EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Agreement, dated as of July 5, 2006, is between MTI Technology
Corporation, a Delaware corporation ("Employer"), and Xxxxxx X. Xxxxxx, Xx.
("Executive").
RECITALS
A. Employer and Executive wish to establish an employment relationship on
the following terms and conditions.
B. Employer has spent significant time, effort, and money to develop or
acquire certain Proprietary Information (as defined below), which Employer
considers vital to its business and goodwill.
C. The Proprietary Information has been or will necessarily be communicated
to or acquired by and simultaneous with this Agreement is being provided to
Executive, in connection with Executive's employment with Employer or Collective
Technologies, LLC, Executive's previous employer, substantially all the assets
of which were acquired by Employer, and Employer wishes to establish the
employment relationship with Executive only if, in doing so, it can protect its
Proprietary Information and goodwill.
D. Employer anticipates that certain Invention/Ideas (as defined below)
will be conceived, developed, or reduced to practice by Executive during the
course of his employment by Employer.
F. Employer wishes to establish the employment relationship with Executive
only if, in doing so, it can provide for the disclosure, assignment, and
protection of these Invention/Ideas as provided in this Agreement.
ACCORDINGLY, the parties agree as follows:
1. Period of Employment.
(a) Basic Terms. Employer shall employ Executive to render services to
Employer in the position and with the duties and responsibilities described in
Section 2 for the period (the "Period of Employment") commencing on the date of
this Agreement and ending on the date upon which the Period of Employment is
terminated in accordance with Section 1(b) or Section 4.
(b) Renewal. Subject to Section 4, Executive's initial Period of
Employment will end on the second anniversary of the date of this Agreement (the
"Term Date") and the Period of Employment thereafter will be renewed
automatically for an additional one (1) year period (without any action by
either party) on the Term Date and on each anniversary thereof, unless one party
gives to the other written notice at least thirty (30) days in advance of the
beginning of any one-year renewal period that the Period of Employment is to be
terminated. Either party may elect not to renew this
Agreement with or without cause. If Employer shall elect not to renew this
Agreement, and Executive's employment is not otherwise terminated pursuant to
Section 4 prior to the end of the notice period required by this Section 1(b),
then Executive's termination shall be deemed to be a termination by Employer
pursuant to Section 4(c). If Executive shall elect not to renew this Agreement,
and his employment is not otherwise terminated pursuant to Section 4 prior to
the end of the notice period required by this Section 1(b), then his termination
shall be deemed to be a termination by Executive pursuant to Section 4(e).
Nothing stated in this Agreement or represented orally or in writing to either
party shall create an obligation to renew this Agreement.
2. Position and Responsibilities.
(a) Position. Executive accepts employment with Employer as an
Executive Vice President of Employer and President of Employer's services
division and shall perform all services appropriate to that position, as well as
such other services as may be assigned by Employer from time to time by the
Chief Executive Officer of Employer and as are consistent with Executive's
position and level within Employer. Executive shall devote his best efforts and
full time attention to the performance of his duties. Executive shall be subject
to the direction of Employer, which shall retain full control of the means and
methods by which he performs the above services and of the place(s) at which all
services are rendered. Executive shall report to the Chief Executive Officer of
Employer. Executive shall be expected to travel if necessary or advisable in
order to meet the obligations of his position.
(b) Other Activity. Except upon the prior written consent of Employer,
Executive (during the Period of Employment) shall not (i) accept any other
employment; or (ii) engage, directly or indirectly, in any other business,
commercial, or professional activity (whether or not pursued for pecuniary
advantage) that is or would be reasonably likely to be competitive with
Employer, that would be reasonably likely create a conflict of interest with
Employer, or that otherwise would be reasonably likely to significantly
interfere with the business of Employer, or any Affiliate. An "Affiliate" shall
mean any person or entity that directly or indirectly controls, is controlled
by, or is under common control with Employer. Subject to the foregoing,
Executive shall be entitled to continue to engage in outside activities such as
serving on the board of directors or board of advisors of, or acting as a
consultant to, for-profit and non-profit businesses, organizations and trade or
industry groups, consistent with his past practices. So that Employer may be
aware of the extent of any other demands upon Executive's time and attention,
Executive shall disclose in confidence to Employer the nature and scope of any
other business activity in which he is or becomes engaged during the Period of
Employment.
(c) Representations and Warranties. Executive represents and warrants
that Executive's execution of this Agreement, his employment with Employer, and
the performance of his proposed duties under this Agreement shall not violate
any obligations he may have to any former employer (or other person or entity),
including any obligations with respect to proprietary or confidential
information of any other person or entity. Executive agrees that he will not use
for the benefit of, or disclose to,
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Employer any confidential information belonging to any former employer or other
entity unless he has written permission from the employer or entity to do so (or
unless Employer has been granted such permission).
