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EXHIBIT 10.1.13
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made effective as of June
7, 1999 (the "Effective Date") at Akron, Ohio between TELXON CORPORATION
("Employer"), a Delaware corporation with offices at 0000 Xxxx Xxxxxx Xxxxxx,
Xxxxx, Xxxx 00000, and XXXXX X. XXXXX ("Key Employee").
WITNESSETH:
WHEREAS, Key Employee agreed to enter into Employer's service as Vice
President and Chief Technology Officer based on the inducement provided him at
the assurance of Employer's management that his services would be compensated in
the form of 35,000 shares of Employer's Common Stock (the "Shares");
WHEREAS, Key Employee, as an accommodation to the needs of Employer with
respect to his services, began working for Employer pending the finalization of
the terms under which he would become entitled to the Shares and which would
otherwise govern his services.
NOW, THEREFORE, in consideration of the foregoing and in consideration of
the mutual promises and agreements contained herein, the parties hereto agree as
follows:
1. EMPLOYMENT PERIOD. Employer agrees to employ Key Employee, and Key
Employee agrees to be so employed, on the terms and conditions set
forth herein for the period beginning on the Effective Date and
ending August 6, 2000 (the "Ending Date"), subject to the earlier
termination of such employment by Employer or Key Employee
pursuant to Section 6 (the "Employment Period").
2. NATURE OF DUTIES.
a. Key Employee's duties and responsibilities shall be to serve
as Vice President and Chief Technology Officer of Employer (or
in such other capacity as Employer's chief executive officer
(the "Chief Executive Officer"), or such other officer of
Employer as the Chief Executive Officer shall direct (the
Chief Executive Officer or such other officer being Key
Employee's "Supervisor"), may at any time and from time to
time in his discretion direct) in conformity with management
policies, guidelines and directions issued by Employer. Key
Employee shall report directly to the Supervisor, and shall
have general charge and supervision of those functions and
such other responsibilities as the Supervisor shall from time
to time determine in his discretion.
b. Key Employee shall work exclusively for Employer on a
full-time basis in such capacity as he is to serve pursuant to
Section 2(a), devoting all of his time and attention during
normal business hours to Employer's business; provided that
Key Employee shall be free to honor his commitments for
speaking engagements extant as of the Effective Date and his
obligations to meet with and otherwise serve on the boards of
directors of which he was a member as of the Effective Date
("Prior Commitments").
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c. Key Employee shall perform his duties and responsibilities
hereunder diligently, faithfully and loyally in order to cause
the proper, efficient and successful operation of Employer's
business.
3. COMPENSATION AND BENEFITS.
a. Compensation. As full compensation for Key Employee's
services, in lieu of any cash salary and bonus and of
participation in any of the preexisting stock-based
compensation plans in which Employer employees may have
opportunity to participate, Employer agrees to pay and issue
to Key Employee, and Key Employee agrees to accept from
Employer, the Shares (sometimes also referred to as the
"Compensation"), subject to the terms and conditions set forth
in this Agreement. In exchange for the performance of services
described in Section 2, such Compensation shall be earned
according to the schedule in Section 3(a)(i) below. Of the
total 35,000 Shares issuable to Key Employee, 23,200 Shares,
representing all of the shares currently available for grant
under Employer's 1992 Restricted Stock Plan, as amended (the
"Plan"), will, when earned, be issued to Key Employee pursuant
to that Plan, and the remaining 11,800 Shares will, when
earned, be issued to Key Employee outside the Plan (the
"Non-Plan Shares"). The Non-Plan Shares shall be subject to
the dividend and voting rights provisions of Plan Section
6.03, as the same may be implemented by the terms of the award
agreement between Employer and Employee with respect to the
Plan Shares, and the adjustment provisions of Plan Section 7
with the same force and effect as if such shares had been
awarded thereunder. Such voting provisions, but not the
dividend provisions, shall continue to apply to the Shares to
the extent that Key Employee elects under Section 4(a) below
to defer payment of the Compensation represented thereby and
for so long as the same continue to be subject to such
deferral. Employer and Key Employee acknowledge and agree that
the issuance of such Shares to Key Employee is an inducement
essential to Key Employee's entering into the employ of
Employer as provided in this Agreement and is subject to the
approval thereof by Employer's Board of Director or an
appropriate committee thereof.
i. Employer and Key Employee acknowledge and agree that
Compensation shall be earned and payable to the Key
Employee in accordance with the following schedule. Except
as otherwise provided below, in the event that Key
Employee's employment under this Agreement is terminated
and such termination becomes effective prior to the time
specified in section 3(a)(iii) on the applicable Vesting
Date indicated below, Key Employee will forfeit his rights
to any and all then nonvested Compensation. The period
during which the respective portions of the Shares are
subject to forfeiture shall constitute the "Restricted
Period" with respect to those Shares.
