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MICRODYNE CORPORATION 1997 ANNUAL REPORT ON FORM 10-K
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Exhibit 10.38
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made as of February 10, 1997
between MICRODYNE, a Maryland corporation (the "Company"), and XXXXXXX X.
XXXXXXX (the "Executive").
RECITALS
The Company manufactures and sells electronic equipment and
provides technical services in the United States and overseas government and
commercial marketplaces.
The Company wishes to hire the Executive as its President and
Chief Executive Officer and Executive wishes to accept such employment on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the agreements
contained herein, the parties hereto agree as follows:
Employment. The Company employs the Executive and the
Executive accepts employment by the Company as its President and Chief Executive
Officer. The initial term of such employment is two years from March 10, 1997
(the Employment Date ) until March 9, 1999. Following the initial term of
employment, this Agreement may be renewed for additional two (2) year terms. At
the expiration of each term (the initial two year term or each two year
extension period), employment shall be automatically terminated unless written
notice to the contrary is given by the Company to the Executive by the November
9 of each year preceding the March 9 termination date. If at the conclusion of
any employment term, the company elects not to renew the Agreement, the
Executive shall receive base salary and all benefits up until the November 9
following the termination of the Agreement.
Duties. During his employment the Executive shall hold such
positions and perform such services as may be assigned to him from time-to-time
by the Board of Directors of the Company. The Executive shall report to the
Board of Directors or such other officer as may be designated from time to time
by the Board of Directors. The Executive shall devote his attention and energies
to, and shall use his best efforts to do all of those things which maximize
shareholder value in the company on a full time basis. The Executive shall not
be engaged in any other business activity which diverts his time and energies
from the performance of his duties for the Company.
Compensation.
During the term of this Agreement, the Executive shall be
compensated on an annual basis with a base salary of $250,000.00, which shall be
payable in accordance with the Company's standard payroll practices. In
addition, the Executive may be entitled to an annual bonus if, in the sole
discretion of the Board, the Executive has met or exceeded some or all of the
annual performance objectives established by the Board and communicated to the
Executive. The board shall not unreasonably withhold the distribution of a bonus
that has been granted to the Executive. An annual bonus shall not exceed 100% of
the Executive's annual base salary.
In addition to the salary and bonus opportunities set
forth in Section 3(a), as soon as practicable following the Employment Date, the
Company shall take all steps necessary at its expense to effect a grant of stock
options for 300,000 shares of Microdyne common stock under the Company's Key
Employee Stock Option Plan. The exercise price of the options is the market
price as of March 10, 1997 (date of employment). The options will vest and be
exercisable at the following times: 50,000 on the Employment Date; 50,000 on
March 9, 1998; 100,000 on March 9, 1999; and 100,000 on March 9, 2000; provided,
however, that any termination of the Executive's employment under this Agreement
shall extinguish the Executive's rights in any options which have not vested as
of the date of such termination. The options which have vested will be
exercisable from the date of vesting until the earlier of five years form the
date of grant or two years from the Executive's termination of employment for
any reason.
Executive will be paid a car allowance of $760.00 per
month plus maintenance during the original term and any additional terms of this
Agreement.
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Benefits. The Company shall provide the Executive with group
life insurance, group medical insurance and other such benefits as may be
consistent with the Company's policies applicable to those employees of similar
rank and position. The Company may from time to time add to, reduce, eliminate
or otherwise modify those benefits at its discretion as provided by law.
Executive is entitled to four weeks of paid vacation per year.
Business Expenses. The Company shall reimburse the Executive
for reasonable and necessary business expenses, ancillary expenses for travel
and similar items, incurred or expended by the Executive in the performance of
his duties hereunder. Such reimbursement shall be in accordance with the
Company's policy and procedures governing reimbursement of such expenses, which
may be altered or modified from time to time in the Company's sole discretion.
Confidential and Proprietary Information.
The Executive recognizes that by virtue of his employment
with the Company he will have access to confidential and proprietary information
relating to the Company's business. The Executive agrees that this information
is a valuable and unique asset of the Company and, if divulged to others, could
cause irreparable harm to the Company's business. The Executive also recognizes
and acknowledges that such information may include data or material that may not
technically qualify as a trade secret or other type of confidential information
but that the Company nevertheless has a legitimate business interest in
protecting its confidentiality.
