Employment Agreement - Xybernaut Corp. and Steven A. Newman
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated April 29, 2003, effective as of January 1,
2003 (this "Agreement"), by and between STEVEN A. NEWMAN (the "Executive"), and
XYBERNAUT CORPORATION, a Delaware corporation (the "Company").
WHEREAS, the Executive has been employed as Vice Chairman and
Executive Vice President of the Company; and
WHEREAS, the Company desires to employ the Executive as the President
and Chief Operating Officer of the Company and the Executive desires to continue
his employment with the Company in the aforementioned capacity, all upon the
terms and provisions, and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
Section 1. Definitions. As used in this Agreement the following terms
shall have the meanings set forth in this Section 1:
(a) "Affiliate" of any Person means any stockholder or person or
entity controlling, controlled by under common control with such Person, or any
director, officer or key executive of such Person or any of their respective
relatives. For purposes of this definition, "control," when used with respect to
any Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings that correspond to the foregoing.
(b) "Cause" shall mean (i) the Company being subjected to any criminal
liability under any applicable law as a result of any action or inaction on the
part of the Executive, which the Executive did not, at the time, reasonably
believe to be in the best interests of the Company; (ii) the conviction or
admission of the Executive of, or plea by the Executive of nolo contendre to, a
felony or crime involving moral turpitude which the Board of Directors concludes
is likely to have a material and adverse effect on the reputation of the
Company; (iii) if the Executive is chronically addicted to any narcotic or other
illegal or controlled substance or repeatedly abuses any alcoholic product or
any prescription stimulants or depressant, as determined by a physician
designated by the Company, which in the reasonable opinion of the Board of
Directors of the Company materially interferes with Executive's performance of
his duties and obligations hereunder; (iv) the Executive commits any act of
fraud, or steals or misappropriates any asset or property of the Company,
including, without limitation, any act of theft or embezzlement; or (v) a breach
of a material provision of this Agreement by the Executive which is not cured by
the Executive within ten (10) business days after written notice of such breach
is received by the Executive from the Company.
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(c) "Change of Control" shall mean the occurrence of any of the
following: (i) a Person or group of Persons, other than any current member of
the Board of Directors, obtains beneficial ownership of at least thirty percent
(30%) of the outstanding capital stock of the Company; (ii) a change in the
membership of more than fifty percent (50%) of the current Board of Directors in
any twelve (12) month period; or (iii) a sale of all or substantially all of the
assets of the Company and its subsidiaries.
(d) "Common Stock" shall mean the common stock, par value $.01 per
share, of the Company, and any other class of common stock of the Company
created after the date of this Agreement in accordance with the Company's
Certificate of Incorporation and applicable law.
(e) "Competing Business" shall mean any business, enterprise or other
Person that as one of its businesses or activities, is engaged in the business
of manufacturing, selling, marketing, licensing or distributing wearable
computers or the solutions associated therewith that are provided by the
Company.
(f) "Confidential and Proprietary Information" shall mean any and all
(i) confidential or proprietary information or material not in the public domain
about or relating to the business, operations, assets or financial condition of
the Company or any Affiliate of the Company or any of the Company's or any such
Affiliate's trade secrets, including, without limitation, research and
development plans or projects; data and reports; computer materials such as
programs, instructions and printouts; formulas; product testing information;
business improvements, processes, marketing and selling strategies; strategic
business plans (whether pursued or not); joint venture strategies; budgets;
unpublished financial statements; licenses; pricing, pricing strategy and cost
data; information regarding the skills and compensation of executives; the
identities of clients and potential clients; intellectual property strategies
and any work on any patents, trademarks and tradenames, prior to any filing or
the use thereof in commerce; pricing, timing, sales terms, service plans,
methods, practices, strategies, forecasts, know-how and other marketing
techniques; and (ii) information, documentation or material not in the public
domain by virtue of any action by or on the part of the Executive, the knowledge
of which gives or may give the Company or any Affiliate of the Company an
advantage over any Person not possessing such information. For purposes hereof,
the term Confidential and Proprietary Information shall not include any
information or material (i) that is known to the general public other than due
to a breach of this Agreement by the Executive or (ii) was disclosed to the
Executive by a Person who the Executive did not reasonably believe was bound to
a confidentiality or similar agreement with the Company.
