EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (“Agreement”) executed as of the ___ day of __________,
2006, by and between Science Dynamics Corporation, a Delaware corporation
(“Employer”) and Xxxxxxx Xxxxxxxxx (“Employee”) an individual resident of
Virginia.
WITNESSETH:
WHEREAS,
the Employee will be the Chief Operating Officer of the Employer and the
Employer and the Employee shall each benefit in a significant way if the
Employer retains or continues to retain the services of the Employee for the
future and accordingly the parties hereto have determined it to be in their
mutual best interest to enter into this Employment Agreement; and
NOW,
THEREFORE, in consideration of the covenants and conditions hereinafter stated,
and intending to be legally bound, the parties hereto agree as
follows:
1. Employment:
The
Employer hereby employs the Employee and the Employee hereby accepts employment
upon the terms and conditions set forth herein.
2. Term:
Subject
to the provisions for termination as hereinafter provided, the term of this
Agreement shall begin on the date set forth above and shall continue for a
period of three (3) year unless sooner terminated as herein provided.
Thereafter, this Agreement shall automatically renew from year to year unless
terminated as provided herein.
3. Compensation:
a. Base
Salary:
For
services rendered by the Employee under this Agreement, the Employer shall
pay
to the Employee a base salary at the rate of $165,000.00 per year, payable
in
bi-monthly installments or more frequently according to the policies of the
Employer. Said salary is subject to annual upward
adjustments
as approved by the Board of Directors or the President of Employer.
Such
salary, as increased from time to time, shall be referred to herein as the
"Base
Salary")
b. Bonuses: Employee
will be
eligible to receive an annual bonus, in an amount not less than thirty percent
(30%) of the then current Base Salary, if established revenue and personal
goals
set by Employer's Board of Directors or President prior to the commencement
of
each fiscal year, are achieved by the Employee and Employer during the
applicable fiscal year. If earned in full, or if Employer fails to establish
such goals, not due to the fault of the Employee, prior to the commencement
of
the fiscal year, Employer shall pay Employee the bonus in full within thirty
(30) days of the end of the applicable fiscal year. Such bonus shall be pro
rated for any partial Employer fiscal year this Agreement is in
effect.
c. Expenses:
In
addition to Base
Salary
and
bonuses, the Employer shall reimburse the Employee for all necessary
business expenses incurred by him
in the
performance of his duties
in
accordance with the Employer's expense reimbursement policies. As required
by
Employer's expense reimbursement policies, the
Employee
shall submit to the Employer written itemized expense accountings and such
additional substantiation and justification as the Employer may reasonably
request.
d. Other
Employee Benefits.
The
Employee shall be provided with such other benefits as are made available to
other Employees of the Employer, including but not limited to, medical and
permanent disability insurance.
e. Equity
Compensation.
Employee shall be granted an incentive stock option (the "Option")
to
purchase one million, two hundred fifty thousand (1,250,000) shares of Employer
Common Stock at a price of six cents ($0.06) per share, pursuant to Employer's
Equity Incentive Plan (the "Plan").
The
Options will have a ten (10) year term. The shares governed by the Option shall
vest annually in one third (1/3)
increments over a three-year period; provided that vesting shall accelerate
if
(i) the Employee is terminated without Cause (as defined in Section 10(a) below)
or without Good Reason (as defined in Section 10(b) below) or (ii) upon a Change
of Control of Employer or Xxxxxxxxx Technologies, Inc. (“RTI”).
For
purposes of this Agreement, "Change of Control" of Employer or RTI means:
(1) the
closing of a sale or other conveyance of all or substantially all of the assets
of RTI or Employer; or (2) the closing of a sale or other conveyance of all
or
substantially all of the outstanding securities of RTI or Employer (including
by
merger, share exchange, consolidation, or other business combination involving
the RTI or Employer, as the case may be).
4. Duties:
Extent of Services:
The
Employee is engaged the
position of
Chief
Operating Officer
and
shall perform such duties as are customarily associated with such title,
consistent with the Bylaws of Employer and as required by the Employer's Board
of Directors and President. The Employee shall report to the
President of Employer. The Employee shall devote substantially
all of his business time and attention (except for vacation periods as set
forth
herein and reasonable periods of illness and other incapacities as permitted
by
Employer's general employment policies),
and
best efforts, to the performance of the duties described hereunder. The Employee
acknowledges that the discharge of the duties of the Employee may require the
Employee to work, from time to time, at reasonable hours on weekends or evenings
and accordingly the Employee agrees not to undertake any part time work
responsibilities without the prior written approval of the Employer and the
Employee agrees that this is a reasonable restriction.