3. Compensation and Benefits.
(a) Base Salary and Annual Bonus. In consideration of the services to
be rendered under this Agreement, Employer shall pay Executive a base salary of
$300,000 per year, payable semi-monthly, pursuant to the procedures regularly
established, and as they may be amended, by Employer in its sole discretion,
during the Period of Employment. Executive shall be eligible to receive an
annual cash bonus of up to $100,000, subject to and contingent upon the
achievement of financial and operational objectives to be determined from time
to time by Employer's Chief Executive Officer and/or Board of Directors.
Employer may review annually Executive's base salary and potential bonus
compensation and may determine, in its sole discretion, whether and how much the
existing compensation shall be adjusted, without regard to any policy or
practice Employer may have for adjusting salaries or potential bonuses,
provided, however, that Employer may not reduce Executive's annual base salary.
All compensation and other comparable payments to be paid to Executive under
this Agreement shall be less withholding and other applicable taxes required by
law.
(b) Benefits. As Executive becomes eligible, he shall have the right
to participate in and to receive benefits from all present and future benefit
plans specified in Employer's policies and generally made available to executive
management employees of Employer from time to time, including, but not limited
to, Employer's Executive Healthcare Expense Reimbursement Plan. The amount and
extent of benefits to which Executive is entitled shall be governed by the
specific benefit plan, as amended. Executive's service to Collective
Technologies, LLC (and its predecessor) shall be treated as service to Employer
for purposes of determining Executive's eligibility for and level of benefits
from Employer. Without limiting the generality of the foregoing, Executive shall
be entitled to vacation leave in accordance with Employer's standard policies
for similarly situated employees, which currently consists of three (3) weeks of
vacation annually, in addition to approved holidays, and Employer shall assume
and carry forward Executive's accrued but unused vacation time with Collective
Technologies, LLC. Executive also shall be entitled to any benefits or
compensation tied to termination as described in Section 4. Employer reserves
the ability, in its sole discretion, to adjust Executive's benefits provided
under this Agreement, provided that the adjustment applies to all other
similarly situated employees of Employer and is not retroactive. No statement
concerning benefits or compensation to which Executive is entitled shall alter
in any way the term of this Agreement, any renewal thereof, or its termination.
(c) Expenses. Employer shall reimburse Executive for reasonable travel
and other business expenses incurred by Executive in the performance of his
duties, in accordance with Employer's policies, as they may be amended in
Employer's sole discretion.
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(d) Restricted Stock and Options. As soon as reasonably practicable
following the execution and delivery of this Agreement, Employer shall, upon and
subject to approval of Employer's Board of Directors, obtaining qualification
under applicable securities laws and the execution and delivery by Employee of
the Restricted Stock Award Agreement attached hereto as Exhibit A (the "Award
Agreement"), issue and sell to Executive an aggregate of 300,000 shares (the
"Restricted Shares") of Employer's common stock, $0.001 par value per share, at
the nominal purchase price of $0.01 per share. The Restricted Shares shall be
issued pursuant to Employer's 2006 Stock Incentive Plan (CT), as amended (the
"Plan"), and shall be Restricted Stock (as defined in the Plan). The Restricted
Shares shall be subject to the terms of the Award Agreement and the Plan. As
soon as reasonably practicable following the execution and delivery of this
Agreement, Employer shall, upon and subject to approval of Employer's Board of
Directors, obtaining qualification under applicable securities laws and the
execution and delivery by Employee of the Stock Option Award Agreement attached
hereto as Exhibit D (the "Option Agreement"), grant to Executive a stock option
(the "Option") to purchase 300,000 shares of Employer's common stock, $0.001 par
value per share, at a per share purchase price equal to the closing sales price
of Employer's common stock on the Nasdaq Capital Market on the date of grant.
Such stock option shall be issued pursuant to the Plan and shall be a
Non-Qualified Stock Option (as defined in the Plan). The Option shall be subject
to the terms of the Option Agreement and the Plan. In addition, Executive shall
be eligible for, in the sole discretion of Employer's Board of Directors,
additional grants of restricted stock, stock options or other awards or benefits
under the Plan or otherwise.
(e) Indemnification and Change of Control Agreements. Concurrently
with the execution of this Agreement, Executive and Employer shall enter into
Employer's standard Indemnification Agreement (the "Indemnification Agreement")
and Change of Control Agreement (the "Change of Control Agreement") for
executive officers, forms of which are attached hereto as Exhibit B and Exhibit
C, respectively. Executive shall be entitled to the benefits provided under such
agreements during the Term of Employment, and thereafter as specified in and
subject to the terms of such agreements. During the Period of Employment,
Executive shall be a designated beneficiary under any policy of directors' and
officers' liability insurance maintained by Employer for the benefit of
similarly situated executive officers of Employer. Executive shall be entitled
to post-termination coverage as a former officer of Employer under any such
policy of directors' and officers' liability insurance to the extent and subject
to the limitations specified in any such policy of insurance, and Employer shall
maintain such post-termination coverage for Executive as a former officer of
Employer, if and to the extent Employer can obtain such coverage on commercially
reasonable terms, until the expiration of the statute of limitations on any
claim that may have accrued during the Period of Employment for which Executive
could be held liable. To the extent that the benefits or payments to which
Executive is entitled under this Agreement are inconsistent with or are
duplicative of the benefits or payments to which Executive is entitled under
such Indemnification Agreement and/or Change of Control Agreement, Executive
shall be entitled to the greatest applicable level of benefits or payments
available thereunder but shall not be entitled to duplicative benefits or
payments.
