EMPLOYMENT AGREEMENT
Exhibit
10.1
THIS
EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of the 25th
day of August, 2008 by and between Aerosonic Corporation, hereinafter called
“the Company,” and Xxxxxx Xxxxx, hereinafter called “Employee,” and provides as
follows:
RECITALS
WHEREAS,
the Company desires to hire Employee as Executive Vice President and Chief
Operations Officer and Employee desires to serve in such capacity, subject
to
the terms provided herein; and
WHEREAS,
the parties have mutually agreed upon the terms and conditions of Employee’s
employment by the Company as hereinafter set forth.
TERMS
OF AGREEMENT
NOW,
THEREFORE, for and in consideration of the premises and of the mutual promises
and undertakings of the parties as hereinafter set forth, the parties covenant
and agree as follows:
Section
1. Employment.
Employee shall be employed as the Chief Operations Officer of the Company.
He
shall perform such services for the Company as may be assigned to Employee
from
time to time upon the terms and conditions hereinafter set forth. Employee
shall
report to the President and Chief Executive Officer of the Company.
Section
2. Term.
This
Agreement shall commence on August 26, 2008, (the “Effective Date”), and
Employee’s employment shall be “at will” and may be terminated by Employee or
the Company in accordance with Section 10 of this Agreement.
Section
3. Exclusive
Service.
Employee shall devote his best efforts and full time to rendering services
on
behalf of the Company in furtherance of its best interests. Employee shall
comply with all policies, standards and regulations of the Company now or
hereafter promulgated, and shall perform his duties under this Agreement to
the
best of his abilities and in accordance with standards of conduct applicable
to
a chief operations officer of a publicly traded company.
Section
4. Salary.
(a) As
compensation while employed hereunder, Employee, during his faithful performance
of this Agreement, in whatever capacity rendered, shall receive an annual base
salary of $160,000, payable on such terms and in a series of substantially
equal
installments according to the Company’s normal payroll practices. The Company’s
Board of Directors, in its discretion, may adjust Employee’s base salary during
the term of this Agreement.
(b) The
Company shall withhold state and federal income taxes, social security taxes
and
such other payroll deductions as may from time to time be required by law or
agreed upon in writing by Employee and the Company. The Company shall also
withhold and remit to the proper party any amounts agreed to in writing by
the
Company and Employee for participation in any corporate sponsored benefit plans
for which a contribution is required.
(c) Except
as
otherwise expressly set forth hereunder, no compensation shall be paid pursuant
to this Agreement in respect of any month or portion thereof subsequent to
any
termination of Employee’s employment with the Company.
Section
5. Benefits.
Employee shall be entitled to participate in or become a participant in any
fringe benefits and employee benefit plans maintained by the Company for which
he is or will become eligible on such terms as the Company’s Board of Directors
may, in its discretion, establish, modify or otherwise change, consistent with
the terms of any such employee benefit plan. Employee shall be entitled to
four
(4) weeks of paid vacation per year in accordance with the policies of the
Company.
Section
6. Stock
Incentive Plan.
Employee
will be entitled to participate in the Company’s Stock Incentive Plan, as the
Company’s Board of Directors, in its discretion, may decide and to the extent
permitted under the terms of the plan.
Section
7. Initial
Stock Option Award.
On or
as soon as practicable after the date on which Employee commences employment,
the Board of Directors shall grant to Employee options to purchase a total
of
twenty-five thousand (25,000) shares of Common Stock of the Company (the
“Options”). The exercise price of the Options shall be the fair market value per
share of Common Stock as set by the Board of Directors on the grant date. The
Options shall be granted under the Company’s 2004 Stock Incentive Plan, as
amended and restated (the “Plan”). The Options shall be subject to the terms,
provisions and conditions of the Plan. In the event that any provision of this
Agreement respecting the Options shall conflict with the terms of the Plan,
however, this Agreement shall control. The Options shall be incentive stock
options, within the meaning of Section 422 of the Internal Revenue Code of
1986,
as amended (the “Code”), to the extent permitted by law, and shall have a 10
year term. The Options shall vest and become exercisable annually over the
first
four years of employment, one-quarter per year, with the first such vesting
to
occur on the one-year anniversary of the Effective Date and subsequent vesting
to occur on the same date in each of the following three (3) years, provided
that Employee remains in the employ of the Company continuously through the
applicable vesting date or as otherwise provided in this Agreement.
