EXHIBIT 10.12
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into effective as of the close of business on
the 31st day of October, 2003, by and between Automation, Manufacturing &
Robotic Technologies, LLC, a Minnesota limited liability company ("Employer"),
and Xxxxxxx Xxxxxxxx ("Xxxxxxxx").
W I T N E S S E T H :
WHEREAS, Employer and Xxxxxxxx mutually desire to establish an employment
arrangement on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt, sufficiency and mutuality of
which are hereby acknowledged, the parties agree as follows:
ARTICLE 1.
EMPLOYMENT AND TERM
1.1. EMPLOYMENT. On the terms herein contained, Employer hereby employs
Xxxxxxxx as its President and Xxxxxxxx hereby accepts such employment.
1.2. TERM. Except as otherwise provided in this Agreement, this Agreement
shall be effective as of the date hereof and shall continue in full force and
effect through December 31, 2006, and shall then terminate.
ARTICLE 2.
COMPENSATION
2.1. PRE-SIGNING BONUS. In consideration of past services rendered by
Xxxxxxxx, it is acknowledged that prior to the execution of this Agreement,
Employer shall pay to Xxxxxxxx a pre-signing bonus equal to Forty-Nine Thousand
Five Hundred Fifty-One and 31/100 Dollars ($49,551.31).
2.2. ANNUAL SALARY. In exchange for the provision of services, Xxxxxxxx
shall be paid salary at an annual rate of One Hundred Twenty-Five Thousand and
00/100 Dollars ($125,000.00), payable in accordance with the standard payroll
practices of Employer.
2.3. NET SALES BONUS. As additional compensation, in exchange for the
provision of services, Xxxxxxxx shall be paid a bonus based upon the "Net Sales"
of Employer in accordance with the following (the "Net Sales Bonus"):
2.3.1. DEFINITIONS. For purposes of calculating the Net Sales Bonus,
the following definitions shall apply:
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a) ASE. "ASE" means Aero Systems Engineering, Inc., a
Minnesota corporation.
b) ASE ACCOUNTING POLICIES. "ASE Accounting Policies"
means the internal accounting policies and procedures
of ASE, where such internal policies and procedures
are consistently applied with respect to ASE and
Employer. ASE may, in its sole discretion, change its
internal accounting policies and procedures so long
as they remain in compliance with generally accepted
accounting principles and are uniformly applied to
ASE and Employer; provided, however, if such change
shall materially impact the Net Sales calculations,
there shall be an appropriate adjustment so that the
Net Sales as calculated after such change shall be
substantially the same as the Net Sales calculated
prior to such change.
c) NET SALES. "Net Sales" for a given fiscal period
(fiscal quarter or fiscal year, as the case may be)
means the net revenues from product or services sales
(in the ordinary course of business) of Employer for
that fiscal period, calculated in accordance with
generally accepted accounting principles and the ASE
Accounting Policies, except that there shall not be a
reserve for doubtful accounts and instead Net Sales
for a given fiscal period shall be adjusted downward
for uncollected receivables as provided in Section
2.3.5 below.
d) NET SALES - XXXXXXXX. "Net Sales - Xxxxxxxx" for a
given fiscal period means the Net Sales of Employer
for that fiscal period where Xxxxxxxx was the
principal party responsible for Employer obtaining
the sales.
e) NET SALES - OTHERS. "Net Sales - Others" for a given
fiscal period means the Net Sales of Employer for
that fiscal period where Xxxxxxxx was not the
principal party responsible for Employer obtaining
the sales.
2.3.2. APPLICABLE PERIODS. If and as provided in this Agreement, the
Net Sales Bonus shall be paid to Xxxxxxxx for fiscal year 2003, and for
each of the fiscal quarters during calendar years 2004, 2005 and 2006,
based upon the Net Sales of Employer for each such fiscal period.
2.3.3. AMOUNT OF NET SALES BONUS. For a given fiscal period, the Net
Sales Bonus to be paid by Employer to Xxxxxxxx will be equal to the sum
of the following:
a) 2% of the Net Sales - Xxxxxxxx for that fiscal
period; plus
b) 1% of the Net Sales - Others for that fiscal period.
