EXECUTIVE EMPLOYMENT AGREEMENT
This agreement (the "Agreement") is made effective March 18, 1998, between DCX,
Inc. ("DCXI" or the "Company") and Xx. Xxxxxx X. Xxxx (the "Executive").
A. Executive is to be employed as Chief Financial Officer of DCXI.
B. DCXI desires to secure the services of Executive, and Executive desires to
serve DCXI Corporate
C. In consideration of the foregoing recitals and the agreements set forth
herein, DCXI and Executive agree as follows:
1. TERM
DCXI shall employ Executive and Executive accepts such employment for a term
beginning on the date of this Agreement and ending December 31, 2000, upon the
terms and conditions set forth herein, unless earlier terminated in accordance
with the provisions herein.
Notwithstanding the foregoing, if this Agreement shall not have been terminated
in accordance with the provisions herein on or before December 31, 2000, the
remaining term of the Agreement shall be extended such that at each and every
moment of time thereafter, the remaining term shall be three years unless (a)
the Agreement is terminated earlier in accordance with the provisions herein or
(b) this Agreement will expire one year from the date of such notification.
2. DEFINITIONS
For purposes of this Agreement, the following terms shall have the meaning set
forth in this paragraph 2:
a. "Base Compensation" shall mean an amount per annum equal to the sum of (i)
the annual base salary in effect for Executive immediately preceding termination
of employment (excluding any reduction in base salary made in breech of this
Agreement), (ii) an amount equal to the product of (A) and (B), where (A) equals
the cumulative cash bonus paid to Executive over the three most recently
completed calendar years prior to termination (including any bonus amounts
deferred by Executive under any DCXI deferred compensation plan or arrangement)
divided by the cumulative base salary paid to Executive over the same three year
period (including any base salary deferred by Executive and where (B) equals the
amount set forth in 2.a.(i) above, (iii) continued participation in all basic
and supplemental life, accident, disability, and other Company-sponsored
insurance benefits provided to Executive immediately preceding termination (or,
if continued participation in one or more of these benefits is not possible,
benefits substantially similar to those which Executive would have been entitled
to if he had continued as an employee of the Company at the same compensation
level in effect immediately prior to termination), and (iv) continuance of
vesting and benefit accrual under any Company-sponsored basic and supplemental
retirement programs in effect for Executive immediately prior to termination
(or, if continued participation in such programs is not possible, benefits
substantially similar to those which executive would have been entitled to if he
had continued as an employee of the Company at the same compensation level
immediately prior to termination).
b. "Board" means the Board of Directors of the Company.
c. "Cause" shall mean (I) willful refusal by Executive to follow a lawful
written demand of the Board, (ii) Executive's willful and continued failure to
perform his duties under this Agreement (except due to Executive's incapacity
due to physical or mental illness) after a written demand is delivered to
Executive by the Board specifically identifying the manner in which the Board
believes that Executive has failed to perform his duties, (iii) Executive's
willful engagement in conduct materially injurious to the Company, or (iv)
Executive conviction for any felony involving moral turpitude. For purposes of
clauses (I), (ii) or (iii) of this definition, no act, or failure to act on
Executive's part shall be deemed "willful" unless done, or omitted to be done,
by Executive not in good faith and without reasonable belief that Executive's
act, or failure to act, was in the best interests of the Company.
d. "Constructive Termination" shall mean Executive's voluntary termination of
employment within ninety (90) days following the occurrence of one or more of
the following events, unless such event is approved in writing by Executive in
advance of such event:
(i) A failure by the Company to abide by any part of this Agreement that is
not remedied within ten (10) business days of notification by Executive of
such failure, including any violation of Executive's rights as described in
Section 3 of this Agreement unless such rights are replaced by alternative
rights of approximately equal value;
(ii) A reduction in Executive's title or responsibilities below Chief
Financial Officer of Corporate
e. "Disability" shall be deemed to have occurred if Executive makes application
for disability benefits under any Company-sponsored long-term disability program
covering Executive and qualifies for such benefits.
f. "Retirement" shall mean Executive's termination of service with the Company
in accordance with the provisions of any Company retirement plan or the
Company's 401K Retirement Savings Plan in which the Executive is eligible to
participate.
3. EXECUTIVE'S RIGHTS REGARDING BASE SALARY, BONUS AND OTHER BENEFITS WHILE
EMPLOYED BY THE COMPANY
a. Base Salary. The minimum annual base salary payable to Executive upon
commencement of this Agreement shall be $120,000 (one hundred twenty thousand
dollars). The Board or its Executive Compensation Committee of the Board (if one
is designated) will review the Executive's base salary at least annually to
determine the amount of any increase. Upon any such increase in Executive's base
salary, such increased rate shall thereafter constitute Executive's minimum
annual base salary for all purposes of this Agreement, except that the Company
may reduce Executives annual base Salary during any year by not more than 10%
below the base salary in effect at the beginning of the year as part of any
general salary reduction which applies to all officers of the Company and its
subsidiaries (if any).
b. Incentive and Performance Bonus.
