EXECUTIVE SEPARATION AND CONSULTING AGREEMENT
This
Executive Separation and Consulting Agreement (the "Agreement") made and entered
into as of the 11th
day of
January 2007, between eMagin Corporation, a Delaware corporation (the
"Company"), and Xxxx Xxxxx (the "Executive").
WITNESSETH:
WHEREAS,
the Company and the Executive entered into an Executive Employment Agreement
effective January 1, 2006 (“Agreement A”) and an Amendment No. 1 to the
Executive Employment Agreement dated April 17, 2006 (“Agreement B”),
cumulatively referred to as the “Employment Agreements”.
WHEREAS,
by mutual agreement with the Company, the Executive will terminate employment
with the Company by the terms of this Agreement that will amend and, to the
extent provided herein, supersede all prior Employment agreements, effective
as
of January 11, 2007 (the “Effective Date”), and provide for the Executive to
remain available as a consultant to advise the Company on M&A and other
matters as long as both the Executive and a majority of the Board of Directors
of the Company agree to continuing the consultancy.
NOW,
THEREFORE, in consideration of and for the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt
of
which is hereby acknowledged, the Executive Employment Agreement is hereby
amended to incorporate terms as follows:
1.
Consideration and Terms of Compensation
The
Company hereby agrees to award the Executive certain payments in exchange for
the Executive’s agreement to terminate his employment with the Company in
accordance with this Agreement, as well as for amounts that are currently owed
to the Executive prior to the termination of employment.. In addition, to better
enable and encourage the Executive to assist the Company as a consultant,
certain post-termination arrangements are provided in this
Agreement.
1.1
Cash
Amounts owed to Executive at time of termination of Employment:
Executive
will be paid the following in cash (or as a confirmation of a credit against
any
withholding taxes owed by the employee) within 4 business days of the Effective
Date: (a) all salary accrued as of the Effective Date plus the equivalent of
30
days of salary; (b) the equivalent of salary for all unused sick, personal
choice holidays, and personal days accrued as of the Effective Date; (c) payment
for accrued vacation equaling 360 hours of vacation time as of the Effective
Date. Any other amounts due the Executive on the Effective Date will also be
paid within 4 days (or as a confirmation of a credit against any withholding
taxes owed by the employee) of the Effective Date.
1.2
Tax
overpayments previously paid by the Executive which have been or will be
refunded directly to the Company, per written notice received from the Company’s
tax accountant, will be paid to the Executive within 4 days of the Effective
Date.
1.3
Stock
paid to Executive at time of termination of Employment
The
Company agrees to grant Executive 500,000 registered shares of common stock
in
eMagin Corporation from the Employee Stock Plan (“the Plan”) or other
unrestricted stock plan. Such shares shall be DWAC-wired to the broker
designated by the Executive on the Effective Date, 11:00AM EST. The Company
will
arrange with the transfer agent to ensure compliance with this delivery
date.
1.4
Executive will be granted a cash payment of $460,000 upon a change of control
event, whether occurring as a result of single or multiple events, such as
sale
of the Company through the sale of stock or equivalent interest representing
a
majority of the Company from the Effective Date, a sale or transfer of all,
or a
majority of the Company’s assets reported by the Company in a SEC filing or
press release, equity or debt financing resulting in an effective change of
control in
one or
more steps
(calculated as if fully converted), or effective change of control by way of
a
sale or transfer of rights to a substantial portion of the future product output
or intellectual property of the Company (e.g., providing another company an
exclusivity for any major markets or providing rights to another company to
produce products using the company’s OLED technology (collectively, a “Change of
Control”). The foregoing Change of Control payment shall be due and payable only
if, and when, such Change of Control of the Company results in the payment
of
the Company’s senior secured debt, when such debt is converted to equity, or
there is a restructuring of the Company where the majority of the debt amounts
due the lenders is agreed to be restructured by the lenders all or in part.
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1.5
In
addition, Executive agrees to reasonably pursue the general type Change of
Control transactions listed in Section 1.4 and to devote reasonable best
efforts, time and attention, unless otherwise mutually agreed by the Executive
and the Chairman of the Board of Directors of the Company, or if there is any
change in direction of the Company away from actively pursuing such a long
term
or short term Change of Control as a primary effort. Any such effort by the
Executive requires reasonable support to the Executive by the Company,
attorneys, and bankers toward the pursuit of such a Change of Control. Moreover,
Executive shall provide the Board of Directors of the Company with weekly
reports describing Executive’s activities during the prior calendar week with
respect to his consulting efforts on behalf of the Company in accordance with
this Agreement.