Accordingly, regardless of the reason for termination, the
Executive shall not use or disclose, for himself or others, any confidential or
proprietary information of the Company, including but not limited to "Trade
Secrets", "Technology" or "Customer Information". For purposes of this
Agreement, the term "Trade Secrets" means information relating to the
manufacture and sale of products made and sold, or proposed to be made and sold,
by the Company including, without limitation, research and development,
engineering, purchasing, manufacturing, marketing or sales plans, customer
lists, financial data, cost and price information and other business records,
together with all concepts or ideas (oral or written) reasonably related
thereto; the term "Technology" means machinery and equipment, drawings, designs,
processes, computer hardware and software, methods, formulae, techniques,
know-how, discoveries, concepts and ideas, whether or not they can be patented,
copyrighted or registered as a trademark, and all improvements to any of the
foregoing used in or relating to the manufacture and sale of the products made
and sold, proposed to be made and sold or considered to be made and sold, by the
Company; and the term "Customer Information" means the name or address of any
customer or any information concerning the transactions of any customer or
supplier with the Company. A Customer of the Company as of any date shall
include any individual or entity who purchased any products or services from, or
entered into any other transactions or negotiations with, the Company during the
one-year period preceding such date. Within ten (10) working days following
termination of employment the Executive must demand a list of Company Customers.
The Company must provide such a list within thirty (30) calendar days. Failure
by the Executive to demand a list waives any challenge by the Executive to the
Company's designation of an entity as a Customer.
Notwithstanding the above, the disclosure of
confidential or proprietary information, including but not limited to Trade
Secrets, Technology or Customer Information, shall not be deemed to violate the
provisions of Section 6(a) if such disclosure (i) is pursuant to a valid order
of a court or governmental agency of competent jurisdiction, (ii) is pursuant to
a credit or other agreement to which the Company is a party and which has been
approved by the Board of Directors, (iii) is to attorneys, auditors or other
professional advisors of the Company, (iv) is to a reputable financial or
similar institution which agrees to preserve the confidentiality of such
information or records, or (v) has been approved by the Board of Directors, and,
in any such case, the Executive reasonably believes at the time of such
disclosure that the disclosure is being made in the ordinary course and within
the usual scope of his duties and serves the best interests of the Company and
its shareholders.
The Executive understands and agrees that all
confidential and proprietary business information, files, research, records,
memoranda, notations, letters, computer hardware and software, customer lists,
books, lists and other documents received from the Company during the term of
his employment are the property of the Company, and that upon the Executive's
termination of employment, for whatever reason, the Executive will promptly
deliver to the Company all such materials, including all copies thereof, in the
Executive's possession or under the Executive's control.
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Covenants Not to Compete or Interfere.
The Executive agrees that during the term of his
employment and for a period of one year after the date of termination of his
employment, regardless of the reason for termination, he will not:
directly or indirectly, in the same or a similar
capacity as that with the Company, be employed by, affiliated with, direct the
business of, or act on behalf of, a business that competes with the Company in
the 50 states of the United States;
solicit, sell or attempt to sell in the 50 states of
the United States any product involved in the Company's business to any customer
or prospect of the Company with whom the Executive had dealings or material
contact during the course of his employment with the Company; or
solicit, induce or attempt to solicit or induce, any
person employed by the Company to leave such employment for employment with a
competing business.
It is the intention of the parties that this
Agreement provide the Company the maximum protection possible in the geographic
areas in which the Company does business and therefore has legitimate business
interests. However, the parties in no way intend to include a provision which
contravenes the public policy of any state. If, at the time of enforcement of
this paragraph, a court should hold the duration, scope or area of restriction
stated herein unreasonable under the circumstances then existing, the parties
agree that the court may enforce the restrictive covenant set forth in Section
7(a) to the extent it deems reasonable.
Termination. This Agreement shall terminate automatically on
March 9, 1999 unless renewed per Section 1, and may be sooner terminated as
follows:
Notwithstanding any other provision in this Agreement
to the contrary, if the Company enters into any agreement with any third party
prior to the Employment Date which results in the Company terminating this
Agreement, the Company shall pay the sum of $125,000 to the Executive, on or
before March 15, 1997, whereupon this Agreement shall be null and void and
neither party shall have any further obligations hereunder.
The Company may terminate the Executive's employment
and its obligations under this Agreement at any time without notice for cause.
For purposes of this Agreement, "cause" means theft, embezzlement or fraud by
the Executive, other criminal misconduct or dishonesty in connection with any
facet of the Corporation's business or which, in the reasonable judgment of the
Board of Directors of the Corporation, impairs or is likely to impair the
effectiveness of the Executive in carrying out his obligations under this
Agreement, or the Executive's involvement in any other unlawful scheme or
conspiracy pursuant to which the Corporation has lost assets or has obtained
assets to which it is not entitled. If the Company terminates the Executive's
employment pursuant to this provision, it shall have no further obligation to
the Executive under this Agreement other than for such benefits as it may be
required to provide under an applicable benefits policy.
