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EXHIBIT 10.73
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is dated as of December 1, 2000, by and
between EDAC TECHNOLOGIES CORPORATION, a Wisconsin corporation ("Edac"), and
Xxxxxxx X. Xxxxxxxxx ("Xx. Xxxxxxxxx").
RECITAL
Edac desires to employ Xx. Xxxxxxxxx and Xx. Xxxxxxxxx is willing to
make his services available to Edac on the terms and conditions set forth below.
AGREEMENTS
In consideration of the premises and the mutual agreements which
follow, the parties agree as follows:
1. Employment. Edac hereby employs Xx. Xxxxxxxxx and Xx. Xxxxxxxxx
hereby accepts employment with Edac on the terms and conditions set forth in
this Agreement.
2. Term. The initial term of Xx. Xxxxxxxxx'x employment hereunder shall
commence on the date hereof and continue for a period of one year, subject to
earlier termination as set forth in this Agreement. The term of Xx. Xxxxxxxxx'x
employment will automatically be extended one year on each anniversary of the
date of this Agreement unless either party notifies the other in writing to the
contrary at least 45 days prior to any such anniversary. The term of employment
is referred to in this Agreement as the "Employment Term."
3. Duties. Xx. Xxxxxxxxx shall serve as the President and Chief
Executive Officer of Edac and will, under the direction of the Board of
Directors (the "Board"), faithfully and to the best of his ability, perform the
duties of such positions as determined by the Board from time to time. As the
President and Chief Executive Officer, Xx. Xxxxxxxxx shall be responsible for
managing the business and affairs of Edac in a professional manner with the
primary objective of enhancing shareholder value and ensuring that Edac's
customers, employees and suppliers are treated in a manner consistent with
Edac's Corporate Mission Statement. Without limiting the generality of the
foregoing, Xx. Xxxxxxxxx shall supervise the operations of Edac and perform
those duties normally associated with the offices of President and Chief
Executive Officer. Xx. Xxxxxxxxx shall also perform such additional duties and
responsibilities which may from time to time be reasonably assigned or delegated
by the Board. Xx. Xxxxxxxxx agrees to
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devote substantially all of his entire business time, effort, skill and
attention to the proper discharge of such duties while employed by Edac.
Effective as of the date hereof and pursuant to Section 3.09 of Edac's By-Laws
now in effect, the Board shall elect Xx. Xxxxxxxxx to serve as a member of the
Board until his successor is duly elected and qualified, or until his prior
death, resignation or removal.
4. Compensation.
(a) Base Salary. Xx. Xxxxxxxxx shall receive a base salary of
$250,000 per year, payable in regular and equal installments in accordance with
Edac's payroll practices as in effect from time to time (the "Base Salary"). Xx.
Xxxxxxxxx'x Base Salary shall be reviewed annually by the Compensation Committee
of the Board (the "Compensation Committee") to determine appropriate increases,
if any, in the Base Salary, but the Base Salary shall not be reduced without Xx.
Xxxxxxxxx'x written consent.
(b) Bonus. Xx. Xxxxxxxxx shall be eligible to receive a cash
bonus at the end of Edac's fiscal year (the "Cash Bonus"). It is intended to
reward Xx. Xxxxxxxxx for his performance as measured by agreed upon objectives,
with a payout of up to 50% of Base Salary. However, the Compensation Committee,
with approval of the Board of Directors, may at its discretion exceed the 50%
target based on their judgment of Xx. Xxxxxxxxx'x performance. The Cash Bonus
shall be paid to Xx. Xxxxxxxxx, subject to appropriate tax withholding, as soon
as practicable after the close of the fiscal year but, in any event, no later
than 90 days after the end of the fiscal year.
(c) Stock Options. Simultaneous with the execution of this
Agreement and in consideration of Xx. Xxxxxxxxx'x entering this Agreement, Xx.