1.6
Section 16 Filings
The
Company will provide the highest priority and conscientious support in issuing
all shares as specified in this Agreement, with all transfer and registration
costs borne by the Company. Unlimited registration rights are provided for
all
stock granted to the Executive. The Company’s attorneys will, at Company
expense, provide prompt assistance to convert all Executive’s stock to free
trading status and to file the necessary Form 4 paperwork to complete the stock
issuances properly and fully assist the Executive with his Section 16 filing
requirements consistent with the Company’s past practices.
1.7
Withholdings for Taxes:
Taxes
will be withheld and paid in a standard manner for ordinary income in 2007
for
all cash payments made pursuant to this Agreement consistent with the Company’s
past practices. Stock issuance withholdings will be based on a Xxxx Xxxxx report
discount valuation of the market closing bid price as reported by the American
Stock Exchange on the day of issuance to take into account block discount
valuation reduction effects.
1.8
Voluntary Forfeiture of Executive’s Options
Upon
the
execution of this Agreement, Executive agrees to forfeit all of the options
currently held by the Executive in the Company. (Approximately 230,000
options).
2.0
Use of Office and Equipment
The
Executive will retain use of his current Company offices and communications
pathways in both Hopewell Junction, NY and Bellevue, WA, including current
office and communications support, equipment, telephone access,
Company-supported land line or cell phones as has been done previously, and
other Executive support provided at Company expense by the Company, until the
earlier of (i) end of calendar year 2007, (ii) a change of control, or (iii)
when the Executive begins full-time employment elsewhere. The Executive will
furthermore retain use of all mobile and home based electronic and
communications equipment, data, media, and supplies provided by the company
for
use primarily by the employee for up to 28 months from the Effective Date,
provided that Company data is copied for the Company’s use.
3.0
Provisions for Moving Personal Effects
The
Company will provide up to $7,500 for reasonable packing of all of Executive’s
personal effects currently located in New York Company offices or storage space
and shipping such items to up to two locations within the general area of the
Company’s Bellevue Offices, to be specified by the Executive. All personal
effects and files on the premises or in storage will remain confidential to
the
Executive. Travel associated with assisting in the clearing out this space
will
also be a permissible expense to the Company or its acquirer. To the extent
the
foregoing payment is deemed to constitute taxable income to the Executive by
a
tax professional, the Company shall also pay to the Executive the amount of
any
actual federal and State income taxes incurred by the Executive in connection
with this payment.
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4.0
Personal Benefits
Executive
will be provided all insurance benefits as when previously employed through
the
earlier of March 31, 2007, or the Sale of the Company or substantially all
of
the Company’s assets, at Company expense free of any cost or tax to the
Executive. All medical, insurance, and dental benefits will be covered during
this period. Thereafter, Executive will be provided with right to participate
in
full COBRA (or equivalent) Company insurance plans.
5.0
No
Arbitration; Time is of the Essence
5.1
This
Agreement is hereby agreed to and is not subject to arbitration to negotiate
the
stated terms or validity. The Company agrees that payment of all cash due to
the
Executive and payment of stock in DWAC or DTC form will be made on the dates
designated elsewhere in this Agreement, or within 2 days of the Effective Date,
whichever is later.
Time
is of the essence
for all
payments due within 10 business days of the Effective Date (namely, payments
due
under section 1.0) and no arbitration or legal issues shall in any way be
permitted to delay these required payments. Financial compensation alone would
not be sufficient compensation for breach of the Company’s duty to make these
payments.
Additionally,
a 12% initial penalty on the 1st late business day a payment is late plus an
interest rate equal to the maximum fee and penalty limits of Washington State
law plus any other losses incurred by the Executive due to the delayed payments
due within 10 business days of the Effective Date. These fees and penalties
would apply to the entire value of any delayed cash or stock payments due within
10 business days of the Effective Date, with the stock pricing value being
the
most recent AMEX closing price as of the date of this agreement or the date
of
each late assessment, whichever is higher based on the most recent quoted
closing price of the Company’s common stock quoted by the American Stock
Exchange or whatever exchange or quotation system the Company’s common stock may
then be listed or quoted on.
All
late
fees and penalties, including all costs of collection and legal costs, arising
from non-payment of the amounts due (either by direct payment or by way of
credit against the Executive’s liabilities at the time of the termination of
Executive’s employment, will be paid in cash immediately when due and any late
fees or penalties will accrue the same fees and penalties as other late payments
in this Agreement.
6.0
Non-Competition and Non-Solicitation
6.1
The
following modification replaces and supersedes Section 4.1 of Agreement A.
