EXHIBIT 10.17
Employment Agreement - Xxxx X. Xxxxxxxxx and Xxxxxx Motorcycle
Company, Ltd., Dated February 15, 2005
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made effective as of the 15th day
of February, 2005 (the "Effective Date")
BY AND BETWEEN:
XXXXXX MOTORCYCLE COMPANY, LTD., a Delaware corporation (the
"Company" or the "Employer"),
AND
XXXX X. XXXXXXXXX, an individual having an address at 00 Xxxxxx
Xxxxxx Xxxx Xxxxx, Xxx Xxxx 00000 ("Executive")
WHEREAS, Executive has agreed to serve as (i) President and Chief Executive
Officer and (ii) as Interim Chief Financial Officer of the Company, and the
Company and the Company have agreed to hire Executive as such, pursuant to the
terms and conditions of this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises
and the mutual covenants, agreements, representations and warranties contained
herein, the Purchase Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Executive and the
Company hereby agree as follows:
ARTICLE 1
EMPLOYMENT
Employer hereby hires the Executive as the President, Chief Executive Officer
and as interim Chief Financial Officer of the Company and Executive hereby
affirms and accepts such employment by Employer for the "Term" (as defined in
Article 3 below), upon the terms and conditions set forth herein.
ARTICLE 2
DUTIES
During the Term, Executive shall serve Employer faithfully, diligently and to
the best of his ability, under the direction and supervision of the Boards of
Directors of Employer ("Boards of Directors") and shall use his best efforts to
promote the interests and goodwill of Employer and any affiliates, successors,
assigns, parent corporations, subsidiaries, and/or future purchasers of
Employer. Executive shall render such services during the Term at Employer's
principal place of business or at such other place of business as may be
determined by the Boards of Directors, as Employer may from time to time
reasonably require of him, and shall devote all of his business time to the
performance thereof. Executive shall have those duties and powers as generally
pertain to each of the offices of which he holds, as the case may be, subject to
the control of the Boards of Directors. Employer and Executive also agree that
Executive shall serve as a member of the Employer's Board of Directors during
the Term.
ARTICLE 3
TERM
3.1 The "Term" of this Agreement in connection with the Executive's positions of
President and Chief Executive Officer and as interim Chief Financial Officer
shall commence on the date hereof and continue thereafter for a term of three
(3) years, as may be extended or earlier terminated pursuant to the terms and
conditions of this Agreement. The Term is renewable upon the agreement of the
parties hereto.
ARTICLE 4
COMPENSATION
SALARY
4.1 (a) In consideration of Executive's services to both Employer, Employer
shall pay to Executive an annual salary (the "Salary") of One Hundred Fifty
Thousand Dollars ($150,000.00), payable in equal installments at the end of such
regular payroll accounting periods as are established by Employer, or in such
other installments upon which the parties hereto shall mutually agree, and in
accordance with Employer's usual payroll procedures, but no less frequently than
monthly.
(b) In addition to his Salary, the Employer shall issue to the
Executive a stock grant in the amount of 200,000 shares upon the execution and
delivery of this Agreement, subject, however, to the Company's right to redeem a
certain amount of such shares in the event this Agreement is terminated by the
Executive without "Good Reason", as defined below, or by the Employer with
"cause", also as defined below, as follows: (i) if any such termination occurs
during the first year of the Term, all 200,000 shares shall be subject to
redemption by the Employer; (ii) if any such termination occurs during the
second year of the Term, 100,000 shares shall be subject to redemption, and;
(iii) if any such termination occurs during the third year of the Term, 50,000
shares shall be subject to redemption. The Company shall exercise its right to
redeem the shares eligible for redemption by written notice to the Executive and
for all purposes under this Section 4.1(b) the Employer's redemption price shall
be $.01 per share. In addition, the Employer shall issue to the Executive
incentive stock options to purchase 100,000 shares of the Employer's restricted
common stock vesting one third each upon the first, second and third anniversary
dates of this Agreement (the "Stock Options"). The restricted common shares and
the Stock Options issuable to Executive under the terms of this Section 4.1(b)
may be issued out of the Employer's stock incentive plan.
