Laser Technology, Inc.
10-K For Year Ended September 30, 1999
Exhibit 10.18
Xxxxx Xxxxx Employment Agreement
LASER TECHNOLOGY, INC.
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Employment Agreement with
Xxxxx Xxxxx
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THIS AGREEMENT entered into this ___ day of November 1999, by and between
Laser Technology, Inc. ("Company") and Xxxxx Xxxxx ("Executive"), effective on
the Effective Date.
WHEREAS, the Executive has heretofore been an outside director of the
Company, and is experienced in all phases of the business of the Company; and
WHEREAS, the parties desire by this writing to set forth the continuing
employment relationship of the Company and the Executive.
NOW, THEREFORE, it is AGREED as follows:
1. Defined Terms
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When used anywhere in the Agreement, the following terms shall have
the meaning set forth herein.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Change in Control" shall mean the acquisition of ownership,
holding or power to vote more than 40% of the Company's voting stock by any
person or persons acting as a "group" (within the meaning of Section 13(d) of
the Securities Exchange Act of 1934). For purposes of this paragraph only, the
term "person" refers to an individual or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and as interpreted through applicable rulings and regulations
in effect from time to time.
(d) "Code (S)280G Maximum" shall mean the product of 2.99 and the
Executive's "base compensation" as defined in paragraph 3 below.
(e) "Company" shall mean Laser Technology Inc., and any successor to
its interest.
(f) "Common Stock" shall mean common stock of the Company.
(g) "Effective Date" shall mean December 1, 1999.
(h) "Executive" shall mean Xxxxx Xxxxx.
(i) "Good Reason" shall mean any of the following events, which has
not been consented to in advance by the Executive (i) a material reduction in
the Executive's base compensation as the same may be increased from time to time
(material shall mean greater than 15%); (ii) the failure by the Company to
continue to provide the Executive with benefits provided for on the Effective
Date, as the same may be increased from time to time, or with benefits
substantially similar to those provided to him under any of the Executive
benefit plans in which the Executive now or hereafter becomes a participant, or
the taking of any action by the Company which would directly or indirectly
reduce any of such benefits or deprive the Executive of any material fringe
benefit enjoyed by him; (iii) a failure to elect or reelect the Executive to the
Board of Directors of the Company; or (iv) a material diminution or reduction in
the Executive's responsibilities or authority (including reporting
responsibilities) in connection with his employment with the Company.
(j) "Just Cause" shall mean, in the good faith determination of the
Company's Board of Directors (i) the Executive's willful misconduct, breach of
fiduciary duty involving personal profit, intentional material failure to
perform stated duties, or conviction for a felony, or (ii) material breach of
any provision of this Agreement, provided that the Executive has been provided
written notice of specific deficiencies in his performance and at least thirty
days to cure those deficiencies. No act, or failure to act, on the Executive's
part shall be considered "willful" unless he has acted, or failed to act, with
an absence of good faith and without a reasonable belief that his action or
failure to act was in the best interests of the Company.
(k) "Protected Period" shall mean the period that begins on the date
six months before a Change in Control and ends on the later of the first annual
anniversary of the Change in Control or the expiration date of this Agreement.
(l) "Trigger Event" shall mean either of the following events that
occurs during the Protected Period: (i) the Executive's resignation of
employment for Good Reason; (ii) the Company's termination of the Executive's
employment for reasons other than Just Cause and without his prior written
consent (iii); the requirement that the Executive move his personal residence,
or perform his principal executive functions, more than fifty (50) miles from
his primary office as of the Effective Date without his prior written consent.
2. Employment. The Executive is employed as the Executive Vice President
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and Chief Financial Officer of the Company. The Executive shall render such
administrative and management services for the Company as are currently
consistent with the duties of the Executive Vice President and Chief Financial
Officer as set forth in the bylaws of the Company and the job description as
noted in exhibit A. The Executive shall also promote, by entertainment or
otherwise, as and to the extent permitted by law, the business of the Company.
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The Executive's other duties shall be such as the President and Board may from
time to time reasonably direct, including normal duties as an officer of the
Company.
3. Base Compensation. Commencing on the Effective Date of this
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Agreement, the Company shall pay the Executive during the term of this Agreement
a salary at the rate of $95,000 per annum, payable in cash not less frequently
than monthly. The CEO in conjunction with the Compensation Committee of the
Board shall review, not less often than annually, the rate of the Executive's
salary, and in its sole discretion may decide to increase his salary.