The
Executive hereby agrees that for a period of one year following the Effective
Date, the Executive will not, without the prior written consent of the Company,
have any direct interest in any person, firm, corporation or business competing
with the Company in the Covered Area. For purposes of this Section 6.1
(i)“Competing Business” means any company engaging directly in the manufacturing
of OLED on single crystal silicon microdisplays. For purposes of this Section
7.1 (ii) “Covered Area” means all geographical areas of the United States, and
other foreign jurisdictions where the Company has offices or manufactures OLED
microdisplays. The Executive will not be restricted in participating in
businesses that may purchase, utilize, design products, sell or resell any
types
of displays or related products, nor will the Executive be restricted in any
technology areas other than directly in OLED microdisplay manufacturing. The
Executive will also not be restricted in investing in or managing investments
in
any display, lighting, or imaging companies of any kind. Furthermore, for a
period of one (1) year following the Effective Date, Executive will not,
directly solicit for employment any officer, director or senior level employee
of the Company except that Executive shall not be precluded from hiring (i)
any
such employee who has been terminated by the Company or the employee prior
to
commencement of employment discussions between Executive and such employee,
(ii)
any such employee who contacts Executive on his or her own initiative without
any direct or indirect solicitation by or encouragement from Executive or (ii)
any such employee that responds to a general advertisement and other similar
broad forms of solicitation (including solicitations by a recruiting firm hired
by Executive).
7.0
Release by the Executive
In
consideration for the promises and undertakings of the Company under this
Agreement, the Executive hereby unconditionally releases and forever discharges
the Company from any and all claims, demands, causes of action, suits, damages,
remedies, obligations, debts and liabilities whatsoever, whether known or
unknown, suspected or unsuspected, both at law and in equity, except for any
claim which arises out of or is in any way related to this Agreement, which
the
Executive now has, has ever had or may hereafter have against the Company
arising contemporaneously with or prior to the Effective Date or on account
of
or arising out of any matter, cause or event occurring contemporaneously with
or
prior to the Effective Date.
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8.0
Publicity
The
Company and Executive agree that all publicity or other public statements
related to Executive will be mutually approved by both the Executive and the
Chairman of the Board of the Company prior to issuance; provided, however,
that
the Company shall be entitled to make all public statements and disclosures
it
reasonably determines is necessary to comply with all applicable
laws.
9.
Other Provisions
9.1
The
parties acknowledge that while the Executive will be acting following the
termination of his employment as a consultant to the Company, he will serve
as
an independent advisor and not in any other capacity including as a fiduciary,
except to the extent of fiduciary duties arising from the Executive’s duties (if
any) as a Director of the Company. Neither this Agreement nor the delivery
of
any advice in connection with this engagement is intended to confer rights
upon
any persons not a party hereto (including security holders, employees or
creditors of the Company) as against the Executive or the Company. The Company
agrees to indemnify the Executive against any claims related to the Company
and
the Company’s actions, other
than claims of gross negligence or willful misconduct specifically by the
Executive.
10.
Entire Agreement and Other Provisions
This
is
the entire agreement, this Agreement supersedes all prior agreements related
to
this matter, and this Agreement may only be formally modified when a
modification is duly executed by the Executive, and the Board of Directors
of
the Company, or such employees, agents or representatives that the Board shall
have appointed to make such modifications. The parties hereby acknowledge and
agree that the Confidential Information and Invention Assignment Agreement
executed by the Executive in favor of the Company shall remain in full force
and
effect after the Effective Date for one year.
This
Agreement is governed by the laws of the Washington, U.S.A. without regard
to
conflicts of law principles. The Company and the Executive agree to waive trial
by jury in any action, proceeding or counterclaim brought by or on behalf of
either party with respect to any matter whatsoever relating to or arising out
of
any actual or proposed transaction or the engagement of or performance by the
Executive hereunder. With respect to all matters relating to this Agreement,
the
Company hereby irrevocably (a) submits to the non-exclusive jurisdiction of
any
Washington State or Federal Court sitting in the State of Washington, County
of
King, U.S.A.; (b) agrees that all claims related hereto may be heard and
determined in such courts; (c) waives the defense of an inconvenient forum;
(d)
agrees that a final judgment of such courts shall be conclusive and may be
enforced in another jurisdiction by suit on the judgment or in any other manner
provided by law; and (e) waives any immunity (sovereign or otherwise) from
jurisdiction of any court or from any legal process that it or its properties
or
assets has or may acquire.
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This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original and all of which taken together shall constitute a single
agreement. The Agreement may be deemed as executed upon receipt of email
affirmation, to be followed by execution of physically signed documents within
five (5) business days.
IN
WITNESS WHEREOF, the
parties hereto have executed this agreement as of the date first stated
above.
“EXECUTIVE”
By
/s/
Xxxx
Xxxxx
Xxxx
Xxxxx
“COMPANY”
eMagin
Corporation
By
/s/
Xxxxxx Xxxxxxx
Xxxxxx
Xxxxxxx
Chairman
of the Board and Chairman of the Compensation Committee
By
/s/
Xxxx
Xxxxxxx
Xxxx
Xxxxxxx
Compensation
Committee
By
/s/
Xxxxx
Xxxxxxxxx
Xxxxx
Xxxxxxxxx
Compensation
Committee
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