AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED
AND RESTATED
This
Amended and Restated Employment Agreement, dated as of the 10th day of September
2007, between Xxxxxx
X. Xxxxxxx
(the
“Executive”) and Memry
Corporation,
a
Delaware corporation (the “Company”).
WITNESSETH,
WHEREAS,
the Company and the Executive entered into an employment agreement on September
1, 2001 (as amended and restated on July 21, 2004, and amended on January 19,
2006 and on April 13, 2006, the “Prior Employment Agreement”);
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
Chief Executive 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, 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. The Executive shall comply with the directions and
instructions made or given by or under the authority of the Company’s Board of
Directors 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
$297,285, 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 60% 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, 175,000 stock options 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 be entitled to an automobile allowance of $500 per month, to
be
paid in accordance with the Company’s policy for paying automobile allowances as
in effect from time to time.
(d) The
Executive shall also be entitled to receive up to $15,000 per year from the
Company towards retirement and/or deferred compensation benefits. This amount
may be invested in any manner as may be selected by the Executive.
(e) 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.
(f) 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.
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 such time after the termination of the
Period of Employment with respect to which the Company is providing severance
payments or benefits to the Executive (i.e., eighteen (18) months under the
terms of Section 8(e)), any business which competes or could reasonably be
expected to compete with the Company and/or its affiliates as of the date of
termination of the Period of Employment; provided, however, that 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. Notwithstanding the foregoing, the Executive, at his sole
discretion, may, by written notice to the Company within ten (10) days following
the termination of the Period of Employment, elect to not receive severance
payments or benefits pursuant to Section 8(e) of this Agreement, and, in return,
the Executive’s post-termination non-competition obligations pursuant to this
Section 4(a) shall terminate.
(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
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.
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.
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 for cause. For
purposes of this Agreement, “for 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; or (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. “For cause” termination must be accompanied
by a written notice to that effect. If the Executive is terminated for cause,
the Executive shall be paid through the date of his termination.
(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. In addition, the
Company shall make a severance payment to the Executive’s legal representative
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 representative following the completion
of such fiscal year at the time similar bonuses are paid to other employees
of
the Company.
(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 two (2)
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 on the
date of termination equal to the sum of (A) 150% (i.e., 18 months) 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) 150% (i.e., 18
months) of the Executive’s target bonus 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
eighteen (18)-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,
in
connection with or 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; or (iii) the relocation of the Executive’s
principal place of business to a location more than sixty (60) miles (which
is a
material change in the geographic location at which the Executive must provide
services) from both (A) Bethel, Connecticut and (B) Easton, Connecticut, without
the Executive’s prior consent. 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), (ii), and/or (iii) 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), (ii) or (iii) above, and
(3) the Executive’s termination of employment occurs within two (2) years
following the initial occurrence the condition described in clause (i), (ii)
or
(iii) above. For purposes of clause (ii) above, a removal of the Executive
from
the position of Chief Executive Officer in contemplation of a proposed
transaction that would constitute a Change in Control or during the two-year
period following a Change in Control shall be deemed a material diminution
of
the authority of the Executive. Further, in the event of a termination pursuant
to this Section 8(e), or pursuant to Section 8(c) or Section 8(d) above, all
outstanding incentive and non-qualified stock options then held by the Executive
still subject to any vesting requirements shall have such vesting requirements
terminated (such that all such options are then immediately
exercisable).
(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 of 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 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, as a director, votes in favor of the matter that would otherwise
cause the 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.
(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) in the event of
a
termination of employment pursuant to Section 8(d) prior to January 1,
2008.
(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).
IN
WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date
first above written.
|
MEMRY
CORPORATION
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|
By:
|
/s/ Xxxxx Xxxxxxxxx
|
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|
Name:
Xxxxx Xxxxxxxxx
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Title:
Vice President, Human Resources
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| /s/ Xxxxxx X. Xxxxxxx | |||
| Xxxxxx X. Xxxxxxx | |||
