1
PATRIOT SCIENTIFIC CORPORATION
EXHIBIT 10.9
Employment Agreement dated November 20, 1995 between the Company and
Xxxxxx X. Xxxxxx
2
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of the 20th day of November, 1995, between
PATRIOT SCIENTIFIC CORPORATION, a Delaware publicly traded corporation (the
"Company"), and Xxxxxx X. Xxxxxx ("Employee").
Employee, in consideration of the covenants and agreements hereinafter
contained, agrees as follows with respect to the employment of the Company of
Employee and Employees future business activities.
1. Employment: Term of Employment. The Company hereby employs Employee and
Employee hereby accepts such employment upon the terms and conditions
hereinafter set forth. Subject to the provisions for termination as hereinafter
provided, Employee's term of employment by the Company shall be from the date of
this agreement until November 19, 1998, and said employment shall continue after
such date until either party shall deliver written notice to the other party
hereto to the effect that the employment hereunder shall terminate thirty (30)
days from the giving of such notice. This Agreement will supersede all prior
written and oral agreements entered into by and between Company and Employee.
2. Services to be Rendered by Employee. Employee shall be subject to the
direction of the Board of Directors, or a duly authorized committee thereof and
his duties shall be those generally vested in the office of Chairman and Chief
Technology Officer for the corporation and he shall have such other powers and
duties as may be reasonably prescribed by the Board of Directors, or a duly
authorized committee thereof, and shall perform such duties as from time to time
may be decided upon by the Board of Directors, or a duly authorized committee
thereof, of the Company, including but not limited to, speaking for and
promoting the sale of the Company's product lines as public spokesman both in
print and television ads. The Board of Directors has previously appointed
Employee President and CEO until the Board of Directors appoints a full-time
successor. Employee shall devote a sufficient amount of his productive time,
energy and ability during the term of this Agreement to the proper and efficient
conduct of the Company's business during the term of this Agreement however the
Employee shall be only required to devote part time and attention to the
Company's business as heretofore provided but in any event not to exceed the
average hours previously provided unless otherwise agreed by the parties.
Employee shall at all times faithfully, industriously, and to the best of his
ability, experience and talent, perform the duties that may be reasonably
required to the reasonable satisfaction of the Board of Directors. Such duties
shall be rendered at such times and at such places as the Employee shall in good
faith determine is in the interest, needs, business, and opportunities of the
Company with periodic input and direction and consultation from the Board of
Directors.
As is the present case, Employee may from time to time work for other persons or
entities in any capacity, including but not limited to an officer, director,
employee or consultant, and conduct other business activities so long as such
work or activities do not adversely and directly impact on his duties and
obligations to the Company as has been reasonably performed in the past. The
Company acknowledges that Employee is an officer and director of Xxxxxx
Communications Corp. and American Technology Corporation and has duties thereto.
3. Compensation.
(a) For the services to be rendered by Employee during his employment by the
Company, the Company shall pay Employee a yearly original Base Salary of sixty
thousand dollars ($60,000.00); and thereafter the yearly Base Salary shall
increase by five percent (5%) on each annual Company fiscal anniversary date,
commencing June 1, 1996, from the yearly Base Salary for the immediately
preceding fiscal period. At such time as the Board of Directors appoints a
successor President and CEO the original Base Salary shall be adjusted to forty
two thousand dollars ($42,000), adjusting for any 5% increases on this original
Base Salary to the time of adjustment. The Base Salary shall be payable in equal
installments at such times as other employees are paid but in any case at least
in monthly installments. The Base Salary shall be subject to other upward
adjustment by and under the direction of the Board of Directors in its sole
discretion.
(b) Employee shall be entitled to participate in any bonus pool or similar
program established by the Board of Directors.
(c) Employee shall be entitled to participate in group life, medical, disability
and other plans or benefits, if any, maintained by the Company for its executive
employees. During the term of this Agreement, the Employee shall be entitled to
four weeks vacation per annum.
(d) The Company shall pay or reimburse Employee for all expenses normal
reimbursed by the Company and reasonably incurred by him in furtherance of his
duties hereunder and authorized by the Company, including without limitation,
expenses for entertainment, traveling, meals, hotel accommodations and the like
upon submission by him of vouchers or an itemized list thereof as the Board of
Directors; may from time to time adopt and authorize, and as say be required in
order to permit such payments as proper deductions to the Company under the
Internal Revenue Code of 1986 and the rules and regulations adopted pursuant
thereto now or hereafter in effect.
