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EXHIBIT J
THIRD AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AGREEMENT dated as of October 16, 1996, between Innotech, Inc., a
corporation organized under the laws of the State of Delaware ("Employer"), and
Xxxxxx X. Xxxxxxxxxx ("Executive").
R E C I T A L S:
WHEREAS, Employer and Executive entered into an Employment Agreement dated
July 1, 1992 (the "July Agreement");
WHEREAS, the July Agreement was amended and restated by the Amended and
Restated Employment Agreement dated as of December 15, 1992 (the "December
Agreement");
WHEREAS, the December Agreement was amended and restated by the Second
Amended and Restated Employment Agreement dated as of October 2, 1995 (the
"October Agreement");
WHEREAS, Employer and Executive desire to amend the October Agreement to
further modify the terms of Executive's employment by Employer; and
WHEREAS, Executive desires to continue employment with Employer and
Employer desires to continue to retain the services of Executive on the terms
and conditions hereafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants set forth herein and for other good and valuable consideration,
Employer and Executive hereby agree that this Third Amended and Restated
Employment Agreement (the "Agreement") amends, restates and is in complete
substitution of the October Agreement and further agree as follows:
1. Employment.
1.1. General. Employer hereby employs Executive in the capacity of
President and Chief Operating Officer. Executive hereby accepts such
employment, upon the terms and subject to the conditions herein contained.
1.2. Duties. During the Employment Period (as defined in Section 3.1
hereof), Executive will be responsible for the day-to-day operations of
Employer, including but not limited to financial, sales and marketing and
manufacturing, and performing such other duties as may from time to time be
assigned to or requested of Executive by Employer's Chairman of the Board
of Directors (the "Chairman"), and/or Board of Directors (the "Board").
Executive shall use his reasonable efforts to perform faithfully and
effectively such responsibilities. Executive shall conduct all of his
activities in a manner so as to maintain and promote the business and
reputation of Employer.
1.3. Full-Time Position. Executive, during the Employment Period,
will devote all of his business time, attention and skills to the business
and affairs of Employer.
1.4. Location of Employment. Executive's place of employment during
the Employment Period shall be in Roanoke, Virginia or at any location as
Employer may from time to time move its principal offices. Notwithstanding
anything to the contrary herein, in the event Employer requires Executive
to relocate to a location outside of the metropolitan Roanoke area and
Executive fails to so relocate, such failure shall not be grounds for
termination by Employer for Cause (as defined in Section 3.2.3 hereof).
2. Compensation and Benefits.
2.1. Salary. Effective August 14, 1996, Employer will pay to
Executive, and Executive will accept, as full compensation for any and all
services rendered and to be rendered by him during the Employment Period to
Employer in all capacities, (i) a base salary at the annual rate of
$175,000, or at such increased rate as the Board, in its sole discretion,
may hereafter from time to time grant to Executive ("Base
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Salary"), payable in accordance with the regular payroll practices of
Employer, and (ii) the additional benefits hereinafter set forth in this
Section 2.
2.2. Additional Compensation. Executive shall be entitled to
participate in Employer's Management Incentive Compensation Plan (the
"MICP") and shall be entitled to awards granted pursuant to the terms
thereof as determined by the Board. Executive, at his election, shall be
entitled to an advance of up to $7,500 against the MICP for 1996 (the "MICP
Advance"), provided, that, Executive shall repay, without interest, the
difference between the amount of any MICP Advance and the actual bonus
earned under the MICP for 1996 in the event that the MICP Advance shall
exceed the actual bonus earned. Executive's target award for MICP plan
years 1997 and 1998 shall be not less than 40% of Executive's then Base
Salary for the applicable plan year.
2.3. Executive Benefits.
2.3.1. Expenses. Employer will reimburse Executive for expenses he
reasonably incurs in connection with the performance of his duties
(including business travel and entertainment expenses), all in accordance
with Employer's policies with respect thereto.
2.3.2. Employer Plans. Executive will be entitled to participate in
such employee benefit plans and programs as Employer may from time to time
offer or provide to executive officers of Employer, including, but not
limited to, participation in life insurance, health and accident and
medical plans and programs.
