Exhibit 10.3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated this first day of March, 1999, between Young
Design, Inc., a Virginia corporation (the "Corporation") and Michael Young (the
"Executive").
WITNESSETH
WHEREAS, the Executive is presently the President of the Corporation who,
in accordance with the policies established by the Board of Directors of the
Corporation (the "Board"), develops and oversees the implementation of the goals
and objectives of the Corporation (the "Employer"); and
WHEREAS, the Employer desires to be ensured of the Executive's continued
active participation in the business of the Employer; and
WHEREAS, in order to induce the Executive to remain in the employ of the
Employer and in consideration of the Executive's agreement to remain in the
employ of the Employer pursuant to the terms and conditions hereof, the parties
desire to specify the terms and conditions of Executive's continuing employment
with the Corporation and to provide certain severance benefits which shall be
due the Executive in the event that his employment with the Employer is
terminated under specified circumstances;
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Definitions. The following words and terms shall have the meanings set
forth below for the purposes of this Agreement:
(a) Affiliates. "Affiliates" of the Corporation, or a person
"affiliated" with the Corporation, are any persons or entities which, directly
or indirectly, through one or more intermediaries, controls or are controlled by
or are under common control with, the persons or entities specified.
(b) Average Annual Compensation. The Executive's "Average Annual
Compensation" for purposes of this Agreement shall be deemed to mean the average
level of compensation paid to the Executive by the Employer or any Subsidiary
thereof during the most recent five taxable years preceding the Date of
Termination (or such shorter period as the Executive was employed), including
Base Salary and bonuses or other compensation under any employee benefit plans
of the Employer.
(c) Base Salary. "Base Salary" shall have the meaning set forth in
Section 3(a) hereof.
(d) Cause. Termination of the Executive's employment for "Cause"
shall mean termination because of willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order or material breach of any
provision of this Agreement. For purposes of this paragraph, no act or failure
to act on the Executive's part shall be considered "willful" unless done, or
omitted to be done, by the Executive not in good faith and without reasonable
belief that the Executive's action or omission was in the best interest of the
Employer. Cause shall be determined in good faith by the affirmative vote of a
majority of the whole Board of Directors (excluding the Executive) after the
Executive has been provided the opportunity to make a presentation to the Board
which presentation to the Board may be with counsel.
(e) Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(f) Date of Termination. "Date of Termination" shall mean (i) if the
Executive's employment is terminated for Cause, Disability or for Retirement,
the date specified in the Notice of Termination, and (ii) if the Executive's
employment is terminated for any other reason, the date on which a Notice of
Termination is given or as specified in such Notice.
(g) Disability. Termination by the Employer of the Executive's
employment based on "Disability" shall mean termination because of any physical
or mental impairment which qualifies the Executive for disability benefits under
the applicable long-term disability plan maintained by the Employer or any
subsidiary or, if no such plan applies, which would qualify the Executive for
disability benefits under the Federal Social Security System.
(h) IRS. "IRS" shall mean the Internal Revenue Service.
(i) Notice of Termination. Any purported termination of the
Executive's employment by the Employer for any reason, including without
limitation for Cause, Disability or Retirement, or by the Executive for any
reason, including without limitation for Good Reason, shall be communicated by a
written "Notice of Termination" to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a dated notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii)
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Executive's employment under the provision so
indicated, (iii) specifies a Date of Termination, which shall be not less than
thirty (30) nor more than ninety (90) days after such Notice of Termination is
given, except in the
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case of the Employer's termination of Executive's employment for Cause for which
the Date of Termination may be the date of the notice; and (iv) is given in the
manner specified in Section 14 hereof.
(j) Retirement. "Retirement" shall mean voluntary termination by the
Executive in accordance with the Employer's retirement policies, including early
retirement, generally applicable to the Employer's salaried employees.
(k) Subsidiary. "Subsidiary" shall mean any subsidiary of the
Corporation.
