EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This Agreement, made this 1st day of June, 1998, by and between Advanced
Photonix, Inc., a Delaware corporation (hereinafter called "Company"), and
Xxxxxxx X. Xxxxxx, an individual (hereinafter called "Employee").
W I T N E S S E T H :
Company wishes to employ Employee and Employee wishes to enter into the employ
of the Company on the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the facts, mutual promises and covenants
contained herein and intending to be legally bound hereby, Company and Employee
agree as follows:
1. Employment
Company hereby employs Employee and Employee hereby accepts employment by the
Company for the period and upon the terms and conditions contained in this
Agreement. Both the Company and Employee acknowledge and agree that this
Agreement supercedes all previous Employment Agreements between the parties.
2. Office and Duties
a) Employee shall serve Company generally as Executive Vice President, Chief
Financial Officer and Corporate Secretary & Treasurer. In his capacity, Employee
shall have such authority and such responsibilities as the President and the
Board of Directors reasonably may determine from time to time.
b) Throughout the term of this Agreement, Employee shall devote his entire
working time, energy, skill and best efforts to the performance of his duties
hereunder in a manner which will faithfully and diligently further the business
and interests of the Company. Notwithstanding the foregoing, Employee shall be
permitted to maintain memberships on the Boards of Directors and in
organizations identified to the Company in writing, provided that such
activities shall not, at any time, preclude Company or any Subsidiary (as herein
defined) of the Company, from obtaining contracts from any such company or
organization. Employee shall also be permitted to serve as a director or
consultant of additional organizations and participate in other activities for
the federal government and other groups upon the prior written approval by the
Company, which approval shall not unreasonably be withheld; provided, however,
that no such activities shall, at any time, exclude Company or any subsidiary of
the Company from obtaining contracts from the government or any other
organizations. For purposes of this Agreement, any corporation with respect to
which Company has the ability to control more than fifty percent of the voting
power shall be a "subsidiary" and all such corporations shall be "Subsidiaries".
3. Term
This Agreement shall be for a term of twenty one months, commencing on June 1,
1998, and ending on March 31, 2000, unless sooner terminated as hereinafter
provided. Unless either party elects to terminate this Agreement at the end of
the original or any renewal term by giving the other party notice of such
election at least ninety (90) days before the expiration of the then current
term, this Agreement shall be
Page 1 of 7
deemed to have been extended for an additional term of one (1) year commencing
on the day after the expiration of the then current term.
4. Compensation and Benefits
a) For all the services rendered by the Employee to the Company, Employee shall
receive a base salary at the rate of $125,000 per year, ("Base Salary"), payable
in reasonable installments in accordance with Company's regular payroll
practices in effect from time to time.
b) Employee shall be eligible for additional salary increases as well as cash
and stock bonuses during the term of this Agreement at the discretion of the
Board of Directors. Incentive cash bonus will be $15,000 or greater on an annual
basis.
c) Benefits to the Employee shall be the same as those customarily provided by
the Company to other employees except employee accrues vacation at a rate of
three weeks per year since original date of employment with the normal
progression as outlined in the Company's employee manual.
5. Expenses
Company will reimburse Employee for all reasonable expenses incurred by Employee
in connection with the performance of the Employee's duties hereunder, upon
receipt of appropriate documentation and in accordance with Company's regular
reimbursement procedures and practices in effect from time to time.
6. Disability
a) If Employee becomes unable to perform his duties hereunder due to partial or
total disability or incapacity resulting from a mental or physical illness,
injury or other cause, Company will continue the payment of Employee's Base
Salary at its current rate for a period of twenty-six (26) weeks following the
date Employee is first unable to perform his duties due to such disability or
incapacity. Thereafter, Company shall have no obligation for Base Salary or
other compensation payments to Employee during the continuance of such
disability of incapacity.
b) If Employee is unable to perform his duties hereunder due to partial or total
disability or incapacity resulting from a mental or physical illness, injury or
any other cause for a period of twenty-six (26) consecutive weeks or for a
cumulative period of twenty-six (26) weeks during any twelve month period,
Company shall have the right to terminate this Agreement thereafter, in which
event company shall have no further obligations or liabilities hereunder after
the date of such termination.