Section
8. Bonuses.
Employee will be eligible to earn a performance bonus of up to thirty-five
percent (35%) of his annual base salary based upon his achieving certain
performance milestones, (the basis for which will be established within eight
(8) weeks after the Effective Date) per fiscal year, in cash, stock or other
equity compensation (as determined by the Board of Directors), based on his
achieving certain performance goals and metrics to be determined by the
Company’s Board of Directors; provided, however, that Executive’s performance
bonus, if any, for the fiscal year ending January 31, 2009, the performance
bonus, if any, shall be prorated based upon the Effective Date. Unless the
Company’s Board of Directors determines otherwise in its sole discretion,
receipt of bonus under any such plan or program will not be guaranteed and
will
depend upon Employee’s and/or the Company’s performance.
Section
9. Expense
Account.
The
Company shall reimburse Employee for reasonable and customary business expenses
incurred in the conduct of the Company’s business. Such expenses will include
business meals, out-of-town lodging and travel expenses, and membership dues
and
costs to attend meetings and conventions of business-appropriate organizations
and associations. Employee agrees to timely submit records and receipts of
reimbursable items and agrees that the Company can adopt reasonable rules and
policies regarding such reimbursement. Each approved reimbursement shall be
made
in no event later than December 31 of the year following the year in which
the
expense was incurred.
Section
10. Termination.
(a)
Notwithstanding the cessation of Employee’s employment, the parties hereto shall
be required to carry out any provisions of this Agreement which contemplate
performance by them subsequent to such termination. In addition, no termination
shall affect any liability or other obligation of either party hereto which
shall have accrued prior to such termination, including, but not limited to,
any
liability, loss or damage on account of breach. No termination of employment
shall terminate the obligation of the Company to make payments of any vested
benefits provided hereunder or pursuant to any employee benefit plan maintained
by the Company in which Employee participates at the time of such termination
or
the obligations of Employee under Sections 11, 12 and 13 of this
Agreement.
(b) Employee’s
employment hereunder may be terminated by Employee upon thirty (30) days written
notice to the Company or at any time by mutual agreement in
writing.
(c) This
Agreement shall terminate upon the death of Employee; provided, however, that
in
such event, in addition to the compensation, (including salary and vested bonus,
if any), accrued as of date of Employee’s death, the Company shall pay to the
estate of Employee the salary which otherwise would have been payable to
Employee from his date of death through then end of the month in which his
death
occurs in substantially equal installments at the time such payments would
have
been made in accordance with Section 4(a) beginning with the pay date of the
first full payroll period beginning immediately following the death of Employee,
subject to Section 25.
(d) The
Company may terminate Employee’s employment other than for “Cause,” as defined
in Section 10(e), at any time upon written notice to Employee, which termination
shall be effective immediately.
(e) The
Company shall have the right to terminate Employee’s employment under this
Agreement at any time for Cause, which termination shall be effective
immediately. Termination for “Cause” shall include termination for Employee’s
personal dishonesty, willful misconduct, breach of a fiduciary duty involving
personal profit, willful violation of any law, rule or regulation (other than
traffic violations or similar offenses), conviction of a felony or of a
misdemeanor involving moral turpitude, misappropriation of the Company’s assets,
or a material breach of any other provision of this Agreement. In the event
Employee’s employment under this Agreement is terminated for Cause, Employee
shall thereafter have no right to receive any compensation or other benefits
under this Agreement.
