EXHIBIT 10.8
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is entered into as of February 8,
2005, (and effective as of the First Closing Date (as hereinafter defined))
between Sunair Electronics, Inc. a Florida corporation (the "Company"), and
Xxxxx X. Xxxxxxx, an individual resident of the State of Florida (the
"Employee").
WHEREAS, the Employee currently is the President and Chief Executive
Officer of the Company;
WHEREAS, the Company is a party to the Purchase Agreement, dated as of
November 17, 2004, with Coconut Palm Capital Investors, II, Ltd. (as the same
shall be amended, restated, modified and supplemented from time to time, the
"Purchase Agreement"); and
WHEREAS, the parties desire that this Agreement only be effective from and
after the First Closing Date (as that term is defined in the Purchase
Agreement).
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained in this Agreement, the parties
hereto agree as follows:
1. Employment.
(a) Retention. From and after the First Closing Date, the Company
agrees to employ the Employee and the Employee agrees to accept such employment,
subject to the terms and conditions of this Agreement.
(b) Employment Period. The period during which the Employee shall
serve as an employee of the Company shall commence on the First Closing Date
and, unless earlier terminated pursuant to this Agreement, shall expire on the
second (2nd) anniversary of the First Closing Date (the "Employment Period").
(c) Duties and Responsibilities. During the period of February 8,
2005, until February 14, 2005, the Employee shall have the title of President
and Chief Executive Officer of the Company reporting to the Board of Directors,
beginning February 15, 2005, and during the remainder of the Employment Period,
the Employee shall have the title of President of the communications division of
the Company (the "Communications Division") reporting to the President and Chief
Executive Officer of the Company and the Employee shall have such authority and
responsibility and perform such duties as may be assigned to him from time to
time at the direction of the President and Chief Executive Officer of the
Company, and in the absence of such assignment, such duties customarily carried
out by Employee immediately prior to this Agreement as are necessary to the
business and operations of the Company. During the Employment Period, the
Employee's employment shall be full time and the Employee shall perform his
duties honestly, diligently, competently, in good faith and in the best
interests of the Company and shall use his best efforts to promote the interests
of the Company.
(d) Compensation. In consideration for the Employee's services
hereunder and the restrictive covenants contained herein, during the Employment
Period, the Employee shall be paid on the basis of an annual salary of One
Hundred Fifty-Two Thousand Five Hundred and 00/100 Dollars ($152,000.00) (the
"Salary"), payable in accordance with the Company's customary payroll practices.
(e) Benefits. During the Employment Period, the Employee shall be
entitled to participate in any insurance programs, sales compensation plans or
other Company bonus plans, vacation policies, pension plans and other fringe
benefit plans and programs as are from time to time established and maintained
for the benefit of the Company's employees with responsibilities comparable to
those of the Employee, subject to the provisions of such plans and programs.
Subject to shareholder approval of the Company's 2004 Stock Incentive Plan (the
"Plan"), and pursuant to the terms and conditions of the Plan, as of the first
day of the Employment Period the Employee shall be granted options to purchase
40,000 shares of the Company's common stock at an exercise price equal to the
Fair Market Value (as defined in the Plan) of the shares on the date of grant.
Such options shall vest at a rate of 1,666 per full month of employment, except
that at the end of month twenty-four of the Employment Period, all remaining
options shall vest.
(f) Expenses. In addition to the salary and benefits described
above, during the Employment Period, the Employee shall be reimbursed for all
out-of-pocket expenses reasonably incurred by him on behalf of or in connection
with the business of the Company, pursuant to the normal standards and
guidelines followed from time to time by the Company.
2. Termination.
(a) Death, Disability and Cause. At any time during the Employment
Period, the Company shall have the right to terminate the Employment Period and
to discharge the Employee for Cause (as defined below) effective upon delivery
of written notice to the Employee. If the Employee dies during the Employment
Period, this Agreement and the Employment Period shall automatically terminate.
