Exhibit 10.18
XXXX COMPUTER CORPORATION
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement") made as of this ____ day of
___________, 1998 by and between XXXX COMPUTER CORPORATION, a Virginia
corporation, having an office at 0000 Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxx 00000
(hereinafter referred to as "Employer") and [Xxxxxx Xxxxxx/D. Xxxxx Xxxxxx], an
individual residing at [Residential address] (hereinafter referred to as
"Employee");
W I T N E S S E T H:
WHEREAS, Employer has entered into an Acquisition Agreement, dated
March 9, 1998 to purchase all of the outstanding stock of International Data
Products, Corp., a Maryland corporation ("IDP") and through a newly formed
Puerto Rico subsidiary of Employer,Puerto Rico Industrial Manufacturing
Operations Acquisition Corp., ("NEW PRIMO") to purchase substantially all of
the net assets of Puerto Rico Industrial Manufacturing Operations Corp., a
Puerto Rican corporation ("OLD PRIMO"); and
WHEREAS, Employee is a selling stockholder of IDP and has been acting
as [President/Vice President] of IDP and of OLD PRIMO; and
WHEREAS, as a condition to entering into the Acquisition Agreement,
Employer desires to ensure that Employee serves as [President/Vice President]
of NEW PRIMO, and continues to serve as [President/Vice President] of IDP; and
WHEREAS, Employee is willing to be employed as [President/Vice
President] of NEW PRIMO and to continue to be employed as President/Vice
President of IDP in the manner provided for herein, and to perform the duties
of [President/Vice President] of IDP and NEW PRIMO upon the terms and
conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein set forth it is agreed as follows:
1. Employment of [President/Vice President]. Employer hereby employs
Employee as [President/Vice President] of IDP and of NEW PRIMO.
2. Term of Employment.
(a) The Employee's term of employment under this Agreement
shall commence on the date hereof (the "Commencement Date") and, except for the
provisions of Section 8 hereof, shall expire three (3) years from the
Commencement Date unless Employee's employment is terminated earlier pursuant to
Section 9 (the "Term of Employment").
3. Duties. During the Term of Employment, the Employee shall perform
those functions generally performed by persons of such title and position and
such duties as may be assigned to him from time to time by the President and
Chief Executive Officer of Employer (the "CEO"), and
2
shall at all times be subject to the direction and control of the CEO. During
the Term of Employment, Employee shall serve the Employer faithfully and to the
best of his abilities and shall devote substantially all of his business time
and efforts to Employer and its subsidiaries and affiliates. Employee shall give
the CEO periodic reports and shall keep the CEO informed on a current basis
concerning the duties assigned to Employee. Other than for customary and
reasonable business travel, Employee shall not be required to perform his duties
outside of a 60 mile radius of Washington, D.C.
4. Compensation and Benefits.
(a) (i) During the Term of Employment, IDP shall pay to Employee as
compensation for services hereunder a salary at the annual rate of Two Hundred
Thousand Dollars ($200,000), which amount shall be payable in approximately
equal monthly installments or at more frequent intervals in accordance with
IDP's customary compensation policies. The Board of Directors of Employer (the
"Board"), in the exercise of its sole discretion, may increase the Employee's
salary based upon his performance with Employer.
(ii) During the Term of Employment, Employee shall be eligible
to earn and receive an annual bonus on the last day of Employer's fiscal year,
commencing with the fiscal year ended October 31, 1998, which bonus, if any,
shall be paid within ninety (90) days following the end of each such fiscal
year. The calculation of the amount of such bonus will be determined by the
Board and shall be equal to the amount determined by the application of the
formulas set forth on Schedule A hereto.
(b) Employer hereby grants Employee a nonqualified stock option
(the "Option") to purchase from the Employer 300,000 shares (or, if the price
per share at which the Employer's shares are sold in the initial public
offering which is a condition to the execution and delivery of the Acquisition
Agreement is greater than $10.00, 400,000 shares) of Employer's common stock at
a price per share of $____, to be exercisable as to 50% of the shares subject to
the Option on or after that date which is six (6) months after the date hereof;
and as to the remaining 50% of the shares on or after that date which is one (1)
year after such date; and provided that this Option shall expire ten (10) years
after the date of grant and must be exercised, if at all, on or before such
date. The Option shall be evidenced by a written instrument, in such form and
substance not inconsistent with this section 4(b) as the Employer may reasonably
prescribe, which shall provide (i) that the Option shall be fully vested and
nonforfeitable when granted, (ii) that Option, or any part thereof, may be
transferred by the Employee to any one or more of his spouse and lineal
descendants, or any entity wholly-owned by any one or more of them, (iii) that
the Option shall be subject to customary anti-dilution adjustments, and (iv)
that shares of common stock acquired upon exercise of the Option shall not be
subject to any contractual holding period. As soon as practicable following the
execution of this Agreement, the Employer shall take all corporate action
necessary to reserve for future issuance a sufficient number of shares of its
common stock to provide for the satisfaction of its obligations with respect to
the Option and after one year from the date hereof, register on Form S-8 the
common stock issuable upon exercise of the Option.