2.3.3. Life Insurance. During the Employment Period, Employer shall
pay all premiums on a term life insurance policy on the life of Executive
having a face value of $1,000,000, and Executive shall be entitled to name
the beneficiaries of such policy; provided, that, in lieu of the foregoing,
Executive may elect to have Employer pay all premiums on a disability
policy with respect to Executive in an amount not greater than the premiums
Employer would have paid on such life insurance policy.
2.3.4. Vacation. During the Employment Period, Executive shall be
entitled to two weeks vacation for each twelve (12) month period Executive
is employed by Employer, as shall be approved by the Chairman. Executive
shall be able to accrue vacation days from year to year in accordance with
Employer's published policies.
2.3.5. Outplacement. Upon termination of the Employment Period,
Employer shall provide and pay for such outplacement services for Executive
as Executive shall select. Employer shall not be required to pay in excess
of $5,000 for such outplacement services.
3. Employment Period; Termination.
3.1. Employment Period. For purposes of this Agreement, Executive's
employment by Employer commenced on August 14, 1996 and will continue until
August 13, 1998 (the "Initial Period"). Thereafter, it will continue for
successive one-year periods commencing August 14 of each subsequent year
following the Initial Period (the Initial Period together with any
subsequent employment period being referred to herein as the "Employment
Period"); provided, however, that either party may elect to terminate this
Employment Agreement as of August 13, 1998, or as of any subsequent August
13 (a "Renewal Termination Date"), by written notice to such effect
delivered by the other party at least 90 days prior to such Renewal
Termination Date. The election of Employer or Executive to terminate this
Agreement as of August 13, 1998, or as of any Renewal Termination Date, as
provided in this Section 3.1 shall not be deemed to be termination by
Employer under Sections 3.2.3, 3.2.4 or 3.2.5 hereof or by Executive under
Section 3.2.6 hereof, and in such event, Executive shall only be entitled
to Base Salary through the Renewal Termination Date and a pro-rata portion
of any amounts Executive would be entitled to under the MICP.
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3.2. Events of Termination. The Employment Period will terminate upon
the occurrence of any one or more of the following events:
3.2.1. Death. In the event of Executive's death, the Employment
Period will terminate on the date of death.
3.2.2. Disability. In the event of Executive's Disability (as
hereinafter defined), Employer will have the option to terminate the
Employment Period by giving a Notice of Termination to Executive. The
Notice of Termination shall specify the date of termination, which date
shall not be earlier than thirty (30) days after the Notice of
Termination is given. For purposes of this Employment Agreement,
"Disability" means the inability of Executive to substantially perform
his duties hereunder for 90 days out of 180 consecutive days as a result
of a physical or mental illness, all as determined in good faith by the
Board.
3.2.3. Termination by Employer for Cause. Employer may, at its
option, terminate the Employment Period for "Cause" based on objective
factors determined in good faith by a majority of the Board as set forth
in a Notice of Termination to Executive specifying the reasons for
termination and the failure of Executive to cure same within ten (10)
days of his receiving the Notice of Termination; provided, that in the
event the Board in good faith determines that the underlying reasons
giving rise to such determination cannot be cured, then said cure period
shall not apply, and the Employment Period shall terminate on the date
of Executive's receipt of the Notice of Termination (the "Termination
Date"). "Cause" shall mean (i) Executive's conviction of, guilty plea
to, or confession of guilt of, a felony, (ii) disloyal, dishonest or
illegal conduct or intentional misconduct or malfeasance by Executive in
the performance of services for or on behalf of Employer, or other
conduct materially detrimental to the business, operations or reputation
of Employer, regardless of whether such conduct is within the scope of
Executive's duties, (iii) failure by Executive to substantially perform
his duties, as assigned to him by the Chairman, President or the Board
from time to time, (iv) violation by Executive of the covenants set
forth in this Agreement, (v) the filing by or against Executive of any
bankruptcy, insolvency or reorganization proceeding, (vi) except as may
be permitted herein, disclosure of Confidential Information (as
hereinafter defined) without the prior written consent of Employer, or
(vii) failure to assign to Employer Inventions (as hereinafter defined)
as may be required herein.
3.2.4. Without Cause By Employer. Employer may, at its option,
terminate the Employment Period for any reason whatsoever (other than
for the reasons set forth above in this Section 3.2) by giving a Notice
of Termination to Executive, and the Termination Date shall be the later
of the date the Notice of Termination is given or the date set forth in
such Notice of Termination.