(g) "Employment Term" shall have the meaning given to that term in
Section 2 hereof.
(h) "GAAP" shall mean generally accepted United States accounting
principles, as from time to time in effect.
(i) "Good Reason" shall mean (i) a substantial change to or reduction
in the duties or responsibilities of the Executive such that the
responsibilities of the Executive are no longer commensurate with the
Executive's office with the Company as set forth herein; (ii) the
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occurrence of a Change of Control; provided that in order for a Change of
Control to constitute "Good Reason" the factors set forth in items (i) or (iii)
shall have also occurred; (iii) a change in the Executive's office from that of
President and Chief Operating Officer of the Company which is not concurred in
by the Executive within three (3) months of its occurrence; or (iv) the breach
of a material term or provisions of this Agreement by the Company which is not
cured by the Company within ten (10) business days after written notice of such
breach is received by the Company from the Executive.
(j) "Gross Revenues" for each twelve (12) month period during the Term
shall have the meaning of gross revenues of the Company set forth in the audited
annual financial statements of the Company for the applicable twelve (12) months
and which shall be determined in accordance with GAAP applied on a consistent
basis.
(k) "Incapacity" shall mean any illness or mental or physical
incapacity or disability which prevents the Executive from performing his duties
or obligations hereunder for a continuous period of one hundred twenty (120)
consecutive days or for shorter periods aggregating one hundred eighty (180)
days within any consecutive twelve (12) month period.
(l) "Inventions" shall mean inventions, discoveries, concepts and
ideas, whether patentable or not, including, without limitation, processes,
methods, formulae and techniques, and improvements thereof or know-how related
thereto, concerning any business activity of the Company or any Affiliate of the
Company, with which the Executive becomes, directly or indirectly, involved as a
result in whole or in part, directly or indirectly, of the Executive's
employment by the Company, or any Affiliate of the Company.
(m) "Performance Bonus" shall have the meaning given to that term in
Section 4(d) hereof.
(n) "Person" shall mean, without limitation, any natural person,
corporation, partnership, limited liability company, joint stock company, joint
venture association, trust or other similar entity or firm.
(o) "Prior Agreement" shall mean that certain Employment Agreement
dated as of January 1, 2000 between the Executive and the Company.
(p) "Salary" shall have the meaning given to that term in Section 4(a)
hereof.
(q) "Without Cause" shall mean the termination of the Executive's
employment hereunder by the Company (and not the Executive), other than
termination by the Company due to the Executive's death or Incapacity or based
upon Cause.
Section 2. Employment and Term. The Company hereby employs the
Executive as the President and Chief Operating Officer of the Company and the
Executive hereby accepts such employment in that capacity, upon the terms and
provisions, and subject to the conditions, set forth in this Agreement, for a
term of two (2) years, commencing on January 1, 2003, and terminating on
December 31, 2004, unless earlier terminated as provided in this Agreement (the
"Employment Term").
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Section 3. Executive's Duties.
(a) The Executive shall be the senior executive officer of the Company
responsible for the Company's operations including, without limitation,
overseeing the management of the Company's day-to-day operations and the
strategic planning of the Company. The Executive shall report directly and only
to the Company's Chief Executive Officer, Mr. Edward G. Newman and the Board of
Directors of the Company. The Executive may perform such other duties as may
reasonably be assigned to the Executive by the Company's Chief Executive
Officer, Mr. Edward G. Newman. The Executive shall also serve as Vice-Chairman
of the Board of Directors of the Company.
(b) The Executive shall devote substantially all of his business time,
effort, skill and attention to the business, operations and affairs of the
Company and to the furtherance of the interests, business and prospects of the
Company. The Executive shall perform the Executive's duties and obligations
hereunder diligently, competently, faithfully and to the best of his ability.
Subject to disclosure to the Company's general corporate counsel, the Executive
may serve on the board of directors or other governing boards of other
corporations or businesses or industry organizations; provided that such service
does not materially interfere with the Executive's performance of his duties and
obligations hereunder.
(c) The Executive agrees to execute policy statements and agreements
that the Company may, from time to time, reasonably require all of its senior
executive officers to execute.
Section 4. Compensation.
