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Exhibit 10.18
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
Amended and Restated Employment Agreement dated and effective as of
July 1, 1997, (this "AGREEMENT"), between ILLINOIS SUPERCONDUCTOR CORPORATION,
a Delaware corporation (with its successors and assigns, referred to as the
"COMPANY"), and XXX X. XXXXX ("XXXXX").
PRELIMINARY STATEMENT
Pursuant to an existing Employment Agreement between the Company and
Xxxxx date and effective as of January 1, 1997, Xxxxx is now employed as the
president and chief executive officer of the Company (the "PRIOR AGREEMENT").
The Company desires to continue to employ Xxxxx, and Xxxxx wishes to
continue to be employed by the Company, upon certain terms and conditions not
contained in the Prior Agreement, including an extension of the term of Xxxxx'x
employment. In order to specify such terms and conditions, and extend the term
of Xxxxx'x employment with the Company, Xxxxx and the Company agree as follows:
AGREEMENT
1. EMPLOYMENT FOR TERM. The Company hereby employs Xxxxx and Xxxxx
hereby accepts employment with the Company for the period beginning on July 1,
1997 and ending on June 30, 1998 (the "TERM"), or upon the earlier termination
of the Term pursuant to Section below. The end of the Term for any reason
shall end Xxxxx'x employment under this Agreement, but shall not terminate
Xxxxx'x or the Company's other obligations set forth in this Agreement.
2. POSITION AND DUTIES. Commencing at 5:00 p.m. on July 7, 1997 (the
"EFFECTIVE TIME"), and thereafter during the Term, Xxxxx shall serve as the
chairman of the board of the Company. Xxxxx shall also continue to serve as
the president and chief executive officer of the Company until the Effective
Time. During the Term, Xxxxx shall also hold such additional positions and
titles as the Board of Directors of the Company (the "BOARD") may determine
from time to time. During the Term, Xxxxx shall devote substantially all of
his business time and best efforts to his duties as an employee of the Company.
3. COMPENSATION.
(A) BASE SALARY. The Company shall pay Xxxxx a base salary, beginning
on the first day of the Term and ending on the last day of the Term, of not
less than $203,960 per annum, payable at least monthly on the Company's regular
pay cycle for professional employees.
(B) OTHER AND ADDITIONAL COMPENSATION. Section 3(a) establishes a
minimum salary during the Term, and shall not preclude the Board from awarding
Xxxxx a higher
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salary or any bonuses or stock options in the discretion of the Board during
the Term at any time.
4. EMPLOYEE BENEFITS. During the Term, Xxxxx shall be entitled to the
employee benefits, including vacation, health and other insurance benefits, and
deferred compensation arrangements, made available by the Company to any other
employee of the Company. During the Term, Xxxxx shall also be entitled to a
car allowance of $650 per month, or such greater amount as the Board shall
determine in its discretion.
5. EXPENSES. The Company shall reimburse Xxxxx for actual
out-of-pocket expenses incurred by him in the performance of his services for
the Company (in accordance with the Company's policy for such reimbursements
applicable to the Company's executive officers on the same terms generally
offered to such officers), upon the receipt of appropriate documentation of
such expenses.
6. TERMINATION.
(A) GENERAL. The Term shall end immediately upon Xxxxx'x death. The
Company may end the Term at any time for any reason or no reason, with or
without "Cause" (as defined in Section 7(a) below) in the absolute discretion
of the Board (but subject to the Company's obligations under this Agreement).
(B) NOTICE OF TERMINATION. Promptly after it ends the Term, the
Company shall give Xxxxx notice of the termination, including a statement of
whether the termination was for Cause. The Company's failure to give notice
under this Section shall not, however, affect the validity of the Company's
termination of the Term.
7. SEVERANCE BENEFITS.
(A) "CAUSE" DEFINED. "Cause" means willful malfeasance or willful
misconduct by Xxxxx in connection with his employment; Xxxxx'x gross
negligence in performing any of his duties under this Agreement; Xxxxx'x
conviction of, or entry of a plea of guilty to, or entry of a plea of nolo
contendere with respect to, any crime other than a traffic violation or
infraction which is a misdemeanor; Xxxxx'x willful and continuing breach of
any written policy applicable to all employees adopted by the Company
concerning conflicts of interest, political contributions, standards of
business conduct or fair employment practices, procedures with respect to
compliance with securities laws or any similar matters, or adopted pursuant to
the requirements of any government contract or regulation; or material and
continuing breach by Xxxxx of any of his agreements in this Agreement.