4. Competition. While employed by the Company and for one (1) year thereafter,
Employee will neither permit his name to be used by, nor engage in or carry on,
directly or indirectly, either for himself or as a member of a partnership, or
as a stockholder (except as a stockholder of less than one percent (1%) of the
issued and outstanding stock of a publicly held
1
3
corporation), investor, officer or director of a corporation or as an Employee,
agent, associate or consultant of any person, partnership or corporation in any
business in direct competition with any business carried on by the Company or a
parent, subsidiary, affiliate or successor of the Company.
5. Termination of Employment.
(a) The Company shall have the right at its option to terminate the employment
of Employee hereunder by giving written notice thereof to the Employee in the
event of any of the following:
(1) If the Board of Directors of the Company, or a duly authorized
committee thereof, acting in good faith and upon reasonable grounds,
determines that the Employee has materially breached any provision of
this Agreement or has committed dishonesty, fraud or embezzlement, or
engaged in material misconduct or similar conduct in connection with
his duties under this Agreement.
(2) If the Company gives Employee thirty days advance written notice of
termination of employment.
(3) If the Employee dies (in which case except as otherwise provided
herein, this Agreement shall automatically terminate).
(4) If the Employee is unable for any reason to carry out or to perform
the duties required of him hereunder and does not resume his duties
prior to the termination date specified in the Company's written notice
of termination; provided, however, if the Employee shall fail to carry
out or to perform the duties required of him because of mental or
physical disability for a six consecutive month period during the term
hereof and following such period he is unable to perform his duties
hereunder because of mental or physical disability, as determined by
the Board of Directors of the Company, or a duly authorized committee
thereof, acting in good faith and upon reasonable grounds, or if this
Agreement is terminated because of the Employee's death he or his
estate shall be entitle to receive his then Base Salary he would
otherwise be entitled to hereunder during the term of this Agreement
pursuant to Paragraph 3 hereof for a period of not longer than twelve
(12) months after the termination of his employment pursuant to this
Paragraph 5(a) (4) or for a period not longer than twelve (12) months
after such death.
(5) If this Agreement is terminated by the Company and the Employee's
employment is terminated by the Company pursuant to Paragraph 5(a)(2)
hereof, then Employee shall be entitled to severance payments equal to
twenty four (24) months of his then monthly Base Salary payable in one
lump sum within thirty (30) days after such effective termination of
Employee's employment by the Company irrespective of the remaining term
of this agreement.
(b) The Employee shall have the right at his sole option to terminate employment
hereunder under the following conditions:
(1) at any time upon thirty (30) days written notice.
(2) upon written notice by Employee to the Company within thirty (30)
days of and indicating that a change in control of the Company has
occurred and therefore Employee elects to terminate as provided herein.
A change in control of the Company shall mean a change in control of a
nature that would be required to be reported in response to Item 5(f)
of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); provided that ,
without limitation, such a change in control shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 25% or more of the combined
voting power of the Company's then outstanding securities; or (ii)
during any period of two (2) consecutive years from the date of this
Agreement, individuals who at the beginning of such period constitute
the Board of Directors of the Company cease for any reason to
constitute at least a majority thereof unless the election, or the
nomination for election by the Company's stockholders, of each new
director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period.
(3) if termination by the Employee is pursuant to 5 (b) (1) then no
severance or termination payments shall be payable. If termination is
noticed pursuant to 5 (b) (2) hereof then Employee shall be entitled to
the same payments in the same manner provided in 5 (a) (5) described
above. In addition, the Employee shall be entitled to recover legal
fees and costs incurred by Employee should the Company not make timely
payment prescribed by this section and should the Employee prevail in
any action filed thereabout.
6. Soliciting Customers. The Employee agrees that he will not for a period of
one (1) year immediately following the termination of his employment with the
Company, either directly or indirectly make known to any competing person, firm,
or corporation the names or addresses of any of the customers of the Company or
any other information pertaining to them.
2
4
7. Trade Secrets of the Company. The Employee prior to and during the term of
employment under this Agreement has had and will have access to and become
acquainted with various trade secrets, consisting of devices, secret inventions,
processes, and compilations of information, records, and specifications which
are owned by the Company, and which are regularly used or to be used in the
operation of the business of the Company. The Employee shall not disclose any of
the aforesaid trade secrets, directly or indirectly, or use them in any way,
either during the term of this agreement or at any time thereafter, except as
required in the course of his employment. All files, records, documents,
drawings, specifications, equipment, and similar items relating to the business
of the Company, whether prepared by the Employee or otherwise coming into his
possession, shall remain the exclusive property of the Company and shall not be
removed under any circumstances from the premises of the Company where the work
is being carried on without prior written consent of the Company or consistent
with the Company's normal business practices.