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(f) Other Perquisites. Executive shall receive perquisite benefits
consistent with those made available from time to time to similarly situated
employees of Employer. Executive shall receive a monthly transportation
allowance of $750.
4. Termination of Employment.
(a) By Death. The Period of Employment shall terminate automatically
upon the death of Executive. Employer shall pay to Executive's beneficiaries or
estate, as appropriate, any compensation and other amounts then due and owing
through the date of termination, including payment for accrued unused vacation,
if any, vested benefits under any employee benefit plan and unreimbursed
expenses due to Executive. Thereafter, all obligations of Employer under this
Agreement shall cease. Nothing in this Section shall affect any entitlement of
Executive's heirs to the benefits of any life insurance plan or other applicable
benefits.
(b) By Disability. If, by reason of any physical or mental incapacity,
Executive has been or will be prevented even with reasonable accommodation from
properly performing his essential duties under this Agreement for more than
ninety (90) days in any twelve (12) month period, then, to the extent permitted
by law, Employer may terminate the Period of Employment upon fourteen (14) days'
advance written notice. Employer shall pay Executive all compensation and other
amounts to which he is entitled through the date of termination, including
payment for accrued unused vacation, if any, vested benefits under any employee
benefit plan and unreimbursed expenses due to Executive. Thereafter, all
obligations of Employer under this Agreement shall cease. Nothing in this
Section shall affect Executive's rights under any applicable Employer disability
plan.
(c) By Employer Not For Cause. At any time, Employer may terminate
Executive without Cause (as defined below) by providing Executive thirty (30)
days' advance written notice. Employer shall have the option, in its complete
discretion, to terminate Executive at any time prior to the end of such notice
period. In the event of a termination pursuant to this Section 4(c), Employer
shall pay Executive all compensation due and owing through the last day actually
worked, including but not limited to payment for any accrued but unused vacation
time, vested benefits under any employee benefit plan and unreimbursed expenses
due to Executive. In addition, Employer shall (i) pay employee an amount, in
equal installments for a period of one (1) year after termination of the Period
of Employment and pursuant to Employer's standard payroll policies and
practices, equal to one and one-half (1 1/2) times Executive's annual base
salary at the time of the termination of his employment plus one and one-half (1
1/2) times his target annual bonus in effect at the time of the termination,
(ii) pay Executive's COBRA premiums, if COBRA is properly elected, for a period
of one (1) year after termination of the Period of Employment, for a period of
one (1) year after termination of the Period of Employment, and (iii) the
restricted stock subject to the Award Agreement and the stock options subject to
the Option Agreement, to the extent not previously exercised, shall
automatically and immediately vest with respect to the greater of (x) the number
of shares, if any, that would have vested if Executive continued service to
Employer for a period of one (1) year after termination of the Period of
Employment, or
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(y) two thirds (2/3) of the aggregate number of shares subject to each such
award. Thereafter, all of Employer's obligations under this Agreement shall
cease. Employer may discipline, demote, or dismiss Executive as provided in and
subject to this Section 4 notwithstanding anything to the contrary contained in
or arising from any statements, policies, or practices of Employer relating to
the employment, discipline, or termination of its employees. Employer and
Executive each agree that (A) the receipt of any post-termination benefits or
other payments under this Section 4(c) or Section 4(f) hereof, except those
required by law, shall be contingent upon and subject to Executive and Employer
executing and delivering to one another a mutual general release of claims, in a
form reasonably satisfactory to each party hereto, which is not revoked by
Executive or Employer, and (B) they will negotiate in good faith with the other
party hereto the terms of such release as soon as reasonably practicable
following Executive's termination of employment.
(d) By Employer For Cause. At any time, and without prior notice
except as provided herein, Employer may terminate Executive for Cause. Employer
shall pay Executive all compensation and other amounts then due and owing,
including payment for accrued unused vacation time, if any, vested benefits
under and employee benefit plan and unreimbursed expenses due to Executive.
Thereafter, all of Employer's obligations under this Agreement shall cease. For
purposes of this Agreement, the term "Cause" shall mean: (i) a material breach
of any term of this Agreement by Executive and failure to cure such breach
within thirty (30) days after written notice thereof from Employer; (ii) the
failure by Executive to perform his duties (other than any such failure
resulting from his incapacity due to death or physical or mental illness)
coupled with a failure to cure the same within thirty (30) days after receipt of
written notice thereof; (iii) acts or omissions which are deemed by Employer's
Board of Directors to be in bad faith, or to constitute gross negligence,
recklessness or willful misconduct, on the part of Executive with respect to the
performance of his duties; (iv) the failure by Executive to follow the
reasonable instructions of the person(s) to whom Executive reports or Employer's
Board of Directors coupled with a failure to cure the same within thirty (30)
days after receipt of written notice thereof; (v) Executive's engaging in
misconduct that is deemed by Employer's Board of Directors to be materially
injurious to Employer, monetarily or otherwise; (vi) Executive's conviction,
plea of guilty or nolo contendere, or judicial determination of civil liability,
based on a federal or state felony or serious criminal or civil offense,
including, but not limited to, crimes or civil offenses involving theft,
embezzlement, fraud or dishonesty, crimes or civil offenses based on banking or
securities laws (including the Xxxxxxxx-Xxxxx Act of 2002), and civil
enforcement actions brought by federal or state regulatory agencies (including
the Securities and Exchange Commission); or (vii) Executive's use of illegal
narcotics and/or, to the extent permitted by law, abuse of alcohol; provided,
however, that as to alcohol abuse, Executive shall be given notice and a thirty
(30) day opportunity to remedy the problem to the satisfaction of Employer. If
termination is due to Executive's disability, Section 4(b) above shall control
and not this subsection on termination for Cause.