5. Working
Facilities:
The
Employee shall be furnished with appropriate working facilities and tools
necessary for the proper performance of his
duties.
6. Special
Covenants Regarding Work Product and Intellectual Property.
In
consideration of the salary or wages received
by the Employee and as a condition upon, and part of the consideration for,
the
employment or continued employment of the Employee, but without limitation
upon
the Employer’s right to terminate the Employee’s employment, the Employee hereby
assigns and transfers to the Employer, and agrees that the Employer shall be
the
owner of all inventions, discoveries, drawings, computer software, algorithms,
improvements and devices heretofore or hereafter conceived, including
intellectual property rights such as patents and copyrights (hereinafter
referred to as ‘"work
product”) developed or made by the Employee, either alone or with others, in
whole or in part during the Employee’s employment by the Employer, which are
useful in, or related
to the Employer’s business or which relate to, or are conceived, developed or
made in the course of, the Employee’s employment or which are developed or made
from
such
employment. The Employer shall have the right to use work product as described
hereinabove, whether original or derivative, in any manner whatsoever, and
the
Employee acknowledges that all work product described hereinabove shall be
considered as ‘"work
made
for hire” belonging to the Employer.
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b. The
Employee hereby agrees to disclose promptly and in writing to any officers
or
representatives designated by the Employer all work product heretofore or
hereafter conceived or made by the Employee alone or with others during the
Employee’s employment to which the Employer is entitled as above provided and
agrees not to disclose such work product except as required by his
employment, without the express consent of the Employer.
The
Employee
further agrees that during his
employment by the Employer and at any time thereafter, he
will,
upon the reasonable
request
of the Employer, execute proper assignments to the Employer of any and all
such
work product to which the Employer is entitled as above provided, and will
execute all papers and perform all other lawful acts which the Employer may
deem
necessary or advisable for the preparation, prosecution, procurement and
maintenance of trademark, copyright and/or patent applications and trademarks,
copyrights and/or patents of the United States of America and foreign countries
for such work product to which the Employer is entitled as above provided,
and
will execute any and all proper documents as shall be required or necessary
to
vest title in the Employer to such work product and all trademark, copyright,
and patent applications and trademarks, copyrights and patents pertaining
thereto. It is understood that all expenses in connection with such trademarks,
copyrights, and patents and all applications related thereto shall be borne
by
the Employer, but the Employer shall he under no obligation to protect by
trademark, copyright, patent, or otherwise any such work product except at
its
own discretion and to such extent as the Employer shall deem
desirable.
c. Notwithstanding
the foregoing, the provisions of this Agreement
do not
apply to an invention for which no equipment, supplies, facility, or trade
secret information of the Employer was used and which was developed entirely
on
the Employee’s own time, unless (a) the invention is useful in, or relates
to (i)
the Employer’s business or relates to, or is conceived, developed or made in the
course of, the Employee’s employment,
or (ii)
to the Employer’s actual or demonstrably anticipated research or development, or
(b) the invention or rendering results from any work performed by the Employee
for the Employer.
7.
Restrictive
Covenants/Protection of Propriety
Information:
a. The
parties hereto recognize that the Employee’s knowledge and skill are a material
factor in inducing the Employer to enter into this Agreement. Further, in the
course of his
employment, and because of the nature of his
responsibilities, the Employee will acquire valuable and confidential
information and trade secrets with regard to the Employer’s business operation,
including, but
not
limited to, the Employer’s existing and contemplated services and products,
documentation, technical data, business and financial methods’ and practices,
plans, pricing, lists of the Employer’s customers and prospective customers,
methods of obtaining customers, financial and operational data of the Employer’s
present and prospective customers, and the particular business requirements
of
the Employer’s present and prospective customers. In addition, the Employee may
develop on behalf of the Employer, a personal acquaintance with some of the
Employer’s customers and prospective customers. As a consequence, the Employee
will occupy a position of trust and confidence with respect to the Employer’s
affairs and its services. In view of the foregoing, and in consideration of
the
remuneration paid and to be paid to the Employee, the Employee agrees that
it is
reasonable and necessary for the protection of the good will and business of
the
Employer that the Employee make the covenants contained in subparagraphs b.,
c.,
and d. below regarding the conduct of the Employee during and after
his
employment relationship with the Employer, and that the Employer will suffer
irreparable injury if Employee engages in conduct prohibited
thereby.