3.2.5. Employer's Material Breach. Executive may, at his option,
terminate the Employment Period upon Employer's material breach of this
Employment Agreement and the continuation of such breach for more than
thirty (30) days after written demand for cure of said breach is given
to Employer by Executive (which demand will identify the manner in which
Employer has materially breached this Employment Agreement). In the
event of a termination under this Section 3.2.5, the Termination Date
shall mean the 31st day after written demand for cure is given by
Executive to Employer. Employer's "Material Breach" of this Employment
Agreement shall mean (i) the failure of Employer to pay Base Salary or
additional compensation hereunder in accordance with this Agreement or
(ii) the assignment to Executive without Executive's consent of duties
substantially inconsistent with his duties as set forth in Section 1.2
hereof.
3.2.6. Without Cause By Executive. Executive may terminate the
Employment Period for any reason whatsoever by giving a Notice of
Termination to Employer. The Termination Date pursuant to this Section
3.2.6 shall be the earlier of (i) the date, following the date of the
Notice of Termination, upon which a suitable replacement for Executive
is found by Employer, or (ii) 60 days after the date of receipt by
Employer of the Notice of Termination.
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3.3. Certain Obligations of Employer Following Termination of the
Employment Period. Following termination of the Employment Period under
the circumstances described below, Employer will pay to Executive in
accordance with its regular payroll practices the following compensation
and provide the following benefits in full satisfaction and final
settlement of any and all claims and demands that Executive now has or
hereafter may have hereunder against Employer:
3.3.1. Death; Disability. In the event that the Employment Period
is terminated by reason of Executive's death or for Disability,
Executive or his estate, as the case may be, shall be entitled to the
following payments:
(i) Base Salary through the date of death or the date of
termination as specified in the Notice of Termination in the event of
Disability;
(ii) A pro-rata portion of any amounts Executive would be
entitled to under the MICP, if any, accrued on or prior to the date
of death or the date of termination as specified in the Notice of
Termination in the event of Disability; and
(iii) Employer shall pay to Executive or his estate, as the case
may be, the amounts and shall provide all benefits generally
available under the employee benefit plans, and the policies and
practices of Employer, determined in accordance with the applicable
terms and provisions of such plans, policies and practices, in each
case, as accrued to the date of termination as specified in the
Notice of Termination in the event of Disability or otherwise payable
as a consequence of Executive's death or Disability.
3.3.2. Without Cause by Employer; Material Breach by Employer. In
the event that the Employment Period is terminated by Employer pursuant
to Section 3.2.4 hereof or by Executive pursuant to Section 3.2.5
hereof, Executive shall be entitled to the following payments:
(i) Base Salary through the Termination Date;
(ii) a pro-rata portion of any amounts Executive would be
entitled to under the MICP, if any, accrued on or prior to the
Termination Date; and
(iii) continuing payments of Base Salary, payable in accordance
with regular payroll practices of Employer, for the greater of: [X]
twelve (12) months or [Y] the remaining portion of the Employment
Period, as it may be extended as provided in Section 3.1 hereof.
3.3.3. Termination by Executive Without Cause or by Employer for
Cause. In the event the Employment Period as terminated by Executive
pursuant to 3.2.6 hereof or by Employer pursuant to Section 3.2.3
hereof, Executive shall be entitled to no further compensation or other
benefits under this Agreement except as to that portion of any unpaid
Base Salary and other benefits accrued and earned by him hereunder up to
and including the effective date of such termination. Executive shall
not be entitled to receive any additional compensation pursuant to the
MICP, except that Executive shall be entitled to receive any amounts
earned but not yet paid under the MICP in respect of any fiscal year
prior to the year of termination and other benefits, if any, in
accordance with other applicable plans and policies of Employer.
3.4. Nature of Payments. All amounts to be paid by Employer to
Executive pursuant to Section 3.3 hereof are considered by the parties to
be severance payments. In the event such payments are treated as damages,
it is expressly acknowledged by the parties that damages to Executive for
termination of employment would be difficult to ascertain and the above
amounts are reasonable estimates thereof. Upon termination of the
Employment Period pursuant to Sections 3.2.2 through 3.2.6 hereof,
inclusive, Executive will be released from any duties and obligations
hereunder (except the duties and obligations set forth in Sections 4, 6.11
and 6.12 hereof) and the obligations of Employer to Executive will be as
set forth in Section 3.3 hereof.