(e) By Employee Not for Good Reason. At any time, Executive may
terminate his employment without Good Reason (as defined below) by providing
Employer thirty (30) days' advance written notice. Employer shall have the
option, in its
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complete discretion, to make Executive's termination effective at any time prior
to the end of such notice period. Upon any termination of Executive's employment
without Good Reason, Employer shall pay Executive all compensation and other
amounts due and owing through the end of the thirty (30) day notice period,
including payment for accrued unused vacation time, if any, vested benefits
under and employee benefit plan and unreimbursed expenses due to Executive.
Thereafter, all of Employer's obligations under this Agreement shall cease.
(f) By Employee for Good Reason. At any time and without any prior
notice, Executive may terminate his employment for Good Reason. If Executive
terminates his employment for Good Reason, Employer shall pay Executive all
compensation due and owing through the last day actually worked, including but
not limited to payment for any accrued but unused vacation time, vested benefits
under any employee benefit plan and unreimbursed expenses due to Executive. In
addition, Employer shall (i) pay employee an amount, in equal installments for a
period of one (1) year after termination of the Period of Employment and
pursuant to Employer's standard payroll policies and practices, equal to one and
one-half (1 1/2) times Executive's annual base salary at the time of the
termination of his employment plus one and one-half (1 1/2) times his target
annual bonus in effect at the time of the termination, (ii) pay Executive's
COBRA premiums, if COBRA is properly elected, for a period of one (1) year after
termination of the Period of Employment, and (iii) the restricted stock subject
to the Award Agreement and the stock options subject to the Option Agreement, to
the extent not previously exercised, shall automatically and immediately vest
with respect to the greater of (x) the number of shares, if any, that would have
vested if Executive continued service to Employer for a period of one (1) year
after termination of the Period of Employment, or (y) two thirds (2/3) of the
aggregate number of shares subject to each such award. Thereafter, all of
Employer's obligations under this Agreement shall cease. For purposes of this
Agreement, the term "Good Reason" shall mean any of the following events or
circumstances: (i) a change in Executive's status, title, position or
responsibilities (including reporting responsibilities) that represents a
material adverse change from the Executive's status, title, position or
responsibilities as in effect within the ninety (90) days preceding such change;
(ii) the assignment to Executive of any duties or responsibilities that are
materially inconsistent with Executive's status, title, position or
responsibilities as in effect immediately prior to such assignment; (iii) any
removal of Executive from or failure to reappoint or reelect Executive to the
office or position (or to a substantially similar office or position) in which
Executive has been engaged to serve under this Agreement, except in connection
with the termination of Executive's employment as a result of his death, or for
Disability or Cause; (iv) a reduction in Executive's annual base salary as set
forth herein or failure to pay Executive any compensation or benefits to which
he is entitled within ten (10) days after receipt of written notice from
Executive; (v) Employer's requiring Executive to be based at any location
outside a fifty (50)-mile radius from Executive's primary place of employment,
except for reasonably required travel on Employer's business which is not
materially greater than such travel requirements required of Executive to
adequately and appropriately perform his duties pursuant to this Agreement; (vi)
the failure by Employer to continue in effect (without reduction in benefit
level and/or reward opportunities) any material compensation or employee benefit
plan in which Executive is entitled to
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participate under this Agreement unless such plan is replaced with a plan that
provides substantially equivalent compensation or benefits to Executive, or to
provide Executive with compensation and benefits, in the aggregate, at least
equal (in terms of benefit levels and/or reward opportunities) to those provided
for under each other employee benefit plan, program and practice in which
Executive is entitled to participate under this Agreement; (vii) the insolvency
or the filing (by any party, including Employer) of a petition for bankruptcy of
Employer, which petition is not dismissed within sixty (60) days after such
filing; (viii) any material breach by Employer of any provision of this
Agreement, and failure of Employer to cure such breach within thirty (30) days
from Employer's receipt of written notice from Executive setting forth the
nature of the alleged breach; (ix) any purported termination of Executive's
employment for Cause by Employer which does not comply with the terms of Section
4(d) hereof; or (x) the failure of Employer to obtain an agreement, satisfactory
to Executive, from any applicable successors and assigns of Employer to assume
and agree to be bound by the terms and provisions of this Agreement, as
contemplated in Section 12 hereof. For purposes of this Agreement, the term
"Good Reason" shall also mean any intentional or willful refusal by Employer to
make any payment which is then due and payable, except pursuant to a good faith
dispute and subject to any applicable cure periods, under that certain
Promissory Note, of even date herewith, by Employer in favor of Collective
Technologies, LLC, a Delaware limited liability company.