7. Death
If Employee dies, all payments hereunder shall cease at the end of the month in
which Employee's death shall occur and Company shall have no further obligations
or liabilities hereunder to Employee's estate or legal representative or
otherwise.
Page 2 of 7
8. Discharge for Cause
Company may discharge Employee at any time for criminal conduct (whether or not
related to Employee's employment), intoxication or drug addiction (if either of
these conditions impairs the Employee's ability to perform his duties),
insubordination, gross negligence, any violation of any express direction or any
reasonable rule or regulation established by the Company from time to time
regarding the conduct of its business, any misrepresentation made in this
Agreement, or any violation by Employee of the terms and conditions of this
Agreement, in which event Company shall have no further obligations or
liabilities hereunder after the date of such discharge.
9. Termination of Employment
(a) In the event Company shall terminate Employee's employment during the term
of this agreement (the "termination date"), other than as a result of disability
as set forth in Paragraph 6 or for cause as set forth in Paragraph 8, at any
time prior to the expiration date of this Agreement as set forth in Paragraph 3,
Company shall be obligated to continue Employee's compensation and benefits set
forth in Paragraph 4 and 5 hereof until the later of the expiration date of this
Agreement or nine months from the termination date. In either such event, (i)
Company's liability to Employee as a result of any such termination shall be
limited as set forth above and (ii) Employee shall have the obligation to
mitigate his damages by using his best efforts to seek employment for which he
is suitably trained and experienced elsewhere. In the event Employee's
compensation from any such employment during the applicable period in which he
is entitled to receive compensation and benefits as set forth in this paragraph
shall be less than that available to him under this Agreement, Company shall pay
Employee any such difference. Employment from consulting activities defined in
Paragraph 2.b) and identified to the Company in writing will not be considered
for purposes of this section.
(b) In the event Company terminates Employee's employment after termination of
this agreement, other than as a result of disability or for cause, Company shall
continue compensation and medical benefits for a period of nine months after
such termination. Employee shall have the obligation to mitigate his damages by
using his best efforts to seek employment for which he is suitably trained and
experienced elsewhere. In the event Employee's compensation from any such
employment during the applicable period in which he is entitled to receive
compensation and benefits as set forth in this paragraph shall be less than that
available to him under this Agreement, Company shall pay Employee any such
difference. Employment from consulting activities identified to the Company in
writing will not be considered for purposes of this section.
10. Company Property
All research, technology developed or being developed, advertising, sales,
manufacturers' and other materials or article or information, including without
limitation data processing reports, customer sales analyses, invoices, price
lists or information, samples or any other materials or data of any kind
furnished to Employee by Company, learned by Employee from Company's direction
or for Company's use or otherwise in connection with Employee's employment
hereunder, are and shall remain the sole and confidential property of Company;
provided, however, the foregoing shall not apply to any such material in the
public domain other than by reason of a breach of this Paragraph 10. If the
Company requests the return of such materials at any time during or at or after
the termination of Employee's employment, Employee shall immediately deliver the
same to Company.
Page 3 of 7
11. Noncompetition, Trade Secrets, Etc.
a) During the term of this Agreement and for a period of one year after the
termination of his employment with the Company for any reason whatsoever,
Employee shall not, directly or indirectly, solicit, induce, encourage or
attempt to influence any client, customer, salesman or supplier of Company to
cease to do business with or to terminate his employment with Company and shall
not utilize for any such purpose any names and addresses of customers or clients
of Company or any data on or relating to past, present or prospective (at the
time of termination of Employee's employment) customers or clients of Company.
