Employment Agreement - EarthShell Corp. and Michael M. Hagerty
EMPLOYMENT AGREEMENT
BETWEEN
EARTHSHELL CORPORATION
AND
MICHAEL M. HAGERTY
This Employment Agreement (the "Agreement") is entered into as of
July 22, 1998 (the "Effective Date") by and between EarthShell Corporation, a
Delaware corporation with its principal office located in Santa Barbara,
California (the "Company"), and Michael M. Hagerty, an individual
("Executive").
AGREEMENT
1. SERVICES PROVIDED TO THE COMPANY. Commencing as of July 27, 1998
("Start Date"), Executive shall be employed by the Company as Vice
President, Chief Technology Officer, and Executive agrees to such employment.
During the term of this Agreement, Employee shall devote all of his regular
working hours to the business and welfare of the Company and its
subsidiaries. Executive, however, may spend a reasonable amount of time with
respect to charitable and civic activities (including serving on the board of
directors of charitable organizations) and may make personal investments or
conduct private business affairs to the extent that such activities do not
materially interfere with the services required under this Agreement.
2. COMPENSATION TO EXECUTIVE.
(a) BASE SALARY. During the term of this Agreement, the Company
shall pay to Executive a base salary in the amount of $250,000 per annum,
with a year-end review of such amount by the Compensation Committee (the
"Compensation Committee") of the Company's Board of Directors (the "Board"),
payable in accordance with the normal payment pattern of the Company, not to
be less frequently than monthly. The Base Salary shall commence to accrue on
the Start Date.
(b) STOCK OPTIONS. Pursuant to the Company's 1995 Stock Incentive
Plan (the "Plan"), the Company shall grant to Executive options to acquire
100,000 shares of the Company's common stock at an exercise price equal to
the $21.00 price per share at which the Company's common stock first sold to
the public in its initial public offering. Such options shall vest at the
rate of 25% on each anniversary of the Effective Date. All options shall
become fully vested on the fourth anniversary of the Effective Date.
(c) ADDITIONAL COMPENSATION. Executive shall receive a relocation
bonus in the amount of $50,000 payable promptly after the Start Date.
Executive may also be entitled to receive (i) an annual bonus up to the
Executive's annual base salary (prorated for the period of service in 1998),
the amount of which shall be determined by the Compensation Committee in its
sole discretion, and (ii) options or other rights to acquire the Company's
common stock pursuant to the Plan, under such terms and conditions as are
determined by the
<PAGE>
Stock Option Committee (the "Option Committee") of the Board in its sole
discretion. In making such determinations, the Compensation Committee and
Option Committee shall consider, among other things, the annual financial
results of the Company, meeting critical milestones on the business plan and
Executive's contributions thereto.
3. EMPLOYEE BENEFITS. The Company shall provide to Executive each of
the following benefits:
(a) BUSINESS EXPENSES. The Company shall pay or reimburse
Executive for all reasonable out-of-pocket expenses incurred by Executive
in the course of providing his services hereunder and which are consistent
with the Company's expense reimbursement guidelines or policies. Such
reimbursement shall be made by the Company within thirty (30) days after
receipt of a statement therefor from Executive setting forth in reasonable
detail the expenses for which reimbursement is requested, accompanied by
reasonable documentation evidencing such expenses.
(b) INSURANCE COVERAGE AND BENEFITS. Beginning on the Start Date,
the Company shall provide Executive, at the Company's expense, coverage under
the major medical, hospitalization, disability and other insurance programs
maintained by the Company for its officers generally, or if none is made for
its officers generally, its employees generally, including any benefit plans
that are provided by the Company subsequent to the date of this Agreement.
In addition, Executive shall receive on the Start Date all other
Company-provided benefits, including 401(k) participation and sick pay
benefits, that are, from time to time, made available by the Company to its
officers generally or, if not made to its officers generally, its employees
generally. Executive shall be entitled to four weeks paid vacation each year.