NUMBER OF
VESTING DATE ISSUED UNDER SHARES
------------ ------------ ---------
January 2, 2000 Non-Plan 11,800
Plan 5,700
March 31, 2000 Plan 7,500
August 6, 2000 Plan 10,000
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ii. During the applicable Restricted Period, that portion of
the Shares may not be sold, assigned, exchanged,
transferred, pledged, hypothecated or otherwise disposed
of or encumbered.
iii. Provided that Key Employee's employment is not terminated
prior to 5:00 p.m. The Woodlands, Texas time on a Vesting
Date, the Key Employee shall vest in the Compensation in
accordance with the schedule set forth in Section 3(a)(i).
iv. Notwithstanding the vesting schedule set forth in Section
3(a)(i), in the event of a "Change in Control", as defined
in Section 4(c)(ii), Key Employee shall immediately become
fully vested in any nonvested Compensation.
v. Notwithstanding the vesting schedule set forth in Section
3(a)(i), in the event Key Employee's employment is
terminated by reason of death pursuant to Section 6(a) or
permanent disability pursuant to Section 6(b), Key
Employee shall become vested in the amount of Compensation
earned from the last Vesting Date, determined by
multiplying the Compensation scheduled to be paid on the
next Vesting Date by the ratio of the number of days
elapsed from the preceding Vesting Date (or in the absence
thereof, the Effective Date) through his date of
termination over the total number of days from the most
recent Vesting Date (or in the absence thereof, the
Effective Date) through the next following Vesting Date
(any fractional Share resulting from such multiplication
being rounded up to the next whole Share). Whether the Key
Employee's termination of employment is due to permanent
disability shall be determined by the Employer in good
faith.
vi. Notwithstanding the vesting schedule set forth in Section
3(a)(i), in the event Key Employee's employment is
terminated other than (1) by reason of death or permanent
disability or (2) by Employer for "cause" (as defined in
Section 6(c)), Key Employee shall become vested in any
nonvested Compensation in accordance with the Vesting
Dates set forth in Section 3(a)(i), provided such
nonvested Compensation has not been forfeited pursuant to
Section 8(b).
b. Expenses. Employer shall reimburse Key Employee for all
reasonable out-of-pocket expenses incurred by Key Employee on
Employer's behalf during the Employment Period and approved by
the Supervisor or such other officer as the Supervisor or
applicable Employer policies shall direct.
c. Vacation. During the Employment Period, Key Employee shall
be entitled to four weeks vacation. Time required for
fulfilling Prior Commitments will not be counted toward such
vacation.
d. Health, Disability, Retirement and Death Benefits. Employer
shall provide Key Employee with the same health, disability,
retirement and death and other fringe benefits as are
generally provided to the executive employees of Employer in
accordance with such terms, conditions and eligibility
requirements as may from time to time be established by
Employer.
e. Living Expenses. To facilitate Employee's service to Employer
under this Agreement, Employer agrees, in respect of the
Employment Period, to pay directly, or reimburse
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Employee, or provide Employee with an agreed upon allowance
(subject to reconciliation and reasonable adjustment), for
the following (collectively, "Living Expenses"):
i. housing at 00000 Xxx Xxxxx Xxxxx, Xxx. 0000, Xxx
Xxxxxxxxx, Xxxxx or comparable accommodations in
reasonable proximity to Employer's World Technology
Center in The Woodlands, Texas (the "World Technology
Center"),
ii. fares for regularly scheduled airline transportation
between (1) Employer's World Technology Center and (2)
Employee's Gardnerville, Nevada family residence or
other extended family locations in contiguous States,
iii. a mutually acceptable leased or rental automobile for
Employee's use while working out of Employer's World
Technology Center,
iv. a "gross-up" for all income and employment taxes
incurred or required to be withheld with respect to
Employee by reason of Employer's provision or
reimbursement of Living Expenses under this Section
3(e).
4. DEFERRED COMPENSATION PLAN.
a. Election. On or before December 10, 1999, Key Employee may
elect to defer the payment of all or any lesser number of
whole Shares of the Compensation otherwise payable under
Section 3(a). Once an election is made under this Subsection
(a), Key Employee may not amend or revoke such election. All
amounts which Key Employee so elects to defer shall continue
to be subject to the vesting and forfeiture provisions of
Section 3(a).
b. Deferred Compensation Account. The amount of Compensation
elected to be deferred under Section 4(a) shall constitute
Key Employee's "Deferred Compensation Account". Key
Employee's Deferred Compensation Account shall be adjusted
to reflect the payment of any distribution of any kind,
including but not limited to, a cash dividend, stock
dividend, stock split, combination of shares,
recapitalization or other change in the capital structure
with respect to the common stock of the Employer. Employer
shall maintain or cause to be maintained appropriate records
of the Deferred Compensation Account.