b) During the term of this Agreement, Employee shall not engage in (as a
principal, partner, director, officer, agent, employee, consultant or otherwise)
or be financially interested in any business operating within the United States,
which is involved in business activities which are the same as the business
activities carried on by Company, or being definitely planned by Company,
including exploitation of the technology developed by Company or being developed
by Company at the time of the termination of Employee's employment. However,
nothing contained in this paragraph 11 shall prevent Employee from holding for
investment no more than five percent (5%) of any class of equity securities of a
company whose securities are traded on a national securities exchange.
c) During the term of this Agreement and at all times thereafter, Employee shall
not use for his personal benefit, or disclosure, communicate or divulge to, or
use for the direct or indirect benefit of any person, firm, association or
company other than Company, any material referred to in this paragraph 11 or any
confidential information regarding the business methods, business policies,
procedures, techniques, research or development projects or results, trade
secrets, or other knowledge or processes of or developed by Company or any names
and addresses of customers or clients or any data on or relating to past,
present or prospective customers or clients or any other confidential
information relating to or dealing with the business operations or activities of
Company, made known to Employee or learned or acquired by Employee while in the
employ of Company.
d) Any and all writings, inventions, improvements, processes, procedures and/or
techniques which Employee may make, conceive, discover or develop, either solely
or jointly with any other person or persons, at any time during the term of this
Agreement, whether during working hours or at any other time and whether at the
request or upon the suggestion of the Company or otherwise, which relate to or
are useful in connection with any business now or hereafter carried on or
contemplated by the Company, including developments or expansions of its present
fields of operations, shall be the sole and exclusive property of Company.
Employee shall make full disclosure to Company of all such writings, inventions,
improvements, processes, procedures and techniques, and shall do everything
necessary or desirable to vest the absolute title thereto in Company. Employee
shall write and prepare all specifications and procedures regarding such
inventions, improvements, processes, procedures and techniques and otherwise aid
and assist Company so the Company can prepare and present applications for
copyright or Letters of Patent wherever possible, as well as reissues, renewals,
and extensions thereof in all countries in which it may desire to have copyright
or patent protection. Employee shall not be entitled to any additional or
special compensation or reimbursement regarding any and all such writings,
inventions, improvements, processes, procedures and techniques.
e) Employee acknowledges that the restrictions contained in the foregoing
subparagraphs a), b), and c), in view of the nature of the business in which
Company is engaged are reasonable and necessary in order
Page 4 of 7
to protect the legitimate interests of Company, and that any violation thereof
would result in irreparable injuries to Company, and Employee therefore
acknowledges that, in the event of his violation of any of these restrictions,
Company shall be entitled to obtain from any court of competent jurisdiction
preliminary and permanent injunctive relief as well as damages and an equitable
accounting of all earnings, profits and other benefits arising from such
violation, which rights shall be cumulative and in addition to any other rights
or remedies to which Company may be entitled.
f) If the period of time or the area specified in subparagraphs a) or b) above
should be adjudged unreasonable in any proceeding, then the period of time shall
be reduced by such number of months or the area shall be reduced by the
elimination of such portion thereof or both so that such restrictions may be
enforced in such area and for such time as is adjusted to be reasonable. If
Employee violates any of the restrictions extended for that period beginning at
the time of the commencement of any such violation and running until such time
as such violation shall be cured by Employee to the satisfaction of Company, on
a day to day basis.
12. Prior Agreements
Employee represents to Company a) that there are no restrictions, agreements or
understandings whatsoever to which Employee is a party which would prevent or
make unlawful his execution of this Agreement and his employment hereunder shall
not constitute a breach of any contract, agreement or understanding, oral or
written, to which he is a party or by which he is bound and b) that he is free
and able to execute this Agreement and to enter into employment by Company.
