If the Board of Directors believes such a conflict exists
during Employee’s employment, the Board of Directors may ask Employee to choose
to discontinue the other work or resign employment with Company. In
addition, Employee agrees not to refer any client or potential client of Company
to competitors of Company without obtaining the Company’s prior written consent
during Employee’s employment. Any termination of Employee’s
employment due to violation of this subsection is considered “With Cause”
for the purposes of section 4.1 above.
5.4 Non-Solicitation
During Employment. Employee shall not during his/her employment
interfere with or disrupt or attempt to disrupt Employer’s business relationship
with its customers or suppliers or solicit any of the employees of Employer
to
leave the employ of Employer.
5.5 Non-Solicitation
of Employees. Employee agrees that, for the duration of the
severance payments as provided for in Section 4.2 or 4.4, he/she shall not,
directly or indirectly, ask or encourage any of the Company’s employees to leave
their employment with the Company or solicit any of the Company’s employees for
employment.
5.6 Breach
of Provisions. If the Employee breaches any of the provisions of
this Section 5, or in the event that any such breach is threatened by the
Employee, in addition to and without limiting or waiving any other remedies
available to the Company at law or in equity, the Company shall be entitled
to
immediate injunctive relief in any court, domestic or foreign, having the
capacity to grant such relief, to restrain any such breach or threatened breach
and to enforce the provisions of this section 5. The Employee
acknowledges and agrees that there is no adequate remedy at law for any such
breach or threatened breach and, in the event that any action or proceeding
is
brought seeking injunctive relief, the Employee shall not use as a defense
thereto that there is an adequate remedy at law. In addition, if the
Employee breaches any of the provisions of this section 5, any and all
Severance Payments and benefit obligations under this Agreement or otherwise
will cease and be extinguished in their entirety and the Company will have
no
further obligations in that regard.
5.7 Reasonable
Restrictions. The parties acknowledge that the foregoing
restrictions, as well as the duration and the territorial scope thereof as
set
forth in this section 5, are under all of the circumstances reasonable and
necessary for the protection of the Company and its business.
5.8 Definition. For
purposes of this section 5, the term “Company” shall be deemed to include
any subsidiary or affiliate of the Company.
SECTION
6
MISCELLANEOUS
6.1 Binding
Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective legal representatives, heirs,
distributees, successors and assigns; PROVIDED, that the rights and obligations
of the Employee hereunder shall not be assignable by him/her.
6.2 Notices. Any
notice provided for herein shall be in writing and shall be deemed to have
been
given or made (a) when personally delivered or (b) when sent by
telecopier and confirmed within forty-eight (48) hours by letter mailed or
delivered to the party to be notified at its or his/hers address set forth
herein; or three (3) days after being sent by registered or certified mail,
return receipt requested, (or by equivalent xxxxxxx with delivery documentation
such as FEDEX or UPS) to the address of the other party set forth or to such
other address as may be specified by notice given in accordance with this
section 6.2:
|
If
to the Company:
|
SYS Technologies |
| 0000 Xxxxxx Xxxxxx Xxxx, Xxxxx 000 | |
|
Xxx Xxxxx,
XX 00000
|
|
|
Tel:
(000) 000-0000
|
|
|
Fax:
(000) 000-0000
|
|
| Attention: Sr. Vice President, Corp. Admin. | |
| If to Employee: | Name: Xxxxx Xxxxx |
| Address: | |
| , CA | |
| Tel: (___) ___-____ | |
| Fax: (___) ___-____ |
6.3 Severability. If
any provision of this Agreement, or portion thereof, shall be held invalid
or
unenforceable by a court of competent jurisdiction, such invalidity or
unenforceability shall attach only to such provision or portion thereof,
and
shall not in any manner affect or render invalid or unenforceable any other
provision of this Agreement or portion thereof, and this Agreement shall
be
carried out as if any such invalid or unenforceable provision or portion
thereof
were not contained herein. In addition, any such invalid or
unenforceable provision or portion thereof shall be deemed, without further
action on the part of the parties hereto, modified, amended or limited to
the
extent necessary to render the same valid and enforceable.