(a) In consideration of the performance of all of the duties and
obligations to be performed by the Executive hereunder, the Company agrees to
pay, and the Executive agrees to accept, for each year of the Employment Term a
salary (the "Salary") at an annual rate of $300,000, payable in accordance with
the Company's regular payroll practices as from time to time in effect, less all
withholdings and other deductions required to be deducted in accordance with any
applicable federal, state, local or foreign law, rule or regulation.
(b) At the sole discretion of the Board of Directors of the Company
the Executive may be paid a discretionary annual bonus in cash, Common Stock,
options to purchase Common Stock, Stock Appreciation Rights ("SAR's") or any
combination thereof, in such an amount, if any, and based upon such criteria as
the Board of Directors of the Company may from time to time consider
appropriate.
(c) Concurrently with the execution and delivery of this Agreement,
the Company will issue to the Executive options to purchase 250,000 shares of
the Company's Common Stock (the "Signing Options"). The Signing Options will
have an exercise price equal to the average closing price of the shares of the
Company's Common Stock equal to the closing price of the shares of Common Stock
on December 31, 2002. The Signing Options shall vest as follows: 125,000 on
December 31, 2003 and 125,000 on December 31, 2004. The Signing Options shall
have a term of ten (10) years and options issued pursuant to the Company's stock
option plans.
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(d) As additional consideration for Executive's services to the
Company hereunder, the Company shall pay Executive an annual bonus (the
"Performance Bonus"), based upon the Company's performance during the Employment
Term, commencing with the fiscal year from January 1, 2003 through December 31,
2003, and for the fiscal year from July 1, 2004 through December 31, 2004, if
applicable, if earned, in the form of options to purchase shares of the
Company's Common Stock, in an amount equal to the greater of (i) two percent
(2%) of the excess over the Revenue Goal (as hereinafter defined), if the
Revenue Goal is attained for the applicable fiscal year; or (ii) five percent
(5%) of the excess over Net Profit Goal (as hereinafter defined), if the Net
Profit Goal is attained for the applicable fiscal year. For purposes hereof, the
term "Revenue Goal" for the fiscal year ended December 31, 2003 shall mean a
fifty percent (50%) increase of the Company's revenues for the fiscal year when
compared to the prior fiscal year; and for the fiscal year commencing January 1,
2004, the Revenue Goal shall be mutually agreed to by the Executive and the
Compensation Committee of the Company's Board of Directors (based upon good
faith negotiations) by December 15, 2003. For purposes hereof, the term "Net
Profit Goal" shall be the attainment of profitability by the Company for the
fiscal year ended December 31, 2003; and for the fiscal year commencing January
1, 2004 shall be as mutually agreed to by the Executive and the Compensation
Committee of the Company's Board of Directors (based upon good faith
negotiations) by December 15, 2003. The calculation of whether any Performance
Bonus is due for any fiscal year during the Employment Term shall be made by the
Board of Directors and upon the Company's issuance of its audited annual
financial statements. The Performance Bonus, if earned, shall be paid within
thirty (30) days of the publication of the audited financial statements of the
Company for the applicable year, in the form of options to purchase shares of
the Company's Common Stock valued at an exercise price equal to the average of
the closing market price of the shares of the Company's Common Stock for the
thirty (30) days prior to the end of the applicable fiscal year, or at the
request of the Executive, shares of the Company's Common Stock. Any options
issued in respect of the Performance Bonus shall be subject to the terms and
provisions of the Company's stock option plans as then in effect or, if no
shares are available under stock option plans then in effect, or any
subsequently enacted stock option plan, as applicable, except that they may be
exercised in any amount, at any time after being vested until three (3) years
from date of termination of employment and are irrevocable during that period.
Should there not be sufficient options available or usable under the Company's
stock option plans as then in effect, the Company will use its best efforts to
cause a new stock option plan to be adopted which will cover the options subject
to the Performance Bonus. If no new stock option plan is adopted, the Company
will grant SAR's shares of Common Stock or make a cash payment to the Executive
of substantially similar value, within thirty (30) days from the date that it is
determined that a sufficient number of options are not available.
Notwithstanding anything set forth in this Section 4(d), in no event shall the
options granted to the Executive, if any, as the Performance Bonus with respect
to any fiscal year during the Employment Term exceed four percent (4%) of the
Company's outstanding shares of capital stock.
(e) Notwithstanding anything set forth in Section 4(d), when
calculating if the Revenue Goal or Net Profit Goal has been attained in any
particular fiscal year, the Company's Compensation Committee shall make such
adjustments as are equitable to the Executive and the Company to account for any
acquisitions of companies or businesses by the Company or its subsidiaries.