(B) TERMINATION WITHOUT CAUSE. If the Company ends the Term prior to
June 30, 1998, other than for Cause, or if Xxxxx resigns as an employee or
officer of the Company prior to June 30, 1998, then the Company shall make the
"Severance Payments" (as defined
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below) to Xxxxx for and during the "Severance Period" (as defined below).
The Severance Payment shall be payable in proportionate amounts at least
monthly on the Company's regular pay cycle for professional employees and (if
the last day of the Severance Period is not the last day of a pay period) on
the last day of the Severance Period.
For purposes of this Agreement: (i) the term "SEVERANCE PAYMENT" means,
for the period of 180 days from the commencement of the Severance Period, an
amount equal to Xxxxx'x base salary in effect on the day prior to the date on
which the Severance Period commences, and thereafter during the Severance
Period an amount equal to 50% of Xxxxx'x base salary in effect at the time the
Severance Period commenced; and (ii) the term "SEVERANCE PERIOD" means the
period commencing on the day following the date of termination of Xxxxx'x
employment with the Company and ending on the second anniversary of the date of
termination.
Xxxxx agrees that during the Severance Period he shall endeavor to
render reasonable advisory and consulting services to the Company with respect
to matters pertaining to the business of the Company as the Board of Directors
or the then Chairman of the Board may reasonably request in writing, provided
that the Company acknowledges and agrees that Xxxxx shall be obligated to
perform such services only to the extent that Xxxxx determines in his
discretion that such services shall not interfere with the conduct of Xxxxx'x
then current business and personal affairs at the time of any such request.
The Company shall pay all reasonable out-of-pocket expenses incurred by Xxxxx
in the performance of such advisory and consulting services.
(C) TERMINATION FOR ANY OTHER REASON. If the Company ends the Term for
Cause, or if the Term ends as a result of Xxxxx'x death, then the Company shall
have no obligation to pay Xxxxx any amount, whether for salary, benefits,
bonuses, or other compensation or expense reimbursements of any kind, accruing
after the end of the Term, and such rights shall, except as otherwise required
by law, be forfeited immediately upon the end of the Term.
(D) OPTION MATTERS. If the Company ends the Term without Cause, the
Company and Xxxxx agree that notwithstanding any term or provision of any
agreement between Xxxxx and the Company to the contrary, (i) all options held
by Xxxxx to acquire shares of the common stock of the Company at the time of
termination shall immediately become vested, and shall be immediately
exercisable by Xxxxx or his personal representative, and (ii) Xxxxx (or his
personal representative, as the case may be) shall have the right to exercise
such vested options, and all other options previously vested in Xxxxx prior to
the date of termination, for a period of 365 days following such end of the
Term. Xxxxx and the Company agree that except as set forth above, all option
agreements referred to above shall remain in full force and effect in
accordance with their terms.
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8. CONFIDENTIALITY, OWNERSHIP, AND COVENANTS OF NON-COMPETITION AND
NON-SOLICITATION.
(A) "COMPANY INFORMATION" AND "INVENTIONS" DEFINED. "COMPANY
INFORMATION" means all information, knowledge or data of or pertaining to (i)
the Company, and (ii) any other person, firm, corporation or business
organization with which the Company may do business during the Term, that is
not in the public domain (and whether relating to methods, processes,
techniques, discoveries, pricing, marketing or any other matters).
"INVENTIONS" collectively refers to any and all inventions, trade secrets,
ideas, processes, formulas, source and object codes, data, programs, other
works of authorship, know-how, improvements, discoveries, developments,
designs, and techniques regarding any of the foregoing.
(B) CONFIDENTIALITY. Except as provided in the next two sentences,
Xxxxx covenants and agrees that all Company Information shall be kept secret
and confidential at all times during and after the end of the Term and shall
not be used or divulged by him outside the scope of his employment as
contemplated by this Agreement, except as the Company may otherwise expressly
authorize by action of the Board. In the event that Xxxxx is requested in a
judicial, administrative or governmental proceeding to disclose any of the
Company Information, Xxxxx will promptly so notify the Company so that the
Company may seek a protective order or other appropriate remedy and/or waive
compliance with this Agreement. If disclosure of any of the Company
Information is required, Xxxxx may furnish the material so required to be
furnished, but Xxxxx will furnish only that portion of the Company Information
that legally is required.
(C) OWNERSHIP. Xxxxx hereby assigns to the Company all of Xxxxx'x
right (including patent rights, copyrights, trade secret rights, and all other
rights throughout the world), title and interest in and to Inventions, whether
or not patentable or registrable under copyright or similar statutes, made or
conceived or reduced to practice or learned by Xxxxx, either alone or jointly
with others, during the course of the performance of services for the Company.