In recognition of the considerable challenges accepted by him, Executive shall
receive an Incentive Bonus consisting of a stock option grant of 200,000 shares
of the Company's common stock fully vested and priced at the closing bid price
on signature date of acceptance of agreement, the first business day which
Executive was engaged. In addition Executive shall receive a stock option grant
of 160,000 shares of the Company's common stock also priced at the bid price on
signature date of acceptance of agreement, and vesting in accordance with the
appropriate portions of the Performance Bonus schedule delineated below (the
"Performance Options).
Executive shall, as provided herein, and subject to paragraph (I) and (ii),
below, receive a Performance Bonus for
(i) The Company's fiscal year ending September 30, 1998, equal to:
* Five percent of base salary if Executive is directly responsible for net
income savings after taxes for DCX of $150,000 or more.
* Executive shall receive an additional bonus of ten percent of base salary if
the average closing bid price for the last five business days on NASDAQ of DCXI
ending September 30, 1998 is equal to the closing NASDAQ bid price on January 2,
1998 plus $1.35.
* Further, if the revenue of the Company exceeds $25 million at September 30,
1998, executive shall receive an additional bonus equal to 0.75% of the amount
of revenue that exceeds $25 million.
(ii) The Company's fiscal years ending September 30, 1998 and later,
* An amount equal to 2% of that portion of the net income of the Company for
each fiscal year in excess of the amount determined by multiplying stockholder's
equity for each such fiscal year by .11. For purposes of these calculations of
stockholders' equity under this Agreement, stockholder's equity for any fiscal
year shall be the average of the four quarterly stockholders' equity figures
reported by the Company for that fiscal year.
* An amount equal to 21% of base salary if the average closing bid price for the
five business days on NASDAQ (or the closing price if listed on another SEC
recognized stock exchange) ending September 30 of such fiscal year exceeds the
previous year's five day average for the same period by 55% or more.
* Further, if the consolidated gross revenue of the Company exceeds $20 million
by September 30, 1998, the Executive shall be deemed vested in 30 percent of the
Performance Options; if in excess of $30 million by September 30, 1999 shall be
deemed vested in 30 percent of the Performance Options and if the Company
exceeds $40 million by September 30, 2000 he will be vested in the remaining 40
% of the Performance Options. Vesting occurs as the annual revenues are met
regardless of year this was accomplished.
(iii) Each cash Performance Bonus shall be payable either 30 days following
the date Company's audited consolidated financial statements for the fiscal
year become available or on January 15 following the end of that fiscal
year, whichever is later (the "Bonus Payment Date").
In the event that there shall be a combination of the Company with another
company, or any other occurrence similar to a combination, and as a result
thereof the amount or value of the bonuses payable pursuant to any of the
formulae set forth above could reasonably be expected to be significantly
affected thereby, appropriate changes will, at the request of either party, be
negotiated to establish a substitute formula or formulae satisfactory to both
parties. If an acceptable substitute formula (e) cannot be developed, they shall
submit such matter to arbitration by a qualified investment banker with at least
ten years' experience in corporate finance. Neither party shall have had
dealings with such arbitrator during the preceding three years.
Executive shall be entitled to receive the bonus provided for in the foregoing
paragraphs for each fiscal year during which he is employed hereunder and, in
addition, for the next 18 months after termination of his employment, except
that said post-termination bonus coverage shall only extend for twelve months
after termination if Executive takes employment (other than as an independent
consultant) with another company in the same industry within twelve months of
termination and shall not apply if Executive has been discharged for cause.
Bonus payments shall be in cash for the fiscal years ending September 30, 1998
and 1999; thereafter the bonus payments shall be payable in cash or a
combination of cash and Restricted Stock or stock options at the discretion of
the Executive.
Executive shall participate in any key executive long-term incentive program or
other executive bonus program which the Board or its Executive Compensation
Committee (if any) may define.
c. Registration of Performance and Incentive Stock Options. The Company agrees
to file with the Securities and Exchange Commission the performance and
incentive stock options granted under paragraph b, above, within 180 days of
executing this Agreement.
d. Non-dilution of Incentive and Performance Options. Options granted with
respect to Section c, above, shall be granted to the Executive on a non-diluted
basis, such that any increase or decrease in the number of shares of common
stock of the Company which occurs during the option period (the time during
which the Executive is an employee and the options remain unexercised for any
reason) will cause the number of options to be proportionately increased or
decreased, commensurate with the change in outstanding shares of the Company.
