Exhibit 2.3
EMPLOYMENT AGREEMENT
This Agreement is executed effective November 1, 1997 (the
"Effective Date") between BOATRACS, INC., a California
corporation (the "Company"), having an address for notices at
0000 Xxxx Xxxx., Xxxxx X-000, Xxx Xxxxx, Xxxxxxxxxx 00000-0000
and XXXXXXX X. XXXXXX, XX., ("Xxxxxx"), having an address for
notices at 0000 Xxxxxxxxxx Xxxxx, Xxxxxxxx, XX 00000, who agree
as follows:
1. Hiring. The Company hereby hires Xxxxxx as, and Xxxxxx
hereby agrees to act as Vice President of Application
Development. The Company and Xxxxxx intend to enter into an
employer-employee relationship, subject to the terms of this
Agreement, based upon Xxxxxx'x ability to design and build
integrated information and communication systems in the marine
industry and other related technical skills and further upon
Xxxxxx'x ability to expand and develop the Company's ability to
offer its customers integrated marine information systems.
2. Duties. Xxxxxx shall faithfully and diligently perform
the duties described on attached Exhibit A and the following
described duties on a full-time basis: (a) Devoting Xxxxxx'x
entire productive time, ability and attention to the business of
the Company; and (b) Performing such other duties as the Chief
Executive Officer and President of the Company (the "CEO"), shall
from time to time specify that are consistent with the duties
normally performed by an employee in Xxxxxx'x position.
3. Base Compensation.
3.1. Xxxxxx'x total compensation ("Base Compensation")
under this Agreement, prorated for any partial year, shall be
$150,000.00 per year commencing on the Effective Date and ending
on the second anniversary of the Effective Date (the "First
Half"), and $180,000.00 per year commencing on the expiration of
the First Half and continuing until the fourth anniversary of the
term of this Agreement (the "Second Half"). The Base
Compensation shall be payable biweekly in arrears from the
Effective Date, in accordance with and at the same times as the
Company's ordinary payroll procedures.
3.2. During the First Half, Xxxxxx may, at his
election, receive up to $30,000.00 per year of Base Compensation
in the form of shares of the Company's common stock (the
"Stock"). During the Second Half, Xxxxxx may, at his election,
receive up to $60,000.00 per year of Base Compensation in the
form of Stock. Xxxxxx may exercise such option, with respect to
any particular semi-annual period (defined as January 1-June 30
and July 1-December 31), by written notice to the Company on or
before 5 days before the beginning of such semi-annual period
(such exercise, an "Election"). Such notice will specify that
portion of his Base Compensation for the upcoming semi-annual
period that Xxxxxx elects to receive in the form of Stock. The
value of Stock for purposes of this Paragraph shall be determined
as follows:
(i) If the Stock is not at the time listed or
admitted to trading on any stock exchange but is traded in the
over-the-counter market, the fair market value shall be the
average mean between the highest bid and lowest asked prices (or,
if such information is available, the closing selling prices) of
one share of the Stock in the over-the-counter market, as such
prices are reported by the National Association of Securities
Dealers through its NASDAQ system or any successor system, on the
first three trading days of the semi-annual period to which the
Election relates. If there are no reported bid and asked prices
(or closing selling prices) for the Stock on any of the dates in
question, then the average mean between the highest bid price and
lowest asked prices (or the closing selling price) on the last
three preceding dates for which such quotations exist shall be
determinative of fair market value.
(ii) If the Stock is at the time listed or
admitted to trading on any stock exchange, then the fair market
value shall be the average closing selling price of one share of
Stock on the first three trading days of the semi-annual period
to which the Election relates, on the stock exchange determined
by the Company, in its reasonable discretion, to be the primary
market for the Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no
reported sale of Stock on such exchange on the dates in question,
then the fair market value shall be the average closing selling
prices on the exchange on the last three preceding dates for
which such quotations exist.
4. Benefits. Xxxxxx shall be entitled to the following
benefits during the term of this Agreement:
4.1. Vacation benefits generally available to other
executives of the Company of comparable seniority and rank,
accrued over the course of each year in accordance with the
Company's policy.
