EXHIBIT 10.1
ACCELR8 TECHNOLOGY CORPORATION
EMPLOYMENT AGREEMENT
WITH XXXXXX X. XXXXXX
This Employment Agreement is made and entered into this 1st day of
December, 2002, by and between Accelr8 Technology Corporation, a Colorado
corporation (the "Company"), and Xxxxxx X. Xxxxxx, an individual ("Executive").
RECITALS
A. The Company desires to be assured of the association and services of
Executive for the Company.
B. Executive is willing and desires to be employed by the Company, and the
Company is willing to employ Executive, upon the terms, covenants and conditions
hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual terms, covenants and
conditions hereinafter set forth, the parties hereto agree as follows:
1. Employment. The Company hereby employs Executive as its Chairman of the
Board of Directors, Chief Executive Officer, Chief Financial Officer, and
Secretary.
2. Term. The term of this Agreement shall be for a period of five (5) years
and one (1) month effective as of December 1, 2002, and ending on December 31,
2007 (the "Initial Term"), unless terminated earlier pursuant to Section 7
below; provided, however, that Executive's obligations in Sections 6 and 8 below
shall continue in effect after such termination. This Agreement shall be
automatically renewed for successive one year periods (the "Renewal Term")
unless, at least 90 days prior to the expiration of the Initial Term or any
Renewal Term, either party gives written notice to the other party specifically
electing to terminate this Agreement at the end of the Initial Term or any such
Renewal Term.
3. Compensation; Reimbursement.
3.1 Base Salary. For all services rendered by Executive under this
Agreement, the Company shall pay Executive a base salary of One Hundred Sixty
Five Thousand Dollars ($165,000) per year (the "Base Salary"). The Base Salary
shall be payable in equal, consecutive monthly installments. Payment of the
Salary shall be subject to the customary withholding tax and other employment
taxes as required with respect to compensation paid by a corporation to an
employee. It is expressly understood and agreed that the Base Salary may be
increased upon the approval of the Company's Compensation Committee (if such a
committee exists) or a subcommittee of the Board of Directors consisting only of
members of the Board who are not employees of the Company (if a Compensation
Committee does not exist).
3.2 Deferred Compensation. In addition to Executive's Base Salary provided
for in Section 3.1, the Company shall contribute at least Seventy Five Thousand
Dollars ($75,000) per year to the Company's deferred compensation plan for
Executive ("Deferred Compensation").
3.3 Bonus. In addition to the Base Salary and the Deferred Compensation,
the Company shall pay Executive such Bonus or Bonuses as the Board of Directors
shall determine in their sole discretion.
3.4 Key Man Life Insurance. In addition to the Base Salary, the Deferred
Compensation, and any Bonuses, the Company shall carry key man life insurance in
the amount of five million dollars ($5,000,000) on Executive's life (the "Key
Man Life Insurance"). Pursuant to a resolution passed by the Board of Directors,
Executive shall designate a beneficiary who shall be entitled to one-half of the
proceeds of the Key Man Life Insurance.
3.5 Additional Benefits. In addition to the Base Salary, Deferred
Compensation, Bonuses and the Key Man Life Insurance, Executive shall be
entitled to all other benefits of employment provided to the employees of the
Company.
3.6 Reimbursement. Executive shall be reimbursed for all reasonable
"out-of-pocket" business expenses for business travel and business entertainment
incurred in connection with the performance of his duties under this Agreement
(1) so long as such expenses constitute business deductions from taxable income
for the Company and are excludable from taxable income to Executive under the
governing laws and regulations of the Internal Revenue Code (provided, however,
that Executive shall be entitled to full reimbursement in any case where the
Internal Revenue Service may, under Section 274(n) of the Internal Revenue Code,
disallow to the Company some percentage of meals and entertainment expenses);
and (2) to the extent such expenses do not exceed the amounts allocable for such
expenses in budgets that are approved from time to time by the Company. The
reimbursement of Executive's business expenses shall be upon monthly
presentation to and approval by the Company of valid receipts and other
appropriate documentation for such expenses.