The Company may terminate the Executive's employment
and its obligations under this Agreement at any time after the Employment Date
upon sixty (60) days' prior written notice without cause. In the event of a
termination without cause, the Executive shall receive a lump sum payment equal
to his annual base salary and an additional twelve months' of base salary and
all benefits continuance (plus the car allowance referenced in 3(c)). Upon
commencement of full time employment with a different company or full time self
employment, all benefits and base salary shall cease. Otherwise, Executive's
COBRA termination date shall be the date all benefits cease.
Death of Executive. This Agreement shall terminate
automatically upon the Executive's death. In such case, the Company shall have
no further obligations to the Executive under this Agreement other than for any
compensation earned or accrued to the date of his death and such benefits as the
Company may be required to provide under an applicable benefits policy.
Survival of Obligations. The obligations of the Executive
under Sections 6 and 7 of this Agreement shall survive the termination of his
employment and this Agreement, regardless of the reason for or method of
termination. Each of the provisions in these Sections shall be enforceable
independently of
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every other provision, and the existence of any claim or cause of action the
Executive may have against the Company shall not constitute a defense to the
enforcement of these Sections by the Company, except that a material breach of
this Agreement by the Company shall constitute a defense to enforcement of the
non-competition provisions (Sections 7(a)(i), (ii)) of Section 7.
Enforcement and Severability.
In the event of a breach or threatened breach by
either party by any of the provisions of this Agreement, the other party shall
be entitled to an injunction restraining the party in breach or the party
threatening breach. Nothing contained herein shall be construed as prohibiting
either party from pursuing any other remedies available to it/him for such
breach or threatened breach, including the recovery of damages. The parties
agree that the losing party shall pay to the prevailing parties all costs,
including reasonable attorney's fees associated with and incurred in enforcing
it/his rights under this Agreement.
If any provision of this Agreement is deemed void or
unenforceable, such provision shall not be deemed part of this Agreement, which
otherwise shall remain in full force and effect.
A waiver by the Company or the Executive of a breach
of any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach by the other party.
Governing Law and Arbitration Agreement.
This Agreement shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of Virginia.
The parties agree that any and all disputes or causes of
action arising under this Agreement by and between them shall be resolved in
accordance with the procedures set forth herein. Prior to the institution of a
legal action in a court of competent jurisdiction or under the applicable rules
of the American Arbitration Association, the party seeking to initiate such
action shall provide the other party with at least ten (10) business days
written notice of the claimed breach of this Agreement and the opportunity to
cure the breach. Moreover, in the event the party seeking to initiate such
action believes the other party has not cured the alleged breach, such party
shall initiate non-binding mediation to resolve the matter. In the event the
matter is not resolved in such mediation, such party may submit the matter to
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. Any arbitration hearing shall occur in McLean, Virginia
and each party agrees that it shall be bound by the arbitration award. Judgment
upon any award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The losing party shall pay to the prevailing party all
costs, including reasonable attorney's fees associated with the arbitration
proceeding and the enforcement of any award rendered. The parties agree that
written notice of an alleged breach must be provided with one hundred eighty
(180) calendar days of the date of the alleged breach or otherwise any claim
with respect to the alleged breach is forever waived.
Notices. Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing and given by telex, fax,
telegram, telecopy, hand-delivery or by first class mail, in the case of the
Executive, to either his office or personal residence, or in the case of the
Company, to the Chairman or Executive Vice President at the Company's principal
office. In the event notice is given by facsimile, a copy of such notice shall
be mailed or hand delivered to the other party within three calendar days of
transmission by facsimile.
Assignment. This Agreement is personal in nature and may not
be assigned by the Company without the written consent of the Executive except
that the consent of the Executive shall not be unreasonably withheld in
connection with the sale to any person, partnership, corporation or other entity
of substantially all the assets of the Company, provided that the assignee
assumes all the liabilities of the Company hereunder. Notwithstanding the
foregoing, this Agreement may be assigned to a wholly-owned subsidiary or parent
of the Company. The rights and duties of the Executive hereunder are
non-assignable. In the event of a material change in operations of the Company
or the Executive's duties or responsibilities, Executive may petition the Board
of Directors for early termination of the term of the Agreement and receipt of
the payments referenced in 8(c) above. If the Board refuses Executive's
petition, Executive may avail himself of the remedies described in Section 12 of
the Agreement.
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Entire Agreement. This instrument contains the entire
agreement of the parties, supersedes any prior employment or consulting
agreement between the parties and may be changed only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought. Both parties acknowledge that
they have read these terms, have had the opportunity to consult counsel, and
fully understand and freely and voluntarily agree to the provisions set forth
herein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day first above written.
MICRODYNE CORPORATION
By /s/ Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxxxx
Chairman of the Board of Directors
/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
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