The option price shall be determined by the Board of Directors so as not to
cause undo financial hardship on Executive and/or the Company.
e. Vacation. Executive shall receive four weeks of vacation per year. Unused
vacation at the expiration of the Agreement's initial three year period will be
paid in cash at a rate equal to the Base Compensation.
e. Automobile allowance. Executive shall receive an unaccountable automobile
allowance of $300 per month.
f. Relocation allowance. Executive shall be entitled to relocation expenses not
to exceed 10% of Executive annual salary and in the event his primary place of
business is subsequently moved in excess of 200 miles from its present location.
g. Executive shall have the right to perform his duties out of any personal
residences he may have, provided that such right does not result in behavior or
actions injurious to the Company.
h. Executive shall be entitled to participate in all perquisites and health and
welfare benefits generally available to other executive officers and employees
of the Company.
i. Reimbursement of all reasonable expenses incurred by Executive in connection
with performance of his duties upon submission of vouchers. Reasonable expense
shall include, but not be limited to all reasonable out-of-pocket expenses for
entertainment, automobile expenses, travel, meals, lodging, professional fees,
professional dues and the like incurred by Executive in the interest of the
Company, subject to such guidelines and policies as may be promulgated by the
Company for senior executives or employees.
4. EXECUTIVE RIGHTS UPON TERMINATION
In the event that Executive's employment at DCXI is terminated for any reason
other than (a) death, (b) Disability, (c) Cause, (d) voluntary resignation by
Executive not constituting Constructive Termination, or (e) the expiration of
the term of this Agreement, DCXI will pay to Executive Base Compensation for a
period continuing three years after the date of termination. In addition, DCXI
will fully vest all stock options and restricted stock awards previously granted
by DCXI to Executive and fully vest and immediately pay to Executive any accrued
award earned by Executive under the Performance Bonus Plan(s), above, or any
other DCXI executive incentive plans which may exist at the time of termination
and in which the Executive is a participant.
Base Compensation payments shall be made when payments would otherwise have been
made to Executive if he were still employed by DCXI, except in such cases where
a different payment schedule is provided for in other Company-sponsored plans or
programs.
In the event Executive's employment at DCXI is terminated for death, Disability,
Cause, voluntary resignation not constituting Constructive Termination, or upon
expiration of the term of this Agreement, Executive shall not be entitled to any
benefits under this Agreement. This statement, however, shall not preclude
Executive from any payments or benefits available to Executive from
participation in Company-sponsored plans or programs.
5. DESIGNATION OF BENEFICIARIES
If Executive should die while receiving Base Compensation payments pursuant to
Paragraph 4, the remaining Base Compensation payments which would have been paid
to Executive if he had lived shall be paid as designated by Executive on his
Company Beneficiary Designation Form. Such payments shall be made at the same
time and in the same manner as if Executive were alive to receive the payments,
except in such cases where a different payment schedule is provided, or in other
company-sponsored plans or programs.
The filing of a new Company Beneficiary Designation Form will cancel all
designations previously filed. Any finalized divorce or marriage (other than a
common-law marriage) of Executive subsequent to the date of filing of a
beneficiary designation shall revoke such designation, unless:
(a) In the case of divorce, the previous spouse was not designated as
beneficiary, and
(b) In the case of marriage, Executive's new spouse had previously been
designated as beneficiary.
The spouse of a married Executive shall join in any designation of a beneficiary
other than the spouse.
If Executive fails to designate a beneficiary as provided for above, or if the
beneficiary designation is revoked by marriage, divorce, or otherwise without
execution of a new designation, then the Company's Board (or its Compensation
Committee it one exists) shall direct the distribution of any benefits under
this Agreement to Executive's estate.
6. DUTIES OF EXECUTIVE
Executive as Chief Financial Offer agrees to devote substantially all of his
time and energy to the performance of the duties of that position so long as his
employment in that position shall be continued by DCXI. Notwithstanding the
above, Executive shall be permitted to serve as a Director or Trustee of other
organizations, provided such service does not prevent Executive from performing
his duties under this Agreement.
7. MITIGATION AND OFFSET
Executive shall not be required to mitigate the amount of any payment provided
for in this Agreement by seeking employment or otherwise, nor to offset the
amount of any payment provided for in this Agreement by amounts earned as a
result of Executive's employment or self-employment during the period he is
entitled to such payment.
8. TAX "GROSS-UP" PROVISION
If any payments due Executive under this Agreement result in Executive's
liability for an excise tax ("parachute tax") under Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), the Company will pay to
Executive, after deducting any Federal, state or local income tax imposed on the
payment, an amount sufficient to fully satisfy the "parachute tax" liability.