(f) The
Company may terminate Employee’s employment under this Agreement, after having
established Employee’s disability, by giving to Employee written notice of its
intention to terminate his employment for disability and his employment with
the
Company shall terminate effective on the 90th day after receipt of such notice
if within 90 days after such receipt Employee shall fail to return to the
full-time performance of the essential functions of his position (and if
Employee’s disability has been established pursuant to the definition of
“disability” set forth below). For purposes of this Agreement, “disability”
means either (i) disability which after the expiration of more than 13
consecutive weeks after its commencement is determined to be total and permanent
by a physician selected and paid for by the Company or its insurers, and
acceptable to Employee or his legal representative, which consent shall not
be
unreasonably withheld or (ii) disability as defined in the policy of disability
insurance maintained by the Company for the benefit of Employee, whichever
shall
be more favorable to Employee. Notwithstanding any other provision of this
Agreement, the Company shall comply with all requirements of the Americans
with
Disabilities Act, 42 U.S.C. § 12101 et. seq.
Upon
termination for disability, Employee in addition to the compensation (including
salary and vested bonus, if any) accrued as of date of this termination, will
also receive in substantially equal installments the salary that would otherwise
would have been payable to Employee through the end of the month in which such
termination occurs at the time such payments would have been made in accordance
with Sections 4(a) beginning with the pay date of the first full payroll period
beginning immediately following the effective date of Employee’s termination of
employment because of Employee’s disability, subject to Section 25.
(g) In
addition to the compensation (including salary and vested bonus, if any) accrued
as of date of this termination, Employee is entitled to (i) severance pay of
three (3) month’s salary if terminated by the Company within twelve (12) months
from the Effective Date, or (ii) severance pay of six (6) months salary if
Employee is terminated by the Company after Employee has completed more than
twelve (12) months of employment with the Company from the Effective Date.
Employee is not entitled to any severance if the termination is due to “Cause”
as defined in Section 10(e). Payment of severance will be made in substantially
equal installments according to the Company’s normal payroll practices as
consistent with the payment of Employee compensation pursuant to Section
4(a).
Section
11. Confidentiality/Nondisclosure.
Employee covenants and agrees that any and all information concerning the
customers, businesses and services of the Company of which he has knowledge
or
access as a result of his association with the Company in any capacity, shall
be
deemed confidential in nature and shall not, without the proper written consent
of the Company, be directly or indirectly used, disseminated, disclosed or
published by Employee to third parties other than in connection with the usual
conduct of the business of the Company. Such information shall expressly
include, but shall not be limited to, information concerning the Company’s trade
secrets, business operations, business records, customer lists or other customer
information. Upon termination of employment Employee shall deliver to the
Company all originals and copies of documents, forms, records or other
information, in whatever form it may exist, concerning the Company or its
business, customers, products or services. In construing this provision it
is
agreed that it shall be interpreted broadly so as to provide the Company with
the maximum protection. This Section 11 shall not be applicable to any
information which, through no misconduct or negligence of Employee, has
previously been disclosed to the public by anyone other than
Employee.
Section
12. Covenants
Against Competition.