2. Term of Employment.
(a) The Employer hereby employs the Executive as President, and
Executive hereby accepts said employment and agrees to render such services to
the Employer, on the terms and conditions set forth in this Agreement. Unless
extended as provided in this Section 2, this Agreement shall terminate one (1)
year after the date first above written; provided, however, this Agreement shall
be automatically renewed on its anniversary date ("Annual Renewal Date") each
year for one (1) additional year unless either party shall give written notice
of non-renewal, in accordance with Section 14 hereof to the other party at least
thirty (30) days prior to an Annual Renewal Date, in which event this Agreement
shall continue in effect for a term ending on the Annual Renewal Date
immediately following such notice. Reference herein to the term of this
Agreement shall refer both to the initial term and any successive term as the
context requires.
(b) During the term of this Agreement, the Executive shall perform
such executive services for the Employer as is consistent with his title of
President and as directed, from time to time, by the Board of Directors,
including but not limited to, the supervision of the Corporation's day-to-day
operations. The Executive shall devote his full time, attention and energies to
the business of the Corporation and shall not, during the term hereof (as
defined in Section 2(a)), be employed or involved in any other business
activity, whether or not such activity is pursued for gain, profit or other
pecuniary advantage, except for (i) volunteer services for or on behalf of such
religious, educational, non-profit and/or other eleemosynary organization as
Executive may wish to serve, (ii) service as a director of as many as three (3)
for-profit business activities, and (iii) such other activities as may be
specifically approved by the Board of Directors (without the Executive's
participation or vote). This restriction shall not, however, preclude the
Executive from employment in any capacity with affiliates of the Corporation,
nor shall any remuneration from such affiliates be considered in calculating the
Base Salary (as defined in Section 3(a)) due to Executive hereunder.
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3. Compensation and Benefits.
(a) For services rendered hereunder by the Executive, the Employer
shall compensate and pay Executive for his services during the term of this
Agreement at a minimum base salary of Ninety thousand dollars ($90,000.00) per
year ("Base Salary"), which may be increased from time to time in such amounts
as may be determined by the Board of Directors of the Employer. In addition to
his Base Salary, the Executive shall receive during the term of this Agreement
such bonus payments as may be determined by the Board of Directors of the
Employer.
(b) During the term of the Agreement, Executive shall be entitled to
participate in and receive the benefits of any pension or other retirement
benefit plan, the 401(k) plan, profit sharing, stock option, employee stock
ownership, or other plans, benefits and privileges given to employees and
executives of the Employer, to the extent commensurate with his then duties and
responsibilities, as fixed by the Board of Directors of the Employer. In
addition, the Corporation shall, to the extent they are not otherwise covered
under another plan, pay for the insurance premiums for the Executive and his
spouse and children under the Corporation's medical insurance plan. The Employer
shall not make any changes in such plans, benefits or privileges which would
adversely affect Executive's rights or benefits thereunder, unless such change
occurs pursuant to a program applicable to all executive officers of the
Employer and does not result in a proportionately greater adverse change in the
rights of or benefits to Executive as compared with any other executive officer
of the Employer. Nothing paid to Executive under any plan or arrangement
presently in effect or made available in the future shall be deemed to be in
lieu of the base salary payable to Executive pursuant to Section 3(a) hereof
(c) During the term of this Agreement, Executive shall be entitled
to four (4) weeks (20 working days) paid vacation in each calendar year to be
taken and determined in accordance with the vacation policies and procedures as
established from time to time by the Board of Directors of the Employer.
Executive shall also be entitled to all paid holidays to which similarly
situated executives and key management employees of the Corporation are
entitled. The Executive shall be entitled to paid leave due to physical illness
in each calendar year to be taken and determined in accordance with the policies
and procedures as established from time to time by the Board of Directors.
Executive shall not be entitled to receive any additional compensation from the
Employer for failure to take a vacation, or failure to use "sick days," nor
shall Executive be able to accumulate unused vacation or "sick" time from one
year to the next, except to the extent authorized by the Board of Directors of
the Employer.
