EMPLOYMENT AGREEMENT
AGREEMENT dated as of July 22, 1998, between XXXXXX X. PRIME,
residing at 0000 Xxxxxx, Xxxxx, Xxxxxxxx 00000 ("Executive"), and ATLAS
TECHNOLOGIES, INC., a Michigan corporation having its principal office at 000
Xxxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000 ("Company").
WHEREAS, the Company and Executive desire to pro vide for the
continued employment of Executive by the Company on the terms set forth herein;
IT IS AGREED:
1. Employment, Duties and Acceptance.
1.1 The Company hereby employs Executive as its Chairman of
the Board. All of Executive's powers and authority in any capacity shall at all
times be subject to the reasonable direction and control of the Company's Board
of Directors ("Board"). During the term of this Agreement, Executive shall be
elected as a member of the Board.
1.2 The Board may assign to Executive such other executive
duties for the Company or any Affiliate as are consistent with Executive's
status in the capacity set forth above. As used herein, "Affiliate" means any
parent corpora tion or subsidiary of the Company and any other corporation under
common control with the Company.
1.3 Executive accepts such employment and agrees to devote all
of his business time, energies and attention to the performance of his duties;
provided that nothing herein shall be construed as preventing Executive from
making and supervising personal investments.
2. Compensation and Benefits.
2.1 [Intentionally omitted.]
2.2 The Company shall pay to Executive a salary ("Salary") at
the rate of $198,588 per year, subject to cost-of-living increases in accordance
with Section 2.4. Executive's Salary shall be paid in equal periodic
installments in accordance with the Company's normal payroll procedures and
shall be subject to withholding taxes and other normal payroll deductions.
2.3 During the term of this Agreement, Executive shall be
entitled to such medical and life insurance benefits and other benefits as are
set forth in Schedule A hereto. Executive shall be entitled to six weeks of
vacation in each calendar year but shall not be entitled to payment in lieu
thereof to the extent not taken.
2.4 (a) The Company will pay or reimburse Execu tive for all
transportation, hotel and other expenses reason ably incurred by Executive on
business trips and for all other ordinary and reasonable out-of-pocket expenses
actually incurred by Executive in the conduct of the business of the Company
against itemized vouchers submitted with respect to any such expenses approved
in accordance with customary procedures.
(b) The Company shall provide Executive with
an automobile suitable for business use and shall pay all the costs and expenses
reasonably incurred by Executive in con nection with the use thereof, including
but not limited to purchase or leasing costs, fuel, maintenance, insurance,
garaging and mobile telephone.
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2.5 [Intentionally omitted.]
2.6 [Intentionally omitted.]
2.7 [Intentionally omitted.]
2.8 [Intentionally omitted.]
2.9 [Intentionally omitted.]
2.10 During the term of this Agreement, the Company shall not
amend the provisions of its Certificate of Incorpo ration and By-Laws relating
to indemnification and limitation of liability of directors and officers, as in
effect on the date hereof, without the consent of Executive.
2.11 [Intentionally omitted.]
2.12 [Intentionally omitted.]
2.13 [Intentionally omitted.]
2A. Bonus.
2A.1 In consideration of the representations set forth in the
Settlement Agreement referred to below, and subject to the further provisions of
this Article 2A, the Company shall pay Executive the sum of Eight Hundred Thirty
Thousand Two Hundred Eighty-Two and 21/100 ($830,282.21) Dollars, payable in
four (4) equal and consecutive annual installments, commencing on July 30, 1999,
and on each anniversary date thereafter. Payments shall be subject to all
withholding requirements under applicable law.
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2A.2 In the event of Executive's death prior to payment in
full of the amount payable under this Article 2A, the payments due Executive
shall be paid to Executive's spouse, if living, and if not, to Executive's
estate.
2A.3 The payments to be made by Company pursuant to this
Article 2A shall not be subject to set-off or deduction for any reason,
including breach by Executive of any pro vision of this Agreement, except as set
forth below.