(g) Termination Obligations.
(i) Executive agrees that all property, including, without
limitation, all equipment, tangible Proprietary Information (as defined below),
documents, books, records, reports, notes, contracts, lists, computer disks (and
other computer-generated files and data), and copies thereof, created on any
medium and furnished to, obtained by, or prepared by Executive in the course of
or incident to his employment, belongs to Employer and shall be returned
promptly to Employer upon termination of the Period of Employment.
(ii) All benefits to which Executive is otherwise entitled shall
cease upon Executive's termination, unless explicitly continued either under
this Agreement or under any specific written policy or benefit plan of Employer.
(iii) Upon termination of the Period of Employment, Executive
shall be deemed to have resigned from all offices and directorships then held
with Employer or any Affiliate.
(iv) The representations and warranties contained in this
Agreement, Employer's payment and other obligations under this Section 4,
Employer's obligations under any indemnification agreement between Employer and
Executive and Executive's obligations under this Section 4(g), Section 5, and
Section 6 shall survive the termination of the Period of Employment and the
expiration of this Agreement.
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(v) Following any termination of the Period of Employment,
Executive shall reasonably cooperate with Employer in all matters relating to
the winding up of pending work on behalf of Employer and the orderly transfer of
work to other employees of Employer. Executive shall also reasonably cooperate,
at Employer's cost and expense, in the defense of any action brought by any
third party against Employer that relates in any way to Executive's acts or
omissions while employed by Employer.
5. Proprietary Information.
(a) Defined. "Proprietary Information" is all information and any idea
in whatever form, tangible or intangible, pertaining in any manner to the
business of Employer, or any Affiliate, or its employees, clients, consultants,
or business associates, which was produced by any employee of Employer in the
course of his or her employment with Employer or Collective Technologies, LLC,
or otherwise produced or acquired by or on behalf of Employer, including all
Proprietary Information previously owned by Collective Technologies, LLC. All
Proprietary Information not generally known outside of Employer's organization,
and all Proprietary Information so known only through improper means, shall be
deemed "Confidential Information." Without limiting the foregoing definition,
Proprietary and Confidential Information shall include, but not be limited to:
(i) formulas, teaching and development techniques, processes, trade secrets,
computer programs, electronic codes, inventions, improvements, and research
projects; (ii) information about costs, profits, markets, sales, and lists of
customers or clients; (iii) business, marketing, and strategic plans; and (iv)
employee personnel files and compensation information. Executive should consult
any written Employer procedures, generally circulated by Employer to its
employees, instituted to identify and protect certain types of Confidential
Information, which are considered by Employer to be safeguards in addition to
the protection provided by this Agreement. Nothing contained in those procedures
or in this Agreement is intended to limit the effect of the other.
(b) General Restrictions on Use. Employer and Executive acknowledge
that Proprietary Information has been or will necessarily be communicated to or
acquired by and simultaneous with this Agreement is being provided to Executive.
During the Period of Employment, Executive shall use Proprietary Information,
and shall disclose Confidential Information, only for the benefit of Employer
and as is necessary to carry out his responsibilities under this Agreement.
Following termination, Executive shall neither, directly or indirectly, use any
Proprietary Information nor disclose any Confidential Information, except as
expressly and specifically authorized in writing by Employer. The publication of
any Proprietary Information through literature or speeches must be approved in
advance in writing by Employer.
(c) Third-Party Information. Executive acknowledges that Employer has
received and in the future will receive from third parties their confidential
information subject to a duty on Employer's part to maintain the confidentiality
of this information and to use it only for certain limited purposes. Executive
agrees that he owes Employer and these third parties, during the Period of
Employment and thereafter, a duty to hold all such confidential information in
the strictest confidence and not to disclose or
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use it, except as necessary to perform his obligations hereunder and as is
consistent with Employer's agreement with third parties.
(d) Competitive Activity. Executive acknowledges and agrees that the
pursuit of the activities forbidden by this subsection would necessarily involve
the use or disclosure of Confidential Information in breach of the preceding
subsections, but that proof of such a breach would be extremely difficult. To
forestall this disclosure, use, and breach, and in consideration of the
employment under this Agreement, Executive agrees that, for a period of one (1)
year after termination of the Period of Employment, he shall not, directly or
indirectly, (i) divert or attempt to divert from Employer (or any Affiliate) any
business of any kind in which it is engaged; (ii) employ or recommend for
employment any person employed by Employer (or any Affiliate); (iii) own,
manage, operate, control, be employed by, participate in, or be connected in any
manner with the ownership, management, operation or control of any Competitive
Business, which, for purposes of this Agreement means any business competitive
in whole or in part with the business conducted by Employer; or (iv) otherwise
engage in any business activity that is or would reasonably be likely to be
competitive with Employer (or any Affiliate) in the States of Texas, California
and New York, unless Executive can prove that any action taken in contravention
of this subsection was done without the use in any way of Confidential
Information. If Executive's employment is terminated or deemed to have been
terminated pursuant to Section 4(c) or Section 4(f) of this Agreement, then
Executive's obligations under this Section 5(d) shall be contingent upon and
subject to Employer's payment of the severance and other benefits required
pursuant to such Section 4(c) or Section 4(f), as applicable.