Notwithstanding anything contained in this Agreement to the contrary,
whenever a given Net Sale includes a large equipment component so that
the gross margin percentage for that sale transaction is materially
less than the projected gross margin percentages indicated in the
financial projections for Employer as made available to and reviewed by
the board of governors of Employer as of the date of this Agreement,
the parties commit to negotiate in good faith to agree upon an
appropriate commission for that order; provided in no event will the
commission percentage on Net Sales - Xxxxxxxx be less than
2
1% and in no event will the commission percentage on Net Sales - Others
be less than 0.5%.
2.3.4. TERMS OF PAYMENT. Any Net Sales Bonus to be paid by Employer
to Xxxxxxxx shall be paid by no later than three (3) months following
the end of each applicable fiscal period. For example, the Net Sales
Bonus for calendar year 2003 shall be paid to Xxxxxxxx by no later than
March 31, 2004, and the Net Sales Bonus for the first fiscal quarter of
calendar year 2004 shall be paid to Xxxxxxxx by no later than June 30,
2004. With each payment, Employer shall include a summary of its
calculations for the Net Sales Bonus. It is agreed and understood that
payments of the Net Sales Bonus to Xxxxxxxx may be subject to offset
and payment to the "Buyers" in connection with an indemnification claim
brought by the Buyers against Xxxxxxxx under Article 6 of that certain
Membership Interest Purchase Agreement, dated October 31, 2003, entered
into by and among ASE, Xxxxxxxx, Xxxxxxx X. Xxxx, Xxxxxxxx X. Xxxxx and
Xxxxxx X. Xxxxxxxx (the "Purchase Agreement").
2.3.5. ACCOUNTS RECEIVABLE.
a) UNCOLLECTED ACCOUNTS RECEIVABLE. Any accounts
receivable of Employer resulting from sales occurring
during a given fiscal period which are not collected
within three (3) months following the end of such
fiscal period shall be deemed uncollectible for the
purpose of calculating the Net Sales Bonus to be paid
to Xxxxxxxx for the just completed fiscal period;
provided, however, that any account receivable deemed
uncollectible in accordance with the above for a
given fiscal period which is subsequently collected
shall increase the Net Sales in the fiscal period of
collection to the extent that Net Sales were
previously reduced as a result of the account
receivable previously being deemed uncollectible.
Additionally, for the fiscal quarter of Employer
ending December 31, 2006, Xxxxxxxx shall receive an
additional Net Sales Bonus payment to the extent
accounts receivable, relating to the Net Sales Bonus
paid to Xxxxxxxx for the fiscal quarter ending
December 31, 2006 and deemed uncollectible in
accordance with the above, are collected during the
period from April 1, 2007 through June 30, 2007.
b) COLLECTION EFFORTS. Employer commits to utilize
commercially reasonable efforts to collect all
accounts receivable of Employer; provided, however,
that this shall not require Employer to initiate any
suit or other legal process or engage any collection
agency as part of its collection efforts.
c) APPLICATION OF RECEIPTS. All sums received by
Employer from an account receivable account debtor
shall be applied by Employer to the oldest balance
first for each such account debtor; provided,
however, that (i) if the payment specifically
references an invoice, the payment shall be applied
to that invoice, (ii) if the account debtor contests
an invoice, the payment shall not be applied to that
invoice unless the account debtor specifically
requests that the payment be applied to such invoice,
and (iii) if the amount of the payment matches up
with the amount of a given
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invoice, the payment shall be applied to that
invoice. Employer shall attempt to give Xxxxxxxx
reasonable notice of any contested invoice.
2.4. BENEFITS. As additional compensation, in exchange for the provision of
services, Xxxxxxxx shall receive, to the extent eligible, those same employee
benefits as are provided generally by Employer to other similarly situated
employees. It is understood that Employer may make changes to any such employee
benefits at its discretion, including the discontinuance of any such benefits,
so long as similar changes are made with respect to the employee benefits
provided to other similarly situated employees.
