EMPLOYMENT AGREEMENT
EXHIBIT
10.3
Employment
Agreement (“Agreement”) effective as of April
9,
2007, by and between Advanced Automation Group LLC (the “Company” or
“Employer”), a Delaware limited liability company, and Xxxxxxxx Xxxx (the
“Executive”) (collectively the Company and the Executive are referred to as the
“Parties”).
INTRODUCTION
WHEREAS,
the
Employer and the Executive wish to enter
into this Agreement to
set
forth
the terms and conditions of the Executive’s employment by the
Company.
Accordingly,
in consideration of the mutual covenants and agreement set forth herein and
the
mutual benefits to be derived herefrom, and intending to be legally bound
hereby, the Company and the Executive agree as follows:
1. Employment
1.1 Duties.
The
Company shall employ the Executive on the terms and conditions set forth in
this
Agreement, as Research & Development Director (“R&D Director”). As
R&D Director, Executive will be responsible for managing research and
development of new generation of precision motor servo controllers for
industrial automation. The Executive accepts such employment with the Company
and shall perform and fulfill such other duties as are assigned to him hereunder
consistent with his status as a senior executive of the Company, devoting his
best efforts and substantially all of his professional time and attention (which
shall constitute no less than forty (40) working hours per week) to accomplish
the performance and fulfillment of his duties hereunder and to the advancement
of the best interests of the Company, subject only to the direction, approval,
and control of the Company’s specific directives of the Board of Managers of the
Company and Executive’s superiors (collectively, “Senior Management”).
1.2 Place
of Performance.
In
connection with his employment by the Company, the Executive shall be based
in
the Detroit, Michigan metropolitan area, except for required travel on Company
business.
2. Term
of Employment.
The
term
of employment of the Executive shall begin on the date entered above and shall
continue for eighteen (18) months, unless earlier terminated as set forth
herein. The Executive understands and agrees that neither his job performance
nor promotions, commendations, bonuses or the like from the Company give rise
to
or in any way serve as the basis for modification, amendment or extension,
by
implication or otherwise, of his term of employment with the
Company.
3. Compensation.
3.1 Base
Salary.
During
the term of this Agreement the Executive shall receive a minimum annual salary
(the “Base Salary”) payable in installments at such times as the Company
customarily pays its other senior executive employees and calculated as
follows:
3.1.1 The
Base
Salary to be paid to Executive shall be $95,000 on annualized
basis;
3.
1.2 The
Executive’s
Base Salary will be subject to review and adjustments will be made based upon
the Company’s normal performance review practices.
3.2 Bonus.
During
the term of this Agreement, the Executive may receive a
bonus,
which the Compensation Committee of the Company’s Board of Managers shall
determine annually and which shall be based on the same criteria and/or formulae
as are used in determining the bonuses and non-salary distributions paid to
similarly situated employees.
3.3 Health
Insurance and Other Benefits.
During
the term of this Agreement, the Executive shall be provided all employee
benefits provided by the Company to its management and all other Company
salaried employees, including without limitation, all medical insurance and
life
insurance plans or arrangements and shall be entitled to participate in all
pension, profit sharing, stock option and any other employee benefit plan or
arrangement established and maintained by the Company, all subject, however,
to
the Company rules and policies then in effect regarding participation therein.
During the term of this Agreement, the benefits provided to Executive, as
described in the preceding sentence, shall not be reduced except in accordance
with the general reduction of such benefits applicable to all salaried employees
generally, but then only to the extent that such benefits are reduced for such
other salaried employees.
4. Reimbursement
of Expenses.
The
Executive shall be reimbursed for all items of travel, entertainment and
miscellaneous expenses which the Executive reasonably incurs in connection
with
the performance of his duties hereunder, provided that (a) all expenses over
$500 are approved by Senior Management prior to being incurred, (b) the
Executive submits to the Company on proper forms provided by the Company such
statements and other evidence supporting such expenses as the Company may
reasonably require and (c) such expenses meet the Company’s policy concerning
such matters.
5. Vacations.
The
Executive shall be entitled to not less than three (3) weeks of paid vacation
in
any calendar year (prorated in any Year during which the Executive is employed
hereunder for less than the entire Year).
6. Termination
of Employment.
6.1 Severance
upon Termination without Cause.
If the
Executive’s employment is terminated by the Company without Cause (as defined
below) (the date of termination is referred to as the “Termination Date”), then
the Company shall pay the Executive in lieu of other damages, an amount (the
“Severance Payments”) equal to his then current Base Salary payable in
installments at the same time the Company pays salary to its other senior
executive employees for four (4) weeks (the “Severance Period”). The Company
shall have no liability to make any Severance Payments as provided for in this
paragraph unless (i) the Executive executes a Separation Agreement and General
Release in a form satisfactory to the Company, and (ii) Executive complies
with
all provisions in Section 8 (Restrictive Covenants). In addition, (i) any
Company stock options not vested at the time of termination shall immediately
terminate and (ii) the Company shall maintain during the Severance Period all
employee benefit plans and programs which the Executive participated in
immediately prior to such termination other than bonus, Commission, incentive
compensation and similar plans based on performance, provided Executive’s
participation is permissible under the general terms and provisions of such
plans. If Executive is terminated for Cause, he shall receive only those amounts
earned but not distributed under the relevant plan, program or practice of
the
Company.