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4. Confidentiality; Nonsolicitation; Non-Compete.
4.1. Confidential Information Defined. Confidential Information means
any and all information (oral or written) relating to Employer or any
person controlling, controlled by, or under common control with Employer or
any of their respective activities, including, but not limited to,
information relating to: technology, patents, patent applications, know
how, secret processes, research, test procedures and results, machinery and
equipment; manufacturing processes; financial information; products;
identity and description of materials and services used; purchasing; costs;
pricing; customers and prospects; advertising, promotion and marketing; and
selling, servicing and information pertaining to any governmental
investigation, except such information which can be shown by Executive to
be generally in the public domain (such information not being deemed to be
in the public domain merely because it is embraced by more general
information which is in the public domain), other than as a result of a
breach of the provisions of Section 4.2 hereof.
4.2. Nondisclosure of Confidential Information. Executive will not,
at any time (other than as may be required or appropriate in connection
with the performance by him of his duties hereunder) directly or
indirectly, use, communicate, disclose or disseminate any Confidential
Information in any manner whatsoever (except as may be required under legal
process by subpoena or other court order; provided, that, Executive will
take reasonable steps to give Employer sufficient prior written notice in
order to contest such requirement or order).
4.3. Certain Activities. Executive will not while employed by
Employer and thereafter, directly or indirectly, hire, offer to hire,
entice away or in any other manner persuade or attempt to persuade any
officer, employee, agent, lessor, lessee, licensor, licensee, customer,
prospective customer or supplier of Employer to discontinue or alter his or
its relationship with Employer.
4.4. Covenant Not to Compete. During the Employment Period and for a
period of two years thereafter Executive will not directly or indirectly
engage in competition with Employer by being associated with any competitor
of Employer that sells or offers to sell any products or services which
compete with the products or services offered or sold by Employer or being
developed by Employer for sale; or induce or attempt to induce, directly or
indirectly, any then current or potential customer of Employer to cease
doing business, in whole or in part, with Employer or solicit business of
any such customer for any products or services of any competitor of
Employer which compete with the products or services offered or sold by
Employer or being developed by Employer for sale. Notwithstanding the
foregoing, in the event Executive's employment is terminated by Employer
Without Cause or due to Employer's Material Breach, this Section 4.4 shall
only apply to the products or services offered or sold by Employer that
relate to its SurfaceCasting technology.
4.5. Inventions. Any and all inventions, innovations or improvements
("Inventions") made, developed or created by Executive (whether at the
request of Employer or otherwise, whether alone or in conjunction with
others, and whether during regular hours of work or otherwise) during the
Employment Period which may be useful in, or relate to, the business of
Employer, shall be promptly and fully disclosed by Executive to the Board
and shall be Employer's exclusive property as against Executive. Executive
shall, at the request of Employer, and without any charge to Employer, but
at Employer's sole cost and expense, execute any documents as may be
necessary or advisable to obtain patents or copyrights for said Inventions
and to vest title thereto in Employer.
4.6. Injunctive Relief. The parties hereby acknowledge and agree that
(a) Employer will be irreparably injured in the event of a breach by
Executive of any of his obligations under this Section 4; (b) monetary
damages will not be an adequate remedy for any such breach; (c) Employer
will be entitled to injunctive relief, in addition to any other remedy
which it may have, in the event of any such breach, including, but not
limited to, termination of the Employment Period for Cause; and (d) the
existence of any claims which Executive may have against Employer, whether
under this Agreement or otherwise, will not be a defense to the enforcement
by Employer of any of its rights under this Section 4.
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4.7. Nonexclusivity and Survival. The covenants of Executive
contained in this Section 4 are in addition to, and not in lieu of, any
obligations which Executive may have with respect to the subject matter
hereof, whether by contract, as a matter of law or otherwise, and such
covenants and their enforceability will survive any termination of the
Employment Period by either party and any investigation made with respect
to the breach thereof by Employer at any time.
5. Stock Option. Concurrently with the execution and delivery of this
Agreement, Employer and Executive have executed and delivered the stock option
agreements in the form annexed hereto as Exhibit A and Exhibit B.