3
(c) Employee shall be entitled to participate in all Employer
benefit plans as are maintained, from time to time, on behalf of Employer and
which are available to employees of Employer generally, subject to eligibility
requirements then in effect; provided however, that nothing herein shall require
the Employer at any time to create or maintain any such plan, program or
arrangement. Employer shall pay all costs for health insurance benefits for
Employee and his immediate family.
(d) Employee shall be entitled to vacation, sick leave and
holidays at full pay in accordance with the Employer's policies established and
in effect from time to time; provided however, that in no event shall Employee
be entitled to less than four (4) weeks paid vacation in any one (1) year. Upon
separation of employment, for any reason, vacation time accrued and not used
shall be paid at the salary rate of Employee in effect at the time of employment
separation.
5. Board of Directors. Employer agrees that so long as this Agreement
is in effect, Employee will be nominated to the Board as part of management's
slate of Directors.
6. Expenses. During the Term of Employment, (i) Employer shall pay or
reimburse Employee for all ordinary and necessary business expenses incurred and
paid by Employee in the course of and within the scope of the performance of his
duties hereunder, provided such expenses are reasonable and are documented in
accordance with Employer's policies in effect from time to time with respect to
travel, entertainment and other business expense, and (ii) Employer shall pay to
Employee $1,000 per month for an automobile and pay dues at one club up to
$4,800 per year.
7. Confidential Information. Employee acknowledges that all
information that is or will be in his possession relating to Employer or any of
its affiliates which is of a secret or confidential nature, including, without
limitation, financial information, market research and development, lists of
customers, technical and production know-how, inventions, processes and
administrative procedures (collectively, "Confidential Information"), is the
exclusive property of Employer or its affiliates, as the case may be provided,
however, that Confidential Information shall not include information which (a)
is or becomes generally available to the public other than as the result of a
disclosure by Employee, or (b) is or becomes available to Employee on a
non-confidential basis from a source other than the Employee or its affiliates;
provided, however, that such source is not known by Employee to be bound by a
confidentiality agreement with or other obligation of secrecy to or for the
benefit of the Employee or any of its affiliates. In the event Employee shall be
legally compelled to make disclosures covered by this Section 7 to any
governmental or regulatory agency or subdivision thereof, such disclosure shall
not constitute a breach by Employee of his obligations hereunder; provided that
Employee shall have consulted with the Employer in advance of, and cooperated
with the Employer with respect to the form of, such disclosure to the extent
permitted by law. Employer shall not, during the Term of Employment or any time
thereafter, use Confidential Information in any manner other than for the
benefit of the Employer or its affiliates or disclose any Confidential
Information to any third party except as required by law. Employer shall, upon
termination of his employment hereunder, immediately surrender and turn over to
the Employer all books, forms, accounts, records, customer lists and any other
documents and information relating to the Employer or any of its affiliates in
his
4
possession or in the possession of his agents or representatives, without
retaining any copy, summary or extract thereof on any storage medium whatsoever.
8. Covenant Not to Compete. Employee agrees that during the term of
Employment and for a period of one (1) year thereafter (the "Noncompetition
Period"), Employee shall not, either alone or in conjunction with any
individual, firm, corporation, association or other entity, whether as
principal, agent, shareholder (except as a passive investor owning less than 5%
of any class of voting securities of any entity if such securities are
registered pursuant to the Securities Exchange Act of 1934, as amended),
officer, director or in any other capacity whatsoever, without the prior written
consent of the Board, which consent may be withheld at the sole discretion of
such Board:
(i) engage or participate in, assist or have an interest in,
directly or indirectly, any business or enterprise which is directly or
substantially in competition with the present or presently contemplated Business
(as defined below) or prospects of the Employer or its affiliates within the
territories in which such Business of Employer or its affiliates is then carried
on or engaged in starting or acquiring a business;
(ii) attempt to direct any supplier or customer of the
Employer or its affiliates away from business for products competitive with
those products of the Employer or its affiliates;
(iii) solicit or attempt to solicit any employee of the
Employer or its affiliates to leave his or her employment and accept employment
elsewhere within three (3) months following their termination of such employee's
employment with the Employer or its affiliates; or
(iv) take any action as a result of which the relations between
the Employer and its affiliates and their suppliers, customers or others are
impaired or which is otherwise detrimental to the business of the Employer and
its affiliates as then conducted.