6.2 Voluntary
Termination; Termination for Cause.
If
Executive’s employment with the Company is terminated for “Cause” by the Company
(as defined below) or if the Executive voluntarily terminates his employment
with the Company at any time, then (i) all payments of compensation by the
Company to Executive hereunder will terminate immediately (except as to amounts
already earned), and (ii) Executive will only be eligible for severance benefits
in accordance with the Company’s established policies as then in
effect.
7. Definitions.
7.1 Cause.
For
purposes of this Agreement, “Cause” shall mean: (i) the Executive’s
continued substantial violations of his employment duties (other than a failure
resulting from the Executive’s in ability to perform his duties because of
illness or other physical or mental incapacity (based on a medical report
provided to the Company) after the Executive has received written demand for
performance from the Company’s Chief Executive Officer or Board which
sets forth the factual basis for the Company’s belief that the Executive has not
substantially performed his duties;
(ii) the Executive engaging in illegal conduct
that was or is reasonably likely to be materially injurious to the business
or
reputation of the Company or its affiliates; (iii) the Executive’s
violation of a federal or state law or regulation materially applicable to
the
Company’s Business; (iv) the Executive’s material breach of the terms of
any confidentiality agreement or invention assignment agreement between the
Executive and the Company; or (v) the Executive being convicted of, or
entering a plea of nolo
contendere to,
a
felony (other than a traffic violation) or committing any act of moral
turpitude, dishonesty or fraud against, or the misappropriation of material
property belonging to, the Company or its affiliates.
8. Restrictive
Covenants.
8.1 Covenant
Not to Compete.
Executive recognizes that the Company is engaged in a highly competitive
business, personal contact is of primary importance in securing new customers
and in retaining the accounts and goodwill of present customers and protecting
the Business of the Company. The Executive, therefore, agrees that during the
Employment Period and (x) during the Severance Period if Executive is receiving
Severance Payments or
(y)
after Executive’s employment is terminated for Cause, for one (1) year following
the Termination Date (either of such periods of time is referred to as the
“Restricted Period”),
he will
not, with respect to the Company’s Business (i) accept employment or render
service to any Person that is engaged in a business directly competitive with
the Company’s Business or (ii) enter into or take part in or lend his name,
counsel or assistance to any business, either as proprietor, principal,
investor, partner, director, officer, executive, consultant, advisor, agent,
independent contractor, or in any other capacity whatsoever, for any purpose
that would be competitive with the Company’s Business (all of the foregoing
activities are collectively referred to as the “Prohibited Activity”). For these
purposes, the Company’s Business shall mean (i)
design, manufacturing and sales of precision servo motor controllers for
industrial automation, and (ii) any other business engaged in by the Company
on
the Termination Date.
8.2 Non-Disclosure
of Information.
The
Executive shall:
8.2.1 Never,
directly or indirectly, disclose to any person or entity for any reason, or
use
for his own personal benefit, any “Confidential Information” as hereinafter
defined; and
8.2.2 At
all
times take all reasonable precautions necessary to protect from loss or
disclosure by Executive or his subordinates any and all documents or other
information containing, referring, or relating to such Confidential Information.
Upon termination of employment with the Company for any reason, the Executive
shall promptly return to the Company any and all documents or other tangible
property containing, referring, or relating to such Confidential Information,
whether prepared by him or others.
8.2.3 Notwithstanding
any provision to the contrary in Section 8, this paragraph shall not apply
to
information which the Executive is called upon by legal process (including,
without limitation, by subpoena or discovery requirement) to disclose or any
information which has become part of the public domain or is otherwise publicly
disclosed through no fault or action of the Executive.
8.2.4 For
purposes of this Agreement, “Confidential Information” shall mean any
information relating in any way to the business of the Company disclosed to
or
known to the Executive as a consequence of, result of, or through the
Executive’s employment by the Company which may consist of, but not be limited
to, technical and non-technical information about the Company’s proprietary
products, processes, programs, concepts, forms, business methods, data, any
and
all financial and accounting data, employees, marketing, customers, customer
lists, and services and information corresponding thereto acquired by the
Executive during the term of the Executive’s employment by the Company.
Confidential Information shall not include any of such items which are published
or are otherwise part of the public domain, or freely available from trade
sources or otherwise.