Such payment shall be made to Executive not later than 30 days prior to the due
date of the "parachute tax."
9. SUCCESSORS
The rights and duties of a party hereunder shall not be assignable by that
party; provided, however, that this Agreement shall be binding upon and inure to
the benefit of any successor of DCXI, and any such successor shall be deemed
substituted for DCXI under the terms of this Agreement. The term successor as
used herein shall include any person, firm, corporation or other business entity
which at any time, by merger, purchase or otherwise, acquires all or
substantially all of the assets or business of DCXI.
This Agreement shall also be binding upon and shall inure to the benefit of
Executive, Executive's heirs, executors, administrators and beneficiaries.
10. ENTIRE AGREEMENT
With respect to the matters specified herein, this Agreement contains the entire
agreement between the parties and supersedes all prior oral and written
agreements, understandings and commitments between the parties. This Agreement
shall not affect the provisions of any other compensation, retirement or other
benefit programs of DCXI to which Executive is a party or of which he is a
beneficiary. No amendments to this Agreement may be made except through a
written document signed by both parties.
11. VALIDITY
In the event that any provision of this Agreement is held to be invalid, void or
unenforceable, the same shall not affect, in any respect whatsoever, the
validity of any other provision of the Agreement.
12. PARAGRAPHS AND OTHER HEADINGS
Paragraphs and other headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
13. NOTICE
Any noticed or demand required or permitted to be given under this Agreement
shall be made in writing and shall be deemed effective upon the personal
delivery thereof is delivered or, if by express delivery service, 24 hours after
placing in the control of the express delivery service; or if mailed, 48 hours
after having been deposited in the United States mail, postage prepaid, and
addressed in the case of DCXI to its then principal place of business, presently
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxxxx Xxxxxxx 00000 , and in the case
of Executive to:
Xx. Xxxxxx X. Xxxx, CPA
0000 Xxxxx Xxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Either party may change the address to which such notices are to be addressed by
giving the other party notice in the manner herein set forth.
14. ATTORNEYS' FEES
In any action at law or in equity to enforce any of the provisions or rights
under this Agreement, the unsuccessful party to such litigation, as determined
by the Court in a final judgment or decree, shall pay the successful party or
parties all costs, expenses and reasonable attorneys' fees incurred therein by
such party or parties (including without limitation such costs, expenses and
fees on any appeals), and if such successful party or parties shall recover
judgment in any such action or proceeding, such costs, expenses and attorneys'
fees shall be included as part of such judgment.
Notwithstanding the foregoing provision, in no event shall the successful party
or parties be entitled to recover any amount from the unsuccessful party for
costs, expenses and attorneys' fees that exceed the unsuccessful party's costs,
expenses and attorneys' fees in connection with the action or proceeding.
15. WITHHOLDING TAXES
To the extent required by law, the Company shall withhold from any payments
under this Agreement any applicable federal, state or local taxes.
16. INDEMNIFICATION
So long as Executive is not found by a court of law to be guilty of a willful
and material breach of this agreement, or to be guilty of gross misconduct, he
shall be indemnified from and against any and all losses, liability, claims and
expenses, damages, or causes of action, proceeding or investigations, or threats
thereof (including reasonable attorney fees and expenses of counsel satisfactory
to and approved by Executive) incurred by Executive, arising out of, in
connection with, or based upon Executive's services and the performance of his
duties pursuant to this Employment Agreement, or any other matter contemplated
by this Employment Agreement, whether or not resulting in any such liability
subject to such limitations as are provided by the Colorado Business
Corporations Act; and Executive shall be reimbursed by the Company as and when
incurred for any reasonable legal and other expenses incurred by Executive in
connection with investigating or defending against any such loss, claim, damage,
liability, action proceeding, investigation or threat thereof, or producing
evidence, producing documents or taking any other action in respect thereto
(whether or not Executive is a defendant in or target of such action, proceeding
or investigation), subject to such limitations as are provided by the Colorado
Business Corporations Act.
17. APPLICABLE LAW AND DISPUTE RESOLUTION
To the full extent controllable by stipulation of the parties, this Agreement
shall be interpreted under Florida law. All disputes arising out of this
Agreement will be settled by binding arbitration in Jacksonville, Florida with a
representative of the American Arbitration Association.
IN WITNESS THEREOF, DCX, Inc. has caused this Agreement to be executed by its
duly authorized representatives and Executive has affixed his signature, as of
the date first above written.
For DCX, Inc. Executive
/s/ Xxxxxxx Xxxxxxxx /s/ Xxxxxx x. Xxxx
----------------------- ----------------------------
Xxxxxxx Xxxxxxxx Xxxxxx X. Xxxx, CPA
Chief Executive Officer
Dated : 3/18/1998 Dated: 3/18/1998