4. Scope of Duties.
4.1 Assignment of Duties. Executive shall have such duties as may be
assigned to him from time to time by the Company's Board of Directors
commensurate with his experience and responsibilities in the positions for which
he is employed pursuant to Section 1 above. Such duties shall be exercised
subject to the control and supervision of the Board of Directors of the Company.
4.2 General Specification of Duties. Executive's duties shall include, but
not be limited to those duties that are generally associated with the positions
of Chairman of the Board of Directors, Chief Executive Officer, Chief Financial
Officer and Secretary of a company similarly situated to the Company, and as
such duties and responsibilities are more particularly described in the
Company's Bylaws.
The foregoing specifications are not intended as a complete itemization of
the duties which Executive shall perform and undertake on behalf of the Company
in satisfaction of his employment obligations under this Agreement.
4.3 Executive's Devotion of Time. Executive hereby agrees to devote his
full time abilities and energy to the faithful performance of the duties
assigned to him and to the promotion and forwarding of the business affairs of
the Company, and not to divert any business opportunities from the Company to
himself or to any other person or business entity.
4.4 Conflicting Activities.
(a) Executive may, during the Initial Term or any Renewal Term of this
Agreement, be engaged in other business activities without the prior consent of
the Board of Directors of the Company; provided, however, that Executive may not
compete directly with the Company. Further, nothing in this Agreement shall be
construed as preventing Executive from investing his personal assets in passive
investments in business entities which are not in competition with the Company
or its affiliates, or from pursuing business opportunities as permitted by
Section 4.4(b).
(b) Executive hereby agrees to promote and develop all business
opportunities that come to his attention relating to current or anticipated
future business of the Company, in a manner consistent with the best interests
of the Company and with his duties under this Agreement. Should Executive
discover a business opportunity that does not relate to the current or
anticipated future business of the Company, he shall first offer such
opportunity to the Company. Should the Board of Directors of the Company not
exercise its right to pursue this business opportunity within a reasonable
period of time, not to exceed sixty (60) days, then Executive may develop the
business opportunity for himself; provided, however, that such development may
in no way conflict or interfere with the duties owed by Executive to the Company
under this Agreement. Further, Executive may develop such business opportunities
only on his own time, and may not use any service, personnel, equipment,
supplies, facility or trade secrets of the Company in their development. As used
herein, the term "business opportunity" shall not include business opportunities
involving investment in publicly traded stocks, bonds or other securities, or
other investments of a personal nature.
5. Change of Control. If any time during the Initial Term or any Renewal
Term of this Agreement there is a change of control of the Company, as defined
below, and Executive's employment is terminated by the Company under Section
7.1(a), (b), (d) or (e) within the greater of one (1) year following the change
of control or the remaining term of this Agreement (the "Change of Control
Date"), the Company shall pay to Executive (a) the balance of all amounts due
from the Change of Control Date until the end of the Initial Term, including
deferred compensation, due under this Agreement plus (b) an amount equal to five
times the sum of (i) his annual Base Salary as in effect on the date of
termination plus (ii) the amount of $75,000 in recognition of Deferred
Compensation payments made on behalf of Executive, and (c) any other amounts due
to Executive under any other provision of this Agreement. This amount shall be
paid to Executive in one lump sum as soon as practicable, but in no event later
than one hundred twenty (120) days, after the date that Executive's employment
is terminated. In addition to the lump sum payment referenced in the preceding
sentence, the Company shall pay to Executive any accrued and unpaid Bonuses as
provided for in Section 3.3 at the same time as the lump sum payment is made.
For example, if the Change of Control Date was January 1, 2003, the amount paid
to would be equal to $2,400,000 ([$165,000 (Base Salary) + $75,000 (Deferred
Compensation) X 5 (years remaining on contract)] + [$165,000 (base salary) +
$75,000 (deferred compensation) X 5]).