Upon any such termination by the Company for Cause or automatic termination upon
death, the Employee or his legal representatives shall be entitled to (A) that
portion of the Salary prorated through the date of termination, (B)
reimbursement of expenses properly incurred by the Employee prior to the date of
termination and not previously reimbursed, (C) to the extent applicable, any
death or disability benefits specified in any of the Company's employee benefit
plans in which the Employee participates as in effect at such time, and (D) any
benefits which are required by law, and, except as provided above, the Company
shall have no further obligations hereunder from and after the date of such
termination. Termination for Cause shall mean termination because of (i) the
Employee's material breach of this Agreement, (ii) the Employee's failure or
refusal to perform the duties and responsibilities required to be performed by
the Employee under the terms of this Agreement, which failure or refusal
continues for a period of fifteen (15) days after written notice thereof is
given to the Employee by the Company, (iii) the Employee's gross negligence or
willful misconduct in the performance of his duties hereunder, (iv) the
Employee's commission of an act of dishonesty affecting the Company, or the
commission of an act constituting common law fraud or a felony, (v) the
Employee's commission of an act (other than the good faith exercise of his
business judgment in the exercise of his responsibilities) resulting in damages
to the Company, or (vi) the Employee's inability to perform his duties and
responsibilities as provided herein due to his physical or mental disability or
sickness extending for greater than one hundred
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fifty (150) days. If the Employee shall resign or otherwise terminate his
employment with the Company, the Employee shall be deemed for purposes of this
Agreement to have been terminated for Cause.
(b) Without Cause. At any time during the Employment Period, the
Company shall have the right to terminate the Employment Period and to discharge
the Employee without Cause effective upon delivery of written notice to the
Employee.
Upon any such termination by the Company without Cause, the Employee shall
be entitled to (A) continue to receive his Salary payable in accordance with
Section 1(d) for six (6) months following the date of such notice, (B)
reimbursement of expenses properly incurred by the Employee prior to the date of
termination and not previously reimbursed, (C) any benefits which are required
by law, (D) reimbursement of expenses incurred by Employee to continue the
health insurance benefit provided by the Company for the six (6) month period
following the date of such notice, (E) the immediate vesting of any unvested
options issued to Employee pursuant to Section 1(e) hereof, and otherwise the
Company shall have no further obligations hereunder from and after the date of
such termination; provided, however that the Employee shall only be entitled to
such payments as long as (i) he is in compliance with the provisions of Sections
3 and 4 below; and (ii) the Employee executes a release reasonably acceptable to
the Company, releasing the Company from any and all claims arising out of the
Employee's employment with the Company other than a claim for benefits required
pursuant to the terms of this Section of this Agreement.
3. Restrictive Covenants. In consideration of the foregoing, the
Employee agrees that the Employee shall not directly or indirectly:
(a) for the Employment Period and for a period of one (1) year
following the date of termination of Employee's employment by the Company,
except in the case of a termination without cause in which such case for a
period of six (6) months (the "Noncompete Period"), directly or indirectly,
alone or as a partner, joint venturer, officer, director, manager, employee,
consultant, agent, independent contractor, or security holder, of any company or
business, engage in, be involved with, or finance, or provide financial
assistance with respect to, any business engaged in the design, development,
marketing, manufacture, production, distribution or sale of any products or the
provisions of any services which are the same as or competitive with the HF
Radio products or services which the Communications Division was designing,
developing, marketing, manufacturing, producing, distributing, selling or
providing at the time of, or for the six month period prior to, termination of
Employee's employment with the Company (the "Business") in the United States and
any other country or territory in which the Communications Division was doing
business at the time of, or for the six month period prior to, termination of
Employee's employment with the Company (the "Territory"); provided, however,
that the beneficial ownership of less than five percent (5%) of any class of
securities of any entity having a class of equity securities actively traded on
a national securities exchange or over-the-counter market shall not be deemed,
in and of itself, to violate the prohibitions of this Section;
(b) during the Noncompete Period, directly or indirectly, (i)
induce any customer of the Communications Division to patronize any business
which is directly or indirectly in competition with the Business conducted by
the Communications Division; (ii) canvass, solicit or accept from any Person
which is a customer of the Business conducted by the
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Communications Division any such competitive business; or (iii) request or
advise any customer or other business relationship of the Business conducted by
the Communications Division to withdraw, curtail, decrease or cancel any such
person's business with the Communications Division or its successors; and
(c) during the Noncompete Period, directly or indirectly, employ
any person who was employed by the Communications Division or in any manner seek
to induce any employee of the Communications Division to leave his or her
employment.