6. Miscellaneous Provisions.
6.1. Severability. If in any jurisdiction any term or provision
hereof is determined to be invalid or unenforceable, (a) the remaining
terms and provisions hereof shall be unimpaired, (b) any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction, and (c) the invalid
or unenforceable term or provision shall, for purposes of such
jurisdiction, be deemed replaced by 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.
6.2. Execution in Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement (and all
signatures need not appear on any one counterpart), and this Agreement
shall become effective when one or more counterparts has been signed by
each of the parties hereto and delivered to each of the other parties
hereto.
6.3. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed duly given when delivered
by hand, or when delivered if mailed by registered or certified mail or
private courier service, postage prepaid, return receipt requested or
via facsimile (with written confirmation of receipt) as follows:
If to Employer, to:
Innotech, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Chairman
Telecopy No.: (000) 000-0000
Copy to:
Xxxx X. Xxxxxxx, Esq.
c/x Xxxxxxx, Calamari & Xxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
If to Executive, to:
Xxxxxx X. Xxxxxxxxxx
0000 Xxxxxxxxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
or to such other address(es) as a party hereto shall have designated by
like notice to the other parties hereto.
6.4. Amendment. No provision of this Agreement may be modified,
amended, waived or discharged in any manner except by a written instrument
executed by Employer and Executive.
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6.5. Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof,
and supersedes all prior agreements and understandings of the parties
hereto, oral or written, with respect to the subject matter hereof.
6.6. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia
applicable to contracts made and to be wholly performed therein without
regard to its conflicts or choice of law provisions.
6.7. Headings. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this
Agreement.
6.8. Binding Effect; Successors and Assigns. Executive may not
delegate his duties or assign his rights hereunder. This Agreement will
inure to the benefit of, and be binding upon, the parties hereto and their
respective heirs, legal representatives, successors and permitted assigns.
6.9. Waiver, etc. The failure of either of the parties hereto to at
any time enforce any of the provisions of this Agreement shall not be
deemed or construed to be a waiver of any such provision, nor to in any way
affect the validity of this Agreement or any provision hereof or the right
of either of the parties hereto to thereafter enforce each and every
provision of this Agreement. No waiver of any breach of any of the
provisions of this Agreement shall be effective unless set forth in a
written instrument executed by the party against whom or which enforcement
of such waiver is sought, and no waiver of any such breach shall be
construed or deemed to be a waiver of any other or subsequent breach.
6.10. Capacity, etc. Executive and Employer hereby represent and
warrant to the other that: (a) he or it has full power, authority and
capacity to execute and deliver this Agreement, and to perform his or its
obligations hereunder; (b) such execution, delivery and performance will
not (and with the giving of notice or lapse of time or both would not)
result in the breach of any agreements or other obligations to which he or
it is a party or he or it is otherwise bound; and (c) this Agreement is his
or its valid and binding obligation in accordance with its terms.
6.11. Enforcement. If any party institutes legal action to enforce or
interpret the terms and conditions of this Agreement, the prevailing party
shall be awarded reasonable attorneys' fees at all trial and appellate
levels, and the expenses and costs incurred by such prevailing party in
connection therewith. Venue for any such action shall exclusively be
Roanoke, Virginia.
6.12. Arbitration.
(a) Any dispute under Section 3 hereof, including but not limited
to the determination by the Board of a termination for Cause pursuant to
Section 3.2.3 hereof or in respect of the breach thereof will be settled
by arbitration in Roanoke, Virginia. The arbitration will be
accomplished in the following manner. Either party may serve upon the
other party written demand that the dispute, specifying the nature
thereof, shall be submitted to arbitration. Within ten (10) days after
the service of such demand, each of the parties will designate an
arbitrator and serve written notice of such appointment upon the other
party. If either party fails within the specified time to appoint such
arbitrator, the other party will be entitled to appoint both
arbitrators. The two (2) arbitrators so appointed will appoint a third
arbitrator.
(b) The decision of the arbitrators will be final and binding upon
the parties. The arbitration will be conducted, to the extent consistent
with this Section 6.12, in accordance with the then prevailing rules of
commercial arbitration of the American Arbitration Association or its
successor.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the first date written above.
INNOTECH, INC.
By: /s/ XXXXXX X. XXXX
------------------------------------
Xxxxxx X. Xxxx
Chairman and Chief
Executive Officer
/s/ XXXXXX X. XXXXXXXXXX
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Xxxxxx X. Xxxxxxxxxx