For purposes of this subsection, a change of control shall mean the
occurrence of one or more of the following three events:
(1) After the effective date of this Agreement, any person becomes a
beneficial owner (as such term is defined in Rule 13d-3 promulgated under
the Securities Exchange Act of 1934, as amended) directly or indirectly of
securities representing 33% or more of the total number of votes that may
be cast for the election of directors of the Company;
(2) Within two years after a merger, consolidation, liquidation or sale of
assets involving the Company, or a contested election of a Company
director, or any combination of the foregoing, the individuals who were
directors of the Company immediately prior thereto shall cease to
constitute a majority of the Board; or
(3) Within two years after a tender offer or exchange offer for voting
securities of the Company, the individuals who were directors of the
Company immediately prior thereto shall cease to constitute a majority of
the Board.
6. Confidentiality of Trade Secrets and Other Materials.
6.1 Executive acknowledges that in his employment hereunder, he will be
making use of, acquiring and adding to the Company's trade secrets and its
confidential and proprietary information of a special and unique nature and
value relating to such matters as, but not limited to, the Company's business
operations, manufacturing processes, manufacturing techniques, manufacturing
methods, manufacturing technology, internal structure, financial affairs,
programs, software, systems, procedures, manuals, confidential reports, lists of
clients and prospective clients and sales and marketing methods, as well as the
amount, nature and type of services, equipment and methods used and preferred by
the Company's clients and the fees paid by such clients, all of which shall be
deemed to be confidential information. Executive acknowledges that such
confidential information has been and will continue to be of central importance
to the business of the Company and that disclosure of it to or its use by others
could cause substantial loss to the Company. In consideration of employment by
the Company, Executive agrees that during the term of this Agreement and any
renewal or extension of his employment by the Company and upon and after leaving
the employ of the Company for any reason whatsoever, Executive shall not, for
any purpose whatsoever, directly or indirectly, divulge or disclose to any
person or entity any of such confidential information which was obtained by the
Executive as a result of Executive's employment with the Company or any trade
secrets of the Company, but shall hold all of the same confidential and
inviolate.
6.2 All contracts, agreements, financial books, records, instruments and
documents; client lists; memoranda; data; reports; programs; software; tapes;
rolodexes; telephone and address books; letters; research; card decks; listings;
programming; and any other instruments, records or documents relating or
pertaining to clients serviced by the Company or the Executive, the services
rendered by the Executive, or the business of the Company (collectively, the
"Records") shall at all times be and remain the property of the Company. Upon
termination of this Agreement and the Executive's employment under this
Agreement for any reason whatsoever, Executive shall return to the Company all
Records (whether furnished by the Company or prepared by the Executive), and
Executive shall neither make nor retain any copies of any of such Records after
such termination.
6.3 All inventions and other creations, whether or not patentable or
copyrightable, made or conceived in whole or in part by Executive while employed
by the Company and within eighteen months thereafter, which relate directly to
the business, existing or proposed, of the Company or any other business or
research or development effort in which the Company or any of its subsidiaries
or affiliates engages during Executive's employment by the Company will be
disclosed promptly by Executive to the Company and shall be the sole and
exclusive property of the Company. All copyrightable works created by Executive
and covered by this Section 6.3 shall be deemed to be works for hire. Executive
shall cooperate with the Company in patenting or copyrighting all such
inventions and other creative works, shall execute, acknowledge, seal and
deliver all documents tendered by the Company to evidence its ownership thereof
throughout the world, and shall cooperate with the Company in obtaining,
defending, and enforcing its rights therein.
7. Termination.
7.1 Bases for Termination.
(a) Executive's employment hereunder may be terminated at any time by
mutual agreement of the parties.
(b) This Agreement shall automatically terminate on the last day of the
month in which Executive dies or becomes permanently incapacitated. "Permanent
incapacity" as used herein shall mean mental or physical incapacity, or both,
reasonably determined by the Company's Board of Directors based upon a
certification of such incapacity by, in the discretion of the Company's Board of
Directors, either Executive's regularly attending physician or a duly licensed
physician selected by the Company's Board of Directors, rendering Executive
unable to perform substantially all of his duties hereunder and which appears
reasonably certain to continue for at least six consecutive months without
substantial improvement. Executive shall be deemed to have "become permanently
incapacitated" on the date the Company's Board of Directors has determined that
Executive is permanently incapacitated and so notifies Executive.