Xxxxxxxxx and Edac shall enter into a Granting Agreement (the "Granting
Agreement") in the form attached hereto as Exhibit A, pursuant to which Edac
shall grant to Xx. Xxxxxxxxx 200,000 stock options (the "Options") under Edac's
2000-B Employee Stock Option Plan (the "Plan"). The grant of the first 150,000
Options will be effective as of the date of this Agreement. The grant of the
final 50,000 Options shall be contingent upon renewal of this Agreement and
shall be effective on the first anniversary of this Agreement. Only vested
Options shall be exercisable. The Options will vest over the three-year period
immediately following the effective date of the Option grant and at the rate set
forth in the vesting schedule below, provided Xx. Xxxxxxxxx is employed by Edac
at such time:
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(i) 40% vesting on the first anniversary of the
effective date of the grant;
(ii) 30% vesting on the second anniversary of the
effective date of the grant; and
(iii) 30% vesting on the third anniversary of the
effective date of the grant.
The grant of the Options pursuant to the Granting Agreement is independent of
the Cash Bonus and shall not be considered in determining the amount of any such
Cash Bonus. Furthermore, such grant of Options is independent of any options the
Compensation Committee may award to Xx. Xxxxxxxxx for performance in the year
2001.
5. Fringe Benefits. During the Employment Term, Xx. Xxxxxxxxx shall
receive all normal benefits available to every Edac employee, plus the following
fringe benefits:
(a) Vacation. Xx. Xxxxxxxxx shall be entitled to four weeks of
paid vacation annually.
(b) Automobile. Edac shall provide Xx. Xxxxxxxxx with the use
of an Edac-owned or leased automobile. In addition, Edac shall pay, or reimburse
Xx. Xxxxxxxxx for his payment of, the ordinary and reasonable expenses incurred
in the normal operation of such automobile.
(c) Country Club. Edac shall, during the Employment Term, pay
all initiation fees, dues and assessments (collectively, the "Fees") associated
with a family membership for Xx. Xxxxxxxxx in a club to be mutually agreed to.
(d) Reimbursement for Reasonable Business Expenses. Edac shall
pay or reimburse Xx. Xxxxxxxxx for reasonable expenses incurred by him in
connection with the performance of his duties pursuant to this Agreement,
including, but not limited to, travel expenses, expenses in connection with
trade shows, seminars, professional conventions or similar professional
functions and other reasonable business expenses.
(e) Insurance. Edac will purchase on behalf of Xx. Xxxxxxxxx a
term life insurance policy and a long-term disability insurance policy in the
amounts set forth below. Such insurance coverages shall be maintained at all
times during the Employment Term. The premiums on all policies shall be paid by
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Edac. Xx. Xxxxxxxxx shall own such policies and shall be entitled to name the
beneficiary or beneficiaries of such policies.
(i) Term Life Insurance. The face amount of the term
life insurance policy shall be an amount equal to three times the Base Salary.
(ii) Long-Term Disability Insurance. The long-term
disability insurance policy shall provide for periodic payments of 70% of the
Base Salary.
(f) Fringe Benefits. Xx. Xxxxxxxxx shall receive all fringe
benefits that are made available to management level employees of Edac.
6. Termination of Employment.
(a) Termination for Death, Disability, Voluntary Termination
or Cause. Xx. Xxxxxxxxx'x employment hereunder shall automatically terminate
upon his death. In addition, Edac shall be entitled to terminate Xx. Xxxxxxxxx'x
employment at any time upon his "Disability." For purposes of this Agreement,
"Disability" shall have the same meaning as contained in the most recently dated
disability insurance policy held by Edac covering Xx. Xxxxxxxxx. If no such
policy exists, Disability shall mean a physical or mental sickness or any injury
which renders Xx. Xxxxxxxxx incapable of performing the services required of him
as an employee of Edac and which does or may be expected to continue for more
than three months during any twelve-month period. Edac and Xx. Xxxxxxxxx shall
determine the existence of a Disability and the date upon which it occurred. In
the event of a dispute regarding whether or when a Disability occurred, the
matter shall be referred to a medical doctor selected by Edac and Xx. Xxxxxxxxx.