(d) The Corporation shall provide the Executive with secretarial and
support staff and furnished offices and conference facilities in Falls Church,
Virginia, and in such other location, if any, in which the Executive hereafter
agrees to perform services on behalf of the Corporation, all of which shall be
consistent with the Executive's duties
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as the President of the Corporation and sufficient for the efficient performance
of those duties.
4. Expenses.
The Employer shall reimburse Executive or otherwise provide for or pay for all
reasonable expenses incurred by Executive in furtherance of, or in connection
with the business of the Employer, including, but not by way of limitation,
traveling expenses, and all reasonable entertainment expenses (whether incurred
at the Executive's residence, while traveling or otherwise), subject to such
reasonable documentation and other limitations as may be established by the
Board of Directors of the Employer. In addition, the Company will provide the
Executive with an automobile allowance of approximately $300.00 per month.
5. Termination.
(a) The Employer shall have the right, at any time upon prior Notice
of Termination, to terminate the Executive's employment hereunder for any
reason, including without limitation termination for Cause, Disability or
Retirement, and Executive shall have the right, upon prior Notice of
Termination, to terminate his employment hereunder for any reason.
(b) In the event that (i) Executive's employment is terminated by
the Employer for Cause or (ii) Executive voluntarily terminates his employment
hereunder, Executive shall have no right pursuant to this Agreement to
compensation or other benefits for any period after the applicable Date of
Termination.
(c) In the event that (i) Executive's employment is terminated by
the Employer for other than Cause, including termination due to Disability,
Retirement or the Executive's death, or (ii) such employment is terminated by
the Executive due to a material breach of this Agreement by the Employer, which
breach has not been cured within fifteen (15) days after a written notice of
non-compliance has been given by the Executive to the Employer, then the
Employer shall, subject to the provisions of Section 6 hereof, if applicable,
(A) Pay to the Executive, in a lump sum or in twelve (12)
equal monthly installments (at the Employer's option) beginning with the first
business day of the month following the Date of Termination, a cash severance
amount equal to the Executive's Average Annual Compensation, and
(B) Maintain and provide for a period ending at the earlier of
(i) the expiration of the remaining term of employment pursuant hereto prior to
the Notice of Termination or (ii) the date of the Executive's full-time
employment by another employer (provided that the Executive is entitled under
the terms of such employment to benefits substantially similar to those
described in this subparagraph (B)), at no cost to the
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Executive, the Executive's continued participation in all group insurance, life
insurance, health and accident, disability and other employee benefit plans,
programs and arrangements in which the Executive was entitled to participate
immediately prior to the Date of Termination (other than stock option and
restricted stock plans of the Employer), provided that in the event that the
Executive's participation in any plan, program or arrangement as provided in
this subparagraph (B) is barred or during such period any such plan, program or
arrangement is discontinued or the benefits' thereunder are materially reduced,
the Employer shall arrange to provide the Executive with benefits substantially
similar to those which the Executive was entitled to receive under such plans,
programs and arrangements immediately prior to the Date of Termination.
6. Mitigation; Exclusivity of Benefits.
(a) The Executive shall not be required to mitigate the amount of
any benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination or otherwise.
(b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employer pursuant to employee benefit plans
of the Employer or otherwise.
7. Withholding. All payments required to be made by the Employer hereunder
to the Executive shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as the Employer may reasonably
determine should be withheld pursuant to any applicable law or regulation.