c. Events Triggering Distribution. Key Employee shall receive a
distribution(s) from his Deferred Compensation Account upon
the earliest to occur of any of the following "triggering
events":
i. Death or Disability. The death of Key Employee or the
termination of his employment by reason of permanent
disability. Whether Key Employee's termination of
employment is due to permanent disability shall be
determined by Employer in good faith.
ii. "Change in Control". A change in the control or
ownership of Employer, which shall mean (a) any
"person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") or any comparable successor provisions
(other than Employer, any business association in an
unbroken chain of such associations beginning with
Employer if each of the association other than the last
association in the unbroken chain owns equity interests
possessing fifty percent (50%)
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or more of the total combined voting power of all
classes of equity interests in one of the other
associations in such chain, or an employee benefit plan
of any of the foregoing, including any trustee of such a
plan acting as trustee) becomes the "beneficial owner"
(as defined in Rule 13d-3 promulgated under the Exchange
Act, as adopted and amended from time to time and as
interpreted by formal or informal opinions of, and
releases published or other interpretive advice provided
by, the staff of the Securities and Exchange
Commission), directly or indirectly, of Employer
securities representing fifty percent (50%) or more of
the combined voting power of Employer's then outstanding
voting securities; (b) the consummation of a transaction
requiring stockholder approval and involving the sale of
all or substantially all of Employer's assets or the
merger or consolidation of Employer with or into another
corporation; or (c) Xxxx X. Xxxxxx, Xx. ceasing for any
reason to be the chief executive officer of Employer.
iii. Significant Increase in Share Price. The attainment by
Employer's common stock of a closing sale price, as
reported on The Nasdaq National Market Tier of The
Nasdaq Stock Market (or other securities market or
exchange on which Employer's Common Stock is then
traded) for any trading day on or after the Vesting Date
for the particular portion of the Shares, equal to or
greater than the price per share specified in the
schedule below:
SPECIFIED PRICE AMOUNT TO
VESTING DATE PER SHARE BE DISTRIBUTED
------------ --------------- --------------
January 2, 2000 $20.00 Vested Deferred
Compensation Account
March 31, 2000 $20.00 Vested Deferred
Compensation Account
August 6, 2000 $25.00 Vested Deferred
Compensation Account
For purposes of this Subsection (iii), "Vested Deferred
Compensation Account" shall mean the portion, and only
that portion, of the Deferred Compensation Account which
has vested as of the applicable Vesting Date as
determined in accordance with Section 3(a).
iv. Following Second Anniversary of Vesting Date. The second
(2nd) anniversary of each Vesting Date, but only with
respect to the portion of the Deferred Compensation
Account vesting on such Vesting Date.
d. Method of Distribution. Except as the application of other
provisions of this Agreement may otherwise permit or require,
upon the occurrence of a triggering event, a distribution
shall be made to Key Employee , payable as soon as
administratively feasible (but in all events within thirty
(30) days after the occurrence of the triggering event, of
all, and not less than all, of the Deferred Compensation
Account or portion thereof to which such triggering event
relates.
e. Contributions to "Rabbi" Trust. Employer may establish a trust
with respect to the Deferred Compensation Account which is
intended to be a grantor trust, within the meaning of Section
671 of the Internal Revenue Code, of which the Employer is the
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grantor (the "Trust"). Notwithstanding any other provision of
this Agreement, the funds of the Trust will remain the
property of the Employer and will be subject to the claims of
its creditors in the event of its bankruptcy or insolvency.
Neither Key Employee nor any person claiming through Key
Employee will have any priority claim on the funds of the
Trust, or any security interest or other right, superior to
the rights of a general creditor of Employer.
f. Designation of Beneficiary. Key Employee may designate a
beneficiary (or beneficiaries) who shall be entitled to
receive that portion of Key Employee's vested undistributed
Deferred Compensation Account. Key Employee may change or
revoke a beneficiary designation by notifying Employer in
writing. The consent of Key Employee's current beneficiary is
not required for a change of beneficiary, and no beneficiary
shall have any rights under this Agreement (or, if established
pursuant to Section 4(e), the Trust) except as are provided by
the terms hereof (or thereof). The rights of a beneficiary who
predeceases Key Employee immediately terminate, unless Key
Employee specifies to the contrary in writing. If Key Employee
fails to designate a beneficiary, Employer (or, if
established, the Trust) shall pay the vested undistributed
amount of the Deferred Compensation Account to Key Employee's
surviving spouse, or to Key Employee's estate in the absence
of a surviving spouse.