4. Confidentiality; Non-Disparagement.
(a) The Employee agrees that at all times during and after the
Employment Period, the Employee shall (i) hold in confidence and refrain from
disclosing to any other party all information, whether written or oral, of a
private, secret, proprietary or confidential nature, of or concerning the
Communications Division and their business and operations, and all files,
letters, memoranda, reports, records, computer disks or other computer storage
medium, data, models or any photographic or other tangible materials containing
such information ("Confidential Information"), including without limitation, any
sales, promotional or marketing plans, programs, techniques, practices or
strategies, any expansion plans (including existing, and entry into new,
geographic and/or product markets), and any customer lists, (ii) use the
Confidential Information solely in connection with his employment with the
Communications Division and for no other purpose, (iii) take all precautions
necessary to ensure that the Confidential Information shall not be, or be
permitted to be, shown, copied or disclosed to third parties, without the prior
written consent of the Board of Directors of the Company, and (iv) observe all
security policies implemented by the Company from time to time with respect to
the Confidential Information. Confidential Information shall not include any
information which becomes generally available to the public or lawfully
obtainable from other sources (except by reason of any unauthorized disclosure
by the Employee). In the event that the Employee is ordered to disclose any
Confidential Information, whether in a legal or regulatory proceeding or
otherwise, the Employee shall provide the Board of Directors of the Company with
prompt notice of such request or order so that the Company may seek to prevent
disclosure. In the case of any disclosure, the Employee shall disclose only that
portion of the Confidential Information that he is ordered to disclose.
(b) The Employee agrees that at all times during and for the one
(1) year period after the Employment Period, the Employee will not engage in any
conduct that is injurious to the Company's reputation and interests, including,
but not limited to, making disparaging comments (or inducing or encouraging
others to make disparaging comments) about the Company or any of the Company's
directors, officers, employees, managers, members or agents or the Company's
operations, financial condition, prospects, products or services.
5. Acknowledgments of the Parties. The parties agree and acknowledge
that the restrictions contained in Sections 3 and 4 hereof are reasonable in
scope and duration and are necessary to protect the Company. If any provision of
Section 3 or 4 as applied to any party or to any circumstance is adjudged by a
court to be invalid or unenforceable, the same shall in no way affect any other
circumstance or the validity or enforceability of any other provision of this
Agreement. If any such provision, or any part thereof, is held to be
unenforceable because of the duration of such provision or the area covered
thereby, the parties agree that the court making such determination shall have
the power to reduce the duration and/or area of such provision,
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and/or to delete specific words or phrases, and in its reduced form, such
provision shall then be enforceable and shall be enforced. It is expressly
acknowledged and agreed that the restrictions contained in Sections 3 and 4
shall survive and continue to be in effect, in accordance with the terms hereof,
following the expiration or termination for any reason of the Employee's
relationship with the Company. The provisions of Sections 3 and 4 shall be
construed as an agreement on the part of Employee independent of any other part
of this Agreement or any other agreement, and the existence of any claim or
cause of action of Employee against the Company whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Company of the provisions of Sections 3 or 4.
6. Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing and shall be deemed given if
delivered by certified or registered mail (first class postage pre-paid),
guaranteed overnight delivery or facsimile transmission if such transmission is
confirmed by delivery by certified or registered mail (first class postage
pre-paid) or guaranteed overnight delivery to, the following addresses and
telecopy numbers (or to such other addresses or telecopy numbers which such
party shall designate in writing to the other parties): (a) if to the Company,
to Sunair Electronics, Inc., 0000 X.X. 0xx Xxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx
00000 Attention: President, Fax: (000) 000-0000; and (b) if to the Employee, at
the address and facsimile number listed on the signature page hereto.
