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Exhibit 10.17
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
Amended and Restated Employment Agreement dated and effective as of July
1, 1997 (this "AGREEMENT"), between ILLINOIS SUPERCONDUCTOR CORPORATION, a
Delaware corporation (with its successors and assigns, referred to as the
"COMPANY"), and XXXXXX X. XXXXX ("LAVES").
PRELIMINARY STATEMENT
Pursuant to an existing Employment Agreement between the Company and Laves
dated and effective as of January 1, 1997, Laves is now employed as the
executive vice president and chief operating officer of the Company (the "PRIOR
AGREEMENT").
The Company desires to continue to employ Laves, and Laves wishes to
continue to be employed by the Company, upon certain terms and conditions not
contained in the Prior Agreement, including an extension of the term of Laves's
employment. In order to specify such terms and conditions, and extend the term
of Laves's employment with the Company, Laves and the Company agree as follows:
AGREEMENT
Laves and the Company therefore agree as follows:
1. EMPLOYMENT FOR TERM. The Company hereby employs Laves and Laves hereby
accepts employment with the Company for the period beginning on July 1, 1997
and ending on June 30, 1998 (the "TERM"), or upon the earlier termination of
the Term pursuant to Section 6 below. The end of the Term for any reason shall
end Laves's employment under this Agreement, but shall not terminate Laves' or
the Company's other obligations in this Agreement.
2. POSITION AND DUTIES. Commencing at 5:00 p.m. on July 7, 1997 (the
"EFFECTIVE TIME"), and thereafter during the Term, Laves shall serve as
president and chief operating officer of the Company. Laves shall also
continue to serve as the executive vice president and chief operating officer
of the Company until the Effective Time. During the Term, Laves shall also
hold such additional positions and titles as the Board of Directors of the
Company (the "BOARD") may determine from time to time. During the Term, Laves
shall devote substantially all of his business time and best efforts to his
duties as an employee of the Company.
3. COMPENSATION.
(a) BASE SALARY. The Company shall continue to pay Laves a base salary,
beginning on the first day of the Term and ending on December 31, 1997, of not
less than $170,000 per annum, payable at least monthly on the Company's regular
pay cycle for professional employees. Effective as of January 1, 1998, and
thereafter during the remainder of the Term, Laves' base salary shall be
increased to the rate of not less than $190,000 per annum.
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(b) BONUSES. Laves shall be eligible to receive bonuses of up to fifty
percent (50%) of his base salary for calendar years 1997 and 1998 based on the
achievement of performance objectives if and as developed in consultation with
Laves by the President and Board of the Company, and if such performance
objectives are attained as determined in the sole discretion of the Board.
(c) OTHER AND ADDITIONAL COMPENSATION. Sections 3(a) and 3(b) establish
minimum salary and bonus grant levels for Laves during the Term, and shall not
preclude the Board from awarding Laves a higher salary or stock options at any
time, nor shall they preclude the Board from awarding Laves bonuses or other
compensation in the discretion of the Board.
4. EMPLOYEE BENEFITS. During the Term, Laves shall be entitled to the
employee benefits, including vacation, health and other insurance benefits, and
deferred compensation arrangements, made available by the Company to any other
employee of the Company.
5. EXPENSES. The Company shall reimburse Laves for actual out-of-pocket
expenses incurred by him in the performance of his services for the Company (in
accordance with the Company's policy for such reimbursements applicable to the
Company's executive officers on the same terms generally offered to such
officers), upon the receipt of appropriate documentation of such expenses.
6. TERMINATION.
(a) GENERAL. The Term shall end immediately upon Laves's death. The
Company may end the Term at any time for any reason or no reason, with or
without "Cause" (as defined in Section 7(a) below) in the absolute discretion
of the Board (but subject to the Company's obligations under this Agreement).
(b) NOTICE OF TERMINATION. Promptly after it ends the Term, the Company
shall give Laves notice of termination, including a statement of whether the
termination was for Cause. The Company's failure to give notice under this
Section shall not, however, affect the validity of the Company's termination
of the Term.
7. SEVERANCE BENEFITS.
(a) "CAUSE" DEFINED. "Cause" means willful malfeasance or willful
misconduct by Laves in connection with his employment; Laves' gross negligence
in performing any of his duties under this Agreement; Laves' conviction of, or
entry of a plea of guilty to, or entry of a plea of nolo contendere with
respect to, any crime other than a traffic violation or infraction which is a
misdemeanor; Laves' willful and continuing breach of any written policy
applicable to all employees adopted by the Company concerning conflicts of
interest, political contributions, standards of business conduct or fair
employment practices, procedures with respect to compliance with securities
laws or any similar matters, or adopted
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pursuant to the requirements of any government contract or regulation; or (v)
material and continuing breach by Laves of any of his agreements in this
Agreement.