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(f) Should there be a Change of Control of the Company or any other
transaction in which the Company is not the surviving entity during the
Employment Term, then as part of that transaction, the Company will require the
surviving entity to modify their Agreement in a fair and equitable manner to
provide the Executive the same type of benefits that he is entitled to earn
pursuant to Section 4(e) of this Agreement.
(g) All options granted to the Executive pursuant to the Agreement or
referred to herein, to the extent permitted by applicable law, shall be
transferable and assignable. Any unvested options granted to the Executive
hereunder shall fully vest upon a Change in Control or upon a termination of
this Agreement by the Executive for Good Reason.
Section 5. Benefits, Vacation.
(a) During the Employment Term, the Executive shall be entitled to
such insurance and health and medical benefits as are generally made available
to the senior executives of the Company, as a group, pursuant to such plans as
are from time to time maintained by the Company; provided, however, that the
Executive shall be required to comply with the conditions of coverage attendant
to such plans.
(b) During each contract year of the Employment Term, the Executive
shall be entitled to six (6) weeks of vacation. The Executive shall take
vacation at such time or times as the Executive desires, subject to the
concurrence of the Company based upon the then current business needs and
activities of the Company. Vacation shall accrue if unused during the term of
employment. At the end of each fiscal year, any unused vacation time will be
paid out to Executive based on Executive's annual salary in effect at that time.
(c) During the Employment Term, the Executive shall be eligible to
participate in the profit sharing and other benefit plans that the Company from
time to time makes available to the senior executives of the Company as a group,
subject to the terms, provisions and conditions of such plans, including,
without limitation, any vesting periods and eligibility criteria.
(d) During the Employment Term, the Company shall pay to the Executive
a car allowance of $1,000 per month. The amounts paid and/or provided for in
this Section 5(d) shall be reported by the Company on Internal Revenue Service
Form 1099.
Section 6. Business Expenses. The Executive shall be entitled to
reimbursement for ordinary, necessary and reasonable business expenses actually
incurred by the Executive during the Employment Term in the performance of the
Executive's duties hereunder, if supported by such reasonable documentation as
may be required by the Company in accordance with the Company's policies.
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Section 7. Termination of Employment Term.
(a) In the event of the death of the Executive during the Employment
Term, the Executive's employment hereunder shall automatically terminate as of
the date of death; provided, however, that the Executive's estate or legal
representative, as the case may be, shall be entitled to receive, and the
Company shall pay, any accrued and unpaid Salary for a one (1) year period
following the date of death, any Performance Bonus that would be payable for the
one (1) year period in which the Executive died which are properly owing to the
Executive pursuant to Section 6 hereof.
(b) In the event of the Executive's Incapacity, the Company may, in
its sole discretion, terminate the Executive's employment hereunder upon written
notice to the Executive; provided, however, that the Executive or the
Executive's legal representative, as the case may be, shall be entitled to
receive, and the Company shall pay, (i) any accrued and unpaid Salary for a one
(1) year period from the date of termination, less any amounts received by the
Executive under any disability insurance policy maintained by the Company; and
(ii) any Performance Bonus that would be payable for the one (1) year period in
which the Executive's employment is terminated (payment of which shall be for
the entire year) due to Incapacity and reimbursement of business expenses which
are properly owing to the Executive pursuant to Section 6 hereof, through the
date of termination.
(c) The Company shall have the right to terminate the Executive's
employment under this Agreement at any time for Cause upon written notice to the
Executive. In the event the Executive's employment hereunder is terminated by
the Company for Cause, the Company shall only be obligated to pay accrued and
unpaid Salary through the date of termination and the Company shall pay any
accrued and unreimbursed business expenses which are properly owing to the
Executive pursuant to Section 6 hereof through the date of termination.