8. Inventions and Patents. The Employee agrees that as to any inventions made by
him during the term of his employment, solely or jointly with others, which are
made using trade secret information of the Company or which relate at the time
of the conception or reduction-to-practice of an invention to the business of
the Company (which shall be limited to ISDN interface products, antenna and
radar technologies and embedded microprocessor technology as currently practiced
by the Company) or the Company's actual or demonstrably anticipated research or
development as promulgated by the Board of Directors prior to any invention
thereof, or which result from any work performed by the Employee directly for
the Company at the Board of Directors direction, shall belong to the Company and
the Employee promises to assign such inventions to the Company. The Employee
also agrees that the Company shall have the right to keep such inventions as
trade secrets, if the Company chooses. The Employee agrees to assign to the
Company the Employee's rights in any such inventions where the Company is
required to grant those rights to the United States government or any agency
thereof. This Agreement does not apply to any inventions which are the subject
of Section 2870 of the California Labor Code.
The Employee shall assist the Company in obtaining such patents on all
inventions described above, and designs, improvements, and discoveries deemed
patentable by the Company in the United States and in all foreign countries, and
shall execute all documents and do all things necessary to obtain letters
patent, to vest the Company with full and extensive title thereto, and to
protect the same against infringement by others.
Employee has been an inventor for more than 30 years for his own account and for
a variety of entities. Nothing in this Agreement is intended to restrict
Employees outside activities as an inventor other than as prescribed in this
section. Accordingly, unless an invention made by Employee relates to ISDN
interface products, antenna and radar technologies or embedded microprocessor
technology, the presumption shall be that any such invention is not owned by the
Company without the written consent of Employee and the burden of proofing the
invention is owned by the Company shall be that of the Company.
9. Severability. Each paragraph and subparagraph of this Agreement shall be
construed and considered separate and severable from the validity and
enforceability of any other provision contained in this Agreement.
10. Assignment. The rights of the Company (but not its obligations) under this
Agreement may, without the consent of the Employee, be assigned by the Company
to any parent, subsidiary, or successor of the Company; provided that such
parent, subsidiary or successor acknowledges in writing that it is also bound by
the terms and obligations of this Agreement. Except as provided in the preceding
sentence, the Company may not assign all or any of its rights, duties or
obligations hereunder without prior written consent of Employee. The Employee
may not assign all or any of his rights, duties or obligations hereunder without
the prior written consent of the Company.
11. Notices. All notices, requests, demands and other communications shall be in
writing and shall be defined to have been duly given if delivered or if mailed
by registered mail, postage prepaid:
(a) If to Employee, addressed to him at the following address as may be changed
in writing from time to time:
Xxxxxx X. Xxxxxx
00000 Xxx Xxxxxxxxx Xxx
Xxxxx, Xxxxxxxxxx 00000
(b) If to the Company, addressed to:
Patriot Scientific Corporation
00000 Xxxxxxxxxxxx Xxxxx, #000
Xxxxx, Xxxxxxxxxx 00000
or to such other address as any party hereto may request by notice given as
aforesaid to the other parties hereto.
12, Title and Headings. Titles and headings to paragraphs hereof are for
purposes of references only and shall in no way limit, define or otherwise
affect the provisions hereof.
13. Governing Law. This Agreement is being executed and delivered and is
intended to be performed in the State of California, and shall be governed by
and construed in accordance with the laws of the State of California.
3
5
14. Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It shall not be necessary
in making proof of this Agreement to produce or account for more than one
original counterpart.
15. Cumulative Rights. Each and all of the various rights, powers and remedies
of the Company in this Agreement shall be considered as cumulative, with and in
addition to any other rights, powers or remedies of the Company and no one of
them as exclusive of the others or as exclusive of any other rights, powers and
remedies allowed by law. The exercise or partial exercise of any right, power or
remedy shall neither constitute the election thereof nor the waiver of any other
right, power or remedy. Sections 4, 6, 7 and 8 hereof shall continue in full
force and effect notwithstanding the Employee's termination of employment and
the termination of this Agreement.
16. Entire Agreement. This Agreement contains the entire agreement of the
parties hereto and may be modified or amended only by a written instrument
executed by parties hereto. Effective on the date hereof, any prior employment
agreements between the Company and the Employee shall terminate.
17. Good Faith. Each of the parties hereto agrees that he or it shall act in
good faith in all actions taken under this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
XXXXXX XXXXXX November 20, 1995
--------------------------- -----------------
Xxxxxx Xxxxxx, Secretary Date
XXXXXX X. XXXXXX November 20, 1995
--------------------------- -----------------
Xxxxxx X. Xxxxxx, Employee Date
4
