EXHIBIT 10.32
RETENTION AND SEVERANCE AGREEMENT
This Retention and Severance Agreement (the "Agreement") is entered into
this ______ day of ___________, 1995 by and between Spectradyne, Inc., a Texas
corporation, with offices at 0000 Xxxxx Xxxxx Xxxx, Xxxxxxxxxx, Xxxxx (together
with its affiliates, "Employer") and Xxxxxxx X. Xxxxx, an individual whose
address is 0000 Xxxxxxx, Xxxxxx, Xxxxx ("Employee").
RECITALS
1. Employer is a debtor in possession in Chapter 11 case number 95-659
(PJW) filed on June 8, 1995, in the United States Bankruptcy Court for the
District of Delaware.
2. Employee was hired by Employer prior to the bankruptcy filing to serve
as its Executive Vice President and Chief Financial Officer. The terms of
Employee's employment were set forth in a Restated Employment Agreement dated as
of September 21, 1994 (the "Employment Agreement").
3. Employer wishes to retain the services of Employee throughout the
bankruptcy proceeding and, as a result of a settlement with the Official
Unsecured Creditors Committee of Employer, has agreed to provide Employee with
the protections and incentives set forth below.
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter contained, it is agreed as follows:
AGREEMENT
1. Employment.
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(a) Employer hereby agrees to employ Employee, and Employee hereby
agrees to serve Employer, as Executive Vice President and Chief Financial
Officer and to perform such duties, functions and responsibilities commensurate
with and appropriate to such position, and as the same may be from time to time
set forth in the By-laws of Employer or otherwise delegated to Employee.
(b) Employee shall receive from Employer the necessary power and
authority to carry out and discharge such duties, functions and
responsibilities.
(c) Employee shall be a full time employee of Employer and shall
devote his best efforts to the performance, discharge and fulfillment of all
such duties, functions and responsibilities.
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(d) Employee will perform his services primarily in Dallas County,
Texas, U.S.A., or at such other location as may be mutually agreed upon by the
Board of Directors of Employer, or their designates, and Employee.
2. Term.
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Employer shall employ Employee from the date of this Agreement until
the Effective Date of a plan of reorganization confirmed in Employer's
bankruptcy case. Employee may terminate this Agreement at any time by giving
Employer and the Official Creditors' Committee thirty (30) days notice of his
intention to terminate the Agreement.
3. Compensation.
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(a) Employer shall pay Employee an annual base salary of $268,840
payable in equal bi-weekly installments.
(b) Employee shall receive a bonus for 1995 in the amount of $134,420
payable in accordance with Employer's normal bonus policy. In the event
Employee is employed by Employer on the Effective Date of Employer's plan,
Employee shall receive a bonus for 1996 payable on the effective date of
Employer's plan of reorganization and equal to $134,420 times a fraction the
numerator of which is the number of days between December 31, 1995 and the
effective date of such plan and the denominator of which is 365.
4. Employee Benefits and Business Expenses.
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(a) During the term hereof, Employee shall be entitled to participate
in such employee benefit plans and programs maintained by Employer for the
benefit of its employees, as such plans and programs may be amended from time to
time hereafter, and to participate in applicable new or amended programs,
including, but not limited to, medical, dental, health, life, accident and
disability insurance programs, savings for retirement plans, bonus, stock option
plans, and any other incentive compensation plans.
(b) Employee shall be reimbursed for any necessary business expenses
reasonably incurred by Employee in carrying out Employee's duties, functions and
responsibilities hereunder.
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5. Severance Benefits.
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In the event that Employer terminates Employee's employment by Employer
without cause (as defined below) during the term of this Agreement but prior to
the time Employer reaches an agreement in principle or executes a term sheet for
a sale, merger, equity infusion, partnership or other transaction which forms
the basis for a reorganization of Employer (a "Transaction"), Employee shall
receive a lump sum severance payment of $403,260 within ten (10) business days
of the date of termination. Employee shall also receive a sum equal to $134,420
multiplied by a fraction the numerator of which is the number of days Employee
has worked in the calendar year and the denominator of which is 365. Employee
shall have no duty to mitigate damages.
In the event Employee is terminated without cause after Employer has
reached an agreement in principle for a Transaction, Employer shall pay to
Employee on the date of such termination, or as soon thereafter as fiscally
practicable, but in no event later than the effective date of Employer's plan of
reorganization, an amount equal to the Deal Bonus defined in paragraph 6 of this
Agreement. Employer shall also continue to pay Employee his base salary through
the earlier of (i) the effective date of Employer's plan of reorganization and
(ii) the expiration of ninety (90) days following the date of termination. With
Employee's last salary payment, Employer shall also pay Employee a sum equal to
$134,420 multiplied by a fraction the numerator of which is the number of days
between the first day of the then current calendar year and the last day for
which Employee is entitled to receive his base salary and the denominator of
which is 365.
