EXECUTIVE EMPLOYMENT AGREEMENT
This agreement (the "Agreement") is made effective January 1, 1997, between DCX,
Inc. ("DCXI" or the "Company") and G. Xxxxxxx Xxxxxxxx (the "Executive").
A. Executive is to be employed as President & Chief Executive Officer of DCXI,
has previously rendered valuable services to DCXI, possesses valuable experience
and has acquired valuable background in and knowledge of DCXI's business.
B. DCXI desires to secure the services of Executive, and Executive desires to
serve DCXI as President and Chief Executive Officer.
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, 1999, 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, 1999, 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) on or after November 1, 1999, the Board of Directors notifies Executive in
writing of its determination to have the date of this Agreement 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 a 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's conviction for any felony involving moral turpitude. For purposes of
clauses (I), (ii) or (iii) of this definition, no act, or failure to
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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 President
and Chief Executive Officer;
(iii) A relocation of Executive's primary place of business more than fifty
(50) miles from its location as of the date of this Agreement.
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. 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 January 2, 1997, the first business day during which Executive was engaged.
In addition Executive shall receive a stock option grant of 180,000 shares of
the Company's common stock also priced at the bid price on January 2, 1997, 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, 1997, equal to:
Five percent of base salary if the Company achieves net income of one
dollar or more.
Executive shall receive an additional bonus of ten percent of base salary
if the average closing bid price for the last 20 business days on NASDAQ of
DCXI ending September 30, 1997 is equal to or exceeds the closing NASDAQ
bid price on January 2, 1997 plus $1.35.
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Further, if the revenue of the Company exceeds $5.0 million at September
30, 1997, executive shall receive an additional bonus equal to 0.75% of the
amount of revenue which exceeds $5.0 million.
(ii) The Company's fiscal years ending September 30, 1998 and later,
An amount equal to 2.0% 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 20 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 20 day average for the same period by 51% or
more.
Further, if the consolidated gross revenue of the Company exceeds $10
million by September 30, 1998, the executive shall be deemed vested in 35
percent of the Performance Options; if in excess of $20 million by
September 30, 1999 he will be vested in an additional 35 percent of the
Performance Options, and if in excess of $30 million by September 30, 2000,
he will be vested in the remaining 30 % of the Performance Options.
(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, 1997
and 1998; 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. TheCompany agrees to
register with the Securities and Exchange Commission the performance and
incentive stock options granted under paragraph b, above, within 125 days of
executing this Agreement.
d. Nondilution 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.
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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.
f. Automobile allowance. Executive shall receive an unaccountable automobile
allowance of $400 per month.
g. Relocation allowance. Executive shall be entitled to certain relocation
allowances as may be negotiated by the Company relative to his relocation for
the position in this Agreement and in the event his primary place of business is
subsequently moved in excess of 50 miles from its present location.
h. 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.
i. 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.
j. Reimbursement. 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.
k. Life Insurance. Executive shall be provided with a life insurance policy in
the amount of $250,000 (provided he can meet the medical conditions for such
coverage), payable to such beneficiaries as he shall designate, with an
additional $100,000 of accidental death coverage.
4. EXECUTIVE'S 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 be entitled to all
benefits under this Agreement, including base salary, performance and incentive
bonuses for 18 months after such event. Stock options vested to date of
termination may be exercised at any time during the 18 months period following
termination.
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.
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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 is to be employed by DCXI as its President and Chief Executive.
Executive 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. The Company agrees to nominate Executive for election to the Board as
a member of the management slate at each annual meeting of stockholders during
his employment hereunder, or at which his class, if such class be designated,
comes up for election.
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 documents signed by both parties.
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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 notice 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
0000 Xxxxx Xxxxx Xxxxxxx 00, Xxxxxxxxx, XX 00000-0000, and in the case of
Executive to:
Xxxxxxx Xxxxxxxx
Queen Harbor
0000 Xxxxxxxxxx Xxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxx 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
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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. TRADE SECRETS AND CONFIDENTIAL INFORMATION
As a material inducement to the Company to enter into this Agreement and to pay
Executive the compensation and benefits stated in Section 3, Executive covenants
and agrees that during his employment by the Company and for a period equal to
any period thereafter for which he receives payments as contemplated in Section
4, above, Executive shall not, directly or indirectly, use, disseminate, or
disclose for any purposes other than for the purposes of the Company's business,
any of the Company's confidential information or trade secrets, unless such
disclosure is compelled in a judicial proceeding. Upon termination of this
employment, all documents, records, notebooks, and similar repositories of
records containing information relating to any trade secrets or confidential
information then in the Executive's possession or control, whether prepared by
him or by others, shall be left with the Company or returned to the Company upon
its request. This section shall not restrict the Executive from using his
General Knowledge (the ideas, concepts, know-how and other industry information
which is part of his common knowledge) from pursuit of livelihood subsequent to
any termination of this Agreement.
This covenant of non-disclorure has been negotiated and agreed to by and between
the Company and Executive with the full knowledge of and pursuant to the
Colorado Trade Secrets Act and is deemed by both parties to be fair and
reasonable.
18. APPLICABLE LAW AND DISPUTE RESOLUTION
To the full extent controllable by stipulation of the parties, this Agreement
shall be interpreted under Colorado law. All disputes arising out of this
Agreement will be settled by binding arbitration in Denver, Colorado 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, with
effect from the date first above written.
Dated: March 28, 1997
For DCX, Inc. Executive
/S/ /S/ /S/
Xxxxxxxxx X. Xxxxxxx D. Xxxxx XxXxxxxxxx G. Xxxxxxx Xxxxxxxx
Chief Financial Officer Vice President and
and Secretary General Manager
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