4. Annual Cash Bonuses. By January 31, 2000, the Company shall establish
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a formula that is based on corporate performance, and targets calendar year-end
cash bonuses that are comparable on a percentage basis to the bonuses given to
similarly situated executives at companies of a similar size and classification
in the most recently published AEA survey available. No other compensation
provided for in this Agreement shall be deemed a substitute for the Executive's
right to receive such bonuses and bonuses under this paragraph shall be in lieu
of any other incentive compensation plan that may be available to senior
management.
5. Other Benefits.
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(a) Participation in Retirement, Medical and Other Plans. The
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Executive shall be eligible to participate in any plan, subject to plan
requirements, that the Company maintains for the benefit of its employees if the
plan relates to (i) pension, profit-sharing, or other retirement benefits, (ii)
medical insurance or the reimbursement of medical or dependent care expenses, or
(iii) other group benefits, including disability and life insurance plans.
(b) Executive Benefits; Expenses. The Executive shall participate in
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any fringe benefits which are or may become available to the Company's senior
management Executives. The Executive shall be reimbursed for all reasonable
out-of-pocket business expenses which he shall incur in connection with his
services under this Agreement upon substantiation of such expenses in accordance
with the policies of the Company.
(c) Deferred Share Award. On February 1, 2000, the Company will grant
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the Executive an award evidencing a future right to receive 25,000 shares of
Common Stock. The Executive shall earn a fully vested and non-forfeitable right
to one-third of the shares subject to this award on December 1, 1999 and on each
of the next two annual anniversary dates of the Effective Date; provided that
his employment with the Company has not terminated prior to the particular
vesting date, and provided further that vesting shall accelerate to 100% upon a
Change in Control or resignation for Good Reason, or termination for reasons
other than For Cause. The Company shall hold the Common Stock associated with
this award and which have vested in an escrow account for distribution according
to an election that the Executive makes more than one year before terminating
employment. In the absence of a valid election, the shares will be transferred
to the Executive within 30 days after his termination of employment for any
reason.
(d) Stock Option Grants. The Executive currently holds 30,000 shares
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of stock options granted in 1999 as compensation for his role as an Outside
Director of the Company. The Company shall grant the Executive additional
options (the "Option") pursuant to this Agreement to purchase 45,000 shares of
Common Stock at an exercise price equal to their fair market value
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on the effective date of this agreement. The Option shall have a term of ten
years, shall qualify as an "incentive" stock option to the maximum extent
allowed by law, shall be nontransferable by the Executive (except to immediate
family members or family trusts), may be exercisable six months after the grant,
and shall be subject to the terms of the Company's most recent stock option
plan. The Executive may exercise the Option from time to time, in whole or in
part, and may pay the exercise price either in cash or by surrendering
previously-owned shares of Common Stock or the right to receive shares subject
to the Option. All other terms of the Option shall be determined, to the extent
consistent herewith, in accordance with the Company's most recent stock option
plan that covers executives; provided that the Executive must consent to any
exercise of discretion that could be adverse to his interests.
(e) Vehicle allowance: The company shall provide the executive with a
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monthly vehicle allowance of $600.00.
6. Term. The Company hereby employs the Executive, and the Executive
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hereby accepts such employment under this Agreement, for the period of three
years beginning December 1, 1999 and ending on November 30, 2002. On September
1, 2001, Executive shall give written notice to the Company through its Board of
Directors that this Agreement is scheduled to expire in 120 days. Unless the
Company notifies the Executive in writing 90 days prior to the expiration of
this Agreement of its desire not to renew this Agreement, this Agreement shall
automatically continue for an additional 12-month period.
7. Loyalty; Noncompetition.
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(a) During the period of his employment hereunder and except for
illnesses, reasonable vacation periods, and reasonable leaves of absence, the
Executive shall devote substantially all his full business time, attention,
skill, and efforts to the faithful performance of his duties hereunder;
provided, however, from time to time, Executive may serve on the boards of
directors of, companies or organizations, which will not present any conflict of
interest with the Company or any of its subsidiaries or affiliates, or
unfavorably affect the performance of Executive's duties pursuant to this
Agreement, or will not violate any applicable statute or regulation. From the
date of this Agreement until the scheduled expiration date, including any
renewal period, as set forth in paragraph 6 of this Agreement, the Executive
shall not engage in any business or activity contrary to the business affairs or
interests of the Company, or be gainfully employed in any other position or job
other than as provided above.