(c) RELOCATION EXPENSES. Executive shall be employed at the
Company's offices in Baltimore, Maryland. Executive shall be reimbursed for
all reasonable out-of-pocket moving and transportation expenses incurred by
Executive in moving his family, household and personal possessions to
Baltimore, Maryland, including transportation costs and travel expenses, and
all closing costs incurred by Executive in connection with (i) selling his
current residence (including brokerage fees not to exceed 6% of the selling
price of the residence) and (ii) purchasing a new residence in the Baltimore
area. Executive's spouse shall be permitted to take two trips to Baltimore at
Company expense for the purpose of locating a new residence in the Baltimore
area. The foregoing amounts to be reimbursed or paid to Executive pursuant to
this Section 3(c) shall be "grossed-up" to the extent necessary to cover any
taxes imposed on Executive by reason of the reimbursement of the costs and
expenses described above in this Section 3(c). In addition to the foregoing
(and to the relocation bonus provided in Section 2(c) above), the Company
shall pay to Executive an amount equal to one month's base salary under
Section 2(a) hereof to cover costs and expenses incurred by Executive and his
family in connection with relocating to Baltimore other than those that are
specifically reimbursable in accordance with the foregoing provisions of
this Section 3(c).
(d) TEMPORARY HOUSING. During the period from the Start Date
through October 31, 1998, the Company shall provide Executive, at Company's
expense, with
2
<PAGE>
temporary housing in the form of hotel or other appropriate temporary
accommodations in the Baltimore area.
4. TERMINATION. Executive's employment hereunder may be terminated
upon thirty (30) days written notice by Executive or the Company, provided
that if Company terminates Executive's employment for other than cause,
Executive shall be entitled to severance pay equal to 100% of his annual base
salary. Notwithstanding the foregoing, Executive shall not be entitled to any
severance payment if his employment shall be terminated for cause. Cause
means the occurrence of any of the following events: (i) willful and
continued failure (to include such failure due to (a) death or (b) disability
for a consecutive period of ninety (90) days or more) by the Executive to
substantially perform his duties with the Company; provided, however, that
the Executive must be notified by the Company of any such failure to perform
his duties and shall have thirty (30) days from the date of such notice to
cure such failure; (ii) any act by the Executive of fraud, misappropriation,
dishonesty, embezzlement or similar conduct against the Company; or (iii)
indictment or conviction of the Executive for a felony or any other crime
involving moral turpitude.
5. CONFIDENTIAL AND PROPRIETARY INFORMATION. Executive agrees to
execute and deliver to the Company its standard non-disclosure agreement with
respect to the Company's confidential and proprietary information. Such
agreement shall be effective as of the Effective Date.
6. GENERAL PROVISIONS.
(a) NOTICES. Any notice to be given pursuant to this Agreement
shall be in writing and, in the absence of receipted hand delivery, shall be
deemed duly given when mailed, if the same shall be sent by certified or
registered mail, return receipt requested, or by a nationally recognized
overnight courier, and the mailing date shall be deemed the date from which
all time periods pertaining to a date of notice shall run. Notices shall be
addressed to the parties at the following addresses:
If to the Company, to: EarthShell Corporation
800 Miramonte Drive
Santa Barbara, California 93109
Attention: Chairman of the Board
If to Executive, to: Michael M. Hagerty
148 Crystal Lane
Aurora, OH 44202
(b) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the Company and any successors whether by
merger, consolidation, transfer of substantially all assets or similar
transaction, and it shall be binding upon and shall inure to the benefit of
Executive and his heirs and legal representatives. This Agreement is personal
to Executive and shall not be assignable by Executive.
3
<PAGE>
(c) WAIVER OF BREACH. The waiver by the Company or Executive of a
breach of any provision of this Agreement by the other shall not operate or
be construed as a waiver of any subsequent breach by the other.
(d) ENTIRE AGREEMENT/AMENDMENT. This Agreement shall constitute
the entire agreement between the parties hereto with respect to the subject
matter hereof, and shall supersede all previous oral and written and all
contemporaneous oral negotiations, commitments, agreements and understandings
relating hereto. Any amendment to this Agreement shall be effective only if
it is in writing and signed by the parties to this Agreement.
(e) APPLICABLE LAW. The validity of this Agreement and the
interpretation and performance of all of its terms shall be construed and
enforced in accordance with the laws of the State of California without
reference to choice or conflict of law principles.
(f) SEVERABILITY. Any provision of this Agreement that is deemed
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction and subject to this paragraph, be ineffective to the extent of
such invalidity, illegality or unenforceability, without affecting in any way
the remaining provisions hereof in such jurisdiction or rendering that or any
other provision of this Agreement invalid, illegal or unenforceable in any
other jurisdiction. If any covenant should be deemed invalid, illegal or
unenforceable because its scope is considered excessive, such covenant shall
be modified so that the scope of the covenant is reduced only to the minimum
extent necessary to render the modified covenant valid, legal and enforceable.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
EARTHSHELL CORPORATION,
a Delaware corporation
By:
-------------------------------
Title:
----------------------------
MICHAEL M. HAGERTY
-----------------------------------
4