(d) The Company shall have the right to terminate the Executive's
employment hereunder Without Cause at any time upon thirty (30) days' prior
written notice to the Executive. If the Company terminates the Executive's
employment hereunder Without Cause prior to December 31, 2003, the Company shall
(i) continue to pay the Salary to the Executive provided for hereunder for a
period equal to the lesser of (x) eighteen (18) months from the date of
termination and (y) the remaining period of the Employment Term and (ii) pay any
unreimbursed business expenses which are properly owing to the Executive
pursuant to Section 6 hereof through the date of termination. If the Company
terminates the Executive's employment hereunder Without Cause after December 31,
2003, the Company shall (i) continue to pay Salary to the Executive provided for
hereunder for a period equal to the greater of nine (9) months or the remaining
period of the Employment Term and (ii) pay an unreimbursed business expenses
which are properly owing to the Executive pursuant to Section 6 hereof through
the date of termination. In addition, should the Executive's employment
hereunder be terminated Without Cause, the Company shall pay to the Executive
the Performance Bonus, if any, for the entire contract year in which the
termination of the Executive's employment with the Company hereunder occurs. The
Executive shall not be under any obligation to mitigate the Company's obligation
pursuant to this Section 7(d) by securing other employment or otherwise.
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(e) The Executive shall have the right to terminate his employment
with the Company hereunder for Good Reason, upon not less than thirty (30) days
prior written notice to the Company. Should the Executive terminate his
employment hereunder for Good Reason, the Company shall be obligated to make the
payments to the Executive provided for in Section 7(d) hereof upon the
termination of the Executive's employment by the Company Without Cause.
(f) The failure of the Company to continue the employment of the
Executive upon expiration of the entire two (2) year Employment Term shall not
be considered a termination of employment for purposes of this Agreement. The
Company's obligations with respect to the Performance Bonus for the last year of
the Employment Term, if any, shall survive the expiration of this Agreement.
Section 8. Inventions. Any Inventions originated or conceived by the
Executive related to the Company's business, during his employment by the
Company or any Affiliate of the Company or with the use or assistance of the
facilities, materials or personnel of the Company or any Affiliate of the
Company, either solely or jointly with others, during the period of employment
with the Company or any Affiliate of the Company shall be the sole and exclusive
property of the Company. The Executive hereby irrevocably assigns and transfers
to the Company and agrees to transfer and assign to the Company all of his
right, title and interest in and to all Inventions, and to applications for
patents and patents granted upon such Inventions and to all copyrightable
material related thereto developed by the Executive or under his supervision.
The Executive agrees for himself and his heirs and personal representatives,
upon the request of the Company and at the Company's expense, to do such acts,
to execute such documents and instruments and to participate in such legal
proceedings as from time to time may be necessary or required to apply for,
secure, maintain, reissue, extend or defend the worldwide rights of the Company
in any of the Inventions.
Section 9. Restrictions Respecting Competing Businesses, Confidential
Information, etc. The Executive acknowledges and agrees that by virtue of the
Executive's position and involvement with the business and affairs of the
Company, the Executive will develop substantial expertise and knowledge with
respect to the most significant aspects of the Company's business, affairs and
operations and will have access to significant aspects of the business and
operations of the Company and to Confidential and Proprietary Information of the
Company.
(a) The Executive hereby covenants and agrees that, during the
Employment Term and thereafter, unless otherwise authorized by the Company, the
Executive shall not, directly or indirectly, under any circumstance: (i)
disclose to any other Person (other than in the regular course of business of
the Company) any Confidential and Proprietary Information, other than pursuant
to applicable law, regulation or subpoena or with the prior written consent of
the Company; (ii) act or fail to act so as to impair the confidential or
proprietary nature of any Confidential and Proprietary Information; (iii) use
any Confidential and Proprietary Information related to the Company's business
other than for the sole and exclusive benefit of the Company; or (iv) offer or
agree to, or cause or assist in the inception or continuation of, any such
disclosure, impairment or use of any Confidential and Proprietary Information.
Following the Employment Term, the Executive shall return all documents, records
and other items containing any Confidential and Proprietary Information to the
Company (regardless of the medium in
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which maintained or stored), without retaining any copies, notes or excerpts
thereof, or at the request of the Company, shall destroy such documents, records
and items (any such destruction to be certified by the Executive to the Company
in writing).