5. ISSUANCE OF SHARES.
a. Key Employee makes the following representations, warranties,
acknowledgements and agreements to Employer with respect to
the issuance of the Shares to him:
i. Key Employee understands that the Non-Plan Shares have
not been registered, and that Employer is under no
obligation to register, and has not made any assurances
to Employee regarding the registration of, the Non-Plan
Shares, under the Securities Act of 1933, as amended
(the "Securities Act"), or any state securities laws;
ii. The Shares are being offered and sold pursuant to
exemptions from registration contained in the Securities
Act and applicable state securities laws based in part
upon Key Employee's representations contained in this
Section 5(a);
iii. Key Employee has had the opportunity to his satisfaction
to ask question of and receive answers from Employer's
management regarding the business, assets, financial
condition, prospects and affairs of Employer;
iv. Key Employee is an "accredited investor" (as such term
is defined in Rule 501 under the Securities Act) and has
such knowledge and experience in financial and business
matters that he is capable of evaluating the merits and
risks of his investment in the Shares and of protecting
his interests in connection with such investment;
v. Key Employee is not aware of the publication of any
advertisement in connection with the transactions
contemplated by Section 3(a)(i);
vi. Key Employee is acquiring the Shares for his own account
for investment only, and not with a view toward their
distribution, can bear a total loss of the investment
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without materially impairing his financial condition,
and can bear the economic risk of the investment
indefinitely; and
vii. Key Employee understands that he cannot resell the
Non-Plan Shares unless and until the Non-Plan Shares are
registered under the Securities Act and/or applicable
state securities laws or an exemption from such
registration is available and that the certificate
evidencing the Non-Plan Shares will be legended
regarding the absence of and necessity for such
registration and that there is no assurance that any
registration exemption will be available or that, if
available, such exemption will allow Key Employee to
transfer all or any portion of the Non-Plan Shares he
may subsequently desire to transfer.
b. By the initial Vesting Date, Employer will cause one or more
stock certificates to be issued in the name of Key Employee
(or if a Trust is established pursuant to Section 4(e), the
trustee thereunder (the "Trustee")) as registered owner. Each
such certificate shall bear legends in substantially the
following form (appropriately revised in the case of Shares
registered in the name of the Trustee):
i. Each certificate representing all of any portion of the
Non-Plan Shares shall bear the following legends:
"Transferability of this Certificate and the shares
of Common Stock represented hereby are subject to the
terms and conditions (including forfeiture) of an
employment agreement, effective as of June 7, 1999,
entered into by the registered owner with Telxon
Corporation. Copies of such agreement are on file at
the offices of Telxon Corporation, 0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx, Xxxx 00000. The Restricted Period
during which these shares are subject to certain
vesting conditions and transfer restrictions under
such agreement expires January 2, 2000.
The Shares of Common Stock represented by this
Certificate have not been registered under the
Securities Act of 1933 and may not be sold, assigned,
transferred, pledged or hypothecated unless (A) the
same shall first have been registered or received
such other regulatory approval or been described in
any such regulatory filing as may be required under
applicable law or (B) the issuer shall have received
an opinion of counsel that an exemption from such
registration or other regulatory requirement is
available with respect to such transaction."
ii. Each certificate representing all or any portion of the
Plan Shares shall bear the following legends:
"Transferability of this Certificate and the shares
of Common Stock represented hereby are subject to the
terms and conditions (including forfeiture) of the
Telxon Corporation 1992 Restricted Stock Plan and of
a Restricted Stock Award Agreement, Grant Number 059,
entered into between the registered owner and Telxon
Corporation. Copies of such Plan and Agreement are on
file at the offices of Telxon Corporation, 0000 Xxxx
Xxxxxx Xxxxxx, Xxxxx, Xxxx 00000. The Restricted
Period during
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which these shares are subject to certain vesting
conditions and transfer restrictions under the Plan
and Award Agreement expires [INSERT APPLICABLE
VESTING DATE].
The Shares of Common Stock represented by this
Certificate have been registered under the Securities
Act of 1933 but, for so long as the registered owner
shall be an "affiliate" of the issuer within the
meaning of Rule 144 (or any successor provision)
promulgated under such Act, may not be sold,
assigned, transferred, pledged or hypothecated unless
(A) the same shall first have been registered or
received such other regulatory approval or been
described in any such regulatory filing as may be
required under applicable law or (B) the issuer shall
have received an opinion of counsel that an exemption
from such registration or other regulatory
requirement is available with respect to such
transaction."
iii. Each certificate evidencing the Shares registered in the
name of Key Employee shall, pending the occurrence of
the applicable Vesting Date, be deposited with Employer,
together with such stock powers in blank as may be
requested of Key Employee by Employer at any time prior
to the applicable Vesting Date (which Key Employee
agrees to execute and deliver upon such request). In the
event of any forfeiture of Shares due to the termination
of Key Employee's employment prior to the applicable
Vesting Date, and if required in order to effect the
cancellation of any such forfeited Shares, the stock
powers so delivered by Key Employee may be used in
processing the same. The Trust shall similarly provide
for the surrender of any forfeited Shares by the Trustee
to Employer for cancellation.
