Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is dated as of August 13, 2002, by and
between EDAC TECHNOLOGIES CORPORATION, a Wisconsin corporation ("Edac" or the
"Company"), and Xxxxxxxx Xxxxxx ("Xx. Xxxxxx").
RECITAL
Edac desires to employ Xx. Xxxxxx and Xx. Xxxxxx is willing to make his
services available to Edac on the terms and conditions set forth below.
AGREEMENTS
In consideration of the premises and the mutual agreements which
follow, the parties agree as follows:
1. Employment. Edac hereby employs Xx. Xxxxxx and Xx. Xxxxxx hereby
accepts employment with Edac on the terms and conditions set forth in this
Agreement.
2. Term. The initial term of Xx. Xxxxxx'x employment hereunder shall
commence on the date hereof and continue for a period of six months, subject to
earlier termination as set forth in this Agreement. The term of Xx. Xxxxxx'x
employment will automatically be extended for successive periods of 90 days
unless either party notifies the other in writing to the contrary at least 30
days prior to any the end of the then current term of this Agreement. The term
of employment is referred to in this Agreement as the "Employment Term."
3. Duties. Xx. Xxxxxx shall serve as the President and Chief Executive
Officer of Edac and will, under the direction of the Board of Directors (the
"Board"), faithfully and to the best of his ability, perform the duties of such
positions as determined by the Board from time to time. As the President and
Chief Executive Officer, Xx. Xxxxxx shall be responsible for managing the
business and affairs of Edac in a professional manner with the primary objective
of enhancing shareholder value and ensuring that Edac's customers, employees and
suppliers are treated in a manner consistent with Edac's Corporate Mission
Statement. Without limiting the generality of the foregoing, Xx. Xxxxxx shall
supervise the operations of Edac and perform those duties normally associated
with the offices of President and Chief Executive Officer. Xx. Xxxxxx shall also
perform such additional duties and responsibilities which may from time to time
be reasonably assigned or delegated by the Board. It is understood and
acknowledged that Xx. Xxxxxx will be employed on less than a full time basis,
but that he will
devote a sufficient part of his business time, effort, skill and attention to
perform his duties while employed by Edac.
4. Compensation.
(a) Base Salary. Xx. Xxxxxx shall receive a base salary of $5,000
per month, payable in regular and equal installments in accordance with Edac's
payroll practices as in effect from time to time (the "Base Salary").
(b) Stock Options. Xx. Xxxxxx shall receive a grant of options to
purchase 140,000 shares of Edac's common stock pursuant to Edac's 2000-B
Employee Stock Option Plan (the "Plan"). The options shall have an exercise
price equal to the "Fair Market Value" of Edac's common stock (determined as
provided in the Plan) as of the date hereof, 56,000 of the options shall vest on
February 13, 2003, 42,000 of the options shall vest on August 13, 2003 and
42,000 of the options shall vest on February 13, 2004, provided that all of the
options shall immediately vest if the Company terminates Xx. Xxxxxx'x employment
without Cause during the Employment Term or if, after the Employment Term, Xx.
Xxxxxx ceases to be a director of Edac for any reason other than his voluntary
resignation or removal for cause, the options shall have a term of ten years
(which term shall continue as to all vested options after the end of the
Employment Term and after Xx. Xxxxxx ceases to be a director of the Company),
and the options shall have such other terms as are consistent with options
granted to Edac's executive officers under the Plan.
(c) Directors' and Officers' Insurance. As of the date of this
Agreement, Xx. Xxxxxx shall have been named as an insured under Edac's policies
of directors' and officers' liability insurance in such a manner as to provide
Xx. Xxxxxx with the same rights and benefits thereunder as are accorded to
Edac's other executive officers and directors.
5. Reimbursement for Reasonable Business Expenses. Edac shall pay or
reimburse Xx. Xxxxxx for reasonable expenses incurred by him in connection with
the performance of his duties pursuant to this Agreement, including, but not
limited to, travel expenses, expenses in connection with trade shows, seminars,
professional conventions or similar professional functions and other reasonable
business expenses.