(b) Nothing contained in this Paragraph 6 shall be deemed to prevent
or limit the Executive's right to invest in the capital stock or other
securities of any business dissimilar from that of the Company, or, solely as a
passive or minority investor, in any business, or to oversee his investment
portfolio of securities, real estate, etc.
8. Standards. The Executive shall perform his duties under this
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Agreement in accordance with such reasonable standards as the Board may
establish from time to time. The Company will provide Executive with the working
facilities and staff necessary for him to perform his duties.
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9. Vacation and Sick Leave. At such reasonable times as the Board shall
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in its discretion permit, the Executive shall be entitled, without loss of pay,
to absent himself voluntarily from the performance of his employment under this
Agreement, all such voluntary absences to count as vacation time; provided that:
(a) The Executive shall be entitled to four weeks annual vacation in
accordance with the policies that the Board periodically establishes for senior
management Executives of the Company.
(b) The Executive shall not receive any additional compensation from
the Company on account of his failure to take a vacation, and the Executive
shall not accumulate unused vacation from one fiscal year to the next, except in
either case to the extent authorized by the Board.
(c) In addition to the aforesaid paid vacations, the Executive shall
be entitled without loss of pay, to absent himself voluntarily from the
performance of his employment with the Company for such additional periods of
time and for such valid and legitimate reasons as the Board may in its
discretion determine. Further, the Board may grant to the Executive a leave or
leaves of absence, with or without pay, at such time or times and upon such
terms and conditions as such Board in its discretion may determine.
(d) In addition, the Executive shall be entitled to an annual sick
leave benefit as established by the Board.
10. Indemnification. The Company and the Executive shall execute a
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separate Indemnity Agreement, a copy of which is attached hereto as Exhibit B,
that acknowledges the Company's obligations to indemnify and hold harmless
Executive from any and all loss, expense, or liability that he may incur due to
his past or future services for the Company (including his services associated
directly or indirectly with the pending class actions, the separate
investigations by the Securities Exchange Commission and the American Stock
Exchange, and related audit investigations).
11. Termination and Termination Pay. Subject to Section 11 hereof, the
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Executive's employment hereunder may be terminated under the following
circumstances:
(a) Just Cause. The Board may, by written notice to the Executive,
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immediately terminate his employment at any time, for Just Cause. The Executive
shall have no right to receive compensation or other benefits for any period
after termination for Just Cause.
(b) Resignation by Executive without Good Reason. The Executive may
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voluntarily terminate employment with the Company during the term of this
Agreement, upon at least 60 days' prior written notice to the Board of
Directors, in which case the Executive shall receive only his compensation,
vested rights and Executive benefits up to the date of his termination of
employment.
(c) Without Just Cause/Resignation for Good Reason. Subject to
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Sections 11(a) and 13 hereof, the Board may, by written notice to the Executive,
immediately terminate his employment at any time for a reason other than Just
Cause, in addition, the Executive may
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voluntarily terminate employment with the Company during the term of this
Agreement for Good Reason, and in both events the Executive shall be entitled to
receive the following compensation and benefits: (i) the salary provided
pursuant to Section 3 hereof, up to the expiration date (the "Expiration Date")
of the term, including any renewal term, if the term is extended, of this
Agreement, and (ii) the cost to the Executive of obtaining all health, life,
disability and other benefits which the Executive would have been eligible to
participate in through the Expiration Date based upon the benefit levels
substantially equal to those that the Company provided for the Executive at the
date of termination of employment. Said sum shall be paid, at the option of the
Executive, either in periodic payments over the remaining term of this
Agreement, as if the Executive's employment had not been terminated, or in one
lump sum within 10 days of such termination (subject to a present value
adjustment pursuant to Section 280G of the Code).
(d) Death or Disability. The Executive's employment under this
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Agreement shall terminate upon his death or total disability during the term of
this Agreement. The Company shall pay the premiums for term life insurance for
the Executive in the amount of $500,000 and the Executive may designate the
beneficiary of the policy. The Company shall pay the premium for disability
insurance for the Executive in an amount customary for an executive at his
compensation level. Premiums for disability insurance shall be limited to
$3,000 per annum.
12. No Mitigation. The Executive shall not be required to mitigate the
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amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent employment.