2A.4 Notwithstanding the foregoing, Company may set-off
against payments to be made pursuant to this Article 2A amounts for which
Executive has agreed to indemnify the Company and Productivity Technologies
Corp. in the event of certain conditions set forth in Section 8 of the
Settlement Agreement dated July 22, 1998 between Prime, Austin, the Company and
Productivity Technologies Corp. Pursuant to Section 8 of the Settlement
Agreement, the maximum amount of the Executive's liability for all reasons shall
not exceed Eight Hundred Thirty Thousand Two Hundred Eighty-Two and 21/00
($830,282.21) Dollars less the sum of all payments made under Section 2A.1 of
this Agreement. Subsequent to any date on which payment is specified to be made
pursuant to this Article 2A, the Company and Productivity Technologies Corp.
will have no further right to seek indemnification with respect to any amount
for which payment has become due hereunder unless written notice of such right
to indemnification has been received by Executive on or prior to such date.
2A.5 Executive hereby acknowledges that in the event of a
default of the senior debt referred to below his right to payment of the amount
set forth in Section 2A.1 shall be subordinated to the prior payment in full of
all principal and interest on any existing or future obligations of the
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Company, including guarantees by the Company, for any money borrowed from any
bank, trust company, insurance company or other financial institution engaged in
the business of lend ing ("Senior Debt"). Executive further agrees that in
accordance with this subordination, the following shall apply:
Upon distribution of assets of the Company upon any
dissolution, winding up, liquidation or reorganization of the Company,
whether in bankruptcy, insolvency, reorganization or receivership
proceedings or upon an assignment for the benefit of creditors or any
other marshaling of the assets and liabilities of the Company or
otherwise,
(i) The holders of all Senior Debt shall first be
entitled to receive payment in full of the principal thereof,
premium, if any, and the interest due thereon before Executive
is entitled to receive any payment pursuant to Section 2A.1;
and
(ii) Any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or
securities, to which Executive would be entitled except for
the provisions of this Section shall be paid by the
liquidating trustee or agent or other person making such
payment or dis tribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or otherwise, directly to the
holders of Senior Debt or their representative or
representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any of such
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Senior Debt may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the
principal of, premium, if any, and interest on the Senior
Debt held or represented by each, to the extent necessary to
make payment in full of all Senior Debt remaining unpaid,
after giving effect to any concurrent payment or
distribution to the holders of such Senior Debt.
2A.6 The Company shall have no obligation to set aside,
earmark or entrust any fund or money with which to pay its obligations under
Section 2A.1. Executive, his ben eficiaries and any successor-in-interest to him
shall be and remain simply a general creditor of the Company in the same manner
as any other creditor having a general claim for a matured and unpaid debt.
2A.7 Executive's rights to payments pursuant to Section 2A.1
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment or garnishment by creditors of
Executive, his spouse, other heirs or beneficiaries.
2A.8 The provisions of this Article 2A shall continue in
effect regardless of the termination of this Agreement for any reason.
3. Term and Termination.
3.1 The term of this Agreement shall commence as of the date
hereof and shall continue until December 31, 1998, unless sooner terminated as
herein provided.
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3.2 If Executive dies during the term of this Agreement, this
Agreement shall thereupon terminate, except that the Company shall pay to the
legal representative of Executive's estate all monies due hereunder to the end
of the month during which Executive dies.
3.3 The Company, by notice to Executive, may terminate this
Agreement if Executive shall fail because of illness or incapacity to render,
for twelve consecutive months, services of the character contemplated by this
Agree ment. Notwithstanding such termination, the Company shall pay to Executive
all monies due hereunder to the end of the month in which such termination
occurs.