Employee acknowledges that he will obtain from the Company valuable information
regarding the business of the Company, and that the services to be rendered
by
Employee are of a special character which have unique value to the Company,
the
loss of which will not be readily calculable. Employee further acknowledges
that
the customers of the Company are located throughout the world, and the market
of
the Company has no defined geographic boundaries, so a business could be located
anywhere in the world, and certainly within the United States, and compete
with
the Company. In view of the unique value to the Company of the services of
Employee and in light of the confidential information to be obtained by or
disclosed to Employee as hereinabove set forth, including access to the business
plans and methods of operation of the Company, and as a material inducement
to
the Company to employ Employee, he covenants and agrees as follows:
(a) Commencing
with the date of this Agreement and continuing for a period of 12 months after
Employee ceases to be employed by the Company for any reason, or 12 months
from
the date a court of competent jurisdiction enters a final order enforcing the
terms of this Section 12, whichever is later, Employee shall not, directly
or
indirectly, own, operate, manage, control or participate in the ownership,
operation, management or control, or perform services of a nature substantially
similar to those performed or provided by Employee for the Company during the
last twelve months of his employment, to or for any person, firm, or other
entity engaged in the business of providing products or services which are
the
same as, or substantially the same as, those provided by the Company at the
time
Employee’s employment ceases, and which are competitive with the Company (“the
Business”). The restrictions set forth herein apply only to those persons,
firms, or other entities which are engaged in the Business within the
Continental United States. Nothing herein shall prohibit Employee from working
(i) for any person, firm or entity that is not in competition with the Company,
or (ii) in any employment position in which he could not cause the Company
any
competitive harm.
(b) Commencing
with the date of this Agreement and continuing for a period of 12 months after
Employee’s employment ceases, or 12 months from the date a court of competent
jurisdiction enters a final order enforcing the terms of this provision,
whichever is later, Employee shall not, directly or indirectly, as a principal,
agent, employer, employee, partner, consultant, or in any other capacity,
solicit, divert from the Company or do business with any customer of the
Company, either in whole or in part, for the purpose of providing any products
or services which are the same as or substantially the same as, and which are
competitive with, the Company products and services sold at the time Employee’s
employment ceases. The phrase “customer” of the Company means any person or
entity (i) to whom Employee has, directly or indirectly, provided services
or
products on behalf of the Company at any time during the 12 months preceding
the
cessation of Employee’s employment; (ii) to whom Employee had, directly or
indirectly, either met, spoken or communicated with for the purpose of offering
the Company’s services or products during the 12 months preceding the cessation
of his employment; or (iii) any person or entity about whom Employee acquired
material information based on his employment with the Company within 12 months
of cessation thereof, and as to whom Employee has been informed that the Company
will be providing Company products or services.
(c) Commencing
with the date of this Agreement and continuing for a period of 12 months after
he ceases to be employed by the Company for any reason, or 12 months from the
date a court of competent jurisdiction enters a final order enforcing the terms
of this Section 12, whichever is later, Employee shall not, directly or
indirectly, recruit, solicit for employment or employ any person who was an
employee of the Company at any time during the twelve (12) months preceding
the
cessation of Employee’s employment.
Section
13. Remedies.
Employee agrees that a breach of any of the covenants set forth in Sections
11
or 12 or their subparts would result in irreparable injury and damage to the
Company for which it would have no adequate remedy at law; and Employee further
agrees that in the event of such a breach, the Company shall be entitled to
an
immediate injunction to prevent such violations. In the event an action is
brought in regard to the covenants set forth in Sections 11 or 12, the
prevailing party shall be entitled to receive all costs and attorneys’ fees as a
result of such breach.
Section
14. Reasonableness
of Restrictions.
Employee has carefully read and considered the provisions of Sections 11 and
12
hereof and, having done so, agrees that the restrictions set forth in such
Sections (including but not limited to, the time period of the restrictions,
the
geographic restrictions and the restrictions on the scope of activity set forth
in Section 12 hereof) are fair and reasonable and are reasonably required for
the protection for the interests of the Company, its officers, directors, and
other employees.
Section
15. Governing
Law.
This
Employment Agreement shall be subject to and construed in accordance with the
laws of the State of Florida, without giving effect to its principles of
conflict of laws.
Section
16. Venue.
Employee agrees that, at the option of the Company, any action brought to
enforce or to test the enforceability of any provision of this Agreement, may
be
brought in either the United States District Court for the Middle District
of
Florida or the Circuit Court of Pinellas County, Florida.
Section
17. Continued
Validity.