iv. Upon the vesting of the Shares evidenced by a stock
certificate, the restrictions imposed by Section
3(a)(ii) shall lapse with respect to those Shares, the
legends which are no longer applicable shall, upon Key
Employee's request, be removed from the certificate(s)
representing such Shares, and Employer shall deliver, or
shall cause its stock transfer agent to deliver, to Key
Employee (in the case of certificates issued to the
Trustee, upon receipt thereof by Employer or its stock
transfer agent from the Trustee) replacement
certificate(s) for such Shares, together with any stock
power relating to the replaced certificate(s) (unless
required to be used in processing the issuance of the
replacement certificate(s)).
c. Notwithstanding anything to the contrary in this Agreement or
any other agreement relating to the Deferred Compensation
Account, the Trust or otherwise to the subject matter hereof,
Key Employee shall not be entitled to receive delivery of any
particular of the Shares, and neither Employer nor, in the
case of any Shares deposited into the Trust, the Trustee, is
obligated to effect or cause the same, unless and until Key
Employee pays, or makes arrangements reasonably acceptable to
Employer for the payment of, all taxes which Employer may be
obligated to withhold with respect to such Shares
6. TERMINATION.
a. Key Employee's employment shall terminate automatically upon
Key Employee's death.
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b. Employer may terminate Key Employee's employment under this
Agreement at any time, upon thirty (30) days written notice to
Key Employee, if Key Employee becomes permanently disabled.
Permanent disability shall be determined by Employer in good
faith according to the same standards applicable to the
employees of Employer generally under the disability benefits
referred to in Section 3(d).
c. Employer shall have the right to terminate Key Employee's
employment under this Agreement at any time (i) immediately
for "cause" (which shall mean for any action or inaction of
Key Employee which is adverse to Employer's interests,
including, without limitation, Key Employee's dishonesty,
grossly negligent misconduct, willful misconduct, disloyalty,
act of bad faith, neglect of duty or material breach of this
Agreement or of any Employer policy applicable to its
employees generally), or (ii) without cause upon thirty (30)
days written notice to Key Employee.
d. Key Employee may voluntarily terminate his employment under
this Agreement at any time, upon thirty (30) days prior
written notice to Employer.
7. EFFECTS OF TERMINATION.
a. In the event of automatic termination of employment by reason
of Key Employee's death pursuant to Section 6(a), or by
Employer by reason of Key Employee's permanent disability
pursuant to Section 6(b), all of Employer's obligations under
this Agreement shall end except for any Compensation payable
under Section 3(a) subject to Section 4, Employer's
obligations to pay Key Employee's Living Expenses incurred to
the date of termination (for purposes of this Subsection (a),
the date of death or the expiration of the 30-day notice
period under Section 6(b), as applicable). Key Employee shall
also have the right to receive any payments under the death or
disability benefits, as the case may be, provided to Key
Employee pursuant to Section 3(d), if any.
b. In the event Key Employee voluntarily terminates his
employment, pursuant to Section 6(d) or otherwise, all of
Employer's obligations under this Agreement shall end except
for any Compensation payable under Section 3(a) subject to
Section 4, Employer's obligations to pay Key Employee's Living
Expenses incurred to the date of termination (which, for
purposes of this Subsection (b), shall be thirty (30) days
after the date on which notification is provided by Key
Employee to Employer pursuant to Section 6(d) (or if a lesser
period of advance notice is given by Key Employee, the date
his termination becomes effective)).
c. In the event Employer exercises its right of termination
without cause pursuant to Section 6(c)(ii), all of Employer's
obligations under this Agreement shall end, except that
Employer shall continue to be obligated to:
i. pay any Compensation payable under Section 3(a) subject
to Section 4,
ii. pay Key Employee's Living Expenses incurred to the date
of termination; and
iii. provide continued benefits (or if unavailable under the
general terms and provisions of the applicable plan,
their equivalent) for Key Employee and his dependents,
for a period terminating on the earliest of (A) the
Ending Date, (B) the commencement date
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of equivalent benefits from a new employer, or (C) Key
Employee's normal retirement date (after which the terms
of the retirement plan which would have been applicable
to Key Employee had he retired as of such termination
date rather than having been terminated shall govern),
under all insured and self-insured employee welfare
benefit plans in which Key Employee was entitled to
participate immediately prior to such termination date,
provided that Key Employee shall not be required to pay
any amount greater than the regular contribution made by
Key Employee for such participation immediately prior to
such termination date.
d. In the event Employer exercises its right of termination for
cause pursuant to Section 6(c)(i), all of Employer's
obligations under this Agreement shall end except for any
benefit payable under Section 3(a) subject to Section 4 and
Employer's obligations to pay Key Employee's Living Expenses
incurred to the date of such termination.