If they fail to agree upon such a medical doctor, Edac and Xx. Xxxxxxxxx shall
each select a medical doctor and the two doctors so selected shall together
select a third medical doctor who shall make the determination. The
determination by the selected medical doctor shall be conclusive and binding
upon the parties hereto.
If it becomes apparent that the Disability renders
Xx. Xxxxxxxxx unable to discharge his responsibilities and is supported by
medical evidence that his return cannot be determined, Edac may, in its
discretion, terminate or modify this Agreement once it is established that Xx.
Xxxxxxxxx will not return to full-time status.
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Edac may also terminate Xx. Xxxxxxxxx'x employment
under this agreement for "Cause," effective immediately upon delivery of notice
to Xx. Xxxxxxxxx. "Cause" shall mean:
(i) the willful and continued failure of Xx.
Xxxxxxxxx to perform substantially Xx. Xxxxxxxxx'x duties with Edac or its
affiliates (other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial performance
is delivered to Xx. Xxxxxxxxx by the Board which specifically identifies the
manner in which the Board believes that Xx. Xxxxxxxxx has not substantially
performed his duties and after Xx. Xxxxxxxxx is given a reasonable period of
time to rectify or eliminate such failure;
(ii) the willful engaging by Xx. Xxxxxxxxx in illegal
conduct or gross misconduct which is materially and demonstrably injurious to
Edac;
(iii) the commission by Xx. Xxxxxxxxx of fraud or
dishonesty with respect to Edac which is materially and demonstrably injurious
to Edac or a material misrepresentation by Xx. Xxxxxxxxx to Edac's shareholders
or directors;
(iv) a material breach of the terms of this Agreement
that is demonstratively injurious to Edac; or
(v) Xx. Xxxxxxxxx'x election not to renew this
Agreement pursuant to Section 2 hereof. If Xx. Xxxxxxxxx'x employment terminates
due to his Disability or death, or if Xx. Xxxxxxxxx voluntarily terminates his
employment or is terminated by Edac for Cause, Xx. Xxxxxxxxx shall be entitled
to receive his Base Salary and vested fringe benefits prorated to the date of
termination. In addition, in the event of a termination due to Xx. Xxxxxxxxx'x
death or Disability, Xx. Xxxxxxxxx shall also receive a prorated Cash Bonus for
the year of termination. The amount of the prorated Cash Bonus shall be
determined by the Compensation Committee and paid as soon as possible after such
determination.
In the event of termination for Cause, or if Xx.
Xxxxxxxxx voluntarily terminates his employment, Xx. Xxxxxxxxx shall forfeit any
unvested Option that he may have at such time. If Xx. Xxxxxxxxx'x employment
terminates due to death or disability, Xx. Xxxxxxxxx'x Options shall lapse in
accordance with section 4 of the Plan.
(b) Termination Without Cause. Notwithstanding anything in
this Agreement to the contrary, if Xx. Xxxxxxxxx'x employment is terminated by
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Edac for any reason other than for Cause, Disability or death, or if Edac elects
not to renew this Agreement pursuant to Section 2 hereof, or if this Agreement
is terminated or not renewed by Edac for what Edac believes is Cause or
Disability, and it is ultimately determined that Xx. Xxxxxxxxx was wrongfully
terminated, Xx. Xxxxxxxxx shall, as full and liquidated damages for such
termination, receive a severance payment equal to 18 months of Base Salary less
any payments, if any, due under the termination provisions of the Change of
Control Agreement (as defined in section 10, below) (the "Severance"). The
Company shall have the option to pay the Severance: (i) in a single installment
payable within 90 days following the termination of Xx. Xxxxxxxxx'x employment;
or (ii) in 18 equal consecutive monthly installments, with the first such
installment payable on the first day of the first month immediately following
the termination of Xx. Xxxxxxxxx'x employment, and each subsequent installment
payable on the same day of each consecutive month thereafter until the Severance
is paid in full. The deferred portion of the Severance shall not bear interest.