In the
event that any of the provisions of Sections 11 or 12 (or their subparts) hereof
shall be held to be invalid or unenforceable, the remaining provisions shall
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable parts had not been included therein. In the event that any
provisions of Section 12 relating to geographic scope, time period and/or
restricted activity shall be declared by a court of competent jurisdiction
to
exceed the maximum time period or restrictions on activities such court deems
reasonable and enforceable, the parties agree that said geographic scope, time
period, and/or other restrictions may be modified by the court in a manner
which
such court deems reasonable and enforceable.
Section
18. Assignability.
This
Agreement shall be binding upon and inure to the benefit of the Company, and
may
be assigned by the Company to any person or firm who may succeed to the majority
of the assets of the Company. This Agreement shall not be assignable by
Employee.
Section
19. Notices.
Any and
all notices, designations, consents, offers, acceptance or any other
communications provided for herein shall be given in writing and shall be deemed
properly delivered if delivered in person or by registered or certified mail,
return receipt requested, addressed in the case of the Company to its registered
agent or in the case of Employee to his last known address.
Section
20. Entire
Agreement.
(a) This
Agreement constitutes the entire agreement among the parties with respect to
the
subject matter hereof and supersedes any and all other agreements, either oral
or in writing, among the parties hereto with respect to the subject matter
hereof.
(b) This
Agreement may be executed in one or more counterparts, each of which shall
be
considered an original copy of this Agreement, but all of which together shall
evidence only one agreement.
Section
21. Amendment
and Waiver.
This
Agreement may not be amended except by an instrument in writing signed by or
on
behalf of each of the parties hereto. No waiver of any provision of this
Agreement shall be valid unless in writing and signed by the person or party
to
be charged.
Section
22. Case
and Gender.
Wherever required by the context of this Agreement, the singular or plural
case
and the masculine, feminine and neuter genders shall be
interchangeable.
Section
23. Captions.
The
captions used in this Employment Agreement are intended for descriptive and
reference purposes only and are not intended to affect the meaning of any
Section hereunder.
Section
24. Section
409A.
This
Agreement is intended to comply with the applicable requirements of Section
409A
of the Code and shall be construed and interpreted in accordance therewith.
Notwithstanding the preceding, the Company shall not be liable to Employee
or
any other person if the Internal Revenue Service or any court or other authority
having jurisdiction over such matter determines for any reason that any payments
under this Agreement are subject to taxes, penalties or interest as a result
of
failing to comply with Section 409A of the Code.
Section
25. Delay
of Payment.
Notwithstanding any other provision of this Agreement, if Employee is a
“specified employee” within the meaning of Section 409A of the Code, to the
extent necessary to comply with Section 409A of the Code, no payments (which
are
not otherwise exempt) may be made hereunder before the date which is six months
after Employee’s separation from service or, if earlier, his death. Any amounts
which would have otherwise been required to be paid during such six months
or,
if earlier, until Employee’s death, shall be paid to Employee in one lump sum
cash payment as soon as administratively practical after the date which is
six
months after Employee’s separation from service or, if earlier, after Employee’s
death. Any other payments scheduled to be made under this Agreement shall be
made and provided at the times otherwise designated in this Agreement
disregarding the delay of payment for the payments described in this Section
25.
Additionally, notwithstanding any other provision of this Agreement, Employee
will only be entitled to receive payment on termination of his employment when
the termination of employment qualifies as a “separation from service” within
the meaning of Section 409A of the Code.
[Signature
Page Follows]
IN
WITNESS WHEREOF,
the
Company has caused this Employment Agreement to be signed by its duly authorized
officer and Employee has hereunto set his hand and seal on the day and year
first above written.
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AEROSONIC
CORPORATION
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By:
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/s/
Xxxxxxx X. Xxxxxxx
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Xxxxxxx
X. Xxxxxxx, President/CEO
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EMPLOYEE
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/s/
Xxxxxx Xxxxx
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XXXXXX
XXXXX
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