(b) TERMINATION WITHOUT CAUSE. If the Company ends the Term prior to June
30, 1998, other than for Cause, then the Company shall make the "Severance
Payments" (as defined below) to Laves for and during the "Severance Period" (as
defined below). The Severance Payment shall be payable in proportionate
amounts at least monthly on the Company's regular pay cycle for professional
employees and (if the last day of the Severance Period is not the last day of a
pay period) on the last day of the Severance Period. Regardless of anything in
this Agreement to the contrary, if Laves resigns as a result of a material
change, or a related series of changes taken as a whole, in the scope or nature
of his responsibilities as president and chief executive officer of the Company
after the Effective Time, such change or changes shall be deemed to be a
constructive termination of Laves' employment by the Company without Cause for
all purposes of this Agreement, including without limitation the obligation of
the Company to make the Severance Payments during the Severance Period.
For purposes of this Agreement: (i) the term "SEVERANCE PAYMENT" means,
for the period of 180 days from the commencement of the Severance Period, an
amount equal to Laves' base salary in effect on the day prior to the date on
which the Severance Period commences, and thereafter during the Severance
Period an amount equal to 50% of Laves' base salary in effect at the time the
Severance Period commenced; and (ii) the term "SEVERANCE PERIOD" means the
period commencing on the day following the date of termination of Laves'
employment with the Company and ending on the second anniversary of the date of
termination, subject to earlier termination as of the date that Laves commences
full time employment with any other person or entity.
Laves agrees that during the Severance Period he shall endeavor to render
reasonable advisory and consulting services to the Company with respect to
matters pertaining to the business of the Company as the Board of Directors or
the then Chairman of the Board may reasonably request in writing, provided that
the Company acknowledges and agrees that Laves shall be obligated to perform
such services only to the extent that Laves determines in his discretion that
such services shall not interfere with the conduct of Laves's then current
business and personal affairs at the time of any such request. The Company
shall pay all reasonable out-of-pocket expenses incurred by Laves in the
performance of such advisory and consulting services.
(c) TERMINATION FOR ANY OTHER REASON. If the Company ends the Term for
Cause, or, subject to the first paragraph of Section 7(b) above, if Laves
resigns as an employee or officer of the Company, or if Laves dies, then the
Company shall have no obligation to pay Laves any amount, whether for salary,
benefits, bonuses, or other compensation or expense reimbursements of any kind,
accruing after the end of the Term, and such rights shall, except as otherwise
required by law, be forfeited immediately upon the end of the Term.
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(d) OPTION MATTERS. If the Company ends the Term without Cause, the
Company and Laves agree that notwithstanding any term or provision of any
agreement between Laves and the Company to the contrary, (i) all options held
by Laves to acquire shares of the common stock of the Company at the time of
termination shall immediately become vested, and shall be immediately
exercisable by Laves or his personal representative, and (ii) Laves (or his
personal representative, as the case may be) shall have the right to exercise
such vested options, and all other options previously vested in Laves prior to
the date of termination, for a period of 365 days following such end of the
Term. Laves and the Company agree that except as set forth above, all option
agreements referred to above shall remain in full force and effect in
accordance with their terms.
8. CONFIDENTIALITY, OWNERSHIP, AND COVENANTS OF NON-COMPETITION AND
NON-SOLICITATION.
(a) "COMPANY INFORMATION" AND "INVENTIONS" DEFINED. "COMPANY INFORMATION"
means all information, knowledge or data of or pertaining to (i) the Company,
and (ii) any other person, firm, corporation or business organization with
which the Company may do business during the Term, that is not in the public
domain (and whether relating to methods, processes, techniques, discoveries,
pricing, marketing or any other matters). "INVENTIONS" collectively refers to
any and all inventions, trade secrets, ideas, processes, formulas, source and
object codes, data, programs, other works of authorship, know-how,
improvements, discoveries, developments, designs, and techniques regarding any
of the foregoing.
(b) CONFIDENTIALITY. Except as provided in the next two sentences, Laves
covenants and agrees that all Company Information shall be kept secret and
confidential at all times during and after the end of the Term and shall not be
used or divulged by him outside the scope of his employment as contemplated by
this Agreement, except as the Company may otherwise expressly authorize by
action of the Board. In the event that Laves is requested in a judicial,
administrative or governmental proceeding to disclose any of the Company
Information, Laves will promptly so notify the Company so that the Company may
seek a protective order or other appropriate remedy and/or waive compliance
with this Agreement. If disclosure of any of the Company Information is
required, Laves may furnish the material so required to be furnished, but Laves
will furnish only that portion of the Company Information that legally is
required.