The following events constitute cause for Employer's discharge of Employee:
(i) Employee's willful misconduct or gross negligence in the
performance or discharge of any of Employee's duties, functions and
responsibilities hereunder;
(ii) Employee's conviction of any felony offense during the term of
this Agreement; or
(iii) Employee's breach of any of Employee's material obligations
hereunder and the continuation thereof for a period of twenty (20) days
after written notice of such breach is received by Employee.
In the event Employer elects to terminate Employee for cause pursuant
to this Section 5, Employer shall give written notice to Employee specifically
stating each fact and reason which is the basis for such termination. Following
such termination, Employer shall have no further obligation to Employee except
for
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accrued and unpaid cash and non-cash compensation payments then due and owing to
Employee under this Agreement.
6. Deal Bonus.
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(a) Definitions.
(i) "Alliance Transaction" shall mean an alliance or business
venture between Employer and other corporations or business entities (each a
Partner) which may involve a contractual arrangement between Employer and such
Partner, a direct investment by such Partner in Employer or other similar
transaction.
(ii) "Sale Transaction" shall mean a sale of all or part of
Employer to another corporation or business entity (a "Buyer") which transaction
might take the form of a merger with, or a sale of assets or equity securities
to a Buyer(s).
(iii) "Aggregate Consideration" shall mean the total amount of
cash and the fair market value (on the date of payment) of all other property
paid or payable directly or indirectly to Employer, its employees, or its debt
and/or equity security holders by a Buyer and/or Partner in connection with a
Sale Transaction and/or Alliance Transaction or a transaction related thereto.
Aggregate Consideration shall also include the value of any long-term
liabilities of Employer (including the principal amount of any indebtedness for
borrowed money (x) repaid in connection with or in anticipation of a Sale
Transaction and/or Alliance Transaction or (y) existing on Employer's balance
sheet both (i) at the time of a Sale Transaction and/or Alliance Transaction and
(ii) immediately after the confirmation of Employer's plan of reorganization (if
such Sale Transaction and/or Alliance Transaction takes the form of a merger or
sale of stock) or assumed by a Buyer and/or Partner in connection with a Sale
Transaction and/or Alliance Transaction (if such Sale Transaction and/or
Alliance Transaction takes the form of a sale of assets)).
(b) Deal Bonus.
If Employee continues to be employed by Employer until Employer's plan
becomes effective and a Sale or Alliance Transaction closes, Employer shall pay
Employee on the later of (i) the effective date of such plan or (ii) the closing
of a Sale Transaction and/or Alliance Transaction, a deal bonus (the "Deal
Bonus") equal to .15% of the Aggregate Consideration received in an Alliance
Transaction or Sale Transaction or in the event of a stand-alone plan, the
enterprise value of reorganized Employer as determined by Salomon Brothers, Inc.
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7. Confidentiality, Proprietary Information and Trade Secrets.
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(a) During the term of this Agreement and at all times thereafter,
Employee shall not use for his personal benefit, or disclose, communicate or
divulge to, or use for the direct or indirect benefit of any person, firm,
association or company other than Employer, any material referred to in
subsections (c), (i) or (j) of this Section 7, or any proprietary information
regarding the business methods, business policies, procedures, techniques,
research or development projects or results, trade secrets or other knowledge or
processes of, or developed by, Employer or any names and addresses of customers
or clients or any data on or relating to past, present or prospective customers
or clients or any other confidential information relating to or dealing with the
business operations or activities of Employer, made known to Employee or learned
or acquired by Employee while employed by Employer.
(b) During the term of this Agreement and for a period of two (2) years
after the termination of this Agreement, Employee shall not, directly or
indirectly, in any geographic area served by Employer or its affiliates induce
or attempt to influence any employee of Employer or its affiliates to terminate
his or her employment with Employer or its affiliates or to hire any such
employee of Employer or its affiliates.
(c) All information, inventions, original works of authorship,
developments, trade secrets and discoveries, including improvements, conceived,
developed, made, reduced to practice or completed by Employee, either alone or
with others, during his employment by Employer at any time within or outside of
normal working hours (the "Work Product"), shall be and remain the sole property
of Employer.