6. Termination of Employment.
(a) Termination for Death, Disability,Voluntary Termination or
Cause. Xx. Xxxxxx'x employment hereunder shall automatically
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terminate upon his death. In addition, Edac shall be entitled to terminate Xx.
Xxxxxx'x employment at any time upon his "Disability." For purposes of this
Agreement, "Disability" shall mean a physical or mental sickness or injury which
renders Xx. Xxxxxx incapable of performing the services required of him as an
employee of Edac and which does or may be expected to continue for more than
three months during any twelve-month period. Edac and Xx. Xxxxxx shall determine
the existence of a Disability and the date upon which it occurred. In the event
of a dispute regarding whether or when a Disability occurred, the matter shall
be referred to a medical doctor selected by Edac and Xx. Xxxxxx. If they fail to
agree upon such a medical doctor, Edac and Xx. Xxxxxx shall each select a
medical doctor and the two doctors so selected shall together select a third
medical doctor who shall make the determination. The determination by the
selected medical doctor shall be conclusive and binding upon the parties hereto.
If it becomes apparent that the Disability renders Xx. Xxxxxx
unable to discharge his responsibilities and is supported by medical evidence
that his return cannot be determined, Edac may, in its discretion, terminate or
modify this Agreement once it is established that Xx. Xxxxxx will not return to
full-time status.
Edac may also terminate Xx. Xxxxxx'x employment under this
agreement for "Cause," effective immediately upon delivery of notice to Xx.
Xxxxxx. "Cause" shall mean:
(i) the willful and continued failure of Xx. Xxxxxx to perform
substantially Xx. Xxxxxx'x duties with Edac or its affiliates (other than any
such failure resulting from incapacity due to physical or mental illness), after
a written demand for substantial performance is delivered to Xx. Xxxxxx by the
Board which specifically identifies the manner in which the Board believes that
Xx. Xxxxxx has not substantially performed his duties and after Xx. Xxxxxx is
given at least 10 days to rectify or eliminate such failure;
(ii) the willful engaging by Xx. Xxxxxx in illegal conduct or
gross misconduct which is materially and demonstrably injurious to Edac;
(iii) the commission by Xx. Xxxxxx of fraud or dishonesty with
respect to Edac which is materially and demonstrably injurious to Edac or a
material misrepresentation by Xx. Xxxxxx to Edac's shareholders or directors; or
(iv) a material breach of the terms of this Agreement that is
demonstratively injurious to Edac, which material breach is not cured by
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Xx. Xxxxxx within 10 days of written notice by Edac to Xx. Xxxxxx specifying the
material breach in reasonable detail.
If Xx. Xxxxxx'x employment terminates due to his Disability or death,
or if Xx. Xxxxxx voluntarily terminates his employment or is terminated by Edac
for Cause, Xx. Xxxxxx shall be entitled to receive his Base Salary and vested
fringe benefits prorated to the date of termination. If either Edac or Xx.
Xxxxxx elects not to renew this Agreement pursuant to Section 2 hereof, Xx.
Xxxxxx shall be entitled to receive his Base Salary and vested fringe benefits
to the end of the then-current Employment Term.
Notwithstanding anything in this Agreement to the contrary,
in the event of termination for Cause, Xx. Xxxxxx shall forfeit any stock
options that he may have at such time. If Xx. Xxxxxx'x employment terminates for
any other reason, the term of Xx. Xxxxxx'x stock options shall be as provided in
Section 4(b).