(e) Interference with Business. In order to avoid disruption of
Employer's business, Executive agrees that, for a period of one (1) year after
termination of the Period of Employment, he shall not, directly or indirectly,
(i) solicit for any actual or proposed Competitive Business any customer of
Employer (or any Affiliate) known to Executive during the Period of Employment
to have been a customer of Employer; or (ii) solicit for employment any person
employed by Employer (or any Affiliate), excluding any such person who responds
to a general advertisement or other communication not specifically directed at
or communicated to such person or Employer's employees in general. If
Executive's employment is terminated or deemed to have been terminated pursuant
to Section 4(c) or Section 4(f) of this Agreement, then Executive's obligations
under this Section 5(e) shall be contingent upon and subject to Employer's
payment of the severance and other benefits required pursuant to such Section
4(c) or Section 4(f), as applicable.
6. Inventions and Ideas.
(a) Defined. The term "Invention/Idea" includes any and all ideas,
processes, trademarks, service marks, inventions, technology, computer hardware
or software, original works of authorship, designs, formulas, discoveries,
patents, copyrights, products, and all improvements, know-how, rights, and
claims related to the foregoing that are conceived, developed, or reduced to
practice by Executive, alone or with others, during the Period of Employment
other than those that (i) were developed
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entirely on Executive's own time without using Employer's equipment, supplies,
facilities, or trade secret information; and (ii) did not, at the time of
conception or reduction to practice, relate to the actual, proposed or
demonstrably contemplated business of Employer or any field reasonably related
any such business of Employer.
(b) Disclosure. Executive shall maintain adequate and current written
records on the development of all Invention/Ideas and shall disclose promptly to
Employer all Invention/Ideas and relevant records, which records will remain the
sole property of Employer. Executive agrees that all information and records
pertaining to any idea, process, trademark, service xxxx, invention, technology,
computer hardware or software, original work of authorship, design, formula,
discovery, patent, copyright, product, and all improvements, know-how, rights,
and claims related to the foregoing ("Intellectual Property"), that Executive
does not believe to be an Invention/Idea, but that is conceived, developed, or
reduced to practice by Executive (alone or with others) during the Period of
Employment (or during the post-employment period set forth in Section 6(e)
below), shall be disclosed promptly to Employer (such disclosure to be received
in confidence).
(c) Assignment. Executive agrees to, and hereby does, assign to
Employer his entire right, title, and interest (throughout the United States and
in all foreign countries), free and clear of all liens and encumbrances, in and
to each Invention/Idea, which shall be the sole property of Employer, whether or
not patentable. In the event any Invention/Idea is deemed by Employer to be
patentable or otherwise registrable, Executive shall (at Employer's expense)
assist Employer) in obtaining letters patent or other applicable registrations
thereon and execute all documents and do all other things necessary or proper
thereto (including testifying at Employer's expense) and to vest Employer, or
any entity or person specified by Employer, with full and perfect title thereto
or interest therein. Executive shall (at Employer's expense) also take any
action reasonably necessary in connection with any continuations, renewals, or
reissues thereof or in any related proceedings or litigation. Should Employer be
unable to secure Executive's signature on any document necessary to apply for,
prosecute, obtain, or enforce any patent, copyright, or other right or
protection relating to any Invention/Idea, whether due to Executive's mental or
physical incapacity or any other cause, Executive irrevocably designates and
appoints Employer and each of its duly authorized officers and agents as
Executive's agent and attorney-in-fact, to act for and in Executive's behalf and
stead and to execute and file any such document, and to do all other lawfully
permitted acts to further the prosecution, issuance, and enforcement of patents,
copyrights, or other rights or protections with the same force and effect as if
executed, delivered, and/or done by Executive.
(d) Exclusions. Executive represents that there are no Invention/Ideas
that he desires to exclude from the operation of this Agreement. To the best of
Executive's knowledge, there is no existing contract in conflict with this
Agreement and there is no contract to assign any Intellectual Property that is
now in existence between Executive and any other person or entity.
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(e) Post-Termination Period. Because of the difficulty of establishing
when any Intellectual Property is first conceived or developed by Executive, or
whether it results from access to Confidential Information or Employer's
equipment, supplies, facilities, or data, Executive agrees that any Intellectual
Property shall be presumed, if rationally related to Employers' business, to be
an Invention/Idea if reduced to practice by Executive or with the aid of
Executive within one (1) year after termination of the Period of Employment.