13. Change in Control.
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(a) Notwithstanding any provision herein to the contrary, if a Trigger
Event occurs during the Protected Period, the Executive shall be paid an amount
equal to the Code (S) 280G Maximum. Said sum shall be paid in one lump sum
within ten (10) days of such termination, unless more than 90 days before the
Change in Control the Executive files an election to collect benefits over a
period of up to five years, in which event interest shall accrue on unpaid
amounts at a rate determined pursuant to Section 280G of the Code. Any payment
under this paragraph 13(a) shall be in lieu of any payment to which the
Executive might otherwise be entitled under Paragraph 11(c) above.
(b) In the event that a trigger event has not already occurred, or if
one has occurred and the executive has elected the five year payout, then not
later than three business days after a Change in Control, the Company shall (a)
deposit in a grantor trust (the "Trust"), having terms consistent with Revenue
Procedure 92-64, an amount that the Company reasonably projects to be sufficient
to fund the payment of all benefits that are or may become payable, pursuant to
this Agreement, and (b) provide the trustee of the Trust with a written
direction both to hold said amount and any investment return thereon in a
segregated account for the benefit of Executive, and to follow the procedures
set forth in the next paragraph as to the payment of such amounts from the
Trust. The provisions of this Section shall be null and void only if the
Executive provides a written release of all claims under this Agreement.
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During the 12-consecutive month period after a Change in Control, upon the
occurrence of a Trigger Event, the Executive may provide the trustee of the
Trust with a written notice directing the trustee to pay to Executive an amount
designated in the notice as being payable pursuant to this Agreement. A copy of
the trustee's notice shall also be delivered to the Company on the same date.
Within ten business days after receiving said notice, the trustee of the Trust
shall pay such amount to the Executive, and coincidentally shall provide the
Company or its successor with notice of such payment. Upon the earlier of the
Trust's final payment of all amounts due under the preceding paragraph or the
date 12 months after the Change in Control, the trustee of the Trust shall pay
to the Company the entire balance remaining in the segregated account maintained
for the benefit of the Executive. The Executive shall thereafter have no
further interest in the Trust.
14. Disputes/Arbitration.
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(a) Any dispute, claim or controversy arising out of this Agreement or its
breach shall be settled by arbitration in Denver, Colorado by a single
arbitrator licensed to practice law, who shall be chosen by mutual agreement of
the parties. The arbitration is not required to be filed with the American
Arbitration Association ("AAA"), but the arbitrator may follow the rules and
procedures of the AAA, as agreed by the parties. The arbitration hearing shall
be held no later than 60 days after the arbitration is initiated. The
arbitrator's decision and award shall be final and binding, and judgment upon
the award may be entered in any court of appropriate jurisdiction. If the
parties cannot agree on an arbitrator, then one will be appointed by the AAA.
If the parties cannot agree on the rules of arbitration, then the rules of the
AAA will be used.
(b) The prevailing party in any arbitration shall be reimbursed for all
costs and expenses, including reasonable attorneys' fees, arising from the
dispute, claim or controversy that is arbitrated, provided that the prevailing
party shall obtain a final arbitration award in its favor. Such reimbursement
shall be paid within ten (10) days of the prevailing party's furnishing to the
other party written evidence, which may be in the form, among other things, of a
cancelled check or receipt, of any costs or expenses incurred by the prevailing
party. The costs and expenses may be part of the arbitration award.
15. Successors and Assigns.
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(a) This Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of the Company which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Company.
(b) Since the Company is contracting for the unique and personal
skills of the Executive, the Executive shall be precluded from assigning or
delegating his rights or duties hereunder without first obtaining the written
consent of the Company.
16. Corporate Authority. The Officer signing on behalf of the Company
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represents and warrants that the execution and delivery of this Agreement by it
has been duly and properly
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authorized by the Executive's Board of Directors and that when so executed and
delivered this Agreement shall constitute the lawful and binding obligation of
the Company.
17. Amendments. No amendments or additions to this Agreement shall be
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binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
18. Applicable Law. Except to the extent preempted by Federal law, the
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laws of the State of Colorado shall govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.
19. Severability. The provisions of this Agreement shall be deemed
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severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
20. Entire Agreement. This Agreement, together with any understanding or
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modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first hereinabove written.
ATTEST: LASER TECHNOLOGY, INC.
____________________ By__________________________
Secretary It's President and CEO
WITNESS:
___________________________ ____________________________
Xxxxx Xxxxx
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