In addition to the Severance, Xx. Xxxxxxxxx shall receive the following benefits
in the event his employment with the Company is terminated under this section:
(x) for a period of six months following the date of termination, an automobile
on terms substantially identical to the terms of Section 5(b) hereof; and (y)
term life and long term disability insurance coverage on terms substantially
identical to the terms of Section 5(e) hereof until such time as Xx. Xxxxxxxxx
secures other employment which provides comparable coverage or until the last
day of the 18th month following termination of Xx. Xxxxxxxxx'x employment under
this section, whichever occurs first. Furthermore, all unvested Options Xx.
Xxxxxxxxx may have at such time as his employment is terminated pursuant to this
section 6(b) shall vest immediately and be exercisable in accordance with the
terms of the Granting Agreement and the Plan.
7. Noncompetition. The parties agree that Edac's supplier, customer,
vendor and employee contacts and relations are established and maintained at
great expense and, by virtue of Xx. Xxxxxxxxx'x employment with Edac, Xx.
Xxxxxxxxx will have unique and extensive exposure to and personal contact with
Edac's suppliers, customers, vendors and employees and that he will be able to
establish a unique relationship with those individuals and entities that will
enable him, both during and after employment, to unfairly compete with Edac.
Further, the parties agree that the terms and conditions of the following
restrictive covenants are reasonable and necessary for the protection of Edac's
business, trade secrets and confidential information and to prevent great damage
or loss to Edac as a result of action taken by Xx. Xxxxxxxxx. Xx. Xxxxxxxxx
acknowledges that the noncompete restrictions and nondisclosure of confidential
information restrictions contained in this Agreement are reasonable and the
consideration provided for herein is sufficient to fully and adequately
compensate Xx. Xxxxxxxxx for
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agreeing to such restrictions. Xx. Xxxxxxxxx acknowledges that he could continue
to actively pursue his career and earn sufficient compensation in the same or
similar business without breaching any of the restrictions contained in this
Agreement. For purposes of this section 7 and section 8 below, "Edac" shall
refer to each of Edac Technologies Corporation and each of its subsidiaries.
(a) During Term of Employment. Xx. Xxxxxxxxx covenants and
agrees that, during his employment with Edac, he shall not, directly or
indirectly, either individually or as an employee, principal, agent, partner,
shareholder, owner, trustee, beneficiary, co-venturer, distributor, consultant
or in any other capacity, participate in, become associated with, provide
assistance to, engage in or have a financial or other interest in any business,
activity or enterprise which is competitive with Edac or any successor or assign
of Edac. The ownership of less than a one percent interest in a corporation
whose shares are traded in a recognized stock exchange or traded in the
over-the-counter market, even though that corporation may be a competitor of
Edac, shall not be deemed financial participation in a competitor.
(b) Upon Termination of Employment. Xx. Xxxxxxxxx agrees that
for a one-year period after Xx. Xxxxxxxxx'x employment with Edac terminates for
any reason, he will not, directly or indirectly, either individually or as an
employee, agent, partner, shareholder, owner, trustee, beneficiary, co-venturer,
distributor, consultant or in any other capacity:
(i) Request or advise any of the customers, vendors,
suppliers, or other business contacts of Edac who currently have or have had
business relationships with Edac within two years preceding the date of such
action, to withdraw, curtail or cancel any of their business or relations with
Edac.
(ii) Induce or attempt to induce any employee, sales
representative, supplier, consultant or personnel of Edac to terminate his or
her relationship or breach his or her agreements with Edac.
(iii) Participate in, become associated with, provide
assistance to, engage in or have a financial or other interest in any business,
activity or enterprise located within the Territory (as defined below) which is
competitive with the business of Edac or any successor or assign of Edac and
which conducts such competitive business within the Territory; provided,
however, that the ownership of less than 1% of the stock of a corporation whose
shares are traded in a recognized stock exchange or traded in the
over-the-counter market, even though that corporation may be a competitor of
Edac, shall not be deemed financial participation in a competitor. For purposes
of this Agreement, the term
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"Territory" shall mean the United States of America. The Board may, in its sole
discretion and at any time prior to the termination of Xx. Xxxxxxxxx'x
employment by Edac, expand the Territory to include those countries in which the
Company or any of its subsidiaries does business.