4.2. Reimbursement for reasonable expenses incurred in
the proper performance of Xxxxxx'x duties under this Agreement
and in accordance and consistent with the Company's policy.
4.3. Inclusion in the Company's medical plan for the
Company's other employees.
4.4. All benefits generally available to other
employees of the Company, including without limitation profit
sharing benefits generally made available to other employees of
Xxxxxx'x rank and seniority.
4.5. Reasonable moving expenses in the event the
Company requires Xxxxxx to relocate his residence outside
Gulfport, Mississippi.
5. Term. The term of this Agreement shall be four (4)
years, commencing on the Effective Date and ending on the fourth
anniversary of the Effective Date, unless terminated earlier in
accordance with the terms hereof.
6. Termination. At any time that Good Cause (as defined
below) exists or has arisen, the Company may, at its election,
terminate this Agreement upon 3 days written notice. In the
event of such Good Cause termination, Xxxxxx may, at his
election, appeal such termination to the Board of Directors of
the Company, whose determination shall be final and binding. For
purposes of this Agreement, "Good Cause" shall mean the existence
or occurrence of any of the following:
6.1. Any neglect or breach of duty by Xxxxxx, or any
failure by Xxxxxx to perform, to the reasonable satisfaction of
the CEO, such duties as may be delegated to Xxxxxx by the Company
from time to time.
6.2. If Xxxxxx is convicted of a felony or files for
any protection under the federal bankruptcy laws (or any such
proceeding is filed against Xxxxxx and is not dismissed within
90 days of such filing).
6.3. If Xxxxxx commits theft, larceny, embezzlement,
fraud, any acts of dishonesty, illegality, moral turpitude or
gross mismanagement, as determined in good faith by the CEO,
whose determination shall be final and binding.
6.4. If Xxxxxx breaches any obligation set forth in
Paragraphs 8, 9, 10 or 11 or materially and repeatedly breaches
any other provision of this Agreement.
6.5. If Xxxxxx breaches any term of that certain Asset
Purchase Agreement dated November 17, 1997 among MED Associates,
Inc., Xxxxxx, Xxxxxx X. Xxxxxx, and the Company.
6.6. The death of Xxxxxx.
6.7. If Xxxxxx becomes materially disabled to such an
extent that Xxxxxx is precluded from performing the duties set
forth in this Agreement for a period of three (3) months or more
within any twelve (12) month period. Disability shall not be
proper grounds for termination in the event that such disability
arises from injuries received by Xxxxxx while traveling in the
scope of his employment.
6.8. If Xxxxxx fails to adhere to any Company policy
or any future policy of Company.
7. Representations and Warranties. Xxxxxx hereby
represents and warrants that as of the date of execution of this
Agreement: (i) this Agreement will not cause or require Xxxxxx to
breach any obligation to, or agreement or confidence with, any
other person; (ii) except as disclosed in writing by Xxxxxx to
the Company prior to the execution of this Agreement, Xxxxxx is
not representing, or otherwise affiliated in any capacity with,
any other lines of products, manufacturers, vendors or customers
of the Company; and (iii) Xxxxxx has not been induced to enter
into this Agreement by any promise or representation other than
as expressly set forth in this Agreement. In addition, in
connection with Xxxxxx'x election to receive a portion of the
Base Compensation in the form of Stock, Xxxxxx hereby represents
and warrants that the following factual statements are true and
accurate as of the Effective Date and will be true and accurate
as of the date of any Election by Xxxxxx: (a) Xxxxxx has a
preexisting business relationship with the Company, or by reason
of its business or financial experience, is capable of evaluating
the risks and merits of an investment in the Stock and of
protecting its own interests in connection with the investment;
(b) Xxxxxx has received and reviewed all information it considers
necessary or appropriate for deciding whether to accept the
Stock; (c) has had an opportunity to ask questions and receive
answers from the Company and its officers, directors, and
employees regarding the business, financial affairs, and other
aspects of the Company and has further had the opportunity to
obtain all information which it deems necessary to evaluate the
investment and to verify the accuracy of information otherwise
provided it; and (d) is acquiring the Stock for his own account
and not with a view to their distribution within the meaning of
Section 2(11) of the Securities Act.