8. COVENANT NOT TO COMPETE.
a. Restricted Activities--Duration. Except as otherwise consented
to or approved by Employer's Board of Directors in writing,
Key Employee agrees that, in addition to being operative
during the Employment Period, the provisions of Subsections
8(a)(i) through 8(a)(iii), inclusive, shall be operative for a
period of twelve (12) months after the later of (1) the date
Key Employee's employment with Employer (pursuant to this
Agreement or otherwise) is terminated or otherwise ceases, or
(2) the completion of the vesting of nonvested Compensation
pursuant to Section 3(a)(vi), regardless of the time, manner
or reason for the termination or other cessation of such
employment. During such periods, without Telxon's prior
written consent, Key Employee will not, directly or
indirectly, acting alone or as a member of a partnership or as
an owner, director, officer, employee, manager, representative
or consultant of any corporation or other business entity:
i. engage in any business which manufactures, sells,
distributes, services or supports products or services
of a type manufactured, sold, marketed, serviced or
supported, or in any other business in competition with
or adverse to the business that is conducted by
Employer, or which Employer is in the process of
developing and in or of which Key Employee participated
or has knowledge, at the time of the cessation of Key
Employee's employment with Employer, in the United
States, Canada or any European, Asian, Pacific Rim or
other foreign country in which Employer then or
thereafter transacts business or is making a bona fide
attempt to do so;
ii. induce, request or attempt to influence any customer or
supplier of Employer to curtail or cancel their business
or prospective business with Employer or in any way
interfere with Employer's business relationships; or
iii. induce, solicit or assist or facilitate the inducement
or solicitation by any third person of any employee,
officer, agent or representative of Employer to
terminate his respective relationship with Employer or
in any way interfere with Employer's employee, officer,
agent or representative relationships.
b. Tolling; Relief of Obligations. In the event that Key Employee
breaches any provision of this Section 8, (i) such violation
shall toll the running of the twelve (12) month period set
forth in Section 6(a) from the date of commencement of such
violation until such violation
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ceases, and (ii) Key Employee shall immediately forfeit all
nonvested Compensation and the nonvested portion of his
Deferred Compensation Account.
c. "Blue Penciling" or Modification. If either the length of
time, geographic area or scope of restricted business activity
set forth in Section 8(a) is deemed unreasonably restrictive
or unreasonable in any other respect in any proceeding before
a court of competent jurisdiction, Key Employee and Employer
agree and consent to such court's modifying or reducing such
restriction(s) with respect, but only with respect, to that
jurisdiction to the extent deemed reasonable under the
circumstances then presented.
9. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
a. For purposes of this Agreement, "Confidential Information"
means all information or trade secrets of any type or
description belonging to Employer which are proprietary and
confidential to Employer and which are not publicly disclosed
or are only disclosed with restrictions. Without limiting the
generality of the foregoing, Confidential Information
includes: strategic and other plans for carrying on business;
cost data and other financial information; lists of customers,
employees, vendors and business partners and alliances;
manufacturing methods and processes; product research and
engineering data, drawings, designs and schematics; computer
programs, flow charts, routines, subroutines, translators,
compilers, operating systems and object and source codes;
specifications, inventions, know-how, calculations and
discoveries; any letters, papers, documents and instruments
disclosing or reflecting any of the foregoing; and all
information revealed to or acquired or created by Key Employee
during Key Employee's employment by Employer relating to any
of the foregoing or otherwise to Employer's past, current or
future business.
b. Key Employee acknowledges that the discharge of Key Employee's
duties under this Agreement will necessarily involve his
access to Confidential Information. Key Employee acknowledges
that the unauthorized use by him or disclosure by him of such
Confidential Information to third parties might cause
irreparable damage to Employer and Employer's business.
Accordingly, Key Employee agrees that at all times after the
date hereof he will not, without the prior written consent of
Employer's Board of Directors, copy, publish, disclose,
divulge to or discuss with any third party, nor use for his
own benefit or that of others any Confidential Information,
except in the normal conduct of his duties under this
Agreement, it being understood and acknowledged by Key
Employee that all Confidential Information created, compiled
or obtained by Key Employee or Employer, or furnished to Key
Employee by any person while Key Employee is associated with
Employer, is and shall be and remain Employer's exclusive
property.
c. Promptly upon termination of his employment, irrespective of
the time or manner thereof or reason therefor, Key Employee
agrees to return and surrender to Employer all Confidential
Information and all copies thereof in any form which are in
any manner in his control or possession, as well as all other
Employer property.
