Employment Agreement - EarthShell Corp. and David H. Kennedy
EMPLOYMENT AGREEMENT
BETWEEN
EARTHSHELL CORPORATION
AND
DAVID H. KENNEDY
This Employment Agreement (the "Agreement") is entered into this
16th day of February, 1998, by and between EarthShell Corporation, a Delaware
corporation with its principal office located in Santa Barbara, California
(the "Company"), and David H. Kennedy, an individual ("Executive"). This
Agreement shall become effective on the first business day following the
consummation of the Company's initial public offering (the "Effective Date")
AGREEMENT
1. TERM. The term of Executive's employment under this Agreement
shall commence on the Effective Date and shall terminate at the time set
forth in Section 5 (the "Employment Term").
2. SERVICES PROVIDED TO THE COMPANY. Commencing as of the
Effective Date, Executive shall be employed by the Company as its General
Counsel and Executive agrees to such employment. During the Employment Term,
Executive 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. Executive shall report directly to the Chief
Executive Officer of the Company with respect to the Company's legal affairs
and he shall report directly to the Chairman of the Company's Board of
Directors and the Company's Audit Committee with respect to regulatory and
securities matters. Executive shall be secondarily responsible (after the
Company's Chief Financial Officer and Chief Operating Officer) for investor
relations. During the Employment Term, Executive agrees to use his best
efforts to advance the business and welfare of the Company, and to render his
services under this Agreement fully, faithfully, diligently, competently and
to the best of his ability. Executive warrants that he is free to enter into
and fully perform the terms of this Agreement.
3. 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 $360,000 per
annum, payable in accordance with the normal payment pattern of the Company
(not to be less frequently than monthly).
(b) STOCK OPTIONS. Pursuant to the Company's 1995 Stock
Incentive Plan (the "Plan"), on the Effective Date, the Company shall grant
to Executive options to acquire 50,000 shares of the Company's common stock
(based on a 262 for one stock split) at an exercise price equal to the price
per share at which the Company's common stock is first sold to the public
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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
"signing" bonus in the amount of $15,000, payable within thirty (30) days
following the Effective Date. Executive may also be entitled to receive (i)
an annual bonus, the amount of which shall be determined by the Compensation
Committee (the "Compensation Committee") of the Company's Board of Directors
(the "Board"), in its sole discretion, and (ii) options or other rights to
acquire the Company's common stock under such terms and conditions as are
determined by the 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 and Executive's
contributions thereto.
4. 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. During the term of this
Agreement, the Company shall provide Executive, at the Company's expense,
with coverage under the major medical, hospitalization, disability and other
insurance programs maintained by the Company for its officers generally, or
if none is maintained for its officers generally, its employees generally.
In addition, Executive shall receive during the term of this Agreement all
other Company-provided benefits, including vacation 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.
(c) RELOCATION EXPENSES. Executive shall be employed at the
Company's headquarters in Santa Barbara, California. Executive shall be
reimbursed for all reasonable out-of-pocket expenses incurred by Executive in
moving his family, household and personal possessions to Santa Barbara,
California, including transportation costs and travel and meal expenses, and
the real estate commissions incurred by Executive in selling his current
residence (not to exceed 6% of the selling price of the residence).
(d) TEMPORARY HOUSING. Following the Effective Date and
through June 30, 1998, the Company shall provide Executive with housing in
the form of hotel accommodations in the Santa Barbara area. It is expected
that Executive's family will relocate to the Santa Barbara area following the
end of the current school term.
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Executive understands and agrees that the Company reserves the right to
change his employee benefits provided such change applies generally to all of
the Company's employees. This includes, but is not limited to, health and
welfare benefits and any deferred compensation, profit-sharing or pension
arrangements.
5. TERMINATION.
(a) Executive's employment hereunder may be terminated upon
thirty (30) days written notice by Executive or the Company for any reason or
for no reason whatsoever, provided that if the Company terminates Executive's
employment for other than Cause, or should Executive terminate his employment
for Good Reason, Executive shall be entitled to severance pay equal to 100%
of his annual base salary. All payments and benefits due Executive hereunder
(other than for COBRA benefits, compensation and vacation pay accrued through
the date of termination) shall cease upon termination of Executive's
employment pursuant to this Section 5.