8. Confidentiality. Xxxxxx hereby acknowledges that the
Company has made (or may make) available to Xxxxxx certain
customer lists, product design information, performance standards
and other confidential and/or proprietary information of the
Company or licensed to the Company, including without limitation
trade secrets, copyrighted materials and/or financial information
of the Company (or any of its Affiliates, as defined in Paragraph
10 below) including without limitation financial statements,
reports and data (collectively, the "Confidential Material").
Except as essential to Xxxxxx'x obligations under this Agreement,
neither Xxxxxx nor any agent, employee, officer, or independent
contractor of or retained by Xxxxxx shall make any disclosure of
this Agreement, the terms of this Agreement, or any of the
Confidential Material. Except as essential to Xxxxxx'x
obligations under this Agreement, neither Xxxxxx nor any agent,
employee, officer, or independent contractor of or retained by
Xxxxxx shall make any duplication or other copy of any of the
Confidential Material. Immediately upon request from the
Company, Xxxxxx shall return to the Company all Confidential
Material. Xxxxxx shall notify each person to whom any disclosure
is made that such disclosure is made in confidence, that the
Confidential Material shall be kept in confidence by such person,
and that such person shall be bound by the provisions of this
Paragraph.
9. Proprietary Information. For purposes of this
Agreement, "Proprietary Information" shall mean any information,
observation, data, written material, record, document, computer
program, software, firmware, invention, discovery, improvement,
development, tool, machine, apparatus, appliance, design,
promotional idea, customer list, practice, process, formula,
method, technique, trade secret, product and/or research related
to the actual or anticipated research, marketing strategies,
pricing information, business records, development, products,
organization, business or finances of the Company (or any of its
Affiliates). All right, title and interest of every kind and
nature whatsoever in and to the Proprietary Information made,
discussed, developed, secured, obtained or learned by Xxxxxx
during the term of this Agreement, or the 60-day period
immediately following termination of this Agreement, shall be the
sole and exclusive property of the Company for any purposes or
uses whatsoever, and shall be disclosed promptly by Xxxxxx to the
Company. The covenants set forth in the preceding sentence shall
apply regardless of whether any Proprietary Information is made,
discovered, developed, secured, obtained or learned (a) solely or
jointly with others, (b) during the usual hours of work or
otherwise, (c) at the request and upon the suggestion of the
Company or otherwise, or (d) with the Company's materials, tools,
instruments or on the Company's premises or otherwise. All
Proprietary Information developed, created, invented, devised,
conceived or discovered by Xxxxxx that are subject to copyright
protection are explicitly considered by Xxxxxx and the Company to
be works made for hire to the extent permitted by law. Xxxxxx
hereby assigns to the Company all of Xxxxxx'x right, title and
interest in and to the Proprietary Information. Xxxxxx hereby
forever fully releases and discharges the Company, any Affiliates
of the Company and their respective officers, directors and
employees, from and against any and all claims, demands, damages,
liabilities, costs and expenses of Xxxxxx arising out of, or
relating to, any Proprietary Information. Xxxxxx shall execute
any documents and take any action the Company may deem necessary
or appropriate to effectuate the provisions of this Agreement,
including without limitation assisting the Company in obtaining
and/or maintaining patents, copyrights or similar rights to any
Proprietary Information assigned to the Company, if the Company,
in its sole discretion, requests such assistance. Xxxxxx shall
comply with any reasonable rules established from time to time by
the Company for the protection of the confidentiality of any
Proprietary Information. Xxxxxx irrevocably appoints the CEO to
act as Xxxxxx'x agent and attorney-in-fact to perform all acts
necessary to obtain and/or maintain patents, copyrights and
similar rights to any Proprietary Information assigned by Xxxxxx
to the Company under this Agreement if (a) Xxxxxx refuses to
perform those acts, or (b) is unavailable, within the meaning of
any applicable laws. Xxxxxx acknowledges that the grant of the
foregoing power of attorney is coupled with an interest and shall
