EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Agreement, made this May 2, 2005 by and between Advanced Photonix,
Inc. a Delaware corporation (hereinafter called the "Company"), and Xxxxx
Xxxxxx, an individual (hereinafter called "Employee").
RECITALS:
1. The Company develops, manufactures and distributes III-V photodiodes
and III-V based photo detectors and terahertz instrumentation through its
Picometrix operating division (the "Picometrix Business Unit"); and
2. The Company wishes to employ Employee and utilize his professional
experience, ability, services background and know-how; and
3. 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 covenants and conditions set
forth in this Agreement and for other good and valuable consideration, which has
been received and which is sufficient, the parties agree to the following terms:
A. EMPLOYMENT TERM. Subject to the terms and conditions contained in
this Agreement, the Company employs Employee, and Employee agrees to be employed
by the Company, for a three (3) year period from the date of this Agreement
unless this Agreement is terminated in accordance with Section L (the
"Employment Term").
B. DUTIES. Employee's position with the Company will be General Manager
("GM") of Picometrix Business Unit, reporting directly to the Chief Executive
Officer of the Company. As such, Employee will initially be primarily
responsible for running the day-to-day operations of the Picometrix Business
Unit, including P&L responsibility. As GM, Employee will have the responsibility
for integrating the Picometrix Business Unit's financial reporting into the
Company's corporate structure. Employee shall additionally assist the Company's
VP of Sales and Marketing in ensuring an orderly transfer of the existing
Picometrix customers and potential customers. Effective as of the Company's 2005
Annual Shareholders Meeting currently scheduled for August of such year, the
Company shall cause its Board of Directors to appoint Employee as its Chief
Financial Officer of the Company, reporting directly to the Chief Executive
Officer of the Company. In such capacity, Employee shall have such other
authority and responsibilities as the Chief Executive Officer and the Board of
Directors of the Company reasonably may determine from time to time consistent
with such role, including conducting investor relations and oversight merger and
acquisitions activities of the Company, and shall have such other authority and
responsibilities as the Chief Executive Officer and the Board of Directors of
the Company reasonably may determine from time to time. Employee shall
additionally work with the President of the Company as directed by the Chief
Executive Officer.
C. ELECTION TO THE BOARD OF DIRECTORS. The Company shall use its
reasonable best
efforts to cause Employee to be elected to the Company Board of Directors as
soon as reasonably practicable after the date hereof; provided, however, that in
any event, the Company shall cause Employee to be designated as one of the
Company's nominees for election as director at the Company's annual meeting held
in 2005.
D. TIME AND EFFORTS. 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 interest
of the Company. Notwithstanding the foregoing, Employee shall be permitted to
maintain memberships on the Boards of Directors of other organizations
identified to the Company in writing, provided that such activities shall not,
at any time, (i) conflict with Employee's responsibilities hereunder or (ii)
preclude the Company or any Subsidiary (as defined below) of the Company, from
obtaining contracts from any such company or organization. For the purposes of
this Agreement, any corporation with respect to which the 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".
E. COMPENSATION AND BENEFITS. Upon execution of this Agreement, the
Company shall pay Employee a "signing bonus" of $30,000. For the services
rendered by Employee to the Company, Employee shall receive a base salary at a
rate of $185,000 per year ("Base Salary"), payable in reasonable installments in
accordance with the Company's regular payroll practices in effect from time to
time and subject to required withholding for taxes. Employee's Base Salary shall
not be subject to decrease during the Employment Term, but is subject to merit
increases as determined by the Compensation Committee of the Corporation's Board
of Directors. In addition to the Base Salary, Employee shall be entitled to a
bonus based on the "Bonus Matrix" for the Company approved by the Company's
Board of Directors and to which the other senior executive officers of the
Company are subject. Employee will be entitled to four (4) weeks of paid
vacation and up to paid sick days each calendar year during the Employment Term
(pro rated for any partial year). In the event of separation of Employee from
the Company, all accrued vacation shall be paid at the then pro-rata hourly base
rate of Employee in accordance with the Company's regular procedures and
practices in effect from time to time. Employee will be entitled to participate
in the group medical insurance and all other fringe benefit plans generally
provided to employees within the Company in accordance with and subject to the
terms of such plans and to other senior executive employees of the Company;
provided, however, that the Company shall pay the premiums necessary to continue
to pay the premiums on the identical individual disability policy, that Employee
had from Picometrix, Inc. prior to the closing contemplated by the Stock
Purchase Agreement, both of which shall be in addition to any group disability
and life insurance provided by the Company to all or any portion of its
employees.