(b) The Executive covenants and agrees that, while the Executive is
employed by the Company and for one (1) year after the Executive ceases to be
employed by the Company, if the Executive (i) voluntarily terminates his
employment with the Company, other than a termination by the Executive for Good
Reason or (ii) is terminated by the Company for Cause, the Executive shall not,
directly or indirectly, manage, operate or control, or participate in the
ownership, management, operation or control of, or otherwise become interested
in (whether as an owner, stockholder, partner, lender, consultant, Executive,
agent, supplier, distributor or otherwise) any Competing Business or, directly
or indirectly, induce or influence any customer or other Person that has a
business relationship with the Company, or any Affiliate of the Company, to
discontinue or reduce the extent of such relationship or modify its relationship
with the Company in a manner that is materially adverse to the Company; provided
that in the case of a termination by the Executive pursuant to clause (i) the
Company at all times continues to pay the amounts owing to the Executive
pursuant to Section 7(b) hereof. For purposes of this Agreement, the Executive
shall be deemed to be directly or indirectly interested in a business if he is
engaged or interested in that business as a stockholder, director, officer,
Executive, agent, partner, individual proprietor, consultant, advisor or
otherwise, but not if the Executive's interest is limited solely to the
ownership of not more than 5% of the securities of any class of equity
securities of a corporation or other Person whose shares are listed or admitted
to trade on a national securities exchange or are quoted on NASDAQ or a similar
means if NASDAQ is no longer providing such information.
(c) While the Executive is employed by the Company and for one (1)
year after the Executive ceases to be an employed by the Company, the Executive
shall not, directly or indirectly, solicit to employ for himself or others any
employee of the Company or any Affiliate of the Company who was an employee of
the Company or any Affiliate of the Company as of the date of the termination of
the Executive's employment with the Company, or to solicit any such employee to
leave such employee's employment or join the employ of another, then or at a
later time; provided that the foregoing shall not apply to any family member of
the Executive who is employed by the Company or any such Affiliate or the
Executive's administrative assistant.
(d) The parties agree that nothing in this Agreement shall be
construed to limit or negate the common law of torts, confidentiality, trade
secrets, fiduciary duty and obligations where such laws provide the Company with
any broader, further or other remedy or protection than those provided herein.
(e) Following the termination of the Executive's employment with the
Company or the expiration of the Employment Term, the Executive shall return all
Company property in his possession to the Company.
(f) Because the breach of any of the provisions of this Section 9 may
result in immediate and irreparable injury to the Company for which the Company
may not have an adequate remedy at law, the Company shall be entitled, in
addition to all other rights and
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remedies, to a decree of specific performance of the restrictive covenants
contained in this Section 9 and to an injunction enjoining such breach, without
posting a bond or furnishing similar security.
Section 10. Severability. Each term and provision of this Agreement is
severable; the invalidity, illegality or unenforceability or modification of any
term or provision of this Agreement shall not affect the validity, legality and
enforceability of the other terms and provisions of this Agreement, which shall
remain in full force and effect. Since it is the desire and intent of the
parties that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought, should any particular provision of this Agreement
be deemed invalid, illegal or unenforceable, the same shall be deemed reformed
and amended to delete that portion that is adjudicated to be invalid, illegal or
unenforceable and the deletion shall apply only with respect to the operation of
such provision and to the extent of such provision and, to the extent that a
provision of this Agreement would be deemed unenforceable by virtue of its
scope, but may be made enforceable by limitation thereon, each party agrees that
this Agreement shall be reformed and amended so that the same shall be
enforceable to the fullest extent permissible under the laws and public policies
applied in the jurisdiction in which enforcement is sought.
Section 11. Assignment. This Agreement and the rights and obligations
of the parties hereto shall bind and inure to the benefit of each of the parties
hereto, the heirs, executors, administrators and legal representatives of the
Executive and the successors and permitted assigns of the Company. Neither this
Agreement nor any rights or benefits hereunder may be assigned by the Executive
or the Company without the prior written consent of the other party hereto,
except that the Company may assign any of its rights or obligations hereunder to
any other Person which purchases all or substantially all of the common stock or
assets of the Company or is the successor to the Company by merger,
consolidation, recapitalization or other similar transaction.
Section 12. Amendment; Entire Agreement, etc. This Agreement may not
be modified, amended, altered or supplemented except by a written agreement
executed by the parties hereto. This Agreement contains the entire agreement and
understanding of the parties hereto with respect to the subject matter of this
Agreement and supersedes all prior and/or contemporaneous agreements and
understandings of any kind and nature (whether written or oral) between the
parties with respect to such subject matter, all of which are merged herein
(including, without limitation, the Prior Employment Agreement).