8. Non-solicitation of Customers and Employees.
(a) The Executive hereby acknowledges and recognizes the highly
competitive nature of the business of the Corporation and accordingly agrees
that, during the term of this Agreement and, in consideration of the receipt of
any payment pursuant to this Agreement, for a period of two years following the
date of termination of the Executive's employment under this Agreement, unless
otherwise agreed to in writing by the Corporation, the Executive shall not,
within fifty (50) miles of Falls Church, Virginia or any other area in the
United States in which the Corporation was doing or soliciting business, either
directly or indirectly, in any manner or capacity, whether as principal, agent,
partner, officer, director, employee, joint venturer, salesman, or corporate
shareholder or otherwise for the benefit of any Person (as defined below), (i)
render services to, or solicit the rendering of services to, any Person in
competition with the business of the Corporation, which then is, or at any time
during a period of one year prior to the termination of the Executive's
employment under this Agreement (the "Termination Date"), was a Customer (as
defined below) of the Corporation, or (ii) solicit the rendering of services to
any Person of any kind whatsoever which is then or has been
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at any time during a period of one year prior to the Termination Date a
Customer, employee, salesperson, agent or representative of the Corporation in
any manner which interferes or might interfere with the relationship of the
Corporation with such Person, or in an effort to obtain such Person as a
customer, supplier, employee, salesperson, agent or representative of any
business in competition with the Corporation, or (iii) for a period of two years
following the Termination Date, hire or participate in the hiring by any Person
of an employee of the Corporation. In order to assure strict compliance with the
foregoing, and in recognition of the compensation to be paid by Employer to
Executive on the termination of this Agreement, Executive grants to Employer the
sole and absolute right to determine whether any employment or services
anticipated to be undertaken by Executive during said period of time as outlined
above, is or may be in violation of the foregoing provisions and Executive
agrees to notify Employer, in writing, fourteen (14) days prior to undertaking
any employment or services within the said time period, regardless of the nature
thereof, of the name and address of any such intended employer, proposed job
title, proposed job description and salary, and the business of the prospective
employer. If, within such fourteen (14) day period, Employer shall object on
reasonable grounds to such anticipated employment in writing to Executive,
Executive agrees not to accept the same or in any manner directly or indirectly
render services to any such prospective employer.
"Person" means any individual, trust, partnership, corporation,
limited liability company, association, or other legal entity.
"Customer" means any Person with which the Corporation or any
subsidiary is currently engaged to provide goods or services, has been engaged
to provide goods or services within twelve (12) months prior to the Termination
Date, or actively marketed, discussed a project with, negotiated with, provided
a bid to or otherwise communicated with in an effort to obtain an engagement to
provide goods or services sold by the Corporation or any subsidiary within
twelve (12) months prior to the Termination Date.
(b) It is expressly understood and agreed that although the
Executive and the Corporation consider the restrictions contained in Section
8(a) of this Agreement reasonable for the purpose of preserving for the
Corporation its good will and other proprietary rights, if a final judicial
determination is made by a court having jurisdiction that the time or territory
or any other restriction contained in Section 8(a) of this Agreement is an
unreasonable or otherwise unenforceable restriction against the Executive, the
provisions of Section 8(a) of this Agreement shall not be rendered void but
shall be deemed amended to apply as to such maximum time and territory and to
such other extent as such court may judicially determine or indicate to be
reasonable.
9. Disclosure of Confidential Information. The Executive acknowledges that
the Corporation's trade secrets, as they may exist from time to time, and
confidential information its products, programs, technical information,
procurement and sales activities and procedures, identity of customers and
potential customers, business
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plans, promotion and pricing techniques, and credit and financial data
concerning customers are valuable, special and unique assets of the Corporation.
In light of the highly competitive nature of the industry in which the
Corporation's business is conducted, the Executive agrees that all knowledge and
information described in the preceding sentence not in the public domain and
heretofore or in the future obtained by the Executive shall be considered
confidential information. Executive agrees that he will not disclose any or such
secrets, processes or information to any Person or other entity for any reason
or purpose whatsoever, except as necessary in the performance of his duties as
an employee of or consultant to the Corporation and then only upon a written
confidentiality agreement in such form and content as requested by the
Corporation from time to time, nor shall the Executive make use of any such
secrets, processes or information (other than information in the public domain)
for his own purposes or for the benefit of himself, any Person or other entity
(except the Corporation and its subsidiaries) under any circumstances. The
provisions contained in this Section 9 shall also apply to information obtained
by the Executive with respect to any future subsidiary of the Corporation.