10. RIGHTS. Key Employee acknowledges and agrees that any procedure,
design feature, schematic, invention, improvement, development,
discovery, know-how, concept, idea or the like (whether or not
patentable, registrable under copyright or trademark laws, or
otherwise protectable under similar laws) that Key Employee (whether
individually or jointly with any
12
other person or persons) may conceive of, suggest, make, invent,
develop or implement during the course of his service to Employer
which relates in any way to the business of Employer or to the
general industry of which Employer is a part, all physical
embodiments and manifestations thereof, and all patent rights,
copyrights and trademarks (and applications therefor) and similar
protections thereof (all of the foregoing referred to as "Work
Product") are and shall be the sole, exclusive and absolute property
of Employer. All Work Product shall be deemed to be works for hire
for the benefit of Employer, and to the extent that any Work Product
may not constitute a work for hire, Key Employee hereby assigns to
Employer all right, title and interest in, to and under such Work
Product, including, without limitation, the right to obtain such
patents, copyright registrations, trademark registrations or similar
protections as Employer may desire to obtain. Key Employee will
immediately disclose all Work Product to Employer and agrees, at
anytime, upon Employer's request and without additional
compensation, to execute any documents and otherwise to cooperate
with Employer (including, without limitation, all lawful testimony
and sworn statements or other certifications as may be appropriate)
respecting the perfection of its right, title and interest in, to
and under such Work Product and in any litigation or administrative
or other proceeding or controversy in connection therewith, all
expenses incident thereto be borne by Employer.
11. INDUCEMENT; REMEDIES INADEQUATE; AND SURVIVAL.
a. The covenants made by Key Employee in favor of Employer under
Sections 8, 9 and 10 and this Section 11 are being executed
and delivered by Key Employee in consideration of Key
Employee's employment with Employer and Employer's obligations
hereunder (including, without limitation, the Compensation and
all other benefits and remuneration provided for herein) in
confirmation of the confidentiality, non-competition and
inventions obligations which Key Employee hereby acknowledges
and agrees have been terms and conditions of his service to
Employer since the commencement thereof on the Effective Date.
b. Key Employee has carefully considered, and has had adequate
time and opportunity to consult with his own counsel or other
advisors regarding the nature and extent of the restrictions
upon him, and the rights and remedies conferred upon Employer,
under Sections 8, 9 and 10 and this Section 11, and hereby
acknowledges and agrees that such restrictions are reasonable
in time, territory and scope, are designed to eliminate
competition which otherwise would be unfair to Employer, do
not stifle the inherent skill and experience of Key Employee,
would not operate as a bar to Key Employee's sole means of
support, are fully required to protect the legitimate
interests of Employer and do not confer a benefit upon
Employer disproportionate to the detriment to Key Employee.
c. Key Employee acknowledges that the services to be rendered by
him to Employer as contemplated by this Agreement are special,
unique and of extraordinary character. Key Employee expressly
agrees and understand that the remedy at law for any breach by
him of Section 8, 9 or 10 will be inadequate and that the
damages flowing from such breach are not readily susceptible
to being measured in monetary terms. Accordingly, upon
adequate proof of Key Employee's violation of any legally
enforceable provision of Section 8, 9 or 10 Employer shall be
entitled to immediate injunctive relief, including, without
limitation, a temporary order restraining any threatened or
further breach. In the event any equitable proceedings are
brought to enforce any provision of Sections 8, 9 and 10, Key
Employee agrees that he will not raise in such proceedings any
defense that Employer has an
13
adequate remedy at law, and Key Employee hereby waives any
such defense. Nothing in this Agreement shall be deemed to
limit Employer's remedies at law or in equity for any breach
by Key Employee of any of the provisions of Sections 8, 9 and
10 which may be pursued or availed of by Employer. Without
limiting the generality of the immediately preceding sentence,
any covenant on Key Employee's part contained in Section 8, 9
or 10 which may not be specifically enforceable shall
nevertheless, if breached, give rise to a cause of action for
monetary damages.
d. As used in Sections 8, 9 and 10 and in this Section 11, the
term "Employer" (other than with respect to the Board of
Directors) shall include, in addition to Employer, all
subsidiaries and other affiliates of Employer, whether so
related to Employer during Key Employee's employment with
Employer or at any time thereafter.
e. Subject only to such time limitations as may be expressly set
forth therein, the covenants and agreements made by Key
Employee in Sections 8, 9 and 10 and this Section 11 shall
survive full payment by Employer of the amounts to which Key
Employee is entitled under this Agreement and the termination
of this Agreement and Key Employee's employment hereunder or
otherwise. The provisions of Sections 8, 9 and 10 and this
Section 11, and to the extent applicable thereto, Sections 15
through 22, shall continue to apply to and be binding upon Key
Employee in the event and for so long as Key Employee shall
remain in the employ of Employer following any termination
under this Agreement and for such post-employment period as
may there be specified but measured from the end of such
continued employment.