3.4 The Company, by notice to Executive, may terminate this
Agreement and Executive's employment with the Company for cause. As used herein,
"cause" shall mean: (a) the refusal or failure by Executive to carry out
specific directions of the Board which are of a material nature and consistent
with his status in the capacity set forth in Section 1.1, or the refusal or
failure by Executive to per form a material part of Executive's duties in such
capacity; provided that failure to achieve specified performance goals shall not
be "cause" hereunder; (b) fraudulent or dishonest action by Executive in his
relations with the Company or any of its Affiliates, or with any customer or
other business contact of the Company or any of its Affiliates ("dishonest" for
these purposes shall include Executive's knowingly or recklessly making of a
material misstatement or omission for his personal benefit); or (c) the
conviction of Executive of any crime involving an act of moral turpitude.
Notwithstand ing the foregoing, no "cause" for termination shall be deemed to
exist with respect to Executive's acts described in clause (a) above unless the
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Company shall have given written notice to Executive specifying the "cause" with
reasonable particu larity and, within five business days after such notice,
Executive shall not have cured or eliminated the situation or event giving rise
to such "cause."
4. Protection of Confidential Information; Non-Compe
tition.
4.1 Executive acknowledges that:
(a) As a result of his employment by the
Company, Executive has obtained and will obtain secret and confidential
information concerning the business of the Company and its Affiliates,
including, without limitation, financial information, proprietary rights, trade
secrets and "know-how," customers, and certain business methodologies
("Confidential Information").
(b) The Company and its Affiliates will suffer
substantial damage which will be difficult to compute if, during the period of
his employment with the Company or thereafter, Executive should divulge
Confidential Information or, thereafter, Executive should enter a business
competitive with that of the Company.
(c) The provisions of this Agreement are
reasonable and necessary for the protection of the business of the Company and
its Affiliates.
4.2 Executive agrees that he will not at any time, either
during the term of this Agreement or thereafter, divulge to any person or entity
any Confidential Information obtained or learned by him as a result of his
employment with the Company or any of its Affiliates, except (i) in the
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course of performing his duties hereunder, (ii) with the Company's express
written consent; (iii) to the extent that any such information is in the public
domain other than as a result of Executive's breach of any of his obligations
here under; or (iv) where required to be disclosed by court order, subpoena or
other government process. If Executive shall be required to make disclosure
pursuant to the provisions of clause (iv) of the preceding sentence, Executive
promptly, but in no event more than 48 hours after learning of such subpoena,
court order, or other government process, shall notify, by personal delivery or
by electronic means, con firmed by mail, the Company and, at the Company's
expense, Executive shall: (a) take all reasonably necessary steps required by
the Company to defend against the enforcement of such subpoena, court order or
other government process, and (b) permit the Company to intervene and
participate with counsel of its choice in any proceeding relating to the
enforcement thereof. As used in this Agreement, "Affiliate" means any entity
that, directly or indirectly, is controlled by, controlling, or under common
control with the Company.
4.3 Upon termination of his employment with the Company,
Executive will promptly deliver to the Company all original memoranda, notes,
records, reports, manuals, draw ings, blueprints and other documents relating to
the business of the Company and its Affiliates (and all copies thereof) and all
property associated therewith, which he may then possess or have under his
control.
4.4 If Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Section 4.2, the Company shall have the
right and remedy to have the provi sions of this Agreement specifically enforced
by any court having equity jurisdiction, it being acknowledged and agreed
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by Executive that the services being rendered hereunder to the Company are of a
special, unique and extraordinary char acter and that any such breach or
threatened breach will cause irreparable injury to the Company and that money
damag es will not provide an adequate remedy to the Company.
4.5 If any provision of Section 4.2 is held to be
unenforceable because of the scope, duration or area of its applicability, the
tribunal making such determination shall have the power to modify such scope,
duration, or area, or all of them, and such provision or provisions shall then
be applicable in such modified form.
4.6 Executive acknowledges that until the termina tion of the
"Non-Competition Period" defined therein, Execu tive is subject to the
provisions of Section 5.04(b) of that certain Merger Agreement dated December
18, 1995, between Production Systems Acquisition Corporation, AMS Holding
Company, Executive, Prime and the Company.
