AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED
AND RESTATED
This
Amended and Restated Employment Agreement, dated as of the 10th day of
September, 2007, between
Xxxx Xxxxxxxxx
(the
“Executive”) and
Memry Corporation,
a
Delaware corporation (the “Company”).
WITNESSETH,
WHEREAS,
the Company and the Executive entered into an offer letter on July 31, 2002
(the
“Offer Letter”) which was superseded and replaced by an employment agreement
dated as of May 26, 2005 (as amended and restated on April 28, 2006, the “Prior
Employment Agreement”); and
WHEREAS,
the Company and the Executive desire to amend and restate the Prior Employment
Agreement on the terms and conditions set forth below (this
“Agreement”).
NOW,
THEREFORE, in consideration of the premises and of the covenants and agreements
set forth herein, the parties agree as follows:
1.
Employment and Duties.
(a)
The
Company hereby agrees to employ the Executive, and the Executive hereby accepts
employment, upon the terms and conditions set forth herein. During the period
during which he is employed hereunder (the “Period of Employment”), the
Executive shall diligently and faithfully serve the Company in the capacity
of
President and Chief Operating Officer, or in such other and/or lesser executive
capacity or capacities as the Board of Directors and the Executive may, from
time to time, agree.
(b)
During the Period of Employment hereof, the Executive shall, at the request
of
the Company, serve as an officer and/or director of direct and indirect
subsidiaries, and other affiliates, of the Company as the Company, acting
through its Board of Directors, shall request from time to time.
(c)
The
Executive shall devote his best efforts and substantially all of his business
time, services and attention to the advancement of the Company’s business and
interests during the Period of Employment. The restrictions in this
Section 1 shall in no way prevent the Executive from (except as set forth
in the immediately succeeding sentence) pursuing other activities, so long
as
all of such other activities do not, in the aggregate, materially interfere
with
the Executive’s duties hereunder (including his obligation to devote
substantially all of his business time, services and attention to the Company).
Notwithstanding the foregoing, however, the Executive shall not accept any
outside directorships during the Period of Employment without the prior consent
of the Company’s Board of Directors.
(d)
The
Executive shall, at all times during the Period of Employment, diligently and
faithfully carry out the policies, programs and directions of the Board of
Directors of the Company and the Company’s senior management. The Executive
shall comply with the directions and instructions made or given by or under
the
authority of the Company’s President and Chief Operating Officer and whenever
requested to do so shall give an account of all transactions, matters and things
related to the Company and its affiliates and their affairs with which the
Executive is entrusted.
2.
Term.
The
Period of Employment shall commence on the date hereof and shall continue unless
and until terminated as set forth in Section 8 hereof.
3.
Compensation.
In
consideration of the services rendered and to be rendered by the Executive,
the
Company agrees to compensate the Executive during the Period of Employment
as
follows:
(a)
From
the date hereof the Company shall pay to the Executive an annual base salary
of
$229,164, payable in equal installments every two weeks. The Executive’s base
salary may be increased from time to time by the Board in accordance with normal
business practices of the Company.
(b)
The
Executive shall also be entitled to receive additional compensation in the
form
of an annual target bonus in an amount equal to 50% of the Executive’s base
annual salary, determined by and in the sole discretion of the Board of
Directors of the Company. Such target amount is based upon the Company meeting
Company performance goals and objectives. The Executive shall also be eligible
to receive, on an annual basis 100,000 performance based stock option grants
pursuant to any bonus and/or incentive compensation programs that may be
established by the Company, including without limitation the Company’s current
incentive plans; provided,
however,
that
nothing set forth in this sentence will in any way limit the Board of Directors
discretion to approve or reject any bonus that the Executive would otherwise
be
due under any such plans.
(c)
The
Executive shall receive use of a company vehicle subject to all legal and tax
regulations as dictated by the Internal Revenue Code as amended.
(d)
The
Executive shall be entitled to other fringe benefits comparable to the benefits
afforded to other executive employees of the Company, including but not limited
to reasonable sick leave and coverage under any health, dental, accident,
hospitalization, disability, retirement, life insurance, 401(k), and annuity
plans, programs or policies maintained by the Company. In addition, and without
limiting the foregoing, the Company shall provide the Executive with twenty
working days of vacation per calendar year, no more than thirty of which (in
the
aggregate) may be carried over from one year to the next.
(e)
The
Executive shall be entitled to reimbursement, in accordance with Company policy,
of all reasonable out-of-pocket expenses which he incurs on behalf of the
Company in the course of performing his duties hereunder, subject to furnishing
appropriate documentation of such expenses to the Company’s Chief Executive
Officer.
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4.
Covenant Not to Compete; Nonsolicitation.
(a)
Except
as
specifically set forth in this Section 4, during the Period of Employment,
the Executive will not engage, directly or indirectly, anywhere in the United
States (including its territories, possessions and commonwealths) or Canada
in
any business which competes or could reasonably be expected to compete with
the
Company and/or its affiliates and, for a period of one year after the
termination of the Period of Employment, any business which competes or could
reasonably be expected to compete with the Company and/or its affiliates as
of
the date of termination; provided,
however,
that
(i) the ownership by the Executive of less than 2% of the outstanding stock
of any publicly traded corporation shall not be deemed solely by reason thereof
to cause the Executive to be engaged in any businesses being conducted by such
publicly traded corporation; and (ii) the Company, at its sole discretion,
may, by written notice to the Executive no more than six (6) months and no
less than three (3) months prior to the end of the one-year period
described above, extend such one-year period for a second year, in which case
the Company will be obligated to pay the Executive, quarterly in advance, at
the
rate of the Executive’s base salary in effect on the last day of the Period of
Employment, for such additional one-year non-compete period.
(b)
During the Period of Employment and for a period of two years thereafter, the
Executive will not, directly or indirectly, either for himself or for any other
person or entity (i) solicit (A) any employee of the Company or any
affiliate of the Company to terminate his or her employment with the Company
or
such affiliate during his or her employment with the Company or such affiliate
or (B) any former employee of the Company or an affiliate of the Company
for a period of one year after such individual terminates his or his employment
with the Company or such affiliate, (ii) solicit any customer or client of
the Company or any such affiliate (or any prospective customer or client of
the
Company or such affiliate) as of the termination of the Period of Employment
to
terminate its relationship with the Company or such affiliate, or do business
with any third parties, or (iii) take any action that is reasonably likely
to cause injury to the relationships between the Company or any such affiliate
or any of their respective employees and any lessor, lessee, vendor, supplier,
customer, distributor, employee, consultant or other business associate of
the
Company or any such affiliate as such relationship relates to the Company’s or
such affiliate’s conduct of its business.
(c) If
the
final judgment of a court of competent jurisdiction declares that any term
or
provision of this Section 4 is invalid or unenforceable, the parties agree
that the court making the determination of invalidity or unenforceability shall
have the power to reduce the scope, duration, or area of the term or provision,
to delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified after
the expiration of the time within which the judgment may be
appealed.
5.
Covenant Not to Disclose Information.
The
Executive agrees that during the Period of Employment and thereafter, he will
not use or disclose, other than to another employee of the Company, qualified
by
the Company to receive that information in the normal course of business, any
then confidential information or trade secrets of the Company or any affiliate
of the Company which were made known to him by the Company, its officers or
employees or affiliates, or learned by him while in the Company’s employ,
without the prior written consent of the Company, and that upon termination
of
his employment for any reason, he will promptly return to the Company any and
all properties, records, figures, calculations, letters, papers, drawings,
schematics or copies thereof or other confidential information of the Company
and its affiliates of any type or description. It is understood that the term
“trade secrets” as used in this Agreement is deemed to include, without
limitation, lists of the Company’s and its affiliates’ respective customers,
information relating to their practices, know-how, processes and inventions,
and
any other information of whatever nature which gives the Company or any
affiliate an opportunity to obtain an advantage over its competitors who do
not
have access to such information.
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6.
Remedy at Law Inadequate.
The
Executive acknowledges that any remedy at law for breach of any of the
restrictive covenants (Sections 4 and 5) contained in this Agreement would
be
inadequate and the Company shall be entitled to injunctive relief in the event
of any such breach.
7.
Inventions and Improvements.
With
respect to any and all inventions (as defined in Section 7(e) below) made
or conceived by the Executive, whether or not during his hours of employment,
either solely or jointly with others, during the Period of Employment, without
additional consideration:
(a)
The
Executive shall promptly inform the Company of any such invention.
(b)
Any
such invention, whether patentable or not, shall be the property of the Company,
and the Executive hereby assigns and agrees to assign to the Company all his
rights to any such invention, and to any United States and/or foreign letters
patent granted upon any such invention or any application therefor.
(c)
The
Executive shall apply, at the Company’s request and expense, for United States
and/or foreign letters patent either in the Executive’s name or otherwise as the
Company may desire.
(d)
The
Executive shall acknowledge and deliver promptly to the Company, without charge
to the Company but at its expense, all sketches, drawings, models and figures
and other information and shall perform such other acts, such as giving
testimony in support of his inventorship, as may be necessary in the opinion
of
the Company to obtain and maintain United States and/or foreign letters patent
and to vest the entire right and title thereto in the Company.
(e)
For
purposes of this Section, the term “invention” shall be deemed to mean any
discovery, concept or idea (whether patentable or not), including but not
limited to processes, methods, formulas, techniques, hardware developments
and
software developments, as well as improvements thereof or know-how related
thereto, (i) concerning any present or prospective activities of the
Company and its affiliates and (ii) (A) which the Executive becomes
acquainted with as a result of his employment by the Company, (B) which
results from any work he may do for, or at the request of, the Company or any
of
its affiliates, (C) which relate to the Company’s or any affiliates’
business or actual or demonstrably anticipated research and development, or
(D) which are developed in any part by use of the Company’s or any such
affiliates’ equipment, supplies, facilities or trade secrets.
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The
parties hereto agree that the covenants and agreements contained in this
Section 7 are, taken as a whole, reasonable in their scope and duration,
and no party shall raise any issue of the reasonableness of the scope or
duration of any such covenants in any proceeding to enforce any such
covenants.
8.
Termination of Employment.
(a)
The
Executive’s Period of Employment may not be terminated except in accordance with
the provisions of this Section 8.
(b)
The
Executive’s Period of Employment may be terminated by the Company with or
without Cause or by the Executive with or without Good Reason (as defined in
subsection (e)). For purposes of this Agreement, “Cause” means that termination
occurs in connection with a determination, made at a meeting of the Board of
Directors at which the Executive (and, at the Executive’s option, his counsel)
shall have had a right to participate, that the Executive has (i) committed
an act of gross negligence or willful misconduct, or a gross dereliction of
duty, that has materially and adversely affected the overall performance of
his
duties hereunder; (ii) committed fraud upon the Company in his capacity as
an employee hereunder; (iii) been convicted of, or pled guilty (or nolo
contendere) to, a felony that the Board of Directors, acting in good faith,
determines is or would reasonably be expected to have a material adverse effect
upon the business, operations, reputation, integrity, financial condition or
prospects of the Company; (iv) any material breach by the Executive of the
terms hereof; (v) failure to follow instructions from a person authorized
to give them pursuant to Section 1(d) above that is lawful and not
inconsistent with the terms hereof; (vi) the Executive’s habitual
drunkenness or habitual substance abuse; (vii) civil or criminal violation
of any state or federal government statute or regulation, or of any state or
federal law relating to the workplace environment (including without limitation
laws relating to sexual harassment or age, sex or other prohibited
discrimination), or any violation of any Company policy adopted in respect
of
any of the foregoing; or (viii) a failure by the Executive to meet the
minimum objectives established in the annual “Memry Sharing Plan” to receive any
bonus pursuant to Section 3(b) above with respect to two consecutive fiscal
years. A termination for Cause must be accompanied by a written notice to that
effect. If the Executive’s employment is terminated by the Company for Cause or
by the Executive without Good Reason, the Executive shall be paid his base
salary through the date of his termination and any unreimbursed business
expenses in accordance with Section 3(e) hereof (the “Accrued
Obligations”).
(c)
If
the Executive dies, the Period of Employment shall terminate effective at the
time of his death;
provided,
however,
that
such termination shall not result in the loss of any benefit or rights which
the
Executive may have accrued through the date of his death. If
the
Period of Employment is terminated due to the Executive’s death, the Company
shall make a severance payment to the Executive’s legal representatives equal to
the Executive’s regular base salary payments through the end of the month in
which such death occurs and any Accrued Obligations. In
addition, the Company shall make a severance payment to the Executive’s legal
representatives equal to the Executive’s target bonus described in
Section 3(b), pro rated for the portion of such fiscal year completed prior
to the Executive’s death; provided,
however,
that
such pro rated portion of the Executive’s target bonus shall be paid to the
Executive’s legal representatives following the completion of such fiscal year
at the time similar bonuses are paid to other employees of the
Company.
5
(d)
If
the Executive becomes disabled, the Period of Employment may be terminated,
at
the Company’s option, at the end of the calendar month during which his
disability is determined; provided, however, that such termination shall not
result in the loss of any benefits or rights which the Executive may have
accrued through the date of his disability. If
the
Period of Employment is terminated on or after January 1, 2008 due to the
Executive’s disability, the Company shall make a lump-sum payment to the
Executive or his legal representative within thirty (30) days following the
date
of termination equal to fifty percent (50%) of the annual base salary at the
rate of salary in effect immediately prior to the effective date of such
termination. If the Period of Employment is terminated on or before December
31,
2007 due to the Executive’s disability, the Company shall make a payment to the
Executive or his legal representative equal to the Executive’s regular salary
payments for a period of six (6) months from the date of such termination or,
if
sooner, until payments begin under any disability insurance policy maintained
by
the Company for the benefit of the Executive. For
the
purposes of this section, the definition of “disability” shall be the same as
the definition of a “permanent disability” contained in any long-term disability
insurance policy maintained by the Company in effect at the time of the
purported disability, or last in effect, if no policy is then in
effect.
(e)
If
the
Executive’s Period of Employment is terminated by the Executive for “Good
Reason,” as hereinafter defined, or is terminated by the Company (other than
pursuant to Section 8(d)) without Cause (and the Company may terminate the
Period of Employment without Cause at any time), then, in addition to the other
rights to which the Executive is entitled upon a termination as provided for
herein, the Executive shall also be entitled to (1) a lump-sum payment within
thirty (30) days following the date of termination equal to the sum of (A)
100%
of the Executive’s annual base salary, at the rate of salary in effect
immediately prior to the effective date of such termination (without regard
to
any purported or attempted reduction of such rate by the Company), plus (B)
100%
of the Executive’s bonus otherwise payable for the fiscal year during which
termination occurs based on the rate of salary in effect immediately prior
to
the effective date of such termination (without regard to any purported or
attempted reduction of such rate by the Company) and (2) continued participation
in the Company’s health plan as an active employee (based on the elections in
effect on the date of termination) as in effect from time to time for the twelve
(12)-month period immediately following the Executive’s termination of
employment (provided that the Company may satisfy this obligation by paying
the
Executive’s COBRA continuation premiums during this period if the Executive is
not eligible to participate in the Company’s health plan as an active
employee).
For
purposes of this Agreement, the term “Good Reason” shall mean: (i) the failure
by the Company to materially observe or comply with any of the material
provisions of this Agreement; or (ii) at the election of the Executive, if,
during the two (2)-year period following a Change in Control (as defined in
Section 10(f)), there is a material diminution in the authority (which shall
include a diminution of the Executive’s position), duties and/or
responsibilities of the Executive. Notwithstanding the foregoing, a termination
of employment by the Executive for Good Reason shall not occur unless (1) the
Executive provides written notice to the Company of the existence of the
condition described in clause (i) or (ii) and a thirty (30)-day opportunity
to
cure, (2) the Executive provides notice of the condition constituting Good
Reason within ninety (90) days following the initial occurrence of the condition
described in clause (i) or (ii) above, and (3) the Executive’s termination of
employment occurs within two (2) years following the initial occurrence the
condition described in clause (i) or (ii) above.
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(f) The
Period of Employment may be terminated by the Executive without Good Reason
at
any time by providing thirty (30) days’ prior written notice to the Company. In
the event of termination of the Executive pursuant to this Section 8(f), the
Board may elect to waive the period of notice, or any portion thereof, and,
if
the Board so elects, the Company will pay the Executive his base salary for
the
notice period (or for any remaining portion of the period).
9.
Effect of Termination.
Upon
termination of the Executive’s employment for any reason whatsoever, all rights
and obligations of the parties under this Agreement shall cease, except that
the
Executive shall continue to be bound by the covenants set forth in Sections
4,
5, 6 and 7 hereof, and the Company shall be bound to pay to the Executive
accrued compensation, including salary and other benefits, to the date of
termination and any severance payments which may be owed under the provisions
of
Section 8 hereof.
10.
Miscellaneous.
(a)
This
Agreement may not be assigned by the Executive. The Company may assign this
Agreement in connection with a Change in Control the Company.
(b)
In
the event that any provision of this Agreement is found by a court of competent
jurisdiction to be invalid or unenforceable, such provision shall be, and shall
be deemed to be, modified so as to become valid and enforceable, and the
remaining provisions of this Agreement shall not be affected.
(c)
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Connecticut.
(d)
No
modification of this Agreement shall be effective unless in a writing executed
by both parties.
(e)
This
Agreement constitutes the entire agreement of the parties with respect to the
subject matter hereof, and supercedes all prior agreements, representations
and
promises by either party or between the parties, including without limitation,
the Offer Letter and the Prior Employment Agreement.
(f)
For
purposes of this Agreement, “Change in Control of the Company” shall mean:
(i) any merger or consolidation or other corporate reorganization of the
Company in which the Company is not the surviving entity; or (ii) any sale
of all or substantially all of the Company’s assets, in either a single
transaction or a series of transactions; or (iii) a liquidation of all or
substantially all of the Company’s assets; or (iv) a change within one
twelve-month period of a majority of the directors constituting the Company’s
Board of Directors at the beginning of such twelve-month period; or (v) if
a single person or entity, or a related group of persons or entities, at any
time acquires beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended) of 25% or more of the
Company’s outstanding voting securities; unless, (x) with respect to any
event described in clauses (i) through (v), the Executive agrees in
writing, prior to the consummation of the event giving rise to the Change in
Control of the Company, that such event or events does not for purposes of
this
Agreement constitute a Change in Control of the Company, or (y) with
respect to clause (iv), the change of directors is approved by the Board of
Directors as constituted prior to such change.
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(g)
Section 409A. Payments in the event of a Termination of Employment,
Disability, Change in Control or Otherwise.
(1)
Notwithstanding anything to the contrary contained herein, in the event that
the
Executive constitutes a “specified employee” (within the meaning of
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”))
and becomes entitled to one or more payments hereunder on account of termination
of employment, to the extent such payments would otherwise be subject to the
excise tax under Code Section 409A and are payable within the first six
(6) months following a termination of employment, such payments shall
instead be made on the first day of the seventh month following such termination
of employment and any remaining payments shall be paid according to the schedule
otherwise applicable to the payments. For purposes of clarification, this
provision shall apply to any severance payable to the Executive pursuant to
Section 8(d) with respect to a termination of employment pursuant to Section
8(d) on or before December 31, 2007.
(2)
The
parties hereto intend that this Agreement shall be in compliance with Code
Section 409A and this Agreement shall be interpreted consistent therewith.
Notwithstanding the foregoing, the Company shall not be liable for any taxes,
penalties, interest or other costs that may arise under Section 409A or
otherwise.”
(3)
For
purpose of clarification, the parties intend that the severance payable to
the
Executive pursuant to Sections 8(d) and (e) with respect to a termination of
employment on or after January 1, 2008 qualifies as a “short term” deferral
pursuant to Treasury Regulation Section 1.409A-1(b)(4).
Signature
page follows.
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IN
WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date
first above written.
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MEMRY
CORPORATION
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By:
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/s/
Xxxxxx X. Xxxxxxx
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Xxxxxx
X. Xxxxxxx
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|
Chief
Executive Officer
|
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/s/
Xxxx Xxxxxxxxx
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Xxxx
Xxxxxxxxx
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