As used in this Agreement, the "Business" of Employer and its
affiliates shall be deemed to include the manufacturing and marketing of
computer systems.
9. Death, Disability and Termination.
(a) This Agreement shall terminate immediately upon the death of
Employee and may be terminated by the Employer upon the giving of at least
thirty (30) days written notice of its intention to do so, consistent with all
applicable laws and regulations, if Employee becomes ill or is injured or
otherwise incapacitated (either mentally or physically) and such illness, injury
or incapacity shall meet the standard for disability benefits under the federal
Social Security Act.
(b) The Employer may terminate this Agreement and Employee's
employment hereunder for cause immediately upon delivery of written notice to
Employee. For purposes of this Agreement, "cause" shall mean (i) any act or
omission which results in a breach of any
5
material term or condition of this Agreement (for reasons other than disability
or death), provided such breach continues for a period of thirty (30) days after
the Employer shall have notified the Employee in writing of such breach; (ii)
any act or omission which constitutes fraud, misappropriation or embezzlement in
the performance of his duties or in the course of his employment hereunder;
(iii) any act or omission which constitutes a felony involving moral turpitude
for which Employee is convicted; (iv) any breach of fiduciary duty by the
Employee for personal gain or enrichment, and (v) any act or omission intended
by Employee to cause a material adverse effect on the Employer.
(c) The Employer's obligation to pay Employee in accordance with
the provisions of Section 4 hereof shall immediately terminate in the event of
termination of Employee's employment hereunder pursuant to paragraphs (a) or (b)
of this Section 9. If Employee's employment is terminated by the Employer other
than pursuant to Sections 9(a) or (b), or if Employee resigns for "good reason"
(as defined in Section 9(d) hereof), the Employee will be entitled to receive
promptly after such termination or resignation a lump sum payment in respect of
his base salary and all other benefits under Section 4 hereof, for the duration
of the three (3) year period commencing the date hereto, and for the duration of
such three year period, Employee shall be entitled to any bonus that is payable
under Section 4(a)(ii) hereof, provided that in the second and third bonus
periods (as set forth in Schedule A hereto), the bonus shall not exceed the
bonus paid in the preceding such period.
(d) Employee shall have the right to terminate his employment
under this Agreement upon 30 days' notice to Employer given within 90 days
following the occurrence of any of the following events (i) through )(vi) or
within three years following the occurrence of event (vii) (any of such events,
"good reason"):
(i) Employee is not elected to or retained in the position
stated in Section 1 hereof;
(ii) Employer acts to materially reduce Employee's duties and
responsibilities hereunder. Employee's duties and responsibilities shall not be
deemed materially reduced for purposes hereof solely by virtue of the fact that
Employer is (or substantially all of its assets are) sold to, or is combined
with, another entity, provided that Employee shall continue to have the same
duties and responsibilities with respect to Employer's business, and Employee
shall report directly to the chief executive officer and/or board of directors
of the entity that acquires Employer or its assets;
(iii) Employer acts to change the geographic location of the
performance of Employee's duties from the Washington, D.C. Metropolitan area.
For purposes of this Agreement, the Washington D.C. Metropolitan area shall be
deemed to be the area within 60 miles of Washington, D.C.;
(iv) A Material Reduction (as hereinafter defined) in
Employee's rate of base compensation, or Employee's other benefits. "Material
Reduction" shall mean a ten percent (10%) differential;
6
(v) A failure by Employer to obtain the assumption of this
Agreement by any successor;
(vi) A material breach of this Agreement by Employer, which
is not cured within thirty (30) days of written notice of such breach by
Employer.
(vii) A Change of Control (as defined in the following
paragraph). For purposes of this Section 9, the term "Change of Control" shall
mean:
a. A person (other than a person who is an officer or a
director of Employer on the effective date hereof),
including a "group" as defined in Section 13(d)(3) of
the Securities Exchange Act of 1934, becomes, or
obtains the right to become, the beneficial owner of
Employer securities having 30% or more of the
combined voting power of the then outstanding
securities of Employer that may be cast for the
election of directors of Employer;
b. At any time, the Board-nominated slate of candidates
for the Board is not elected;
c. Employer consummates a merger in which it is not the
surviving entity;
d. Substantially all of Employer's assets are sold; or
e. Employer's stockholders approve the dissolution or
liquidation of Employer.
(e) Upon the termination pursuant to this Section 9, for any
reason, Employee shall have no further obligation to the Employer except that he
shall (i) continue to be bound by the provisions of Sections 7 and 8 hereto; and
(ii) remain subject to liability to the Employer for any damages caused by
Employees conduct described in paragraph (b) of this Section 9.
10. Corporate Opportunities. Employee agrees that during the Term of
Employment he will not take any action to divert from the Employer any
opportunity which is within the scope of any of the businesses or prospects of
the Employer or its affiliates.
11. Injunctive Relief. It is understood and agreed by and between the
parties hereto that the obligations of Employee as set forth in Sections 7 and 8
hereof, and the rights and privileges granted to the Employer by Employee
hereunder, are of a special, unique, extraordinary and intellectual character,
the loss of which cannot be reasonably or adequately compensated in damages in
any action at law, and that a breach by Employee of the terms and conditions
contained in Sections 7 or 8 of this Agreement will cause the Employer
irreparable damage. Employee hereby expressly agrees that the Employer shall be
entitled to the remedies of
7
injunction, specific performance and other equitable relief to prevent a breach
or anticipated breach by Employee of Sections 7 or 8 hereof, without being
required to prove damages or furnish any bond or other security. This provision
shall be in addition to any other remedies which the Employer may have as a
result of a breach of this Agreement and shall not be construed as a waiver of
any of the rights which the Employer may have for damages or otherwise.
12. Arbitration. Any controversies between Employer and Employee
involving the construction or application of any of the terms, provisions or
conditions of this Agreement, save and except for any breaches arising out of
Sections 7 and 8 hereof, shall on the written request of either party served on
the other be submitted to arbitration. Such arbitration shall comply with and be
governed by the rules of the American Arbitration Association. An arbitration
demand must be made within one (1) year of the date on which the party demanding
arbitration first had notice of the existence of the claim to be arbitrated, or
the right to arbitration along with such claim shall be considered to have been
waived. An arbitrator shall be selected according to the procedures of the
American Arbitration Association. The cost of arbitration shall be borne by the
losing party or in such proportions as the arbitrator shall decide. The
arbitrator shall have no authority to add to, subtract from or otherwise modify
the provisions of this Agreement, or to award punitive damages to either party.
This Section 12 shall not prevent the Employer from seeking equitable relief as
contemplated in Section 11.
13. Attorneys; Fees and Costs. In the event that any party commences
legal action or proceeding to enforce any of the terms or provisions of this
Agreement, the substantially prevailing party shall be entitled to recover
reasonable attorney's fees and costs incurred in the trial court and on appeal,
and in enforcing any judgment obtained.
14. Entire Agreement, Modification and Waiver. This Agreement
constitutes the entire agreement between the parties hereto pertaining to the
subject matter hereof and supersedes all prior understandings, representations,
and warranties, agreements, communications and discussions, whether oral or
written, of the parties. No supplement, modification, or amendment of this
Agreement shall be binding unless executed in writing by all of the parties
hereto. No waiver shall be binding unless executed in writing by the party
making the waiver. No waiver of any of the provisions of this Agreement shall be
deemed to be or shall constitute a continuing waiver.
15. Severability. If any provision of this Agreement is held to be
invalid, void or unenforceable, in whole or in part, then such provision shall
be deemed to be modified or restricted to the extent and in the manner necessary
to render the same valid and enforceable, or shall be deemed excised from this
Agreement, as the case may require, and this Agreement shall be construed and
enforced to the maximum extent permitted by law as if such provision had been
originally incorporated herein as so modified or restricted or as if such
provision had not been originally incorporated herein, as the case may be. In
the event that any provision of this Agreement is held to be invalid, void or
unenforceable, the remaining provisions shall continue in full force and effect,
without being impaired or invalidated in any way.
8
16. Survival of Certain Obligations. The obligations of the Employer
and the Employee set forth in this Agreement which by their terms extend beyond
or survive the termination of the Term of Employment shall not be affected or
diminished in any way by the termination or expiration of the Term of
Employment.
17. No Assignment.
(a) This Agreement is personal to the Employee and, without
the prior written consent of the Employer, is not assignable by the Employee.
(b) This Agreement shall inure to the benefit of and be
binding upon the Employer and its successors and assigns. The Employer shall be
entitled to assign all its obligations hereunder to IDP and treat the Employee
as an employee of IDP for all purposes, but Employer shall remain liable for the
full, timely performance of all the obligations so assigned as if the assignment
had not been made.
18. No Third Party Beneficiaries. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
or entity other than the parties hereto and the parties specified in Section 17,
any rights or remedies by reason of this Agreement.
19. Governing Law. This Agreement and all the amendments hereof, and
waivers and consents with respect thereto shall be governed by the internal laws
of the Commonwealth of Virginia, without regard to the conflicts of laws
principles thereof.
20. Notices. Any notice or other communications required or permitted
under this Agreement shall be sufficiently given if in writing and delivered by
hand or sent by telex or telefax, (with receipt confirmed), provided that a copy
is mailed by registered or certified mail, postage prepaid, return receipt
requested; or sent by overnight courier addressed as follows:
If to the Employer to:
Xxxx Computer Corporation
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Telefax: (000) 000-0000
9
Telephone: (000) 000-0000
If to the Employee to:
[Oscar/Xxxxxx Xxxxxx]
[Residential Address]
[Tel/Fax Numbers]
Unless otherwise specified herein, such notices or other communication
shall be deemed received (a) on the date delivered, if delivered personally, by
telex or telefax or (b) one business day after being sent, if sent by overnight
courier. Each of the addressees shall be entitled to specify a different address
by giving notice as aforesaid to the parties hereto in accordance with this
notice provision.
21. Further Assurances. Each party hereto agrees to execute and deliver
all documents and instruments and to take or cause to be taken such other
actions that are reasonably necessary or appropriate to consummate the
transactions contemplated by this Agreement.
22. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
XXXX COMPUTER CORPORATION
By:
-----------------------------
Xxxx X. Xxxxxxx
Executive Vice President
EMPLOYEE
----------------------------
[Xxxxxx/D. Xxxxx Xxxxxx]
Schedule A
To [Xxxxxx/Oscar]
Fuster Employment Agreement
Bonus Formulas
1. If the combined operating profits of IDP and PRIMO from the earlier
to occur of the closing date and May 1, 1998 through October 31, 1998, exceed
$5.0 million, then the following portion of such operating profits (i.e., income
before interest and income taxes) will be contributed to a bonus pool: 20% of
the amount of operating profits (if any) between $5.0 and $7.0 million, plus 35%
of the amount of operating profits (if any) between $7.0 and $9.0 million plus
50% of the amount of operating profits (if any) in excess of $9.0 million.
Xxxxxx X. Xxxxxx and D. Xxxxx Xxxxxx will each be entitled to receive 30% of
this bonus pool, and the other 40% of the bonus pool will be paid to other
members of the IDP management team.
2. If the combined operating profits of IDP and PRIMO for the period
November 1, 1998 - October 31, 1999 exceed $10 million, then the following
portion of such operating profits (i.e. income before interest and income taxes)
will be contributed to a bonus pool: 20% of the amount of operating profits (if
any) between $10 million and $16 million, plus 35% of the amount of operating
profits (if any) between $16 million and $20 million, plus 50% of the operating
profits (if any) in excess of $20 million. Xxxxxx X. Xxxxxx and D. Xxxxx Xxxxxx
will each be entitled to receive 30% of this bonus pool, and the other 40% of
the bonus pool will be paid to other members of the IDP management team.
3. If the combined operating profits of IDP and PRIMO for the period
November 1, 1999 - October 31, 2000 exceed $15 million, then the following
portion of such operating profits (i.e. income before interest and income taxes)
will be contributed to a bonus pool: 20% of the amount of operating profits (if
any) between $15 million and $22 million, plus 35% of the amount of operating
profits (if any) between $22 million and $30 million, plus 50% of the operating
profits (if any) in excess of $30 million. Xxxxxx X. Xxxxxx and D. Xxxxx Xxxxxx
will each be entitled to receive 30% of this bonus pool, and the other 40% of
the bonus pool will be paid to other members of the IDP management team.