8.2.5 Upon
termination of this Agreement for any reason, the Executive shall return to
a
designated officer of the Company all equipment and/or tangible property then
in
the Executive’s possession or custody which belongs or relates to the Company,
including, without limitation, copies or reproductions of correspondence,
memoranda, reports, notebooks, drawings, photographs, data base, or any other
documents or electronically stored information which constitutes Confidential
Information.
8.3 Trade
Secrets - Intellectual Property Rights.
Executive shall provide the Company with any copyrightable work, trade secrets
and other protectable intellectual property that are related to the Company’s
Business and that are developed or produced by Executive while in the employment
of the Company pursuant to this Agreement (collectively, “Work
Product”).
8.3.1 All
Work
Product shall be considered works made for hire and shall be the exclusive
property of the Company and the Company shall be considered the author and/or
creator of such work for worldwide copyright purposes and renewals and
extensions thereof. The Company may request, at its own cost and expense, that
Executive assist the Company in obtaining worldwide patent, copyright and other
property rights for the Work Product.
8.3.2 If
Executive’s rights in the Work Product cannot be assigned to the Company, the
Executive waives enforcement of all such rights against the Company. The
Executive further agrees to join in any action, at the Company’s sole cost and
expense, to enforce or to procure a waiver of such rights.
8.3.3 If
the
rights of the Work Product cannot be waived or the Work Product is not deemed
a
“work for hire”, the Executive hereby grants the Company and its assigns a
worldwide royalty-free license to reproduce, distribute, modify, publicly
display, sublicense and assign such rights in all media or distribution
technologies now known and hereinafter developed or devised.
8.3.4 The
Executive hereby appoints the Company as his attorney in fact to execute and
file any patent, copyright or other lawful application with respect to the
Work
Product.
8.4 Conflict
of Interest.
Executive shall exercise good judgment and maintain high ethical standards
in
the course of his dealings so as to preclude the possibility of a conflict
between the interest of the Company and his own personal interest. Executive,
therefore, has an obligation to avoid any activity, agreement, personal
interest, or other relationship or situation which: (i) conflicts with the
Company’s best interest; (ii) interferes with Executive’s responsibility to
serve the Company to the best of Executive’s ability; or (iii) gives the
appearance of self dealing.
8.4.1 This
policy requires that Executive shall not have any relationship, nor engage
in
any activity that might impair the independence or judgment in the execution
of
Executive’s duties. Executive shall not have any direct or indirect personal
financial interests in suppliers of property, goods or services that would
affect his decisions or actions on the Company’s behalf. Executive shall not
accept gifts, benefits, or unusual hospitality that would be reasonably likely
to influence Executive in the performance of his duties.
8.4.2 If
any
possible conflict of interest situation arises, the Executive is responsible
to
immediately disclose the facts to the Board of Managers of the Company so that
an evaluation may determine whether a problem exists and, if so, to eliminate
it.
8.5 Nonsolicitation.
During
the
term of this Agreement and during the Restricted Period, Executive shall not,
directly or indirectly, induce, attempt to induce, or aid others in inducing
any
of Company’s employees to accept employment or affiliation with another firm,
partnership, association, or company.
8.6 Injunctive
Relief/Legal Remedies.
The
Parties agree that the remedy at law for any breach by Executive of this
Agreement, and specifically the provisions of Section 8 (“Restrictive
Covenants”), will be inadequate and that the Company or any of its subsidiaries
or other successors or assigns shall be entitled to injunctive relief without
bond. Such injunctive relief shall not be exclusive, but shall be in addition
to
any other rights and remedies Company or any of its subsidiaries or their
successors or assigns might have for such breach.
8.6.1 The
Employee acknowledges: (i) that compliance with the restrictive provisions
contained in Section 8 is necessary to protect the business and goodwill of
the
Company and its subsidiaries, and (ii) that a breach of this Agreement will
result in irreparable and continuing damage to the Company, for which monetary
damages may not provide adequate relief. Consequently, Employee agrees that
in
the event of a breach or threatened breach of any of the restrictive covenants
described herein, the Company, at its discretion, shall be entitled to seek
both: (i) a preliminary and/or permanent injunction in order to prevent such
damage, or continuation of such damage, and (ii) monetary damages as
determinable. Nothing herein, however, shall be construed to restrict and/or
prohibit the Company from pursuing any and all other remedies; the employee
acknowledges that all remedies are cumulative.
8.6.2 If
any
legal action arises to enforce the Company’s trade secrets, the prevailing party
shall be entitled to recover any and all damages, as well as all costs and
expenses, including reasonable attorney’s fees incurred in enforcing or
attempting to enforce the Company’s trade secrets.