Executive can rebut the above presumption if he proves that the Intellectual
Property (i) was developed entirely on Executive's own time without using
Employer's equipment, supplies, facilities, or trade secret information; (ii)
was not conceived or reduced to practice during the Period of Employment, or, if
conceived or reduced to practice during this period, did not, at the time of
conception or reduction to practice, relate to the actual, proposed or
demonstrably contemplated business of Employer or any field reasonably related
any such business of Employer; and (iii) did not result from any work performed
by Executive for Employer.
7. Arbitration.
(a) Arbitrable Claims. To the fullest extent permitted by law, all
disputes between Executive (and his attorneys, successors, and assigns) and
Employer (and its Affiliates, shareholders, directors, officers, employees,
agents, successors, attorneys, and assigns) of any kind whatsoever, including,
without limitation, all disputes relating in any manner to the employment or
termination of Executive, and all disputes arising under this Agreement, the
Award Agreement, the Option Agreement, the Indemnification Agreement and the
Change of Control Agreement (collectively "Arbitrable Claims"), shall be
resolved by arbitration conducted in Xxxxxx County, Texas, notwithstanding any
contrary provisions contained in any such agreements. All persons and entities
specified in the preceding sentence (other than Employer and Executive) shall be
considered third-party beneficiaries of the rights and obligations created by
this Section on Arbitration. Arbitrable Claims shall include, but are not
limited to, contract (express or implied) and tort claims of all kinds, as well
as all claims based on any federal, state, or local law, statute, or regulation,
excepting only claims under applicable workers' compensation law and
unemployment insurance claims. By way of example and not in limitation of the
foregoing, Arbitrable Claims shall include (to the fullest extent permitted by
law) any claims arising under Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, the Americans with Disabilities Act, and the
California Fair Employment and Housing Act, as well as any claims asserting
wrongful termination, harassment, breach of contract, breach of the covenant of
good faith and fair dealing, negligent or intentional infliction of emotional
distress, negligent or intentional misrepresentation, negligent or intentional
interference with contract or prospective economic advantage, defamation,
invasion of privacy, and claims related to disability.
(b) Procedure. Arbitration of Arbitrable Claims shall be in accordance
with the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association, as amended ("AAA Employment Rules"), as
augmented in this Agreement. Arbitration shall be initiated as provided by the
AAA Employment Rules, although the written notice to the other party initiating
arbitration shall also include a
12
statement of the claim(s) asserted and the facts upon which the claim(s) are
based. Arbitration shall be final and binding upon the parties and shall be the
exclusive remedy for all Arbitrable Claims. Either party may bring an action in
court to compel arbitration under this Agreement and to enforce an arbitration
award. Otherwise, neither party shall initiate or prosecute any lawsuit or
administrative action in any way related to any Arbitrable Claim.
Notwithstanding the foregoing, either party may, at its option, seek injunctive
relief for violations of Sections 4, 5, or 6. Notwithstanding the foregoing, the
decision of the arbitrator shall be subject to judicial review and may be
vacated or modified by a court if it is not supported by substantial evidence on
the record as a whole or if the decision is based on erroneous interpretation of
applicable law. The interpretation and enforcement of this agreement to
arbitrate shall be governed by the Federal Arbitration Act. THE PARTIES HEREBY
WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO ARBITRABLE CLAIMS,
INCLUDING WITHOUT LIMITATION ANY RIGHT TO TRIAL BY JURY AS TO THE MAKING,
EXISTENCE, VALIDITY, OR ENFORCEABILITY OF THE AGREEMENT TO ARBITRATE.
(c) Arbitrator Selection and Authority. All disputes involving
Arbitrable Claims shall be decided by a single arbitrator. The arbitrator shall
be selected by mutual agreement of the parties within thirty (30) days of the
effective date of the notice initiating the arbitration. If the parties cannot
agree on an arbitrator, then the complaining party shall notify the AAA and
request selection of an arbitrator in accordance with the AAA Employment Rules.
The arbitrator shall have authority to award equitable relief, damages, costs,
and fees to the greatest extent permitted by law, including, but not limited to,
any remedy or relief that a court would have. The fees of the arbitrator shall
be borne by the non-prevailing party, as determined by the arbitrator. If the
allocation of responsibility for payment of the arbitrator's fees would render
the obligation to arbitrate unenforceable, the parties authorize the arbitrator
to modify the allocation as necessary to preserve enforceability. The arbitrator
shall have exclusive authority to resolve all Arbitrable Claims, including, but
not limited to, whether any particular claim is arbitrable and whether all or
any part of this Agreement is void or unenforceable.
(d) Confidentiality. All proceedings and all documents prepared in
connection with any Arbitrable Claim shall be confidential and, unless otherwise
required by law, the subject matter thereof shall not be disclosed to any person
other than the parties to the proceedings, their counsel, witnesses and experts,
the arbitrator, and, if involved, the court and court staff. All documents filed
with the arbitrator or with a court shall be filed under seal. The parties shall
stipulate to all arbitration and court orders necessary to effectuate fully the
provisions of this subsection concerning confidentiality.