f. Notwithstanding anything in Sections 8, 9 or 10 or this
Section 11 the application of which may otherwise have
contrary effect, the technology development efforts which were
being pursued by Key Employee prior to his commencement of
employment with Employer as described on the attached Schedule
A and, so long as the same are not during the term of his
employment hereunder actively pursued by Key Employee on
Employer time or premises or with the direct use of Employer
resources, the continuation thereof or any commercialization
or other exploitation thereof shall constitute a breach of any
of the covenants, restrictions and agreements to be performed
or observed by Key Employee under this Agreement, and Employer
shall not have any right, title or interest of any kind or
nature whatsoever to or in the whole or any part thereof.
12. ASSIGNMENT OF KEY EMPLOYEE'S RIGHTS. In no event shall Employer be
obligated to make any payment under this Agreement to any assignee
or creditor of Key Employee. Prior to the time provided for the
making of any payment under this Agreement, neither Key Employee nor
his legal representative shall have any right by way of anticipation
or otherwise to assign or otherwise dispose of any interest under
this Agreement.
13. RIGHT OF SET-OFF. Any payments to be made to Key Employee under this
Agreement shall be subject to offset by Employer for any claims for
damages, liabilities or expenses which it may have against Key
Employee.
14. EMPLOYER'S OBLIGATIONS UNFUNDED. Except as to any benefits that may
be required to be funded under any benefit plan of Employer pursuant
to law or under any other written agreement, the obligations of
Employer under this Agreement are not funded, and Employer
14
shall not be required to deposit in escrow or otherwise set aside
any moneys in advance of the due date for payment thereof to Key
Employee.
15. NOTICES. Any notice to be given hereunder by Employer to Key
Employee shall be deemed to be given if delivered to Key Employee in
person, or if mailed to Key Employee, by certified mail, postage
prepaid, return receipt requested, at his address last shown on the
records of Employer, and any notice to be given by Key Employee to
Employer shall be deemed to be given if delivered in person or by
mail, postage prepaid, return receipt requested to the Chief
Executive Officer at Employer's principal executive office, unless
Key Employee or Employer shall have duly notified the other parties
in writing of a change of address. If mailed, notice shall be deemed
to have been given when deposited in the mail as set forth above.
Key Employee may also give notice to Employer by fax, to the
attention of its Chief Executive Officer, at (000) 000-0000 (or such
other number of which Employer may duly notify Key Employee), which
notice shall be deemed effective as of the time shown in the
telephonic confirmation of transmission; Key Employee shall send a
confirmation copy of any fax notice by first class mail, postage
prepaid, to Employer's Chief Executive Officer at Employer's
principal executive office.
16. AMENDMENTS. This Agreement shall not be modified or discharged, in
whole or in part, except by an agreement in writing signed by the
parties hereto.
17. ENTIRE AGREEMENT. This Agreement, together with any and all other
written agreement(s) made contemporaneously herewith, constitute the
entire agreement between the parties with respect to Key Employee's
employment by Employer from and after the Effective Date. The
parties are not relying on any other representation or understanding
with respect thereto, express or implied, oral or written. This
Agreement, as supplemented by such contemporaneous agreement(s),
supersedes any prior employment agreement, written or oral, of
Employer with respect to Key Employee.
18. CAPTIONS. The captions contained in this Agreement are for
convenience of reference only and do not affect the meaning of any
terms or provisions hereof.
19. GENDER AND NUMBER. Whenever the context may permit, any pronouns
used herein shall include the corresponding masculine, feminine and
neuter forms, and the singular form of any noun or pronoun,
including any terms defined herein, shall include the plural and
vice versa.
20. BINDING EFFECT. The rights and obligations of Employer hereunder
shall inure to the benefit of, and shall be binding upon, Employer
and its respective successors and assigns, and the rights and
obligations of Key Employee hereunder shall inure to the benefit of,
and shall be binding upon, Key Employee and his heirs, personal
representatives and estate.
21. SEVERABLE PROVISIONS. The provisions of this Agreement are
severable, and if any one or more provisions may be determined to be
illegal or otherwise unenforceable in any jurisdiction, in whole or
in part, the remaining provisions and any partially enforceable
provision shall be binding and enforceable to the extent enforceable
in such jurisdiction.
22. GOVERNING LAW. This Agreement shall be interpreted, construed, and
enforced in all respects in accordance with the laws of the State of
Ohio.
15
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
Effective Date.
TELXON CORPORATION KEY EMPLOYEE
BY: /S/ XXXX X. XXXXXX, XX. XXXXX X. XXXXX
------------------------ -----------------------------
XXXX X. XXXXXX XXXXX X. XXXXX
CHAIRMAN & CEO