10. Business Information. Upon the termination of his employment with the
Corporation, Executive (or, as appropriate, his personal representatives) shall
deliver to the Corporation (without retaining copies of the same), all plans,
source codes, designs, customer lists, correspondence, records, documents,
accounts and papers of any description and any other property of the Corporation
within the possession or under the control of Executive (or, as appropriate, his
personal representatives) and relating to the affairs and business of the
Corporation, whether drafted, created or compiled by Executive or received by
Executive from other individuals or entities (whether employees of or affiliated
with the Corporation).
11. Remedies. The Executive acknowledges and agrees that the Corporation's
remedy at law for a breach or threatened breach of any of the provisions of
Section 8, Section 9 or Section 10 of this Agreement would be inadequate and, in
recognition of this fact, in the event of a breach or threatened breach by the
Executive of any of the provisions of Section 8, Section 9 or Section 10 of this
Agreement, it is agreed that, in addition to any remedy at law, the Corporation
shall be entitled to without posting any bond, and the Executive agrees not to
oppose the Corporation's request in the nature of specific performance,
temporary restraining order, temporary or permanent injunction, or any other
equitable relief or remedy which may then be available, provided, however,
nothing herein shall be deemed to relieve the Corporation of its burden to prove
grounds warranting such relief nor preclude the Executive from contesting such
grounds or facts in support thereof. Nothing herein contained shall be construed
as prohibiting the Corporation form pursuing any other remedies available to it
for such breach or threatened breach.
12. Assignability. The Employer shall assign this Agreement and its rights
and obligations hereunder in whole, but not in part, to any corporation or other
entity with or into which the Employer may hereafter merge or consolidate or to
which the Employer
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may transfer all or substantially all of its assets, if in any such case said
corporation or other entity shall by operation of law or expressly in writing
assume all obligations of the Employer hereunder as fully as if it had been
originally made a party hereto, but may not otherwise assign this Agreement or
its rights and obligations hereunder. The Executive may not assign or transfer
this Agreement or any rights or obligations hereunder.
13. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
To the Employer: Board of Directors
Young Design, Inc.
308 Hillwood Avenue
Falls Church, Virginia 22046
To the Executive: Michael Young
7110 Sea Cliff Road
McLean, Virginia 22101
14. Amendment; Waiver. This Agreement represents the entire agreement of
the parties relating to subject matter hereof. No provisions of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and such officer or
officers as may be specifically designated by the Board of Directors of the
Employer to sign on its behalf. No waiver by any party hereto at any time of any
breach by any other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
15. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the Commonwealth
of Virginia without regard to its principles of conflicts of laws.
16. Nature of Obligations. The obligations of the Employer hereunder are
unsecured and the Executive represents a general creditor of the Corporation for
compensation which may be due and owing. Nothing contained herein shall create
or require the Employer to create a trust of any kind to fund any benefits which
may be payable hereunder, and to the extent that the Executive acquires a right
to receive benefits from the Employer hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Employer.
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17. Interpretation and Headings. This Agreement shall be interpreted in
order to achieve the purposes for which it was entered into. The section
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
18. Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect. With
respect to Section 9 of this Agreement, in the event any court of competent
jurisdiction determines that such provisions are unreasonable or contrary to law
with respect to their time or geographic restriction, or both, the parties
hereto authorize such court to substitute restrictions as it deems appropriate
without invalidating such paragraph or this Agreement.
19. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
YOUNG DESIGN, INC.
By: /s/ Robert F. Fitzgerald
-----------------------------
Name: Robert F. Fitzgerald
Title: CEO
EXECUTIVE
By: /s/ Michael Young
-----------------------------
Michael Young
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