9. Arbitration.
9.1 Any
and
all disputes, controversies and claims arising out of, or relating to, this
Agreement, or with respect to the interpretation of this Agreement, or the
rights or obligations of the Parties and their successors and permitted assigns,
whether by operation of law or otherwise, shall be settled and determined by
arbitration in New York, New York, pursuant to the then existing rules of the
American Arbitration Association (“AAA”), for commercial arbitration. Each party
shall pay their own legal fees. The losing party shall pay the fees and costs
imposed by the AAA; if neither party clearly prevails in the arbitration, the
parties shall request that the AAA appointed arbitrator apportion the AAA’s fees
and costs between the parties.
9.2 The
Parties covenant and agree that the decision of the AAA shall be final and
binding and hereby waive their right to appeal therefrom.
9.3 The
arbitrator(s) will apply New York law to the merits of any dispute or claim,
without reference to rules of conflicts of law. The arbitration proceedings
will
be governed by federal arbitration law and by then existing rules of the AAA,
without reference to arbitration law. Executive and the Company hereby consent
to the personal jurisdiction of the state and federal courts located in New
York, New York for any action or proceeding arising from or relating to this
Agreement or relating to any arbitration in which the Parties are
participants.
9.4 THE
EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION.
THE EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE AGREES
TO
SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS
AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH
OR
TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE
CONSTITUTES A WAIVER OF THE EXECUTIVE’S RIGHT TO A JURY TRIAL AND RELATES TO THE
RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE
RELATIONSHIP, INCLUDING BUT NOT LIMITED TO ADMINISTRATIVE CLAIMS.
10. Miscellaneous.
10.1 Notices.
Any
notice, demand or communication required or permitted under this Agreement
shall
be in writing and shall either be hand-delivered to the other party or mailed
to
the addresses set forth below by registered or certified mail, return receipt
requested, or sent by overnight express mail or courier or facsimile to such
address, if a party has a facsimile machine. Notice shall be deemed to have
been
given and received (i) when hand-delivered or after three (3) business days
when
deposited in the U.S. Mail, (ii) when transmitted and received by facsimile
or
sent by express mail properly addressed to the other party. The addresses
are:
To
the
Company:
Advanced
Automation Group LLC
0000
Xxxxxx Xxxx
Xxxxxxxxx
Xxxxx, Xxxxxxxx 00000
To
the
Executive:
Xxxxxxxx
Xxxx
0000
Xxxxxxxxx Xxxxx
Xxxx,
Xxxxxxxx 00000
The
foregoing addresses may be changed at any time by either party by notice given
in the manner herein provided.
10.2 Integration;
Modification.
. This
Agreement,
the
Letter Agreement dated as of March __, 2007 by and among Harbin Electric, Inc,
Xxxxxxx Technology LLC, Executive and Xxxxxxxx Xxx ( the “Master Agreement”) and
the License Agreement dated as of March __, 2007 by and between the Company,
Xxxxxxx Technology LLC, Executive and Xxxxxxxx Xxx
constitute the entire understanding and agreement between the Company and the
Executive regarding its subject matter, and supersedes all prior negotiations
and agreements or interpretations, whether oral or written. This Agreement
may
not be modified except by written agreement signed by the Executive and a duly
authorized officer of the Company. In the event of any conflict between the
terms of this Agreement and the terms of the Master Agreement, the terms of
the
Master Agreement shall govern.
10.3 Binding
Effect.
This
Agreement shall be binding upon and inure to the benefit of the parties,
including and their respective heirs, executors, successors and assigns, except
that this Agreement may not be assigned by the Executive.
10.4 Waiver
of Breach.
No
waiver by either party of any condition or of the breach by the other of any
term or covenant contained in this Agreement, whether conduct or otherwise,
in
any one (1) or more instances shall be deemed or construed as a further or
continuing waiver of any such condition or breach or a waiver of any other
condition, or the breach of any other term or covenant set forth in this
Agreement. Moreover, the failure of either party to exercise any right hereunder
shall not bar the later exercise thereof with respect to other future
breaches.
10.5 Governing
Law.
This
Agreement shall be governed by the internal laws of the State of New
York.
10.6 Headings.
The
headings of the various sections and paragraphs have been included herein for
convenience only and shall not be considered in interpreting this
Agreement.
10.7 Counterparts.
This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original but all of which together will constitute one (1) and the
same
instrument.
10.8 Due
Authorization.
The
Company represents that all corporate action required to authorize the
execution, delivery and performance of this Agreement has been duly
taken.
IN
WITNESS WHEREOF,
this
Agreement has been executed by the Executive and on behalf of the Company by
its
duly authorized officer on the day and year first above written.
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ADVANCED
AUTOMATION GROUP, LLC
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| By: | /s/ Xxxxxx Xxxx | |
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Chaiman and Chief Executive Officer |
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April 9, 2007
Date
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EXECUTIVE:
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| /s/ Xxxxxxxx Xxxx | ||
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Xxxxxxxx Xxxx |
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April 9, 2007
Date
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