8. Confidential Information. The parties agree that Edac's customers,
business connections, customer lists, procedures, operations, techniques,
customer profiles and other aspects of its business are established at great
expense and protected as confidential information and provide Edac with a
substantial competitive advantage in conducting its business. The parties
further agree that, by virtue of Xx. Xxxxxxxxx'x employment with Edac, he will
have access to, and be entrusted with, secret, confidential and proprietary
information, and that Edac would suffer great loss and injury if Xx. Xxxxxxxxx
would disclose this information or use it to compete with Edac. Therefore, Xx.
Xxxxxxxxx agrees that during the term of his employment, and for a period ending
on the earlier of (a) two years after the termination of his employment with
Edac or (b) the date on which the information referred to in this section
becomes publicly known through no fault of Xx. Xxxxxxxxx, he will not, directly
or indirectly, either individually or as an employee, agent, partner,
shareholder, owner, trustee, beneficiary, co-venturer, distributor, consultant
or in any other capacity, use or disclose, or cause to be used or disclosed, any
secret, confidential or proprietary information acquired by Xx. Xxxxxxxxx during
his employment with Edac whether owned by Edac prior to or discovered and
developed by Edac subsequent to Xx. Xxxxxxxxx'x employment, and regardless of
the fact that Xx. Xxxxxxxxx may have participated in the discovery and the
development of that information.
9. Law of Torts and Trade Secrets. The parties agree that nothing in
this Agreement shall be construed to limit or negate the statutory or common law
of torts or trade secrets where it provides Edac with broader protection than
that provided herein.
10. Change of Control. Simultaneous with the execution of this
Agreement, the parties shall enter into a Change of Control Agreement (the
"Change of Control Agreement") in the form attached hereto as Exhibit B.
11. Waiver. The failure of either party to insist, in any one or more
instances, upon performance of the terms or conditions of this Agreement shall
not be construed as a waiver or a relinquishment of any right granted hereunder
or of the future performance of any such term, covenant or condition.
12. Notices. Any notice to be given hereunder shall be deemed
sufficient if addressed in writing, and delivered by registered or certified
mail or
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delivered personally, in the case of Edac, to its principal business office, and
in the case of Xx. Xxxxxxxxx, to his address appearing on the records of Edac,
or to such other address as he may designate in writing to Edac.
13. Severability. If any provision of this Agreement is held to be
invalid or unenforceable for any reason whatsoever, it is agreed such invalidity
or unenforceability shall not affect any other provision of this Agreement and
the remaining covenants, restrictions and provisions hereof shall remain in full
force and effect and any court of competent jurisdiction may so modify the
objectionable provision as to make it valid, reasonable and enforceable.
Furthermore, the parties specifically acknowledge that the provisions of
sections 7(a), 7(b)(i), 7(b)(ii) and 7(b)(iii) are each separate and independent
agreements.
14. Amendment. This Agreement may only be amended by an agreement in
writing signed by all of the parties hereto.
15. Benefit. This Agreement shall be binding upon and inure to the
benefit of and shall be enforceable by and against Edac, its successors and
assigns and Xx. Xxxxxxxxx, his heirs, beneficiaries and legal representatives.
It is agreed that the rights and obligations of Xx. Xxxxxxxxx may not be
delegated or assigned.
16. Entire Agreement. Except for the Change of Control Agreement, the
provisions of which will control in the event of a conflict with the provisions
of this Agreement, this Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings among the parties with respect to such
subject matter.
17. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect.
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The parties have executed or caused this Agreement to be executed as of
the day, month and year first above written.
EDAC TECHNOLOGIES CORPORATION
BY /s/ Xxxx X. XxXxxxxxxxx
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Its Chairman
/s/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx
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