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b. The
Employee covenants and agrees that during
the
period of the Employee’s employment with the Employer, and
upon
termination of Employee's employment by Employee voluntarily and without Good
Reason or by Employer with Cause, continuing
two (2)
years from the date
of
such termination
(the
“Non-Compete Period’), he
will not
directly or indirectly, as principal, agent, owner, joint venture, investor,
employee, or consultant, engage in any business activity which is (i) in
competition with the Employer, (ii) in the same market as the products or
services of the Employer, (iii) involving the same types of products or services
as the Employer anywhere in the United States of America (the “Non-Compete
Zone”). The Employee agrees that the above restriction is reasonable and will
not prohibit the Employee from obtaining employment at the date of termination
of this Agreement.
c. The
Employee further covenants and agrees that during the Non-Compete Period,
he/she
shall
not, directly or indirectly, (i) induce or attempt to induce, or aid others
in
inducing, an employee of the Employer or its wholly-owned
subsidiaries
to leave
the employ of the Employer or its wholly-owned
subsidiaries,
or in
any way interfere with the relationship between the Employer or its wholly-owned
subsidiaries
and an
employee thereof, or (ii) in any way interfere with the relationship between
the
Employer or its wholly-owned
subsidiaries
and any
customer, supplier, licensee or other business relation of the Employer or
its
wholly-owned
subsidiaries.
d. The
Employee agrees that any and all of the Employer’s confidential and proprietary
information shall be and shall remain the sole and exclusive property of the
Employer. While in the employ of the Employer, or at any time thereafter, the
Employee will not, without the express written consent of the Employer, directly
or indirectly, communicate or
divulge to or use for the benefit of himself
or any
other person, firm, association or corporation, any of the Employer’s trade
secrets or confidential information, including, by way of illustration and
not
by way of exclusion, the matters contained in subparagraph (a) above, or which
were communicated to or otherwise learned of or acquired by the Employee in
the
course of his or her employment with the Employer, except that Employee may
disclose such matters to the extent that (i) the information is or becomes
generally publicly known, by means other than through unauthorized disclosure
by
the Employee; (ii) the information was approved for release by written
authorization by Employer; or (iii) the information is required to be disclosed
by a judicial or governmental authority or agency, provided the Employee first
gives Employer not less than ten (10) days prior written notice of such
anticipated disclosure.
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8. Vacation:
Employee
shall be entitled to receive up to 3
weeks
of paid
vacation and ten
(10)
sick days in addition to paid holidays
during
each year of this Agreement while employed full time. The vacation shall be
taken at such time or times as will not unreasonably hinder or interfere with
the Employee’s representation of the Employer’s customers or the business or
operations of the Employer. If Employee does not choose to use of all their
accrued time-off during a given year, up to 2
weeks
of
vacation
(e.g.,
80
hours)
can be
rolled into the next year.
9. Disability:
The
Employee’s disability and/or sick leave shall be covered by the usual and
customary policies and procedures of the Employer.
10. Termination:
a. With
Cause
or without Good Reason:
The
Employer may, at any time, terminate this Agreement with Cause.
The Employee may voluntarily terminate this Agreement with two weeks prior
notice to Employer, without Good Reason (as defined in Section 10(a) below)
and,
in
such
event, the Employee, if requested by the Employer, shall continue to render
his
services
and shall be paid his Base Salary.