2.5. VACATION. Xxxxxxxx shall be entitled to four (4) weeks paid vacation
per year.
ARTICLE 3.
DUTIES OF XXXXXXXX
3.1. SERVICES. Xxxxxxxx shall perform those duties and obligations as are
charged to Xxxxxxxx by the Board of Governors of Employer, and will comply with
the policies adopted by the Board of Governors of Employer, as the same may be
determined from time to time; provided, however, it is expected that the duties
assigned to Xxxxxxxx shall include the duties as described on attached Exhibit
A.
3.2. TIME AND EFFORT. Xxxxxxxx shall devote his full time and effort to the
business of Employer. Xxxxxxxx shall perform the duties and obligations required
of Xxxxxxxx hereunder in a competent, efficient and satisfactory manner at such
hours and under such conditions as the performance of such duties and
obligations may reasonably require.
3.3. ARTICLES AND BYLAWS. Xxxxxxxx shall act in accordance with and so as to
abide by the Articles of Incorporation and Bylaws of Employer.
ARTICLE 4.
TERMINATION
4.1. TERMINATION FOR CAUSE. Employer shall have the right to terminate the
employment of Xxxxxxxx upon the occurrence of any of the following events and
any such termination shall be considered "For Cause":
4.1.1. Xxxxxxxx shall breach or otherwise fail to perform any of his
material employment duties (other than as a result of his physical or
mental impairment, which shall be covered under Section 4.4 below) and
such breach or failure shall continue uncured for a period of thirty
(30) days following receipt of written notice thereof from Employer
(provided if such breach or failure is not reasonably capable of being
cured within the 30-day cure period, the length of the cure period will
be extended for up to an additional thirty days provided Xxxxxxxx
continuously throughout the cure period takes all action reasonably
required to remedy the breach);
4.1.2. Xxxxxxxx shall engage in any act constituting gross misconduct
such as theft, embezzlement, fraud or material dishonesty, a judicial
determination shall be made that Xxxxxxxx has engaged in sexual
harassment (or Employer shall have made a substantial
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payment to settle a claim of sexual harassment against Xxxxxxxx), or
Xxxxxxxx shall engage in misconduct involving moral turpitude (but
specifically excluding a breach of or failure to perform employment
duties under this Agreement, which shall be governed by Section 4.1.1
above) which relates or is connected to Xxxxxxxx'x employment with
Employer; or
4.1.3. Xxxxxxxx shall be convicted of, or shall plead guilty or nolo
contendere to, a felony (whether related or unrelated to Xxxxxxxx'x
employment with Employer).
Where the employment of Xxxxxxxx is terminated pursuant to this Section 4.1,
such termination shall be effective upon delivery of notice thereof to Xxxxxxxx
(except in the case of Section 4.1.1, where termination shall only be effective
if not remedied within thirty (30) days as provided therein) and the effect of
such termination shall be as indicated in Section 4.5 below.
4.2. TERMINATION WITHOUT CAUSE. Employer shall additionally have the right
to terminate the employment of Xxxxxxxx other than "For Cause" upon delivery of
written notice thereof to Xxxxxxxx. Where the employment of Xxxxxxxx is
terminated pursuant to this Section 4.2, such termination shall be effective as
of the date indicated in the termination notice (it being acknowledged that such
termination may be effective immediately on the date of the notice) and the
effect of such termination shall be as indicated in Section 4.5 below.
4.3. VOLUNTARY TERMINATION BY XXXXXXXX. Xxxxxxxx shall have the right to
terminate his employment with Employer at any time upon delivery of at least six
(6) weeks' written notice thereof to Employer. Where the employment of Xxxxxxxx
is terminated pursuant to this Section 4.3, such termination shall be effective
on the date indicated in the termination notice (provided, upon receipt of such
notice from Xxxxxxxx, Employer shall have the right to require that Xxxxxxxx'x
employment be terminated effective as of any date prior to the effective date
indicated in such notice) and the effect of such termination shall be as
provided in Section 4.5 below.