(c) OWNERSHIP. Laves hereby assigns to the Company all of Laves' right
(including patent rights, copyrights, trade secret rights, and all other rights
throughout the world), title and interest in and to Inventions, whether or not
patentable or registrable under copyright or similar statutes, made or
conceived or reduced to practice or learned by Laves, either alone or jointly
with others, during the course of the performance of services for the Company.
Laves shall also assign to, or as directed by, the Company, all of Laves's
right, title and interest in and to any and all Inventions, the full title to
which is required to be in the United States government by a contract between
the Company and the United States government or any of its agencies. The
provisions of Sections 8(a), 8(b) and this Section 8(c) are not
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intended to supersede or limit the effect of any prior confidentiality or
proprietary rights agreements previously executed by Laves.
(d) PERIOD DEFINED. "NON-COMPETITION PERIOD" means the period beginning on
the day following the date of termination of Laves' employment with the Company
and ending on the second anniversary of the day following the date of
termination of Laves' employment with the Company.
(e) COVENANTS OF NON-COMPETITION AND NON-SOLICITATION. Laves acknowledges
that his services pursuant to this Agreement are unique and extraordinary, that
the Company will be dependent upon Laves for the development and growth of its
business and related functions, and that he will continue to develop personal
relationships with significant customers of the Company and to have control of
confidential information concerning, and lists of customers of, the Company.
Laves further acknowledges that the business of the Company is international in
scope and cannot be confined to any particular geographic area of the United
States. For the foregoing reasons, Laves covenants and agrees that during the
Non-Competition Period Laves shall not, directly or indirectly, engage in, be
financially interested in, represent, render any advice or services to, or be
employed by, any other business (conducted for profit or not for profit) that
is engaged in the development or production of (i) high temperature
superconducting materials, (ii) radio frequency filter devices, or (iii) fault
current limiter devices, in any such case for or related to uses which are or
could reasonably deemed to be competitive with the current or currently
contemplated business of the Company in the world. For the reasons
acknowledged by Laves at the beginning of this Section , Laves additionally
acknowledges, covenants, and agrees that, during the Non-Competition Period,
Laves shall not, directly or indirectly, whether on his own behalf or on behalf
of any other person or entity, in any manner (A) solicit the business of or
otherwise contact in any commercial capacity any person or entity that is, or
is reasonably anticipated to become, at the date of termination to become, a
customer, supplier, or contractor of the Company for the purpose of obtaining
business of the type performed by the Company, or (B) solicit for employment
any persons who were officers or employees of the Company upon the date of
termination of his employment hereunder, or at any time during a ninety-day
period preceding such date, or aid any competitive business organization in any
attempt to hire any such officers or employees of the Company. Notwithstanding
the foregoing, this Section (e) shall terminate and be of no further force or
effect if the Company fails to make any payment or otherwise perform any
obligation owed to Laves pursuant to Sections 3, 4, 5 and 7(b) above.
(f) EQUITABLE REMEDIES. Laves acknowledges, covenants and agrees that, in
the event he shall violate any provisions of this Section 8, the Company will
not have an adequate remedy at law and will therefore be entitled to enforce
each such provision by temporary or permanent injunctive or mandatory relief
obtained in an action or proceeding without the necessity of posting any bond
of any kind whatsoever, and without prejudice to any other remedies that may be
available at law or in equity. The foregoing restrictions shall not preclude
Laves from the ownership of not more than three percent (3%) of the voting
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securities of any corporation whose voting securities are registered under
Section 12(g) of the Securities Exchange Act of 1934, even if its business
competes with that of the Company.
9. SUCCESSORS AND ASSIGNS.
(a) LAVES. This Agreement is a personal contract, and the rights and
interests that the Agreement accords to Laves may not be sold, transferred,
assigned, pledged, encumbered, or hypothecated by him. Except as contemplated
in Section 7(d) above, Laves shall not have any power of anticipation,
alienation or assignment of the payments contemplated by this Agreement, all
rights and benefits of Laves shall be for the sole personal benefit of Laves,
and no other person shall acquire any right, title or interest under this
Agreement by reason of any sale, assignment, transfer, claim or judgment or
bankruptcy proceedings against Laves. Except as so provided, this Agreement
shall inure to the benefit of and be binding upon Laves and his personal
representatives, distributees and legatees.
(b) THE COMPANY. This Agreement shall be binding upon the Company and
inure to the benefit of the Company and of its successors and assigns,
including (but not limited to) any corporation that may acquire all or
substantially all of the Company's assets or business or into or with which the
Company may be consolidated or merged. This Agreement shall continue in full
force and effect in the event that the Company sells all or substantially all
of its assets, merges or consolidates, otherwise combines or affiliates with
another business, dissolves and liquidates, or otherwise sells or disposes of
substantially all of its assets. The Company's obligations under this
Agreement shall cease, however, if the successor to, the purchaser or acquiror
either of the Company or of all or substantially all of its assets, or the
entity with which the Company has affiliated, shall assume in writing the
Company's obligations under this Agreement (and deliver an executed copy of
such assumption to Laves), in which case such successor or purchaser, but not
the Company, shall thereafter be the only party obligated to perform the
obligations that remain to be performed on the part of the Company under this
Agreement.
10. ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the parties concerning Laves's employment with the Company and
supersedes all prior negotiations, discussions, understandings and agreements,
whether written or oral, between Laves and the Company relating to the subject
matter of this Agreement. All prior employment agreements, including the Prior
Agreement, between the Company and Laves shall remain in full force and effect
with respect all matters addressed in such prior employment agreements
occurring on or before the effective date of this Agreement.
11. AMENDMENT OR MODIFICATION, WAIVER. No provision of this Agreement may
be amended or waived unless such amendment or waiver is agreed to in writing
signed by Laves and by a duly authorized officer of the Company other that
Laves. No waiver by any party to this Agreement of any breach by another party
of any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same time, any prior time or any subsequent time.
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12. NOTICES. All notices, demands or other communications of any kind to
be given or delivered under this Agreement shall be in writing and shall be
deemed to have been properly given if (a) delivered by hand, (b) delivered by a
nationally recognized overnight courier service, (c) sent by registered or
certified United States Mail, return receipt requested and first class postage
prepaid, or (d) facsimile transmission followed by a confirmation copy
delivered by a nationally recognized overnight courier service. Such
communications shall be sent to the parties at their respective addresses as
follows:
If to Laves: Xxxxxx Xxxxx
000 Xxxxx Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
If to the Company: Illinois Superconductor Corporation
000 Xxxxxxxx Xxxxx
Xxxxx Xxxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
with a copy to: Xxxxx X. Xxxxxx
Xxxxxxxxx & Xxxxxx
00 X. XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Either party may change such address for delivery to the other party by
delivery of a notice in conformity with the provisions of this section
specifying such change. Notice shall be deemed to have been properly given (i)
on the date of delivery, if delivery is by hand, (ii) three (3) days after the
date of mailing if sent by certified or registered mail, (iii) one (1) day
after date of delivery to the overnight courier if sent by overnight courier,
or (iv) the next business day after the date of transmission by facsimile.
13. SEVERABILITY. If any provision of this Agreement or the application
of any such provision to any party or circumstances shall be determined by any
court of competent jurisdiction to be invalid and unenforceable to any extent,
the remainder of this Agreement or the application of such provision to such
person or circumstances other than those to which it is so determined to be
invalid and unenforceable shall not be affected, and each provision of this
Agreement shall be validated and shall be enforced to the fullest extent
permitted by law. If for any reason any provision of this Agreement containing
restrictions is held to cover an area or to be for a length of time that is
unreasonable or in any other way is construed to be too broad or to any extent
invalid, such provision shall not be determined to be entirely null, void and
of no effect; instead, it is the intention and desire of both the Company and
Laves that, to the extent that the provision is or would be valid or
enforceable under applicable law, any court of competent jurisdiction shall
construe and interpret or reform this Agreement to provide for a restriction
having the maximum enforceable area, time period and such other constraints or
conditions (although not greater than those contained currently contained in
this Agreement) as shall be valid and enforceable under the applicable law.
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14. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
15. HEADINGS. All descriptive headings of sections and paragraphs in this
Agreement are intended solely for convenience of reference, and no provision of
this Agreement is to be construed by reference to the heading of any section or
paragraph.
16. WITHHOLDING TAXES. All salary, benefits, reimbursements and any other
payments to Laves under this Agreement shall be subject to all applicable
payroll and withholding taxes and deductions required by any law, rule or
regulation of and federal, state or local authority.
17. APPLICABLE LAW: JURISDICTION. The laws of the State of Illinois
shall govern the interpretation, validity and performance of the terms of this
Agreement, without reference to rules relating to conflicts of law. Any suit,
action or proceeding against Laves with respect to this Agreement, or any
judgment entered by any court in respect thereof, may be brought in any court
of competent jurisdiction in the State of Illinois, as the Company may elect in
its sole discretion, and Laves hereby submits to the nonexclusive jurisdiction
of such courts for the purpose of any such suit, action, proceeding or
judgment.
18. INTERPRETATION AND CONSTRUCTION. Each of the parties to this
Agreement has been represented by their own counsel, each has reviewed and
approved this Agreement as executed, and neither party shall be charged with
the responsibility of having drafted any provision of this Agreement so as to
cause any rule of strict construction to be applied against such party.
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
ILLINOIS SUPERCONDUCTOR CORPORATION
By: /s/ Xxx X. Xxxxx
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Xxx X. Xxxxx
President
/s/ Xxxxxx X. Xxxxx
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XXXXXX XXXXX
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