For
purposes of this Agreement, "Cause" means the occurrence of any of the following
events with respect to the Employee:
i. conviction
of, or plea or
nolo
contendere to, a felony or other
crime involving
moral turpitude;
ii. fraud
on
or misappropriation of any funds or property of Employer or any of its
wholly-owned subsidiary, customer or vendor of Employer or any of its
wholly-owned subsidiary;
iii. personal
dishonesty, willful misconduct, or breach of fiduciary duty against Employer
or
any of its wholly-owned subsidiary which involves personal profit;
iv. material
breach of any provision of this Agreement, as determined by Employer's Board
of
Directors; or
v. refusal
to substantially perform the Employee's written and known duties (excluding
death and disability of the Employee); provided, however, that
vi. in
the
case of clauses (iv) and (v), it shall not constitute Cause unless Employer,
shall have provided Employee with written notice of its alleged actions
constituting Cause (which notice shall specify in reasonable detail the
particulars of such Cause) and Employee has not cured any such alleged Cause
or
substantially commenced its effort to cure such breach within thirty (30) days
of Employee's receipt of such written notice.
5
If
the
Employee’s employment
is terminated with Cause by Employer or without Good Reason by the Employee,
Employer shall promptly pay to Employee all accrued Base Salary through the
date
of termination and any other amounts payable to Employee through the date of
termination pursuant to any other compensation plans, programs, or this
Agreement.
b. With
Good Reason or Without Cause.
The
Employee may terminate this Agreement with Good Reason or the Employer may
terminate this Agreement without Cause and the Employer shall (A) pay to
Employee all accrued Base Salary though such employment termination date and
any
other amounts payable to Employee through the date of termination pursuant
to
any other compensation plans, programs, or this Agreement; (B) continue to
pay
the full Base Salary in effect on such termination date for the remaining
portion of the three-year term of this Agreement with such Base Salary to be
paid in the same manner as set forth in Section 3(a) above; (B)
continue for the remaining portion of such three-year term, any benefits to
which Employee is entitled, subject to the terms of any such benefit plan,
policy or program in effect on the date of such termination (or pay the Employee
the equivalent monetary value of such benefits to the extent such plans cannot
be continued).
For
the
purposes of this Agreement, "Good Reason" means any one of the following: (a)
the Employer's material breach of any provision of this Agreement; (b) any
material adverse change in the Employee's position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities,
or
any other action by Employer made without the Employee's permission (other
than
a change due to the Employee's permanent disability or as an accommodation
under
the Americans With Disabilities Act) or (c) Employer requiring relocation of
Employee more than twenty-five (25) miles from Manassas, Virginia without
Employee's consent; provided,
however,
that it
shall not constitute Good Reason unless the Employee shall have provided the
Employer with written notice of its alleged actions constituting Good Reason
(which notice shall specify in reasonable detail the particulars of such Good
Reason) and the Employer or Purchaser, as the case may be, has not cured any
such alleged Good Reason or substantially commenced its effort to cure such
breach within thirty (30) days of the Employer's receipt of such written
notice.
11. Warranties
of Employee:
As a
material consideration in the employment of the Employee, the Employee hereby
confirms representations previously made to the Employer that he is
free
to enter into this employment arrangement with the Employer and hereby warrants
that the obligations contained herein do not conflict with any other
Agreement
with any
previous employer or independent contracting party.
12. Remedies:
(a) In
the
event of a breach or threatened breach of this Agreement by the Employee, the
Employer shall be entitled, in addition to all other remedies otherwise
available to the Employer, to an injunction, enjoining and restraining such
breach or threatened or intended breach, and the Employee hereby consents to
the
issuance thereof forthwith in any court of competent jurisdiction without proof
of specific damages.
6
(b) In
the
event that either party shall enforce any part of this Agreement through legal
proceedings and the other shall have been in default hereof, such defaulting
party agrees to pay to no defaulting party any costs and attorneys fees
reasonably incurred in connection therewith.