survive the death or disability of Xxxxxx. Xxxxxx shall promptly
disclose to the Company, in confidence (a) all Proprietary
Information that Xxxxxx creates during the term of this
Agreement, and (b) all patent applications filed by Xxxxxx within
one year after termination of this Agreement. Any application
for a patent, copyright registration or similar right filed by
Xxxxxx within one year after termination of this Agreement shall
be presumed to relate to Proprietary Information created by
Xxxxxx during the term of this Agreement, unless Xxxxxx can prove
otherwise. Nothing contained in this Agreement shall be
construed to preclude the Company from exercising all of its
rights and privileges as sole and exclusive owner of all of the
Proprietary Information owned by or assigned to the Company under
this Agreement. The Company, in exercising such rights and
privileges with respect to any particular item of Proprietary
Information, may decide not to file any patent application or any
copyright registration on such Proprietary Information, may
decide to maintain such Proprietary Information as secret and
confidential, or may decide to abandon such Proprietary
Information or dedicate it to the public. Xxxxxx shall have no
authority to exercise any rights or privileges with respect to
the Proprietary Information owned by or assigned to the Company
under this Agreement. This Agreement does not apply to any
Proprietary Information that qualifies fully under the provisions
of California Labor Code Section 2870 or any similar or successor
statute.
10. Competition. Xxxxxx acknowledges that this Agreement is
being entered in connection with the purchase by the Company of
substantially all of the assets of a corporation with respect to
which Xxxxxx and his spouse are the sole shareholders. To the
extent permitted by applicable law, during the period of time set
forth in Paragraph 10.5 below:
10.1. Xxxxxx shall not, directly or indirectly, engage
or invest in, own, manage, operate, finance, control, or
participate in the ownership, management, operation, or control
of, be employed by, associated with, or in any manner connected
with, or render services or advice to, any business whose
products or activities compete in whole or in part with the
products or business of the Company within the world.
10.2. Xxxxxx shall not undertake any employment or
activity competitive with the Company's business, including
without limitation the inducement or solicitation of the
Company's customers, if the duties or work of, in connection with
or related to such competitive employment or activity would or
might cause Xxxxxx to reveal or use any Confidential Material or
Proprietary Information. The restriction set forth in this
Paragraph 10.2 shall not be limited to a particular geographical
area.
10.3. Xxxxxx shall not, directly or indirectly, either
for himself or any other person, (A) induce or attempt to induce
any employee of the Company or any Affiliate (as defined below)
to leave the employ of such company, (B) in any way interfere
with the relationship between the Company or any Affiliate and
any employee of such company, (C) employ, or otherwise engage as
an employee, independent contractor, or otherwise, any employee
of the Company or any Affiliate, or (D) induce or attempt to
induce any customer, supplier, licensee, or business relation of
the Company or any Affiliate to cease doing business with such
company, or in any way interfere with the relationship between
any customer, supplier, licensee, or business relation of such
company.
10.4. Xxxxxx shall not, directly or indirectly, either
for himself or any other person, solicit the business of any
person known to Xxxxxx to be a customer of the Company or any
Affiliate, whether or not Xxxxxx had business or personal contact
with such person, unless Xxxxxx'x solicitation of such person is
done in connection with a business that is not competitive with
that of the Company or any Affiliate.
10.5. The duration of the covenants set forth in this
Paragraph 10 shall be the entire term of Xxxxxx'x employment with
the Company plus a period of two years after the termination of
such employment. Xxxxxx agrees that this covenant is reasonable
with respect to its duration, geographical area, and scope.
Notwithstanding such restriction, Xxxxxx may purchase or
otherwise acquire up to (but not more than) three percent (3%) of
any class of securities of any enterprise (but without otherwise
participating in the activities of such enterprise) if such
securities are listed on any national or regional securities
exchange or have been registered under Section 12(g) of the
Securities Exchange Act of 1934.
In the event of a breach by Xxxxxx of any covenant set forth
in this Paragraph 10, the term of such covenant will be extended
by the period of the duration of such breach, provided, however,
that such extension shall be limited to two years. In addition
to the Company's right to damages and any other rights it may
have, to obtain injunctive or other equitable relief to restrain
any breach or threatened breach or otherwise to specifically
enforce the provisions of this Paragraph, Xxxxxx agrees that
money damages alone would be inadequate to compensate the Company
and would be an inadequate remedy for such breach. If a court of
competent jurisdiction holds that the obligations of Xxxxxx
pursuant to this Paragraph 10 are unenforceable due to the
duration, geographical area or scope of this covenant, then such
duration, geographical area or scope of this covenant shall be
reduced to the least degree necessary to render this covenant
enforceable. For purposes of this Agreement, "Affiliate" shall
mean any partner, employee, director, shareholder, officer of
Company or any person or entity controlled by, controlling, or
under common control with, directly or indirectly, the Company.
Xxxxxx shall be released from his obligations under this
Paragraph 10 upon the occurrence of either of the following
events: (a) the material breach by the Company under this
Agreement adjudicated as such by a court of competent
jurisdiction, or (b) Xxx Xxxxxxx and Xxxxxxx Xxxxxxxxx'x
termination of their involvement with the Company.
11. Business Opportunities. During the term of this
Agreement, if Xxxxxx (or any agent, employee, officer or
independent contractor of or retained by Xxxxxx) becomes aware
of, or develops, creates, invests, devises, conceives or
discovers, any project, investment, venture, business or other
opportunity (any of the preceding, an "Opportunity") that is
similar to, competitive with, related to or in the same field as
the Company or any Affiliate, or any project, investment,
venture, or business of the Company or any Affiliate, then Xxxxxx
shall so notify the Company immediately in writing of such
Opportunity and shall use Xxxxxx'x good-faith efforts to cause
the Company to have the opportunity to invest in, participate in
or otherwise become affiliated with such Opportunity.
12. Survival. The representations, warranties and
covenants of Xxxxxx in this Agreement shall survive any
termination of this Agreement.
13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
14. Further Assurances. Each party to this Agreement shall
execute all instruments and documents and take all actions as may
be reasonably required to effectuate this Agreement.
15. Venue and Jurisdiction. For purposes of venue and
jurisdiction, this Agreement shall be deemed made and to be
performed in the City of San Diego, California.
16. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all
of which together shall constitute one document.
17. Time of Essence. Time and strict and punctual
performance are of the essence with respect to each provision of
this Agreement.
18. Attorney's Fees. In the event any litigation,
arbitration, mediation, or other proceeding ("Proceeding") is
initiated by any party(ies) against any other party(ies) to
enforce, interpret or otherwise obtain judicial or quasi-judicial
relief in connection with this Agreement, the prevailing
party(ies) in such Proceeding shall be entitled to recover from
the unsuccessful party(ies) all costs, expenses, and actual
attorney's fees relating to or arising out of (d) such Proceeding
(whether or not such Proceeding proceeds to judgment), and
(e) any post-judgment or post-award proceeding including without
limitation one to enforce any judgment or award resulting from
any such Proceeding. Any such judgment or award shall contain a
specific provision for the recovery of all such subsequently
incurred costs, expenses, and actual attorney's fees.
19. Modification. This Agreement may be modified only by a
contract in writing executed by the party(ies) to this Agreement
against whom enforcement of such modification is sought.
20. Headings. The headings of the Paragraphs of this
Agreement have been included only for convenience, and shall not
be deemed in any manner to modify or limit any of the provisions
of this Agreement, or be used in any manner in the interpretation
of this Agreement.
21. Prior Understandings. This Agreement contains the
entire agreement between the parties to this Agreement with
respect to the subject matter of this Agreement, is intended as a
final expression of such parties' agreement with respect to such
terms as are included in this Agreement, is intended as a
complete and exclusive statement of the terms of such agreement,
and supersedes all negotiations, stipulations, understandings,
agreements, representations and warranties, if any, with respect
to such subject matter, which precede or accompany the execution
of this Agreement.
22. Interpretation. Whenever the context so requires in
this Agreement, all words used in the singular shall be construed
to have been used in the plural (and vice versa), each gender
shall be construed to include any other genders, and the word
"person" shall be construed to include a natural person, a
corporation, a firm, a partnership, a joint venture, a trust, an
estate or any other entity.
23. Partial Invalidity. Each provision of this Agreement
shall be valid and enforceable to the fullest extent permitted by
law. If any provision of this Agreement or the application of
such provision to any person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this
Agreement, or the application of such provision to persons or
circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected by such invalidity or
unenforceability, unless such provision or such application of
such provision is essential to this Agreement.
24. Notices. All notices or other communications required
or permitted to be given to a party to this Agreement shall be in
writing and shall be personally delivered, sent by certified
mail, postage prepaid, return receipt requested, or sent by an
overnight express courier service that provides written
confirmation of delivery, to such party at its address as set
forth above in the introductory Paragraph of this Agreement.
Each such notice or other communication shall be deemed given,
delivered and received upon its actual receipt, except that if it
is sent by mail in accordance with this Paragraph, then it shall
be deemed given, delivered and received three days after the date
such notice or other communication is deposited with the United
States Postal Service in accordance with this Paragraph. Any
party to this Agreement may give a notice of a change of its
address to the other party(ies) to this Agreement.
25. Drafting Ambiguities. Each party to this Agreement has
reviewed and revised this Agreement. Each party to this
Agreement has had the opportunity to have such party's legal
counsel review and revise this Agreement. The rule of
construction that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of
this Agreement or of any amendments or exhibits to this
Agreement.
BOATRACS, INC., a California corporation
By: /s/ XXX XXXXXXX
Xxx Xxxxxxx, Chief Executive Officer
and President
/s/ XXXXXXX X. XXXXXX, XX.
OPTION AGREEMENT
This Option Agreement ("Amendment") is entered into
effective as of November 1, 1997, among BOATRACS, INC., a
California corporation (the "Company"), and XXXXXXX X. XXXXXX,
XX., an individual ("Xxxxxx"), who agree to between them (the
"Agreement") as follows:
1. Stock of the Company. Xxxxxx and the Company agree that
if, at any time prior to November 1, 2001, (i) Xxxxxx materially
breaches the Agreement and such breach is not cured within 10
days after written notice of such breach, or (ii) Xxxxxx
voluntarily terminates his employment with the Company (other
than on account of death or material disability), then the
Company shall have the option to purchase all of the 300,000
shares of common stock of the Company issued to Xxxxxx and/or Med
Associates, Inc. ("Med") pursuant to that certain Asset Purchase
Agreement dated as of November 1, 1997, as amended. The purchase
price for such shares shall be $.001 per share. Until the time
for the exercise of such option has expired, neither Xxxxxx nor
Med may assign or transfer any rights or interests in or to such
shares. The Company may exercise such option by giving Xxxxxx or
Med written notice on or before May 1, 2001.
2. Miscellaneous.
The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. This Agreement may
be executed in several counterparts, each of which shall be
deemed an original, and all of which shall constitute one and the
same instrument. This Agreement shall be governed in all
respects, including validity, interpretation and effect, by the
laws of the State of California, applicable to contracts made and
to be performed in California. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns of
the parties hereto.
BOATRACS, INC., a California
corporation
By: /s/ XXX XXXXXXX
Xxx Xxxxxxx, Chief Executive
Officer and President
/s/ XXXXXXX X. XXXXXX, XX.
XXXXXXX X. XXXXXX, XX.
With respect to the option to
purchase the shares set forth
above:
MED ASSOCIATES, INC., a Mississippi
corporation
By: /s/ XXXXXXX X. XXXXXX, XX.
Xxxxxxx X. Xxxxxx, Xx.,
Chief Executive Officer