(b) Termination Without Cause. Notwithstanding anything in this
Agreement to the contrary, if Xx. Xxxxxx'x employment is terminated by Edac for
any reason other than for Cause, Disability or death, or if this Agreement is
terminated by Edac for what Edac believes is Cause or Disability, and it is
ultimately determined that Xx. Xxxxxx was wrongfully terminated, Xx. Xxxxxx
shall, as full and liquidated damages for such termination, receive a severance
payment equal to his Base Salary for the then remaining Employment Term of this
Agreement (excluding any additional renewals thereof) (the "Severance"). Edac
shall pay the Severance in a single installment payable within 30 days following
the termination of Xx. Xxxxxx'x employment. Xx. Xxxxxx shall also retain his
stock options as provided in Section 4(b).
7. Noncompetition. The parties agree that Edac's supplier, customer,
vendor and employee contacts and relations are established and maintained at
great expense and, by virtue of Xx. Xxxxxx'x employment with Edac, Xx. Xxxxxx
will have unique and extensive exposure to and personal contact with Edac's
suppliers, customers, vendors and employees and that he will be able to
establish a unique relationship with those individuals and entities that will
enable him, both during and after employment, to unfairly compete with Edac.
Further, the parties agree that the terms and conditions of the following
restrictive covenants are reasonable and necessary for the protection of Edac's
business, trade secrets and confidential information and to prevent great damage
or loss to Edac as a result of action taken by Xx. Xxxxxx. Xx. Xxxxxx
acknowledges that the noncompete restrictions and nondisclosure of confidential
information restrictions contained in this Agreement are reasonable and the
consideration provided for herein is sufficient to fully and
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adequately compensate Xx. Xxxxxx for agreeing to such restrictions. Xx. Xxxxxx
acknowledges that he could continue to actively pursue his career and earn
sufficient compensation in the same or similar business without breaching any of
the restrictions contained in this Agreement. For purposes of this section 7 and
section 8 below, "Edac" shall refer to each of Edac Technologies Corporation and
each of its subsidiaries.
(a) During Term of Employment. Xx. Xxxxxx covenants and agrees
that, during his employment with Edac, he shall not, directly or indirectly,
either individually or as an employee, principal, agent, partner, shareholder,
owner, trustee, beneficiary, co-venturer, distributor, consultant or in any
other capacity, participate in, become associated with, provide assistance to,
engage in or have a financial or other interest in any business, activity or
enterprise which is competitive with Edac. The ownership of less than a one
percent interest in a corporation whose shares are traded in a recognized stock
exchange or traded in the over-the-counter market, even though that corporation
may be a competitor of Edac, shall not be deemed financial participation in a
competitor.
(b) Upon Termination of Employment. Xx. Xxxxxx agrees that for a
one-year period after Xx. Xxxxxx'x employment with Edac terminates for any
reason, he will not, directly or indirectly, either individually or as an
employee, agent, partner, shareholder, owner, trustee, beneficiary, co-venturer,
distributor, consultant or in any other capacity:
(i) Request or advise any of the customers, vendors,
suppliers, or other business contacts of Edac who currently have or have had
business relationships with Edac within two years preceding the date of such
action, to withdraw, curtail or cancel any of their business or relations with
Edac.
(ii) Induce or attempt to induce any employee, sales
representative, supplier, consultant or personnel of Edac to terminate his or
her relationship or breach his or her agreements with Edac.
(iii) Participate in, become associated with, provide
assistance to, engage in or have a financial or other interest in any business,
activity or enterprise located within the Territory (as defined below) which is
competitive with the business of Edac or any successor or assign of Edac and
which conducts such competitive business within the Territory; provided,
however, that the ownership of less than 1% of the stock of a corporation whose
shares are traded in a recognized stock exchange or traded in the
over-the-counter market, even though that corporation may be a competitor of
Edac, shall not be deemed financial participation in a competitor. For purposes
of this Agreement, the term
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"Territory" shall mean the United States of America. The Board may, in its sole
discretion and at any time prior to the termination of Xx. Xxxxxx'x employment
by Edac, expand the Territory to include those countries in which the Company or
any of its subsidiaries does business.