(b) Executive shall not be entitled to any severance payment
if his employment shall be terminated for "Cause." For purposes of this
Agreement, "Cause" shall be defined as the following occurrences:
(i) A material breach by Executive of the provisions of
this Agreement (or the Confidentiality Agreement referred to in
Section 6);
(ii) Executive's substantial misconduct or dishonesty,
commission of an act of fraud upon the Company or other deliberate act or
omission detrimental or damaging in a significant way to the goodwill of
the Company or materially damaging to the Company's relationship with its
licensees, joint venturers, customers or suppliers;
(iii) Executive's failure or refusal to perform
faithfully and diligently his duties and responsibilities under this
Agreement or violation of any duty of loyalty (including, without
limitation, self-dealing to the Company's detriment);
(iv) Executive's medically-verifiable inability to perform
a substantial portion of his duties under this Agreement due to physical
or mental incapacity; or
(v) Executive's death.
(c) Executive may terminate his employment hereunder for Good
Reason, in which event Executive shall be entitled to receive the severance
pay set forth in Section 5(a). For purposes of this Agreement, "Good Reason"
shall mean, without Executive's express written consent, the occurrence (a
"Change") of any of the following circumstances:
(i) a significant adverse alteration or diminution in the
nature of Executive's duties or responsibilities from those in effect
immediately prior to such
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Change, other than actions that are fully corrected by the Company within
ten (10) days after receipt of written notice from Executive;
(ii) any failure by the Company to comply with any material
provision of this Agreement that has not been cured within ten (10) days
after notice of such noncompliance has been given by Executive to the
Company; or
(iii) any requirement by the Company that Executive
perform his services on a permanent basis at a location that is more than
thirty (30) miles from the Company's headquarters in Santa Barbara,
California.
(d) Executive acknowledges and agrees that the provisions of
this Section 5 state his entire and exclusive rights, entitlements and
remedies against the Company, its successors, assigns, affiliates and
representatives for any termination of employment by the Company. As a
material inducement to the Company to enter into this Agreement, Executive
represents to the Company that he will make no other claims in any such event.
6. CONFIDENTIAL AND PROPRIETARY INFORMATION. Executive agrees to
execute and deliver to the Company its standard non-disclosure,
non-competition and non-solicitation agreement (the "Confidentiality
Agreement").
7. 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: David H. Kennedy
c/o EarthShell Corporation
800 Miramonte Drive
Santa Barbara, California 93109
(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.
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(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.
(g) ARBITRATION OF FUTURE DISPUTES. In the event of any
dispute concerning the validity, interpretation, enforcement or breach of
this Agreement or in any way related to Executive's employment with the
Company or the termination of such employment (including any associated
claims involving any officers, directors, employees or agents of the
Company), excepting only the parties' rights under the Confidentiality
Agreement to seek the equitable remedies provided thereunder, the dispute
shall be resolved by arbitration in Santa Barbara, California, in accordance
with the then existing Model Employment Dispute Rules of the American
Arbitration Association, and judgment upon any arbitration award may be
entered by any state or federal court having jurisdiction thereof. The
parties intend this arbitration provision to be valid, enforceable,
irrevocable and construed as broadly as possible. If either party hereto
retains the services of an attorney to enforce any provision of this
Agreement, the prevailing party shall be entitled to its court costs and
reasonable attorney fees, as determined and awarded by the arbitrator.
(h) ASSIGNMENT. The Company shall have the right to assign
its respective rights and obligations hereunder to any entity which at any
time may be a direct or indirect subsidiary of the Company, or any successor
in interest of the Company whether by merger, consolidation, purchase of
assets or otherwise, or any other person or entity controlling or which at
any time controls or is under common control with the Company or any of its
respective subsidiaries or successors.
(i) COMPLIANCE WITH LAWS AND POLICIES. Executive agrees that
he will at all times comply with all applicable laws and all current and
future policies of the Company.
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(j) COUNTERPARTS. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first above written.
EARTHSHELL CORPORATION,
a Delaware corporation
By: /s/ ESSAM KHASHOGGI
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Title: Chairman
-------------------------------------
DAVID H. KENNEDY
/s/ DAVID H. KENNEDY
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