(c) Executive hereby acknowledges that the restrictive common shares
and the Stock Option issuable to him under this Section 4.1 shall be "restricted
securities" as such term is defined under Rule 144 promulgated under the
Securities Act of 1933, as amended (the "1933 Act"); that the Executive hereby
represents that he shall accept such compensation and has no present intent to
distribute or transfer such securities; that such securities shall bear the
appropriate restrictive legend providing that they may not be transferred except
pursuant to the registration requirements of the 1933 Act or pursuant to
exemptions therefrom, and; the Executive further acknowledges that he may be
required to hold such securities for an indeterminable amount of time.
BENEFITS
4.2 During the Term, Executive shall be entitled to participate in all medical
and other Executive benefit plans, including vacation, sick leave, retirement
accounts and other Executive benefits provided by Employer to any of the other
senior officers of the Employer on terms and conditions no less favorable than
those offered to such senior officers. Such participation shall be subject to
the terms of the applicable plan documents and Employer's generally applicable
policies.
EXPENSE REIMBURSEMENT
4.3 Employer shall reimburse Executive for reasonable and necessary expenses
incurred by him on behalf of Employer in the performance of his duties hereunder
during the Term, including any and all travel expenses related to the Employer's
business in accordance with Employer's then customary policies, provided that
such expenses are adequately documented.
BONUS
4.4 In addition to the compensation payable under Section 4.1, Executive shall
be entitled to receive an annual bonus, the amount of which shall be determined
by the Employer's Board of Directors ("Bonus"). Each year's Bonus shall be paid
to the Executive within 110 days of the Employer's calendar year end.
OTHER COMPENSATION
4.5 Employer shall provide Executive with a leased automobile for his exclusive
use throughout the term of this Agreement, including costs for maintenance.
ARTICLE 5
OTHER EMPLOYMENT
During the Term of this Agreement, Executive shall devote substantially all of
his business and professional time and effort, attention, knowledge, and skill
to the management, supervision and direction of Employer's business and affairs
as Executive's highest professional priority. Except as provided below, Employer
shall be entitled to all benefits, profits or other issues arising from or
incidental to all work, services and advice performed or provided by Executive.
Nothing in this Agreement shall preclude Executive from devoting reasonable
periods required for:
(a) serving as a director or member of a committee of any organization
or corporation involving no conflict of interest with the interests of Employer,
provided that Executive must obtain the written consent of Employer;
(b) serving as a consultant in his area of expertise (in areas other
than in connection with the business of Employer), to government, industrial,
and academic panels where it does not conflict with the interests of Employer;
and
(c) managing his personal investments or engaging in any other
non-competing business;
provided that such activities do not materially interfere with the regular
performance of his duties and responsibilities under this Agreement..
ARTICLE 6
CONFIDENTIAL INFORMATION/INVENTIONS
CONFIDENTIAL INFORMATION
6.1 Executive shall not, in any manner, for any reasons, either directly or
indirectly, divulge or communicate to any person, firm or corporation, any
confidential information concerning any matters not generally known in the
combustion engine industry (the "Engine Industry") or otherwise made public by
Employer which affects or relates to Employer's business, finances, marketing
and/or operations, research, development, inventions, products, designs, plans,
procedures, or other data (collectively, "Confidential Information") except in
the ordinary course of business or as required by applicable law. Without regard
to whether any item of Confidential Information is deemed or considered
confidential, material, or important, the parties hereto stipulate that as
between them, to the extent such item is not generally known in the Security
Industry, such item is important, material, and confidential and affects the
successful conduct of Employer's business and goodwill, and that any breach of
the terms of this Section 6.1 shall be a material and incurable breach of this
Agreement. Confidential Information shall not include: (i) information obtained
or which became known to Executive other than through his employment by
Employer; (ii) information in the public domain at the time of the disclosure of
such information by Executive; (iii) information that Executive can document was
independently developed by Executive; and (iv) information that is disclosed by
Executive with the prior written consent of Employer.
DOCUMENTS
6.2 Executive further agrees that all documents and materials furnished to
Executive by Employer and relating to the Employer's business or prospective
business are and shall remain the exclusive property of Employer. Executive
shall deliver all such documents and materials, uncopied, to Employer upon
demand therefore and in any event upon expiration or earlier termination of this
Agreement. Any payment of sums due and owing to Executive by Employer upon such
expiration or earlier termination shall be conditioned upon returning all such
documents and materials, and Executive expressly authorizes Employer to withhold
any payments due and owing pending return of such documents and materials.
INVENTIONS
6.3 All ideas, inventions, and other developments or improvements conceived or
reduced to practice by Executive, alone or with others, during the Term of this
Agreement, whether or not during working hours, that are within the scope of the
business of Employer or that relate to or result from any of Employer's work or
projects or the services provided by Executive to Employer pursuant to this
Agreement, shall be the exclusive property of Employer. Executive agrees to
assist Employer, at Employer's expense, to obtain patents and copyrights on any
such ideas, inventions, writings, and other developments, and agrees to execute
all documents necessary to obtain such patents and copyrights in the name of
Employer.
DISCLOSURE
6.4 During the Term, Executive will promptly disclose to the Boards of Directors
full information concerning any interest, direct or indirect, of Executive (as
owner, shareholder, partner, lender or other investor, director, officer,
Executive, consultant or otherwise) or any member of his immediate family in any
business that is reasonably known to Executive to purchase or otherwise obtain
services or products from, or to sell or otherwise provide services or products
to, Employer or any of their suppliers or customers.
ARTICLE 7
COVENANT NOT TO COMPETE
(A) Except as expressly permitted in Article 5 above, during the Term of this
Agreement, Executive shall not engage in any of the following competitive
activities: (a) engaging directly or indirectly in any business or activity
substantially similar to any business or activity engaged in (or proposed to be
engaged in) by Employer; (b) engaging directly or indirectly in any business or
activity competitive with any business or activity engaged in (or proposed to be
engaged in, by Employer; (c) soliciting or taking away any Executive, agent,
representative, contractor, supplier, vendor, customer, franchisee, lender or
investor of Employer, or attempting to so solicit or take away; (d) interfering
with any contractual or other relationship between Employer and any Executive,
agent, representative, contractor, supplier, vendor, customer, franchisee,
lender or investor; or (e) using, for the benefit of any person or entity other
than Employer any Confidential Information of Employer.
(B) The foregoing covenant prohibiting competitive activities shall survive the
termination of this Agreement and shall extend, and shall remain enforceable
against Executive, for the period of two (2) years following the date this
Agreement is terminated. In addition, during the two-year period following such
expiration or earlier termination, neither Executive nor Employer shall make or
permit the making of any negative statement of any kind concerning Employer or
their affiliates, or their directors, officers or agents or Executive.
ARTICLE 8
SURVIVAL
Executive agrees that the provisions of Articles 6, 7 and 9 shall survive
expiration or earlier termination of this Agreement for any reasons whether
voluntary or involuntary, with or without cause, and shall remain in full force
and effect thereafter.
ARTICLE 9
INJUNCTIVE RELIEF
Executive acknowledges and agrees that the covenants and obligations of
Executive set forth in Articles 6 and 7 with respect to non-competition,
non-solicitation, confidentiality and Employer's property relate to special,
unique and extraordinary matters and that a violation of any of the terms of
such covenants and obligations will cause Employer irreparable injury for which
adequate remedies are not available at law. Therefore, Executive agrees that
Employer shall be entitled to an injunction, restraining order or such other
equitable relief (without the requirement to post bond) as a court of competent
jurisdiction may deem necessary or appropriate to restrain Executive from
committing any violation of the covenants and obligations referred to in this
Article 9. These injunctive remedies are cumulative and in addition to any other
rights and remedies Employer may have at law or in equity.
ARTICLE 10
TERMINATION
TERMINATION BY EXECUTIVE
10.1 Executive may terminate this Agreement for Good Reason at any time upon 30
days' written notice to Employer, provided the Good Reason has not been cured
within such period of time.
GOOD REASON
10.2 In this Agreement, "Good Reason" means, without Executive's prior written
consent, the occurrence of any of the following events, unless Employer shall
have fully cured all grounds for such termination within thirty (30) days after
Executive gives notice thereof:
(i) any reduction in his then-current Salary;
(ii) any material failure to timely grant, or timely honor, any equity or
long-term incentive award;
(iii) failure to pay or provide required compensation and benefits;
The written notice given hereunder by Executive to Employer shall specify
in reasonable detail the cause for termination, and such termination
notice shall not be effective until thirty (30) days after Employer's
receipt of such notice, during which time Employer shall have the right to
respond to Executive's notice and cure the breach or other event giving
rise to the termination.
TERMINATION BY EMPLOYER
10.3 Employer may terminate its employment of Executive under this Agreement for
cause at any time by written notice to Executive. For purposes of this
Agreement, the term "cause" for termination by Employer shall be (a) a
conviction of or plea of guilty or nolo contendere by Executive to a felony, or
any crime involving fraud or embezzlement; (b) the refusal by Executive to
perform his material duties and obligations hereunder; (c) Executive's willful
or intentional misconduct in the performance of his duties and obligations; or
(d) if Executive or any member of his family makes any personal profit arising
out of or in connection with a transaction to which Employer is a party or with
which it is associated without making disclosure to and obtaining the prior
written consent of Parent. The written notice given hereunder by Employer to
Executive shall specify in reasonable detail the cause for termination. For
purposes of this Agreement, "family" shall mean Executive's spouse and/or
children. In the case of a termination for the causes described in (a) and (d)
above, such termination shall be effective upon receipt of the written notice.
In the case of the causes described in (b) and (c) above, such termination
notice shall not be effective until thirty (30) days after Executive's receipt
of such notice, during which time Executive shall have the right to respond to
Employer's notice and cure the breach or other event giving rise to the
termination.
SEVERANCE
10.4 Upon a termination of this Agreement without Good Reason by Executive or
with cause by Employer FOLLOWING THE FIRST YEAR OF THE TERM OF THIS AGREEMENT,
Employer shall pay to Executive one year's compensation determined in accordance
with Section 4.1, subject to the provision of Section 6.2. Upon a termination of
this Agreement with Good Reason by Executive or without cause by Employer,
Employer shall pay to Executive all accrued and unpaid compensation and expense
reimbursement, as of the date of such termination and the "Severance Payment."
The Severance Payment shall be payable in a lump sum, subject to Employer's
statutory and customary withholdings. The Severance Payment shall be paid by
Employer within thirty (30) business days of the expiration of any applicable
cure period. The "Severance Payment" shall equal the total amount of the Salary
payable to Executive under Section 4.1 of this Agreement from the date of such
termination until the end of the Term of this Agreement (prorated for any
partial month), together with a prorated amount any bonus payable under Section
4.4.
TERMINATION UPON DEATH
10.5 If Executive dies during the Term of this Agreement, this Agreement shall
terminate, except that Executive's legal representatives shall be entitled to
receive any earned but unpaid compensation or expense reimbursement due
hereunder through the date of death.
TERMINATION UPON DISABILITY
10.6 If, during the Term of this Agreement, Executive suffers and continues to
suffer from a "Disability" (as defined below), then Employer may terminate this
Agreement by delivering to Executive ten (10) calendar days' prior written
notice of termination based on such Disability, setting forth with specificity
the nature of such Disability and the determination of Disability by Employer.
For the purposes of this Agreement, "Disability" means Executive's inability,
with reasonable accommodation, to substantially perform Executive's duties,
services and obligations under this Agreement due to physical or mental illness
or other disability for a continuous, uninterrupted period of sixty (60)
calendar days or ninety (90) days during any twelve month period. Upon any such
termination for Disability, Executive shall be entitled to receive any earned
but unpaid compensation or expense reimbursement due hereunder through the date
of termination.
ARTICLE 11
PERSONNEL POLICIES, CONDITIONS, AND BENEFITS
Except as otherwise provided herein, Executive's employment shall be subject to
the personnel policies and benefit plans which apply generally to Employer's
Executives as the same may be interpreted, adopted, revised or deleted from time
to time, during the Term of this Agreement, by Employer in its sole discretion.
During the Term hereof, Executive shall be entitled to vacation during each year
of the Term at the rate of four (4) weeks per year. Within 30 days after the end
of each year of the Term, Employer shall elect to (a) carry over and allow
Executive the right to use any accrued and unused vacation of Executive, or (ii)
pay Executive for such vacation in a lump sum in accordance with its standard
payroll practices. Executive shall take such vacation at a time approved in
advance by the Board of Directors of Employer, which approval will not be
unreasonably withheld but will take into account the staffing requirements of
Employer and the need for the timely performance of Executive's
responsibilities.
ARTICLE 12
BENEFICIARIES OF AGREEMENT
This Agreement shall inure to the benefit of the parties hereto, their
respective heirs, successors and permitted assigns.
ARTICLE 13
GENERAL PROVISIONS
NO WAIVER
13.1 No failure by either party to declare a default based on any breach by the
other party of any obligation under this Agreement, nor failure of such party to
act quickly with regard thereto, shall be considered to be a waiver of any such
obligation, or of any future breach.
MODIFICATION
13.2 No waiver or modification of this Agreement or of any covenant, condition,
or limitation herein contained shall be valid unless in writing and duly
executed by the parties to be charged therewith.
SUBMISSION TO JURISDICTION; CONSENT TO SERVICE OF PROCESS.
13.3 The parties hereto irrevocably submit to the exclusive jurisdiction of any
federal or state court located within the State of New Jersey over any dispute
arising out of or relating to this Agreement and each party irrevocably agrees
that all claims in respect of such dispute or any suit, action or proceeding
related thereto may be heard and determined in such courts. The parties hereby
irrevocably waive, to the fullest extent permitted by applicable law, any
objection which they may now or hereafter have to the laying of venue of any
such dispute, suit, action or proceeding brought in such court or any defense of
inconvenient forum for the maintenance of any such dispute, suit, action or
proceeding. Each of the parties hereby agrees that a judgment in any such
dispute, suit, action or proceeding may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New Jersey, without regard to any conflict of laws principles.
ENTIRE AGREEMENT
13.4 This Agreement embodies the whole agreement between the parties hereto
regarding the subject matter hereof and there are no inducements, promises,
terms, conditions, or obligations made or entered into by Employer or Executive
other than contained herein.
SEVERABILITY
13.5 In the event a court of competent jurisdiction determines that a term or
provisions contained in this Agreement is overly broad in scope, time
geographical location or otherwise, the parties hereto authorize such Court to
modify and reduce any such term or provision deemed overly broad in scope, time,
geographic location or otherwise so that it complies with then applicable law.
HEADINGS
13.6 The headings contained herein are for the convenience of reference and are
not to be used in interpreting this Agreement.
INDEPENDENT LEGAL ADVICE
13.7 Employer has obtained legal advice concerning this Agreement and has
requested that Executive obtain independent legal advice with respect to same
before executing this Agreement. Executive, in executing this Agreement,
represents and warranties to Employer that he has been so advised to obtain
independent legal advice, and that prior to the execution of this Agreement he
has so obtained independent legal advice, or has, in his discretion, knowingly
and willingly elected not to do so.
NO ASSIGNMENT
13.8 No party may pledge or encumber its respective interests in this Agreement
nor assign any of its rights or duties under this Agreement without the prior
written consent of the other party.
IN WITNESS WHEREOF the parties have executed this Agreement effective as of the
day and year first above written. XXXXXX MOTORCYCLE COMPANY, LTD.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxx, On Behalf of
the Board of Directors
/s/ Xxxx X. Xxxxxxxxx
------------------------------------------
Xxxx X. Xxxxxxxxx
EMPLOY AGR XXXXXXXXX CMC-ORIGINAL - Feb 2005