(d) Employee shall:
(i) during the term of this Agreement, disclose promptly to an
authorized representative of Employer all Work Product and all
information in Employee's possession as to possible applications
thereof to industry and other uses thereof or therefor;
(ii) during the term of this Agreement, not file any patent or
copyright applications relating to any Work Product, except with the
prior written consent of an authorized representative of Employer;
(iii) assist Employer at any time during his employment by
Employer, or after termination of his employment by Employer with
reimbursement by Employer for all reasonable expenses incurred by him,
in the preparation, execution, and delivery of any assignments,
disclosures, patent applications, or other papers on any Work Product,
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and perform such other acts as Employer deems necessary, in any
jurisdictions, to assign to Employer or its designees such Work
Product, patent and copyright applications, whether or not active, and
patents and copyrights relating thereto; and
(iv) keep and maintain adequate and current written records of
all Work Product during the term of his employment with Employer. The
records will be in the form of notes, sketches, drawings and any other
format that may be specified by Employer. Such records will be
available to and remain the sole property of Employer at all times;
provided, however, that any invention as to which the Employee can prove the
following is exempt from this Section:
(i) it was developed entirely on Employee's own time; and
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(ii) no equipment, supplies, facilities, trade secretes or
proprietary information of Employer was used in its development; and
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(iii) it either (A) does not relate, at the time the invention
was conceived or reduced to practice, to Employer's business or to
Employer's actual or demonstrably anticipated research and
development, or (B) does not result from any work performed by
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Employee for Employer.
(e) All information, inventions, original works of authorship,
developments, trade secrets and discoveries developed, made or conceived prior
to Employee's employment by Employer that as of the date of commencement of such
employment Employee owned or in which Employee had an interest or right, other
than those patented prior to such employment, are identified on Exhibit A
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attached hereto. Any such information, inventions, original works of
authorship, developments, trade secrets and discoveries not so patented or
listed on Exhibit A shall be deemed to be Work Product. Subject to the
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foregoing, Employee shall not be requested or required to assign or disclose any
information, inventions, original works of authorship, developments, trade
secrets and discoveries developed, made or conceived prior to Employee's
employment with Employer.
(f) Employee acknowledges and agrees that the provisions and restrictions
contained in this Section (the "Restrictions"), in view of the nature of the
business in which Employer is engaged, are reasonable and necessary in order to
protect the legitimate business interests of Employer, and that any violation
thereof would result in irreparable harm to Employer, and Employee therefore
further acknowledges and agrees that, in the event Employee violates, or
threatens to violate, any of such Restrictions, Employer shall be entitled to
obtain from any court of competent jurisdiction, without the posting of any bond
or other security, preliminary
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and permanent injunctive or equitable relief 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 at law or in equity to which Employer may be entitled.
(g) If any Restriction, or any part thereof, is determined in any
judicial or administrative proceeding to be invalid or unenforceable, the
remainder of the Restrictions shall not thereby be affected and shall be given
full effect, without regard to the invalid provisions.
(h) If Employee violates any of the Restrictions, the restrictive
period shall not run in favor of Employee from the time of the commencement of
any such violation until such time as such violation shall be cured by Employee
to the satisfaction of Employer.
(i) It is recognized that Employee will have access to certain
confidential information of Employer and its affiliates, and that such
information constitutes valuable, special and unique property of Employer and
its affiliates. Employee shall not at any time disclose any such confidential
information to any party for any reason or purpose except as may be made in the
normal course of business of Employer and for its benefit.
(j) All advertising, sales, and other materials or articles of
incorporation, including, without limitation, data processing reports, customer
sales analyses, invoices, or any other materials or data of any kind furnished
to Employee by Employer or developed by Employee on behalf of Employer or at
Employer's direction or for Employer's use or otherwise in connection with
Employee's employment hereunder, are and shall remain the sole, exclusive and
confidential property of Employer. In the event that Employer requests the
return of such materials at any time during, upon or after the termination of
Employee's employment, Employee shall immediately deliver the same, and any and
all copies thereof, to Employer.
9. Waivers.
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Neither the failure nor any delay on the part of either party hereto to
exercise any right, remedy, power or privilege (collectively, "Right") under
this Agreement shall operate as a waiver, abandonment or release thereof, nor
shall any single or partial exercise of any Right preclude any other or further
exercise of the same or of any other Right, nor shall any waiver of any Right
with respect to any occurrence be construed as a waiver of such Right with
respect to any other occurrence.
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10. Severability.
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If any provision of this Agreement shall be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect or impair
the validity or enforceability of the remaining provisions of this Agreement,
which provisions shall remain in full force and effect, and the parties hereto
shall continue to be bound thereby.
11. Entire Agreement.
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This Agreement contains the entire agreement between the parties
relating to the subject matter hereof and supersedes all previous agreements and
understandings between the parties, whether written or oral, with respect to the
subject matter hereof. This Agreement shall not be modified, altered or amended
except by a writing executed by both parties. Employee acknowledges and agrees
that no such agreement will be effective unless it is approved by formal
resolution of the Board of Directors of Employer.
12. Legal Fees and Expenses.
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The prevailing party in any legal action relating to this Agreement
shall be entitled to recover its or his legal fees and expenses, in addition to
any other remedies it or he may have.
13. Governing Law.
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This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Texas applicable to contracts made and
to be performed in such State without giving effect to the principles of
conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year above first written.
SPECTRADYNE, INC.
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By:
Its:
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Xxxxxxx X. Xxxxx
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