4.4. DEATH OR DISABILITY. The employment of Xxxxxxxx shall additionally and
automatically terminate upon the death of Xxxxxxxx or upon Xxxxxxxx otherwise
becoming unable to perform his employment duties as the result of physical or
mental impairment for an aggregate of 180 days in any period of 360 consecutive
days. Where the employment of Xxxxxxxx is terminated pursuant to this Section
4.4., such termination shall be effective upon the date of such death or
disability of Xxxxxxxx and the effect of such termination shall be as provided
in Section 4.5 below.
4.5. EFFECT OF TERMINATION. The effect of any termination of Xxxxxxxx'x
employment with Employer pursuant to this Agreement shall be as follows:
4.5.1. SALARY. If Xxxxxxxx'x employment is terminated pursuant to
Section 4.1 (For Cause), Section 4.3 (Voluntary) or Section 4.4 (Death
or Disability), Xxxxxxxx shall receive payment of his Section 2.2
salary prorated through the effective date of such termination. If
Xxxxxxxx'x employment is terminated pursuant to Section 4.2 (Without
Cause), Xxxxxxxx shall continue to receive the full amount of his
Section 2.2 salary through December 31, 2006 in the same manner as if
his employment had not been terminated.
4.5.2. NET SALES BONUS. If Xxxxxxxx'x employment is terminated
pursuant to Section 4.1 (For Cause), Section 4.3 (Voluntary) or Section
4.4 (Death or Disability), he shall receive
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payment of the Net Sales Bonus based upon Net Sales occurring on or
prior to the effective date of his termination of employment with
Employer, payable in accordance with Section 2.3 above. If Xxxxxxxx'x
employment is terminated pursuant to Section 4.2 (Without Cause),
Xxxxxxxx shall continue to receive the full amount of the Net Sales
Bonus in the same manner as if his employment had not been terminated.
4.5.3. EMPLOYEE BENEFITS. Upon the termination of Xxxxxxxx'x
employment with Employer for any reason, whether voluntary or
involuntary, for cause or without cause, all other employee benefits
provided by Employer to Xxxxxxxx will terminate effective as of the
effective date of such termination of employment, subject to COBRA
rights; provided, however, that any accrued benefits of Xxxxxxxx under
any employee benefit plans and any rights he may have under the Member
Control Agreement of Employer shall be unaffected by such termination.
It is understood that the payments to be made to Xxxxxxxx as provided above
where his employment has been terminated pursuant to Section 4.2 (Without Cause)
shall only be required to be made if Xxxxxxxx first delivers to Employer a
release pursuant to which he releases Employer and ASE from all claims other
than claims relating to his right to receive the payments as provided above and
the right to receive additional payments of purchase price under the Purchase
Agreement.
4.6. SURVIVING RIGHTS. Notwithstanding the termination of Xxxxxxxx'x
employment, the parties shall be required to carry out any provisions hereof
which contemplate performance subsequent to such termination, and such
termination shall not affect any liability or other obligation which shall have
accrued prior to such termination, including, but not limited to, any liability
for loss or damage on account of a prior default.
ARTICLE 5.
EMPLOYMENT COVENANTS
5.1. CONFIDENTIALITY. Xxxxxxxx agrees that he shall not, during his
employment or thereafter, make use of, divulge or otherwise disclose, directly
or indirectly, any confidential information, trade secrets or business secrets
(including, without limitation, any customer lists, records, manuals or
financial information of ASE, Employer or any of their affiliates together with
any strategies or policies of ASE, Employer or any of their affiliates) which
Xxxxxxxx may have learned from ASE, Employer or any of their affiliates, whether
as a result of his employment or otherwise, except to the extent such disclosure
is necessary for his performance under this Agreement or if the information has
otherwise become publicly available through no fault of his.
5.2. COVENANT NOT TO COMPETE. Xxxxxxxx shall not, until two (2) years
following the termination of Xxxxxxxx'x employment with Employer, ASE and their
successors and affiliates, anywhere within North America (and any other
continent in which Employer has performed services or sold product within the 12
months preceding the termination of Xxxxxxxx'x employment), either directly or
indirectly:
5.2.1. Own, manage, finance, operate or control, or participate in
the ownership, management, financing, operation or control of, or be
employed by, or act as consultant or advisor to, or be connected in any
manner with, any corporation, partnership, person, firm or other
business that is engaged in (a) a business substantially similar to or
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otherwise competitive with the current business of Employer, (b) a
business substantially similar to or otherwise competitive with the
business engaged in by Employer at the time of the termination of
Xxxxxxxx'x employment or (c) a business of purchasing, selling or
leasing robotics, providing services relating to the integration of
robotics, or providing services relating to the development and
integration of related software (collectively, the "AMR Tec Business");
5.2.2. Call upon, solicit, divert or attempt to take away or continue
any business relationship with any customers or business of ASE or
Employer for the purpose of selling any product or service competitive
to ASE or Employer; or
5.2.3. Induce or attempt to induce any employee, agent or contractor
of or consultant to ASE or Employer or their affiliates to do any of
the foregoing or to discontinue such person's association with ASE or
Employer or their affiliates.
5.3. REMEDIES. Xxxxxxxx agrees and understands that any breach of the
covenants or agreements set forth in this Article 5 will cause ASE and Employer
irreparable harm for which there is no adequate remedy of law and, in addition
to whatever rights ASE and Employer may otherwise have under applicable law,
Xxxxxxxx consents to the issuance of an injunction in favor of ASE and Employer
enjoining the breach of any of the aforesaid covenants or agreements by any
court of competent jurisdiction. If any or all of the aforesaid covenants or
agreements are held to be unenforceable because of their scope or duration or
the subject matter covered thereby, the parties agree that the court making such
determination shall have the power to reduce or modify the scope, duration and
subject matter to the extent that allows the maximum scope, duration and subject
matter permitted by applicable law.
5.4. DISCLOSURE AND ASSIGNMENT OF PROPRIETARY RIGHTS. Xxxxxxxx shall
promptly disclose to Employer in writing all inventions, works of authorship,
technologies, processes, designs, products, modifications and improvements and
similar items that relate to ASE, Employer or either of their respective
businesses which are conceived, made, discovered, written or created by
Xxxxxxxx, either alone or jointly with another person, group or entity, during
the term of this Agreement and all continuations or extensions thereof. Xxxxxxxx
hereby assigns all rights to all such items to ASE and Employer. Xxxxxxxx agrees
to execute all documents, take all actions and supply all information that ASE
or Employer considers necessary or desirable in order to transfer or record the
transfer of Xxxxxxxx'x entire right, title and interest in and to such items to
ASE and/or Employer and in order to enable ASE and Employer to obtain exclusive
patent, copyright or other legal protection for such items.
5.5. DOCUMENTS AND TANGIBLE PROPERTY. All documents or other tangible
property relating in any way to the business of ASE and/or Employer which are
conceived of or generated by Xxxxxxxx or come into Xxxxxxxx'x possession during
his employment by Employer shall be and remain the exclusive property of
Employer and Xxxxxxxx agrees to return all such documents and tangible property
to Employer on termination of his employment or at such earlier time as Employer
may reasonably request him to do so.
ARTICLE 6.
GENERAL PROVISIONS
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6.1. NOTICES. All notices, requests and other communications shall be in
writing and, except as otherwise provided herein, shall be considered to have
been delivered (i) on the date of delivery if personally delivered, (ii) on the
first business day after the date of its mailing if sent by reputable overnight
courier addressed to the proper party at its address as set forth below, and
(iii) on the second business day after the date of its mailing if sent by United
States Mail, first class, certified or registered, postage prepaid, return
receipt requested, addressed to the proper party at its address as set forth
below, or to such other address as such party may hereafter designate by written
notice to the other party:
6.1.1. If to Employer, to: Automation, Manufacturing & Robotic
Technologies, LLC
c/o Aero Systems Engineering, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attn: President of Aero Systems
Engineering, Inc.