Xxxxx shall also assign to, or as directed by, the Company, all of Xxxxx'x
right, title and interest in and to any and all Inventions, the full title to
which is required to be in the United States government by a contract between
the Company and the United States government or any of its agencies. The
provisions of Sections 8(a), 8(b) and this Section 8(c) are not intended to
supersede or limit the effect of any prior confidentiality or proprietary
rights agreements previously executed by Xxxxx.
(D) PERIOD DEFINED. "NON-COMPETITION PERIOD" means the period
beginning on the day following the date of termination of Xxxxx'x employment
with the Company and ending on the second anniversary of the date of
termination of Xxxxx'x employment with the Company.
(E) COVENANTS OF NON-COMPETITION AND NON-SOLICITATION. Xxxxx
acknowledges that his services pursuant to this Agreement are unique and
extraordinary, that the Company
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will be dependent upon Xxxxx for the development and growth of its business
and related functions, and that he will continue to develop personal
relationships with significant customers of the Company and to have control of
confidential information concerning, and lists of customers of, the Company.
Xxxxx further acknowledges that the business of the Company is international in
scope and cannot be confined to any particular geographic area. For the
foregoing reasons, Xxxxx covenants and agrees that during the Non-Competition
Period Xxxxx shall not, directly or indirectly, engage in, be financially
interested in, represent, render any advice or services to, or be employed by,
any other business (conducted for profit or not for profit) that is engaged in
the development or production of (i) high temperature superconducting
materials, (ii) radio frequency filter devices, or (iii) fault current limiter
devices, in any such case for or related to uses which are or could reasonably
deemed to be competitive with the current or currently contemplated business of
the Company in the world. For the reasons acknowledged by Xxxxx at the
beginning of this Section 8(e), Xxxxx additionally acknowledges, covenants, and
agrees that, during the Non-Competition Period, Xxxxx shall not, directly or
indirectly, whether on his own behalf or on behalf of any other person or
entity, in any manner (A) solicit the business of or otherwise contact in any
commercial capacity any person or entity that was a customer, supplier, or
contractor of the Company for the purpose of obtaining business of the type
performed by the Company, or (B) solicit for employment any persons who were
officers or employees of the Company upon the date of termination of his
employment hereunder or at any time during a ninety-day period preceding such
date, or aid any competitive business organization in any attempt to hire any
such officers or employees of the Company. Notwithstanding the foregoing, this
Section (e) shall terminate and be of no further force or effect if the Company
fails to make any payment or otherwise perform any obligation owed to Xxxxx
pursuant to Sections 3, 4, 5 and 7(b) above.
(F) EQUITABLE REMEDIES. Xxxxx acknowledges, covenants and agrees that,
in the event he shall violate any provisions of this Section , the Company will
not have an adequate remedy at law and will therefore be entitled to enforce
each such provision by temporary or permanent injunctive or mandatory relief
obtained in an action or proceeding, without the necessity of proving damage or
posting of any bond of any kind whatsoever, and without prejudice to any other
remedies that may be available at law or in equity. The foregoing restrictions
shall not preclude Xxxxx from the ownership of not more than three percent (3%)
of the voting securities of any corporation whose voting securities are
registered under Section 12(g) of the Securities Exchange Act of 1934, even if
its business competes with that of the Company.
9. SUCCESSORS AND ASSIGNS.
(A) XXXXX. This Agreement is a personal contract, and the rights and
interests that the Agreement accords to Xxxxx may not be sold, transferred,
assigned, pledged, encumbered, or hypothecated by him. Except as contemplated
in Section 7(d) above, Xxxxx shall not have any power of anticipation,
alienation or assignment of the payments
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contemplated by this Agreement, all rights and benefits of Xxxxx shall be for
the sole personal benefit of Xxxxx, and no other person shall acquire any
right, title or interest under this Agreement by reason of any sale,
assignment, transfer, claim or judgment or bankruptcy proceedings against
Xxxxx. Except as so provided, this Agreement shall inure to the benefit of and
be binding upon Xxxxx and his personal representatives, distributees and
legatees.
(B) THE COMPANY. This Agreement shall be binding upon the Company and
inure to the benefit of the Company and of its successors and assigns,
including (but not limited to) any corporation that may acquire all or
substantially all of the Company's assets or business or into or with which the
Company may be consolidated or merged. This Agreement shall continue in full
force and effect in the event that the Company sells all or substantially all
of its assets, merges or consolidates, otherwise combines or affiliates with
another business, dissolves and liquidates, or otherwise sells or disposes of
substantially all of its assets. The Company's obligations under this
Agreement shall cease, however, if the successor to, the purchaser or acquiror
either of the Company or of all or substantially all of its assets, or the
entity with which the Company has affiliated, shall assume in writing the
Company's obligations under this Agreement (and deliver an executed copy of
such assumption to Xxxxx), in which case such successor or purchaser, but not
the Company, shall thereafter be the only party obligated to perform the
obligations that remain to be performed on the part of the Company under this
Agreement.
10. ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the parties concerning Xxxxx'x employment with the Company during the
Term and supersedes all prior negotiations, discussions, understandings and
agreements, whether written or oral, between Xxxxx and the Company relating to
the subject matter of this Agreement. All prior employment agreements,
including the Prior Agreement, between the Company and Xxxxx shall remain in
full force and effect with respect to all matters addressed in such prior
employment agreements occurring on or before the effective date of this
Agreement.
11. AMENDMENT OR MODIFICATION, WAIVER. No provision of this Agreement
may be amended or waived unless such amendment or waiver is agreed to in
writing signed by Xxxxx and by a duly authorized officer of the Company other
that Xxxxx. No waiver by any party to this Agreement of any breach by another
party of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same time, any prior time or any subsequent time.
12. NOTICES. All notices, demands or other communications of any kind
to be given or delivered under this Agreement shall be in writing and shall be
deemed to have been properly given if (a) delivered by hand, (b) delivered by a
nationally recognized overnight courier service, (c) sent by registered or
certified United States Mail, return receipt requested and first class postage
prepaid, or (d) facsimile transmission followed by a confirmation copy
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delivered by a nationally recognized overnight courier service. Such
communications shall be sent to the parties at their respective addresses as
follows:
If to Xxxxx: Xxx X. Xxxxx
000 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
If to the Company: Illinois Superconductor Corporation
000 Xxxxxxxx Xxxxx
Xx. Xxxxxxxx, Xxxxxxxx 00000
Attention: Chairman of the Board
with a copy to: Xxxxx X. Xxxxxx, Esq.
Xxxxxxxxx & Xxxxxx
00 X. XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Either party may change such address for delivery to the other party by
delivery of a notice in conformity with the provisions of this section
specifying such change. Notice shall be deemed to have been properly given (i)
on the date of delivery, if delivery is by hand, (ii) three (3) days after the
date of mailing if sent by certified or registered mail, (iii) one (1) day
after date of delivery to the overnight courier if sent by overnight courier,
or (iv) the next business day after the date of transmission by facsimile.
13. SEVERABILITY. If any provision of this Agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this Agreement or the application
of such provision to such person or circumstances other than those to which it
is so determined to be invalid and unenforceable shall not be affected, and
each provision of this Agreement shall be validated and shall be enforced to
the fullest extent permitted by law. If for any reason any provision of this
Agreement containing restrictions is held to cover an area or to be for a
length of time that is unreasonable or in any other way is construed to be too
broad or to any extent invalid, such provision shall not be determined to be
entirely null, void and of no effect; instead, it is the intention and desire
of both the Company and Xxxxx that, to the extent that the provision is or
would be valid or enforceable under applicable law, any court of competent
jurisdiction shall construe and interpret or reform this Agreement to provide
for a restriction having the maximum enforceable area, time period and such
other constraints or conditions (although not greater than those contained
currently contained in this Agreement) as shall be valid and enforceable under
the applicable law.
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14. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
15. HEADINGS. All descriptive headings of sections and paragraphs in
this Agreement are intended solely for convenience of reference, and no
provision of this Agreement is to be construed by reference to the heading of
any section or paragraph.
16. WITHHOLDING TAXES. All salary, benefits, reimbursements and any
other payments to Xxxxx under this Agreement shall be subject to all applicable
payroll and withholding taxes and deductions required by any law, rule or
regulation of and federal, state or local authority.
17. APPLICABLE LAW: JURISDICTION. The laws of the State of Illinois
shall govern the interpretation, validity and performance of the terms of this
Agreement, without reference to rules relating to conflicts of law. Any suit,
action or proceeding against Xxxxx with respect to this Agreement, or any
judgment entered by any court in respect thereof, may be brought in any court
of competent jurisdiction in the State of Illinois, as the Company may elect in
its sole discretion, and Xxxxx hereby submits to the nonexclusive jurisdiction
of such courts for the purpose of any such suit, action, proceeding or
judgment.
18. INTERPRETATION AND CONSTRUCTION. Each of the parties to this
Agreement has been represented by their own counsel, each has reviewed and
approved this Agreement as executed, and neither party shall be charged with
the responsibility of having drafted any provision of this Agreement so as to
cause any rule of strict construction to be applied against such party.
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
ILLINOIS SUPERCONDUCTOR CORPORATION
By: /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
Chairman of the Board
/s/ XXX X. XXXXX
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XXX X. XXXXX
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