F. EXPENSES. The Company will reimburse Employee for all reasonable
expense incurred by Employee in connection with the performance of Employee's
duties hereunder, upon receipt of appropriate documentation and in accordance
with the Company's regular reimbursement procedures and practices in effect from
time to time.
G. DEATH. If Employee dies, all payments hereunder shall cease as of
the date on which Employee's death occurs and the Company shall have no further
obligations or liabilities
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hereunder to Employee's estate or legal representative or otherwise, provided,
however, that any salary, commission or benefits accrued but unpaid as of the
date of termination shall be paid to Employee's estate or legal representative
or otherwise.
H. CONFIDENTIALITY. Employee knows that the Company has in its
possession business information which is confidential. During Employee's
employment with the Company and after termination of Employee's employment,
Employee will hold in confidence and will not use or reveal, divulge or make
known to any person, company or any other third party, any Proprietary
Information. "Proprietary Information" is any and all information or data,
whether in writing, or learned by Employee orally, by observation or other
sensory detection, relating to any product, product design, service, research,
development, formula, process, method of distribution or delivery, know-how,
trade secret, customer list, contract term, customer pricing, supplier list or
price, business strategy, compensation, plan or practice, operating records,
software, technology, sales data, information or other records, list or
documents used by the Company in operating any of its businesses or otherwise
except (i) information which at the time of disclosure is in the public domain;
(ii) information which, after disclosure, becomes part of the public domain by
publication or otherwise except by breach of this Agreement by Employee; (iii)
information which Employee can establish by competent proof was in his
possession at the time of disclosure by the Company or Picometrix and was not
acquired directly or indirectly, from the Company and such proof is presented
promptly after the Company's disclosure to him; (iv) information which Employee
receives from a third party, provided however, that such information was not
obtained by said third party, directly or indirectly, from the Company; and (v)
information which is required by law to be disclosed. The Proprietary
Information and all other information relating to the Company belong to and will
remain the property of the Company. All Proprietary Information, other
information and property of the Company must be returned to the Company by
Employee upon termination of Employee's employment, however, if Employee is
required to perform any service for the Company after Employee's employment with
the Company is terminated, then Employee shall be entitled to be compensated for
his services at a rate to be mutually agreed by the parties hereto. For purposes
of this Section H and Sections I and J hereof, the term "Company" shall mean
Advanced Photonix, Inc. and all of its subsidiaries.
I. DISCOVERIES AND WORKS. Any and all writings, inventions,
improvements, process and/or techniques ("Discoveries and Works") 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 the Company Employee
shall make full disclosure to the Company of all such writings, inventions,
improvements, process, procedures and techniques, and shall do everything
necessary or desirable to vest the absolute title thereto in the Company.
Employee shall write and prepare all specifications and procedures regarding
such inventions, improvements, process, procedures and techniques, and otherwise
aid and assist the 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
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desire to have a copyright or patent protection. Employee shall not be entitled
to any additional or special compensation or reimbursement regarding any and all
such inventions, improvements, process, procedures and techniques.
J. NON-SOLICITATION AND NON-COMPETITION. The services of Employee will
be unique and extraordinary and essential to the business of the Company,
especially since Employee shall have access to the Company's customer lists,
trade secrets and other privileged and confidential information essential to the
Company's business. Employee therefore agrees that he will not, while he is an
employee of the Company and for a period of one (1) year thereafter, directly or
indirectly solicit, induce, encourage or attempt to influence any employee,
client, customer, salesman or supplier of the Company to cease to do business
with or to terminate his employment with the Company, and shall not utilize for
any such purposes any names and addresses of customers or clients of the 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 the Company.