(e) Continuing Obligations. The rights and obligations of Executive
and Employer set forth in this Section on Arbitration shall survive the
termination of Executive's employment and the expiration of this Agreement.
8. Notices. Any notice or other communication under this Agreement must be
in writing and shall be effective upon delivery by hand, upon facsimile
transmission to
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either party (but only upon receipt by the transmitting party of a written
confirmation of receipt), or three (3) business days after deposit in the United
States mail, postage prepaid, certified or registered, and addressed to Employer
or to Executive at the corresponding address or fax number below. Executive
shall be obligated to notify Employer in writing of any change in his address.
Notice of change of address shall be effective only when done in accordance with
this Section.
Employer's Notice Address:
MTI Technology Corporation
00000 Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Executive's Notice Address:
0000 Xxxxxxxx Xxxx
Xxxxxx, XX 00000
9. Action by Employer. All actions required or permitted to be taken under
this Agreement by Employer, including, without limitation, exercise of
discretion, consents, waivers, and amendments to this Agreement, shall be made
and authorized only by the President or by his or her representative
specifically authorized in writing to fulfill these obligations under this
Agreement.
10. Integration. This Agreement is intended to be the final, complete, and
exclusive statement of the terms of Executive's employment by Employer. This
Agreement supersedes all other prior and contemporaneous agreements and
statements, whether written or oral, express or implied, pertaining in any
manner to the employment of Executive, and it may not be contradicted by
evidence of any prior or contemporaneous statements or agreements. To the extent
that the practices, policies, or procedures of Employer, now or in the future,
apply to Executive and are inconsistent with the terms of this Agreement, the
provisions of this Agreement shall control.
11. Amendments; Waivers. This Agreement may not be amended except by an
instrument in writing, signed by each of the parties. No failure to exercise and
no delay in exercising any right, remedy, or power under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, or power under this Agreement preclude any other or further
exercise thereof, or the exercise of any other right, remedy, or power provided
herein or by law or in equity.
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12. Assignment, Successors and Assigns. Executive agrees that he will not
assign, sell, transfer, delegate, or otherwise dispose of, whether voluntarily
or involuntarily, or by operation of law, any rights or obligations under this
Agreement. Any such purported assignment, transfer, or delegation shall be null
and void. Nothing in this Agreement shall prevent the consolidation of Employer
with, or its merger into, any other entity, or the sale by Employer of all or
substantially all of its assets, and Employer shall be entitled to assign its
rights and obligations hereunder in connection therewith provided that the
assignee agrees in writing to be bound by the terms and provisions hereof.
Subject to the foregoing, this Agreement shall be binding upon and shall inure
to the benefit of the parties and their respective heirs, legal representatives,
successors, and permitted assigns, and shall not benefit any person or entity
other than those specifically enumerated in this Agreement.
13. Severability. If any provision of this Agreement, or its application to
any person, place, or circumstance, is held by an arbitrator or a court of
competent jurisdiction to be invalid, unenforceable, or void, such provision
shall be enforced to the greatest extent permitted by law, and the remainder of
this Agreement and such provision as applied to other persons, places, and
circumstances shall remain in full force and effect.
14. Attorneys' Fees. In any legal action, arbitration, or other proceeding
brought to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to recover reasonable attorneys' fees and costs.
15. Injunctive Relief. If Executive breaches or threatens to breach any of
the covenants in Section 5 on Proprietary Information or Section 6 on Inventions
and Ideas, the parties acknowledge and agree that the damage or imminent damage
to Employer's business or its goodwill would be irreparable and extremely
difficult to estimate, making any remedy at law or in damages inadequate.
Accordingly, Employer shall be entitled to injunctive relief against Executive
in the event of any breach or threatened breach of the above provisions by
Executive, in addition to any other relief (including damages) available to
Employer under this Agreement or under law.
16. Governing Law. Except to the extent specifically provided in Section 7
above, this Agreement shall be governed by and construed in accordance with the
laws of the State of Texas.
17. Interpretation. This Agreement shall be construed as a whole, according
to its fair meaning, and not in favor of or against any party. By way of example
and not in limitation, this Agreement shall not be construed in favor of the
party receiving a benefit nor against the party responsible for any particular
language in this Agreement. Captions are used for reference purposes only and
should be ignored in the interpretation of the Agreement.
18. Employee Acknowledgment. Executive acknowledges that he has had the
opportunity to consult legal counsel in regard to this Agreement, that he has
read and understands this Agreement, that he is fully aware of its legal effect,
and that he has
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entered into it freely and voluntarily and based on his own judgment and not on
any representations or promises other than those contained in this Agreement.
The parties have duly executed this Agreement as of the date first written
above.
"Executive"
/s/ Xxxxxx X. Xxxxxx, Xx.
----------------------------------------
Xxxxxx X. Xxxxxx, Xx.
"Employer"
MTI TECHNOLOGY CORPORATION
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Its: Chief Financial Officer
and Secretary
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EXHIBIT A
Form of Restricted Stock Award Agreement
EXHIBIT B
Form of Indemnification Agreement
EXHIBIT C
Form of Change of Control Agreement
EXHIBIT D
Form of Option Agreement