13. Indemnification:
(a) Employer
shall indemnify Employee to the fullest extent permitted by law, notwithstanding
if such indemnification is not specifically authorized in Employer's Certificate
of Incorporation and/or Bylaws, as applicable, if Employee was or is or becomes
a party to or witness or other participant in, or is threatened to be made
a
party to or witness or other participant in, any threatened, pending or
completed action, suit, proceeding or alternative dispute resolution mechanism,
or any hearing, inquiry or investigation that Employee in good faith believes
might lead to the institution of any such action, suit, proceeding or
alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other (hereinafter a “Claim”) by reason of (or
arising in part out of) any event or occurrence related to the fact that
Employee is or was a director, officer, employee, agent or fiduciary of
Employer, or any subsidiary of Employer, or is or was serving at the request
of
Employer as a director, officer, employee, agent or fiduciary of another
corporation, partnership, joint venture, trust or other enterprise, or by reason
of any action or inaction on the part of Employee while serving in such capacity
(hereinafter an “Indemnifiable Event”) against any and all reasonable expenses
(including attorneys’ fees and all other costs, expenses and obligations
incurred in connection with investigating, defending, being a witness in or
participating in (including on appeal), or preparing to defend, be a witness
in
or participate in, any such action, suit, proceeding, alternative dispute
resolution mechanism, hearing, inquiry or investigation), judgments, fines,
penalties and amounts paid in settlement (if such settlement is approved in
advance by Employer, which approval shall not be unreasonably withheld) of
such
Claim and any federal, state, local or foreign taxes imposed on Employee as
a
result of the actual or deemed receipt of any payments under this Section 13
(collectively, hereinafter “Expenses”), including all interest, assessments and
other charges paid or payable in connection with or in respect of such Expenses.
Employer shall advance all Expenses incurred by Employee. Such payment of
Expenses shall be made by Employer as soon as practicable but in any event
no
later than thirty days after written demand by Employee (setting forth in
reasonable detail expense incurred) therefor is presented to
Employer.
(b) While
Employee is employed by Employer and for four (4) years thereafter, Employer's
Certificate of Incorporation and/or Bylaws, as applicable, shall provide that
the liability of the Employer's officers for monetary damages shall be
eliminated to the fullest extent under applicable law.
(c) While
Employee is employed by Employer and for four (4) years thereafter, Employer
shall maintain director and officer liability insurance with coverage (1) in
respect of all periods when Employee was employed by Employer and (2) in amount
and scope customary for companies similarly situated to Employer.
14. Cumulative
Rights:
All of
the rights and remedies of the parties hereto shall be cumulative with, and
in
addition to, any other rights, remedies or causes of action allowed by law
and
shall not exclude any other rights or remedies available to either of the
parties hereto.
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15. Notices:
Any
notice required or permitted to be given under this Agreement shall be
sufficient if in writing, and if sent by certified mail, return receipt
requested, to his
residence in the case of the Employee, or to the principal office in the case
of
the Employer.
16. Waiver
of Breach:
The
waiver by either party of a breach of any provision of this Agreement by the
other party shall not operate or be construed as a waiver of any subsequent
breach by such party.
17. Governing
Law:
The
validity of this
Agreement, the construction and enforcement of its terms, and the interpretation
of the rights and duties of the parties shall be governed by the laws of the
Commonwealth
of Virginia (without regard to the conflicts of law principles
thereof).
18. Severability:
In the
event any one or more of the provisions of this Agreement shall for any reason
be held to be invalid, illegal or unenforceable, the remaining provisions of
this Agreement shall be unimpaired, and shall continue in full force and
effect.
19. Assignment:
The
rights and obligations of the Employee under this Agreement are not assignable.
The rights and obligations of the Employer under this Agreement inure to the
benefit and shall be binding upon the successors and assigns of the Employer.
20. Survival
Provisions:
The
provisions of this Agreement set forth in paragraphs 6, 7,
11
and
13
hereof,
and the Employee’s representations and warranties contained herein, shall
survive termination of employment.
21. Entire
Agreement:
This
instrument contains the entire agreement of the parties with respect to
employment of the Employee. It may not be changed orally, but only by agreement
in writing, signed by the party against whom enforcement of any such waiver,
change, modification, extension or discharge is sought.
22. Advice
of Counsel and Construction.
The
parties acknowledge that this Agreement was drafted by counsel to the Employer
who represented its interests and not the Employee. All parties to this
Agreement have been represented by counsel or have had the opportunity to be
so
represented. Accordingly the rule of construction of contract language against
the drafting party is hereby waived by all parties.
{Signature
page follows.}
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IN
WITNESS WHEREOF, the parties have executed this Agreement
on the
day and year first above written.
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EMPLOYER:
SCIENCE
DYNAMICS CORPORATION
a
Delaware Corporation
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| |
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Xxxx Xxxxxxx, President |
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| EMPLOYEE: | ||
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Xxxxxxx Xxxxxxxxx |
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{Signature
page to Employment Agreement}