13. Personal Rights and Obligations
This Agreement and all rights and obligations hereunder are personal and shall
not be assignable by either party except as provided in this subparagraph, and
any purported assignment in violation thereof shall be null and void. Any
person, firm or corporation succeeding to the business of Company (or that
portion of the business with which Employee is involved) by merger,
consolidation, purchase of assets or otherwise, must assume by contract or
operation of law the obligations of Company hereunder and in such a case
Employee shall continue to honor this Agreement with such person, firm or
corporation substituted for Company as the employer; provided, however, that
Company shall, if it still exists as a separate entity, notwithstanding such
assumption and/or assignment, remain liable and responsible for the fulfillment
of the terms and conditions of this Agreement on the part of the Company.
14. Miscellaneous
a) Indulgences, Etc.
Neither the failure nor any delay on the part of either party to exercise any
right, remedy, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power or
privilege preclude any other or further exercise of the same or any other right,
remedy, power or privilege, nor shall any waiver of any right, remedy, power or
privilege with respect to any occurrence be construed as a waiver of such right,
remedy, power or privilege with respect to any other occurrence. No waiver shall
be effective unless it is in writing and is signed by the party asserted to have
granted such waiver.
Page 5 of 7
b) Notices
All notices, requests, demands and other communications required or permitted
under this Agreement shall be in writing and shall be deemed to have been duly
given, made and received only when delivered (personally, by courier service
such as Federal Express, or by other messenger) or when deposited in the United
States mails, registered or certified mail, postage prepaid, return receipt
requested, addressed as set forth below:
(i) if to Employee: (ii) if to Company:
Xxxxxxx X. Xxxxxx Advanced Photonix, Inc.
000 Xxxx Xxxxxx Xx. 0000 Xxxxxxx Xxxxx
Xxxx Xxxxxx, XX 00000 Xxxxxxxxx, XX 00000
In addition, notice by mail shall be by air mail if posted outside of the
continental United States.
Any party may alter the address to which communications or copies are to be sent
by giving notice of such change of address in conformity with the provisions of
this paragraph for the giving of notice.
c) Binding Nature of Agreement
This Agreement shall be binding upon and inure to the benefit of Company and its
successors and assigns and shall be binding upon Employee, his heirs and legal
representatives.
d) Execution in Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original as against any party whose signature appears
thereon, and all of which shall together constitute one and the same instrument.
This Agreement shall become binding when one or more counterparts hereof,
individually or taken together, shall bear the signatures of all of the parties
reflected hereon as the signatories.
e) Provisions Separable
The provisions of this Agreement are independent of and separable from each
other, and no provision shall be affected or rendered invalid or unenforceable
by virtue of the fact that for any reason any other or others of them may be
invalid or unenforceable in whole or in part.
f) Entire Agreement
This Agreement contains the entire understanding among the parties hereto with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written, except as herein contained. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof. This Agreement may not be
modified or amended other than by agreement in writing.
Page 6 of 7
g) Paragraph Headings
The paragraph headings in this Agreement are for convenience only; they form no
part of this Agreement and shall not affect its interpretation.
h) Gender, Etc.
Words used herein, regardless of the number and gender specifically used, shall
be deemed and construed to include any other number, singular or plural, and any
other gender, masculine, feminine or neuter, as the context indicates is
appropriate.
i) Number of Days
In computing the number of days for purposes of this Agreement, all days shall
be counted, including Saturdays, Sundays and holidays; provided, however, that
if the final day of any time period falls on a Saturday, Sunday or holiday on
which federal banks are or may elect to be closed, then the final day shall be
deemed to be the next day which is not a Saturday, Sunday or holiday.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first above written.
ADVANCED PHOTONIX, Inc.
By: /s/ Xxxxx Xxxxxxxxx
-----------------------
Xxxxx Xxxxxxxxx
President & Chief Executive Officer
EMPLOYEE
By: /s/X. X. Xxxxxx
-------------------
Xxxxxxx X. Xxxxxx
Attest:
/s/Xxxxxx X. Xxxxxxx
--------------------
Xxxxxx X. Xxxxxxx
Chairman, Compensation Committee
Page 7 of 7