8. Confidential Information. The parties agree that Edac's customers,
business connections, customer lists, procedures, operations, techniques,
customer profiles and other aspects of its business are established at great
expense and protected as confidential information and provide Edac with a
substantial competitive advantage in conducting its business. The parties
further agree that, by virtue of Xx. Xxxxxx'x employment with Edac, he will have
access to, and be entrusted with, secret, confidential and proprietary
information, and that Edac would suffer great loss and injury if Xx. Xxxxxx
would disclose this information or use it to compete with Edac. Therefore, Xx.
Xxxxxx agrees that during the term of his employment, and for a period ending on
the earlier of (a) two years after the termination of his employment with Edac
or (b) the date on which the information referred to in this section becomes
publicly known through no fault of Xx. Xxxxxx, he will not, directly or
indirectly, either individually or as an employee, agent, partner, shareholder,
owner, trustee, beneficiary, co-venturer, distributor, consultant or in any
other capacity, use or disclose, or cause to be used or disclosed, any secret,
confidential or proprietary information acquired by Xx. Xxxxxx during his
employment with Edac whether owned by Edac prior to or discovered and developed
by Edac subsequent to Xx. Xxxxxx'x employment, and regardless of the fact that
Xx. Xxxxxx may have participated in the discovery and the development of that
information, except for any such information disclosed to Xx. Xxxxxx by a third
party who was not under any obligation of confidence or secrecy to the Company
at the time of such disclosure.
9. Law of Torts and Trade Secrets. The parties agree that nothing in
this Agreement shall be construed to limit or negate the statutory or common law
of torts or trade secrets where it provides Edac with broader protection than
that provided herein.
10. Waiver. The failure of either party to insist, in any one or more
instances, upon performance of the terms or conditions of this Agreement shall
not be construed as a waiver or a relinquishment of any right granted hereunder
or of the future performance of any such term, covenant or condition.
11. Notices. Any notice to be given hereunder shall be deemed
sufficient if addressed in writing, and delivered by registered or certified
mail or delivered personally, in the case of Edac, to its principal business
office, and in the case
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of Xx. Xxxxxx, to his address appearing on the records of Edac, or to such other
address as he may designate in writing to Edac.
12. Severability. If any provision of this Agreement is held to be
invalid or unenforceable for any reason whatsoever, it is agreed such invalidity
or unenforceability shall not affect any other provision of this Agreement and
the remaining covenants, restrictions and provisions hereof shall remain in full
force and effect and any court of competent jurisdiction may so modify the
objectionable provision as to make it valid, reasonable and enforceable.
Furthermore, the parties specifically acknowledge that the provisions of
sections 7(a), 7(b)(i), 7(b)(ii) and 7(b)(iii) are each separate and independent
agreements.
13. Amendment. This Agreement may only be amended by an agreement in
writing signed by all of the parties hereto.
14. Benefit. This Agreement shall be binding upon and inure to the
benefit of and shall be enforceable by and against Edac, its successors and
assigns and Xx. Xxxxxx, his heirs, beneficiaries and legal representatives. It
is agreed that the rights and obligations of Xx. Xxxxxx may not be delegated or
assigned.
15. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings among the parties with
respect to such subject matter (including, without limitation, the Consulting
Agreement, dated as of July 18, 2002, between Edac and Xx. Xxxxxx).
16. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect.
17. Release. Simultaneous with the execution of this Agreement, and in
consideration of the respective obligations of the Company and Xx. Xxxxxx under
this Agreement, each of Xx. Xxxxxx and the Company is executing and delivering
the Mutual Release in the form attached hereto as Exhibit A.
The parties have executed or caused this Agreement to be executed as of
the day, month and year first above written.
EDAC TECHNOLOGIES CORPORATION
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BY /s/Xxxxxx X. Xxxxx
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Its Chairman
/s/Xxxxxxxx X. Xxxxxx
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Xxxxxxxx Xxxxxx
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