(c) Executive's employment may be terminated by the Company "with cause,"
effective upon delivery of written notice to Executive given at any time
(without any necessity for prior notice) if any of the following shall occur:
(1) any action by Executive which would be grounds for termination
under applicable law (currently covering any willful breach of duty, and
habitual neglect of duty);
(2) any material breach of Executive's obligations in Sections 4 or 6
above; or
(3) any material acts or events which inhibit Executive from fully
performing his responsibilities to the Company in good faith, such as (i) a
felony criminal conviction; (ii) any other criminal conviction involving
Executive's lack of honesty or Executive's moral turpitude; (iii) drug or
alcohol abuse; or (iv) acts of dishonesty, gross carelessness or gross
misconduct.
(d) Executive's employment may be terminated by the Company "without cause"
(for any reason or no reason at all) at any time by giving Executive 60 days
prior written notice of termination, which termination shall be effective on the
60th day following such notice. If Executive's employment under this Agreement
is so terminated, the Company shall (i) make a lump sum cash payment to
Executive within 10 days after termination is effective of an amount equal to
(1) Executive's Base Salary accrued to the date of termination; (2) unreimbursed
expenses accrued to the date of termination; (3) an amount equal to the greater
of (a) Executive's annual Base Salary (i.e., 12 months of Base Salary), or (b)
amounts remaining due to Executive as Base Salary (assuming that payments under
this Agreement were made until expiration of the Initial Term or if applicable
the Renewal Term), and (4) any other amounts due to Executive under any other
provision of this Agreement. For purposes of this provision, Executive's annual
Base Salary and the remaining portion of the term of the Agreement shall be
calculated as of the termination date. After the Company's termination of
Executive under this provision, the Company shall not be obligated to provide
the benefits to Executive described in Section 3.3 (except as may be required by
law). In addition to the lump sum payment referenced in the preceding sentence,
the Company shall pay to Executive the Bonus provided for in Section 3.2 based
upon the number of days in the year that Executive was employed by the Company,
within one hundred five days after the end of the fiscal year in which Executive
was terminated.
(e) Executive may terminate his employment hereunder by giving the Company
60 days prior written notice, which termination shall be effective on the 60th
day following such notice.
7.2 Payment Upon Termination. Upon termination under Sections 7.1(a), (b),
(c) or (e), the Company shall pay to Executive within 10 days after termination
an amount equal to the sum of (1) Executive's Base Salary accrued to the date of
termination; (2) unreimbursed expenses accrued to the date of termination, and
(3) any other amounts due to Executive under any other provision of this
Agreement. Except for the foregoing compensation then due and owing and the
compensation provided for in Section 8.1(d), the Company shall not be obligated
to compensate Executive, his estate or representatives after any such
termination. Further, Executive shall not be entitled to any of the benefits
described in Section 3.3 (except as provided by law) after such termination.
7.3 Dismissal from Premises. At the Company's option, Executive shall
immediately leave the Company's premises on the date notice of termination is
given by either Executive or the Company.
8. Restrictive Covenants.
8.1 The Company and Executive acknowledge and agree that Executive's
services are of a special and unusual character which have a unique value to the
Company, the loss of which cannot be adequately compensated by damages in an
action at law and if used in competition with the Company could cause serious
harm to the Company. Further, Executive and the Company also recognize that an
important part of Executive's duties will be to develop good will for the
Company through his personal contact with customers, agents and others having
business relationships with the Company, and that there is a danger that this
good will, a proprietary asset of the Company, may follow Executive if and when
his relationship with the Company is terminated. Accordingly, Executive
covenants that for a period of eighteen months after Executive ceases to be
employed by the Company for any reason whatsoever, Executive shall not, within
the State of Colorado, without the prior written consent of the Company,
directly or indirectly:
(a) Offer to render any services or solicit the rendition of any services
which were rendered by the Company during the two year period immediately
preceding such cessation of Executive's employment with the Company to any
clients, customers or accounts of the Company who were such at any time during
such two year period to or for the benefit or account of Executive or to or for
the benefit or account of any other person or entity.
(b) Render or attempt to render any services which were rendered by the
Company during the two year period immediately preceding such cessation of
Executive's employment with the Company to any clients, customers or accounts of
the Company who were such at any time during such two year period to or for the
benefit or account of Executive or to or for the benefit or account of any other
person or entity.
(c) Solicit for employment or employ to or for the benefit or account of
Executive or to or for the benefit or account of any other person or entity any
employee of the Company, nor shall Executive urge, directly or indirectly, any
client or referrer of clients, customers, or accounts of the Company to
discontinue, in whole or in part, business with the Company or not to do
business with the Company. For purposes of this Section 8.1(c) of this
Agreement, the term "referrer of clients" shall mean any person or entity who or
which referred a client, customer or account to the Company at any time prior to
such cessation of Executive's employment with the Company.
(d) Engage, either as a consultant, independent contractor, proprietor,
stockholder, partner, officer, director, employee or otherwise, in any business
which (i) designs or sells software for the migration or conversion of computer
applications or software, or (ii) designs, sells, or competes in the surface
chemistry and quantitative instruments industry, or the DNA/RNA assays,
protein-based assays and biosensors industries, or (iii) any business that
otherwise competes with the Company in any state of the United States or in any
foreign country, in each such case where the Company sold, licensed or otherwise
its products or related services at any time during the two year period
immediately preceding such cessation of Executive's employment with the Company.
The Company and the Executive agree that the Company may elect to either enforce
or waive this Section 8.1(d); provided however, that if the Company elects to
enforce this Section 8.1(d), then subject to the provisions of the immediately
following sentence, the Company agrees to pay Executive on a monthly basis an
amount equal to his monthly Base Salary at the time of termination for each
month that the Company elects to keep this provision in effect. It is expressly
understood and agreed that if Executive is paid any amounts pursuant to Section
7.1(d), then the provisions of this Section 8.1(d) shall remain in full force
and effect without the Company being obligated to make the additional payments
contemplated in the immediately preceding sentence.
8.2 The parties hereto agree that to the extent that any provision or
portion of Section 8.1 of this Agreement shall be held, found or deemed to be
unreasonable, unlawful or unenforceable by a court of competent jurisdiction,
then any such provision or portion thereof shall be deemed to be modified to the
extent necessary in order that any such provision or portion thereof shall be
legally enforceable to the fullest extent permitted by applicable law; and the
parties hereto do further agree that any court of competent jurisdiction shall,
and the parties hereto do hereby expressly authorize, request and empower any
court of competent jurisdiction to, enforce any such provision or portion
thereof or to modify any such provision or portion thereof in order that any
such provision or portion thereof shall be enforced by such court to the fullest
extent permitted by applicable law.
8.3 The provisions of Sections 8.1(a), 8.1(b), 8.1(c) and 8.1(d) of this
Agreement are cumulative. Compliance with Sections 8.1(a), 8.1(b), 8.1(c) and
8.1(d) of this Agreement is a condition precedent to the Company's obligation to
make any payments of any nature to Executive, whether under this Agreement or
otherwise. Nothing in this Agreement shall be construed as prohibiting the
Company from pursuing any other remedies available to it for a breach or
threatened breach of Sections 6 and 8 of this Agreement.
8.4 As used in this Section 8, "clients", "customers" and "accounts" shall
include any person or entity that, directly or indirectly, through one or more
intermediaries, controls or is controlled by, or is under common control with,
any such "clients", "customers" or "accounts."
9. Injunctive Relief. The Company and Executive hereby acknowledge and
agree that any violation of the provisions of Sections 6 or 8 hereunder will
cause irreparable injury to the Company and there is no adequate remedy at law
for such violation. Accordingly, in addition to any other relief to which the
Company may be entitled, the Company shall be entitled to such injunctive relief
as may be ordered by any court of competent jurisdiction including, but not
limited to, an injunction restraining any violation of Sections 6 or 8 above
without the proof of actual damages.
10. Miscellaneous.
10.1 Transfer and Assignment. This Agreement is personal as to Executive
and shall not be assigned or transferred by Executive without the prior written
consent of the Company. This Agreement shall be binding upon and inure to the
benefit of all of the parties hereto and their respective permitted heirs,
personal representatives, successors and assigns.