5. Miscellaneous Provisions.
5.1 All notices provided for in this Agreement shall be in
writing, and shall be deemed to have been duly given when delivered personally
to the party to receive the same, when transmitted by electronic means, or when
mailed first class postage prepaid, by certified mail, return re ceipt
requested, addressed to the party to receive the same at his or its address set
forth below, or such other address as the party to receive the same shall have
specified by written notice given in the manner provided for in this Section
5.1. All notices shall be deemed to have been given as of the date of personal
delivery or transmittal thereof or three business days after mailing thereof.
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If to Executive:
Xxxxxx X. Prime
0000 Xxxxxx
Xxxxx, Xxxxxxxx 00000
Marked "Personal and Confidential"
If to the Company:
Atlas Technologies, Inc.
000 Xxxxx Xxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attn.: Chief Executive Officer
Telecopier: (000) 000-0000
with a copy to:
Xx. Xxxxx X. Xxxxxx
Xxxxxxx & Co., Inc.
000 Xxxxx Xxxx Xxxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
Telecopier: (000) 000-0000
5.2 This Agreement executed simultaneously here with sets
forth the entire agreement of the parties relating to the employment of
Executive and are intended to supersede all prior negotiations, understandings
and agreements. No provisions of this Agreement may be waived or changed except
by a writing by the party against whom such waiver or change is sought to be
enforced. The failure of any party to re quire performance of any provision
hereof shall in no manner affect the right at a later time to enforce such
provision.
5.3 All questions with respect to the construction of this
Agreement, and the rights and obligations of the parties hereunder, shall be
determined in accordance with the law of the State of Michigan applicable to
agreements made and to be performed entirely in Michigan. Any dispute,
controversy or claim arising out of or relating to this Agreement, the making,
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interpretation or the breach thereof, other than a claim solely for injunctive
relief for any alleged breach of the provisions of Section 4.2, as to which the
parties shall have the right to apply for specific per formance to any court
having equity jurisdiction in Genesee County, Michigan, shall be submitted to
arbitration to the American Arbitration Association in Flint, Michigan, before a
single arbitrator in accordance with the Commercial Arbitra tion Rules of the
American Arbitration Association and judg ment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof and any party
to the arbitration may, if he or it so elects, institute proceedings in any
court having jurisdiction for the specific performance of any such award. The
powers of the arbitrator shall in clude, but not be limited to, the awarding of
injunctive relief. All costs and expenses of the arbitration, including legal
fees of the prevailing party, shall be borne by the non-prevailing party.
5.4 This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the Compa ny. This Agreement shall
not be assignable by Executive, but shall inure to the benefit of and be binding
upon Executive's heirs and legal representatives.
5.5 This Agreement supersedes all prior agreements between the
Company and Executive regarding the terms and conditions of Executive's
employment with the Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
/s/ Xxxxxx X. Prime
___________________________________
XXXXXX X. PRIME
ATLAS TECHNOLOGIES, INC.
/s/ Xxxxxxx X. Xxxxxx
By:________________________________
Xxxxxxx X. Xxxxxx
Title: President
The undersigned hereby agrees to the provisions of Article 2A
of the above Employment Agreement.
PRODUCTIVITY TECHNOLOGIES CORP.
/s/ Xxxxx X. Xxxxxx
By:________________________________
Xxxxx X. Xxxxxx
Title: Chief Financial Officer
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SCHEDULE A
1. Paid Holidays
A. Memorial Day
B. Independence Day
C. Labor Day
D. Thanksgiving Day
E. Christmas Eve Day
F. Christmas Day
G. New Years Day
2. Insurance
A. Health and dental insurance, including master
medical and prescription plan
B. Life and accident insurance
C. Short-term disability pay, regular weekly
salary and health insurance for up to 52 weeks
3. Participation in qualified retirement plans of the employer
upon meeting the eligibility requirements therefor.
4. Miscellaneous benefits as provided in the current Salaried
Employee Handbook including, but not lim ited to, tool
allowance, safety glasses and educational assistance.
5. Such other benefits as are provided to salaried personnel of
the Company.
A-1