Employee further agrees that while he is an employee of the Company, and for a
period of six (6) months thereafter, he will not, without the prior written
approval of the Company, directly or indirectly, within the United States of
America, or any other area in which the Company shall then conduct substantial
operations, whether as an owner, partner, member, employee, officer, director or
stockholder (other than as the owner of less than 5% of the stock of a
corporation registered under the Securities Exchange Act of 1934, as amended),
or in any other capacity, engage in any business activity competitive with the
business of the Company, which is the development, manufacture and distribution
of custom optoelectronic assemblies. Nothing herein shall limit Employee's
obligations under the non-competition and non-solicitation covenants of the
Purchase Agreement.
K. INJUNCTIVE RELIEF. Employee acknowledges that the restrictions
contained herein are reasonable and necessary in order to protect the legitimate
interest of the Company, and that any violation thereof would result in
irreparable injuries to the Company, and Employee therefore acknowledges that,
in the event of his violation of any of these restrictions, the Company shall be
entitled to seek from any court of competent jurisdiction preliminary and
permanent injunctive relief, without the necessity of posting bonds, 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 the Company may be entitled.
L. TERMINATION. This Agreement may be terminated by the Company; (i)
for Cause (as defined below) upon written notice given to Employee; or (ii)
immediately and without notice upon Employee's death or Disability (as defined
below). Employee may resign Employee's employment for Good Reason (as defined
below) so long as Employee tenders Employee's resignation to Company within
sixty (60) days after the occurrence of the event or after Employee first learns
of the event which forms the basis for Employee's termination for Good Reason
(whichever last occurs), citing with specificity such basis.
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As used herein:
"Cause" means (i) Employee being convicted for a felony (or its
equivalent) or fraud; (ii) a material breach by Employee in performing the
duties described in this Agreement which is not cured by Employee within twenty
(20) business days after the Company gives Employee written notice of the
specific breach alleged; or (iii) gross malfeasance, willful misconduct, or
dishonesty in performance of Employee's duties hereunder.
Disability" with respect to Employee shall be deemed to have occurred
when Employee cannot act as contemplated by this Agreement because Employee is
unable to engage in any substantial gainful activity on behalf of Company by
reason of any medically verifiable physical or mental impairment for a minimum
of six (6) consecutive months.
"Good Reason" means (i) any reduction in the amount of Employee's Base
Salary, (ii) unilateral and substantial change in Employee's title and duties;
provided, however, that the unilateral change by the surviving or acquiring
entity (or its parent) in Employee's title and duties to a position that is
comparable in salary, title and responsibilities with respect to the acquired or
surviving entity or a division or unit thereof created out of Company or its
assets (whether it becomes a subsidiary, unit or division) to Employee's current
position shall not constitute "Good Reason", (iii) relocation of Employee's work
site more than twenty-five (25) miles from current Ann Arbor, Michigan residence
without Employee's consent, (iv) any material breach by Company of its
obligations under this Agreement that is not remedied by Company within twenty
(20) days of written notice of such breach from Employee, or (v) Company
requires Employee as a condition of employment to perform any illegal act or any
act that is inconsistent with accepted standards of ethical and professional
behavior.
If Employee's employment is terminated by the Company for Cause, the
Company's obligations under this Agreement will terminate and the Company will
have no obligations to make any additional payments of any kind, including,
without limitation, unpaid commission, provided, however, that the Company shall
pay Employee any accrued and unpaid salary through the date of termination. If
the Company terminates Employee for other than Cause or Employee terminates his
employment for Good Reason, the Company shall pay Employee a lump sum severance
equal to his Base Pay for the remainder of the then remaining Employment Term
and incur such costs as are necessary to continue all benefits (including,
without limitation, the benefits specified in Section E hereof) paid to on
behalf of Employee for such remainder, but in no event for purposes of
Employee's then-effective Base Salary and such benefits for less than, plus, in
any case, accrued but unused vacation and sick days, provided that Employee and
Company shall have executed a reciprocal release in such form as may be
reasonably required by the Company and acceptable to Employee.