10.2 Severability. Nothing contained herein shall be construed to require
the commission of any act contrary to law. Should there be any conflict between
any provisions hereof and any present or future statute, law, ordinance,
regulation or other pronouncement having the force of law, the latter shall
prevail, but the provision of this Agreement affected thereby shall be curtailed
and limited only to the extent necessary to bring it within the requirements of
the law, and the remaining provisions of this Agreement shall remain in full
force and effect.
10.3 Governing Law. This Agreement is made under and shall be construed
pursuant to the laws of the State of Colorado.
10.4 Counterparts. This Agreement may be executed in several counterparts
and all documents so executed shall constitute one agreement, binding on all of
the parties hereto, notwithstanding that all of the parties did not sign the
original or the same counterparts.
10.5 Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersedes all prior oral or written agreements, arrangements and understandings
with respect thereto. No representation, promise, inducement, statement or
intention has been made by any party hereto that is not embodied herein, and no
party shall be bound by or liable for any alleged representation, promise,
inducement or statement not so set forth herein.
10.6 Modification. This Agreement may be modified, amended, superseded or
cancelled, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by the
party or parties to be bound by any such modification, amendment, supersession,
cancellation or waiver.
10.7 Attorneys' Fees and Costs. In the event of any dispute arising out of
the subject matter of this Agreement, the prevailing party shall recover, in
addition to any other damages assessed, its attorneys' fees and court costs
incurred in litigating or otherwise settling or resolving such dispute whether
or not an action is brought or prosecuted to judgment. In construing this
Agreement, none of the parties hereto shall have any term or provision construed
against such party solely by reason of such party having drafted the same.
10.8 Waiver. The waiver by either of the parties, express or implied, of
any right under this Agreement or any failure to perform under this Agreement by
the other party, shall not constitute or be deemed as a waiver of any other
right under this Agreement or of any other failure to perform under this
Agreement by the other party, whether of a similar or dissimilar nature.
10.9 Cumulative Remedies. Each and all of the several rights and remedies
provided in this Agreement, or by law or in equity, shall be cumulative, and no
one of them shall be exclusive of any other right or remedy, and the exercise of
any one or such rights or remedies shall not be deemed a waiver of, or an
election to exercise, any other such right or remedy.
10.10 Headings. The section and other headings contained in this Agreement
are for reference purposes only and shall not in any way affect the meaning and
interpretation of this Agreement.
10.11 Notices. Any notice under this Agreement must be in writing, may be
telecopied provided that evidence of the transmission and receipt is created at
the time of transmission, sent by express 24-hour guaranteed courier, or
hand-delivered, or may be served by depositing the same in the United States
mail, addressed to the party to be notified, postage-prepaid and registered or
certified with a return receipt requested. The addresses of the parties for the
receipt of notice shall be as follows:
If to the Company: Accelr8 Technology Corporation
000 Xxxx Xxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
If to Executive: Xxxxxx X. Xxxxxx
000 Xxxx Xxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Each notice given by registered or certified mail shall be deemed delivered and
effective on the date of delivery as shown on the return receipt, and each
notice delivered in any other manner shall be deemed to be effective as of the
time of actual delivery thereof. Each party may change its address for notice by
giving notice thereof in the manner provided above.
10.12 Survival. Any provision of this Agreement which imposes an obligation
after termination or expiration of this Agreement shall survive the termination
or expiration of this Agreement and be binding on Executive and the Company.
10.13 Right of Set-Off. Upon termination or expiration of this Agreement,
the Company shall have the right to set-off against the amounts due Executive
hereunder the amount of any outstanding loan or advance from the Company to
Executive.
10.14 Effective Date. This Agreement shall become effective as of the date
set forth on page 1 when signed by Executive and the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Employment
Agreement to be executed as of the date first set forth above.
XXXXXX X. XXXXXX ACCELR8 TECHNOLOGY CORPORATION
________________________________ By:_________________________________
Xxxxx Xxxxxxx, Director
By: ________________________________
A. Xxxxxxxxx Xxxxxx III, Director