7. Amendment; Waiver. This Agreement may not be modified, amended,
supplemented, canceled or discharged, except by a written instrument executed by
all parties. No failure to exercise, and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the exercise of any other right, power or privilege. No waiver of any breach of
any provision shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision, nor shall any waiver be implied from
any course of dealing between the parties. No extension of time for performance
of any obligations or other acts hereunder or under any other agreement shall be
deemed to be an extension of the time for performance of any other obligations
or any other acts. The rights and remedies of the parties under this Agreement
are in addition to all other rights and remedies, at law or equity, that they
may have against each other.
8. Remedies Upon Breach. Employee acknowledges that his services
hereunder are of a special and unique character and places him in a position of
trust and confidence with confidential and proprietary documents and information
and employees, customers and suppliers of the Company, and that such information
and documents are of a special and unique character that give them a peculiar
value, and, as a result, any breach of Employee's obligations under this
Agreement will cause the Company irreparable injury that cannot be adequately
compensated by the payment of damages in an action at law. Accordingly, the
parties agree that the Company shall be entitled to the remedies of injunction,
specific performance and other equitable relief to redress any breach, or to
prevent any threatened breach and the Company shall be required to prove special
damages and provided the Company is successful on the merits, Employee shall pay
any and all costs and expenses (including reasonable attorneys' fees and
expenses) incurred by the Company in enforcing its rights hereunder. Nothing
contained in this Agreement shall, however, be construed as a waiver by the
Company of any right, including, without limitation, the Company's right to
damages.
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9. Assignment. This Agreement, and the Employee's rights and
obligations hereunder, may not be assigned or delegated by Employee. The Company
may assign its rights, and delegate its obligations, hereunder without the
consent of the Employee. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and be binding upon their respective
successors and assigns.
10. Severability; Survival. Subject to Section 5 hereof, in the event
that any provision of this Agreement is found to be void and unenforceable by a
court of competent jurisdiction, then such unenforceable provision shall be
deemed modified so as to be enforceable (or if not subject to modification then
eliminated herefrom) for the purpose of those proceedings to the extent
necessary to permit the remaining provisions to be enforced. The provisions of
Sections 3, 4 and 8 will survive the termination for any reason of the
Employee's relationship with the Company.
11. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
12. Governing Law. This Agreement shall be construed in accordance with
and governed for all purposes by the laws of the State of Florida applicable to
contracts executed and to be wholly performed within such State.
13. Entire Agreement. This Agreement contains the entire understanding
of the parties in respect of its subject matter and supersedes all prior
agreements and understandings (oral or written) between or among the parties
with respect to such subject matter. Notwithstanding the foregoing, Employee
acknowledges the execution and continued applicability of certain agreements
entered into with the Company including that certain Release and Waiver
Agreement dated March 22, 1988, and that certain Nondisclosure Agreement dated
March 22, 1988.
14. Headings. The headings herein are for convenience of reference and
are not part of this Agreement and shall not affect the interpretation of any of
its terms.
15. Construction. This Agreement shall be construed as a whole according
to its fair meaning and not strictly for or against any party. The parties
acknowledge that each of them has reviewed this Agreement and has had the
opportunity to have it reviewed by their respective attorneys and that any rule
of construction to the effect that ambiguities are to be resolved against the
drafting party shall not apply in the interpretation of this Agreement.
16. Effective Date. This Agreement shall only be effective from and
after the First Closing Date. Prior to the First Closing Date, this Agreement
shall be of no force and effect. This Agreement shall also be of no force and
effect if the Employee's employment with the Company terminates for any reason
prior to the First Closing Date.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SUNAIR ELECTRONICS, INC., a
Florida corporation
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Secretary/Treasurer
EMPLOYEE:
/s/ Xxxxx X. Xxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxx
Address for Notices:
0000 XX 0xx Xx.
Xxxxxxxxxx, XX 00000
Facsimile: 000 000-0000
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