M. VALIDITY. If any provision contained in this Agreement, or the
application of any provision, is held invalid or unenforceable by a court of
competent jurisdiction, that provision will be deemed to be modified in a manner
to make it consistent with the intent of the original provision, so that as
revised, the provision will be valid and enforceable, and this Agreement, and
the application of the provision to persons or circumstances other than those
for which it would be invalid or unenforceable, will not be affected by the
revision.
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N. BINDING NATURE OF AGREEMENT. This Agreement shall be binding upon
and inure to the benefit of the Company and its successors and assigns and shall
be binding upon Employee, his heirs and legal representatives.
O. ENTIRE AGREEMENT. Except as otherwise indicated herein, this
Agreement supersedes all previous agreements between Employee and the Company,
contains the entire understanding and agreement between the parties regarding
Employee's employment with the Company. This Agreement cannot be amended,
modified or supplemented in any respect except by subsequent written agreement
signed by both the Company and Employee.
P. SURVIVAL. The provisions of Sections H and J shall survive the
expiration or earlier termination of this Agreement, provided, however, that if
Employee is terminated prior to the expiration of this Agreement for reasons
other than cause, then the obligations and duties owed to the Company by
Employee pursuant to Section J of this Agreement shall also terminate.
Q. 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.
R. NOTICES. All notices, request, demands and other communication
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given, made and received if they are in writing and
delivered by hand or sent by facsimile and confirmed, or sent by first class
U.S. mail or nationally recognized overnight delivery service. Notice shall be
deemed effective on the date given if delivered by hand or sent by facsimile (if
transmitted before 5 p.m. PST), one day after being sent if sent by overnight
delivery service, and three days after being sent if mailed by first class U.S.
mail. Addresses for such parties are as set forth below:
If to Employee:
Xx. Xxxxx Xxxxxx
0000 Xxxxxxxxxx Xx.
Xxx Xxxxx, XX 00000
If to the Company:
Advanced Photonix, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx, CEO
Fax: (000) 000-0000
With a copy to:
Dornbush Xxxxxxxxx Xxxxxxxx & Xxxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx, Esq.
Fax: (000) 000-0000
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S. GOVERNING LAW AND ATTORNEYS' FEES. This Agreement shall be governed
by, and construed in accordance with, the domestic laws of the State of Michigan
without reference to the conflicts of laws provisions thereof.
T. PARTIES IN INTEREST. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision given any third persons any right of
subrogation or action over or against any party to this Agreement.
U. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts together
shall constitute one and the same instrument.
V. WAIVER AND AMENDMENT. The parties may be written instrument extend
the time for the performance of any of the obligations or other acts of the
other hereunder and may waive (i) any inaccuracies of the other in the
representations or warranties contained in this Agreement or in any document
delivered pursuant hereto, (ii) compliance with any of the covenants,
undertakings or agreements of the other, or satisfaction of any of the
conditions to its or their obligations, contained in this Agreement, or (iii)
the performance (including performance to the satisfaction of a party or its
counsel) by the other of any of its or their obligations set our herein. Any
waiver, amendment or supplement hereof shall be in writing.
W. CONSTRUCTION. Words and phrases defined in the plural shall also be
used in the singular and vice versa and be construed in the plural or singular
as appropriate and apparent in the context used. Unless otherwise specifically
provided herein, accounting terms shall be given and assigned their usual
meaning and effect as defined.
[SIGNATURES ON FOLLOWING PAGE]
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ADVANCED PHOTONIX, INC.
By: /s/ XXXXXXX X. XXXXX
--------------------------------
Xxxxxxx X. Xxxxx, Chief Executive
Officer
/s/ XXXXX X. XXXXXX
------------------------------------
XXXXX X. XXXXXX
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