6.4 Waiver. No
waiver by a party hereto of a breach or default hereunder by the other party
shall be considered valid, unless expressed in a writing signed by such first
party, and no such waiver shall be deemed a waiver of any subsequent breach
or
default of the same or any other nature.
6.5 Entire
Agreement. This Agreement sets forth the entire agreement between
the Parties with respect to the subject matter hereof, and supersedes any and
all prior agreements between the Company and Employee, whether written or oral,
relating to any or all matters covered by and contained or otherwise dealt
with
in this Agreement. This Agreement does not constitute a commitment of
the Company with regard to Employee’s employment, express or implied, other than
to the extent expressly provided for herein.
6.6 Amendment. No
modification, change or amendment of this Agreement or any of its provisions
shall be valid, unless in writing and signed by the party against whom such
claimed modification, change or amendment is sought to be enforced.
6.7 Authority. The
Parties each represent and warrant that it/he or she has the power, authority
and right to enter into this Agreement and to carry out and perform the terms,
covenants and conditions hereof.
6.8 Attorneys’
Fees. The Parties shall each be responsible for their own
attorneys’ fees.
6.9 Titles. The
titles of the sections of this Agreement are inserted merely for
convenience and ease of reference and shall not affect or modify the meaning
of
any of the terms, covenants or conditions of this Agreement.
6.10 Applicable
Law; Choice of Forum. Any proceeding between the parties arising
out of or relating to this Agreement shall be brought in the appropriate forum
in San Diego County, California. This Agreement, and all of the
rights and obligations of the parties in connection with the employment
relationship established hereby, shall be governed by and construed in
accordance with the substantive laws of the State of California without giving
effect to principles relating to conflicts of law.
6.11 Arbitration.
6.11.1 Scope. To
the fullest extent permitted by law, Employee and Company agree to the binding
arbitration of any and all controversies, claims or disputes between them
arising out of or in any way related to this Agreement, the employment
relationship between Company and Employee and any disputes upon termination
of
employment, including but not limited to breach of contract, tort,
discrimination, harassment, wrongful termination, demotion, discipline, failure
to accommodate, family and medical leave, compensation or benefits claims,
constitutional claims; and any claims for violation of any local, state or
federal law, statute, regulation or ordinance or common law. For the
purpose of this agreement to arbitrate, references to “Company” include all
parent, subsidiary or related entities and their employees, supervisors,
officers, directors, agents, pension or benefit plans, pension or benefit plan
sponsors, fiduciaries, administrators, affiliates and all successors and assigns
of any of them, and this agreement to arbitrate shall apply to them to the
extent Employee’s claims arise out of or relate to their actions on behalf of
Company.
6.11.2 Arbitration
Procedure. To commence any such arbitration proceeding, the party
commencing the arbitration must provide the other party with written notice
of
any and all claims forming the basis of such right in sufficient detail to
inform the other party of the substance of such claims. In no event
shall this notice for arbitration be made after the date when institution of
legal or equitable proceedings based on such claims would be barred by the
applicable statute of limitations. The arbitration will be conducted
in San Diego, California, by a single neutral arbitrator and in accordance
with the then-current rules for resolution of employment disputes of the
American Arbitration Association (“AAA”). The parties are entitled to
representation by an attorney or other representative of their choosing. The
arbitrator shall have the power to enter any award that could be entered by
a
judge of the trial court of the State of California, and only such power, and
shall follow the law. The award shall be binding and the Parties
agree to abide by and perform any award rendered by the
arbitrator. The arbitrator shall issue the award in writing and
therein state the essential findings and conclusions on which the award is
based. Judgment on the award may be entered in any court having
jurisdiction thereof. Company shall bear the costs of the arbitration
filing and hearing fees and the cost of the arbitrator.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first above written.
| Dated: 9/11/2007 | /s/ Xxxxxxx X. Xxxxx, Xx. | |
| Name: Xxxxxxx X. Xxxxx, Xx. | ||
| SYS Technologies, Inc. | ||
| Dated: 9/11/2007 | By: /s/ Xxxxxx Xxxxxxx | |
| Name: Xxxxxx Xxxxxxx | ||
| Title: Sr. Vice President, Corp. Admin. | ||