With a copy to:
Winthrop & Weinstine, P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx
6.1.2. If to Xxxxxxxx, to: Xxxxxxx Xxxxxxxx
0000 Xxxxxx Xxxxx
Xxxxxxx Xxxxxxx, XX 00000
With a copy to:
Best & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx Xxxx
6.2. WAIVER, MODIFICATION OR AMENDMENT. No waiver, modification or amendment
of any term, condition or provision of this Agreement shall be valid or of any
effect unless made in writing, signed by the party to be bound or its duly
authorized representative and specifying with particularity the nature and
extent of such waiver, modification or amendment. Any waiver by any party of any
default of the other shall not affect, or impair any right arising from, any
subsequent default. Nothing herein shall limit the rights and remedies of the
parties hereto under and pursuant to this Agreement, except as hereinbefore set
forth.
6.3. SECTION HEADINGS. Section headings as to the content of particular
sections are for convenience only and are in no way to be construed as part of
this Agreement or as a limitation of the scope of the particular sections to
which they refer.
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6.4. ENTIRE AGREEMENT. This Agreement contains the entire understanding of
the parties hereto concerning the employment of Xxxxxxxx by Employer and
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
6.5. INTERPRETATION AND SEVERANCE. The provisions of this Agreement shall be
applied and interpreted in a manner consistent with each other so as to carry
out the purpose and intent of the parties hereto, but if for any reason a
provision hereof is determined to be unenforceable or invalid, such provision or
such part thereof as may be unenforceable or invalid shall be deemed severed
from this Agreement and replaced by another provision which, being valid and
enforceable, most closely represents the original intentions of the parties, and
the Agreement as so modified shall be carried out with the same force and effect
as if the severed and replaced provision or part thereof had not been a part of
this Agreement.
6.6. COUNTERPARTS. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other party.
6.7. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota.
6.8. SURVIVAL. The parties acknowledge and agree that certain provisions of
this Agreement which by their express or implied terms extend beyond the
termination of Xxxxxxxx'x employment hereunder or beyond the termination of this
Agreement shall continue in full force and effect notwithstanding Xxxxxxxx'x
termination of employment or the termination of this Agreement.
6.9. ATTORNEYS' FEES AND COSTS. In the event that either party prevails in
legal action against the other arising under or relating to this Agreement, the
prevailing party shall be entitled to recover from the other party all of its
costs and expenses, including, without limitation, reasonable attorneys' fees.
6.10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
representatives, successors and assigns; provided, however, that the obligations
of Xxxxxxxx under this Agreement are personal to him and, as a consequence,
Xxxxxxxx may not assign or otherwise transfer any of his obligations under this
Agreement; and provided further, however, that it is agreed Employer may assign
all of its rights and obligations under this Agreement to an affiliate of
Employer so long as Employer remains liable to pay all amounts otherwise
required to be paid by Employer to Xxxxxxxx under this Agreement.
6.11 ARBITRATION. In the event of a dispute hereunder which cannot be
resolved by the parties among themselves, such dispute shall be settled by one
arbitrator selected in accordance with the Rules of the American Arbitration
Association and judgment on the award rendered pursuant to such arbitration may
be entered in any court or tribunal of competent jurisdiction. The parties
hereby agree that all arbitrations occurring under this Agreement shall be held
in Minneapolis, Minnesota. Notwithstanding the above, nothing contained herein
shall limit or restrict a party's ability to seek injunctive relief for a breach
or threatened breach of this Agreement in any court of competent jurisdiction.
[THE REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK.
SIGNATURES APPEAR ON THE FOLLOWING PAGE(s).]
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[SIGNATURE PAGE TO THAT CERTAIN EMPLOYMENT AGREEMENT, DATED OCTOBER 31, 2003.]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
EMPLOYER: XXXXXXXX:
Automation, Manufacturing & Robotic
Technologies, LLC /s/ Xxxxxxx Xxxxxxxx
----------------------------
Xxxxxxx Xxxxxxxx
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxx, Chief Financial Officer
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