Section 13. Waiver. Waiver by either party of either breach of or
failure to comply with any provision of this Agreement by the other party shall
not be construed as, or constitute, a continuing waiver of such provision, or a
waiver of any other breach of, or failure to comply with, any other provision of
this Agreement, any such waiver must be in writing to be limited to the specific
matter and instance for which it is given. No waiver of any such breach or
failure or of any term or condition of this Agreement shall be effective unless
in a written instrument and signed by the waiving party and delivered, in the
manner required for notices generally, to the affected party.
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Section 14. Notices. All notices, consents, directions, approvals,
instructions, requests and other communications required or permitted by the
terms of this Agreement to be given to any person shall be in writing, and shall
be delivered personally or sent by certified mail, return receipt requested
(postage prepaid) or by telecopy, to the parties at the following addresses or
telecopy numbers, as applicable:
If to the Executive:
Dr. Steven. Newman
Xybernaut Corporation
12701 Fair Lakes Circle
Suite 550
Fairfax, VA 22033
Telecopier: (703) 222-7660
If to the Company:
Xybernaut Corporation
12701 Fair Lakes Circle
Suite 550
Fairfax, VA 22033
Attention: Secretary
Telecopier: (703) 631-6734
With a copy to:
Jenkens & Gilchrist Parker Chapin LLP
The Chrysler Building
405 Lexington Avenue
New York, NY 10174
Attention: Martin Eric Weisberg, Esq.
Telecopier: (212) 704-6288
or to such other address as a party may have furnished to the other parties in
writing in accordance herewith. Any notice, consent, direction, approval,
instruction, request or other communication given in accordance with this
Section 14 shall be effective after it is received by the intended recipient.
Section 15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED IN THAT STATE, WITHOUT REGARD OR
REFERENCE TO ITS PRINCIPLES OF CONFLICTS OF LAWS. THIS AGREEMENT SHALL BE
CONSTRUED AND INTERPRETED WITHOUT REGARD TO ANY PRESUMPTION AGAINST THE PARTY
CAUSING THIS AGREEMENT TO BE DRAFTED.
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Section 16. Arbitration. The parties agree that with respect to any
dispute or claim hereunder, either party shall be entitled to submit the claim
or dispute to binding arbitration to be held in Fairfax County, Virginia, in
accordance with the rules and procedures of the American Arbitration Association
(the "AAA"). The party or parties requesting arbitration shall serve upon the
other party a demand therefor, in writing, specifying in detail the controversy
and matter(s) to be submitted to arbitration. The selection of arbitrators and
the arbitration proceedings shall be conducted pursuant to the rules for
resolution of commercial disputes promulgated by the American Arbitration
Association (the "AAA") and the procedures of the AAA from time to time in
effect for the resolution of commercial disputes. Each party shall designate one
(1) arbitrator and the two (2) arbitrators shall designate a third arbitrator.
If the two (2) arbitrators are not able to agree on the third arbitrator, the
third arbitrator shall be chosen from a listing of available arbitrators
designated by the AAA in accordance with the procedures of the AAA. An
arbitration conducted pursuant to this Section 16 shall be the sole and
exclusive remedy for the resolution of any such dispute or claim arising out of
or relating to this Agreement. The determination of the arbitrators shall be
conclusive and binding on the parties. The arbitrators shall, in addition to
making an award, be entitled to determine that the costs and expenses incurred
by the prevailing party in the arbitration (including, without limitation,
reasonable attorneys' fees and expenses and the costs of the AAA) be paid by the
other party to the arbitration. Judgment on the decision of the arbitrators may
be entered in any court of competent jurisdiction. Each of Executive and Company
hereby (i) irrevocably consents to the exclusive personal jurisdiction of the
courts of the Commonwealth of Virginia located in Fairfax County, Virginia for
this purpose; (ii) waives any right to contest the venue of such courts; or
(iii) to assert that such courts constitute an inconvenient forum.
Section 17. Headings; Counterparts. The headings contained in this
Agreement are inserted for reference purposes only and shall not in any way
affect the meaning, construction or interpretation of this Agreement. This
Agreement may be executed in two (2) counterparts, each of which when executed
shall be deemed to be an original, but both of which, when taken together, shall
constitute one and the same document.
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IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement as of the date first above written.
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Steven A. Newman
XYBERNAUT CORPORATION
By:
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Name:
Title: