Document:

exv10w48

 

Exhibit 10.48

EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT dated as of November 1, 2002 (this “Agreement”), by
and between THOMAS D. DAVIS (the “Executive”), and XYBERNAUT CORPORATION, a
Delaware Corporation (the “Company”).

     WHEREAS, the Executive has been employed as a Vice President and the
Controller of the Company; and

     WHEREAS, the Company desires to employ the Executive as a Senior Vice
President and the Chief Financial 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 of the action
or inaction, 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 reasonably 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 committing fraud, or stealing or misappropriating
any asset or property of the Company, including, without limitation, any theft
or embezzlement; or (v) a breach of a material term or provision of this
Agreement by the Executive which is not cured by the Executive within twenty
(20) business days after written notice of such breach from the Company is
received by the Executive; or (vi) the willful failure of the Executive to
follow the lawful directives of the Chief Executive Officer of the Company

 

 

or the Board of Directors of the Company which are consistent with the
Company’s policies and United States generally accepted accounting principles.

     (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 more than 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; (iii) a sale or complete dissolution of the Company;
or (iv) in the event Edward G. Newman is no longer Chairman or Chief Executive
Officer of the Company.

     (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 primary 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); 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)  “CPI” shall have the meaning given to that term in Section 5(a)
hereof.

     (h)  “Employment Term” shall have the meaning given to that term in Section
2 hereof.

2

 

     (i)  “GAAP” shall mean generally accepted United States accounting
principles, as from time to time in effect.

     (j)  “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; or (ii) the occurrence of Change of Control;
provided that in order for a Change of Control pursuant to clause (i) or (ii)
of that definition to constitute “Good Reason” it shall be necessary that the
factors set forth in clause (iv) of that definition also shall have occurred;
or (iii) a change in the Executive’s office from that of Senior Vice President
and Chief Financial Officer of the Company which is not concurred in by the
Executive within twenty (20) days of its occurrence, or the breach of a
material term or provision of this Agreement by the Company which is not cured
by the Company within twenty (20) business days after written notice of such
breach from the Executive is received by the Company. The failure to renew this
Agreement after the expiration of the Employment Term, shall not constitute
Good Reason.

     (k)  “Incapacity” shall mean any mental or physical incapacity or
disability which prevents the Executive from performing his essential duties
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, patents, patent applications, copyrights and other
intellectual property, 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, and whether
conceived of solely by the Executive or jointly with the efforts of others.

     (m)  “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.

     (n)  “Salary” shall have the meaning given to that term in Section 5(a)
hereof.

     (o)  “Signing Bonus” shall have the meaning given to that term in Section
5(b) hereof.

     (p)  “Without Cause” shall mean the termination of the Executive’s
employment hereunder by the Company, other than termination by the Company due
to the Executive’s death or Incapacity or based upon Cause.

     Section 2. Employment and Term.

     (a)  The Company hereby employs the Executive as a Senior Vice President
and the Chief Financial 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

3

 

Agreement, for a term of twenty-six (26) months, commencing on November 1,
2002, and terminating on December 31, 2004, unless earlier terminated as
provided in this Agreement (the “Employment Term”).

     (b)  The Company anticipates negotiating the employment agreements of other
executive officers of the Company prior to December 31, 2002. To the extent
that the terms and conditions provided to the other members of senior
management are substantially more beneficial to such members than those
provided herein, taking into account the differences in position and tenure
with the Company, then the Company will negotiate in good faith to modify this
Agreement to be generally along similar lines to those more beneficial terms
and conditions.

     Section 3. Executive’s Duties.

     (a)  The Executive shall be the senior financial executive officer of the
Company responsible for the Company’s financial operations including, but not
limited to, internal and external financial reporting, accounting, taxation,
cash management and budgeting and forecasting. The Executive, together with
the Company’s Chief Executive Officer, shall be responsible for overseeing the
Company’s internal controls, disclosure procedures and ensuring that the
Company’s financial statements comply with applicable laws and regulations.
The Executive shall report directly to the Chief Executive Officer of the
Company. The Executive shall perform such other duties as may reasonably be
assigned to the Executive by the Company’s Chief Executive Officer or the Board
of Directors of the Company; provided, such assignments are lawful and
consistent with the Company’s policies and generally accepted accounting
principles and tax principles (if applicable).

     (b)  The Executive shall devote all of his business time, effort, skill and
attention exclusively 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.

     (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. Company’s Duties Regarding Disclosure Controls, Internal
Controls, Internal Policies, Laws and Regulations. The Company represents to
the Executive that it will use best efforts to comply with and enforce all
current disclosure controls, internal controls and internal policies
(including, but not limited to, the process of financial, legal and operational
review and authorization of all contracts and transactions prior to execution),
laws and regulations, as well as those controls, policies, laws and regulations
that may be put into place from time to time.

4

 

     Section 5. 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 the Employment Term a salary (the
“Salary”) at an annual rate of $150,000, payable in accordance with the
Company’s regular payroll practices as from time to time in effect, less all
withholdings and other deductions in accordance with any applicable federal,
state, local or foreign law, rule or regulation. After each twelve (12) month
period during the Employment Term, the annual Salary for each successive year
will be increased by the lesser of (i) 10% and (ii) the percentage increase, if
any, in the CPI for each year just completed measured for the entire twelve
(12) month period, plus three percent (3%). For purposes hereof, the term “CPI”
means the Consumer Price Index for all Urban Consumers for the United States
for the Washington, D.C. metropolitan area prepared by the Bureau of Labor
Statistics of the U.S. Department of Labor, or if such index is not then being
published, by the U.S. Department of Labor, the most nearly comparable
successor index that the parties may agree upon. Notwithstanding the above,
the Executive agrees to take a temporary reduction, deferral or other
adjustment to Executive’s Salary on a pari passu basis with other senior
executives of the Company due to the current financial condition of the
Company; provided that the period(s) that the reduction, deferral or adjustment
(are) in effect shall not exceed an aggregate of six (6) months during the
Employment Term, whether or not such months occur concurrently, without the
prior written consent of the Executive.

     (b)  In consideration of the Executive’s execution and delivery of this
Agreement, the Company shall make a cash payment of $10,000 (the “Signing
Bonus”) to be payable as follows: $6,666 immediately and $3,334 when the
Company obtains aggregate financings subsequent to the date of this Agreement
of at least $1,500,000.

     (c)  By this Agreement, the Company confirms its prior grants to the
Executive of options to purchase 86,563 shares of Common Stock, of which a
total of 82,709 options remain outstanding, as set forth on Schedule A attached
hereto. Additionally, in consideration of the services to be performed by the
Executive hereunder, the Company hereby grants to the Executive options to
purchase 150,000 shares of Common Stock at an exercise price equal to the
average of the closing market price of the shares of the Company’s Common Stock
on the date of this Agreement, which options will vest one-third upon execution
of this Agreement, one-third on the one-year anniversary of this Agreement and
the final one-third upon the two-year anniversary of this Agreement.

     (d)  The Company anticipates establishing a new bonus program(s) on or
about December 31, 2002. The Executive will be eligible for participation in
such program(s) or any other programs that may be established from time to time
during the Employment Term. There is no guaranty that the Company will
establish any such program(s).

     (e)  At the sole discretion of the Board of Directors of the Company, the
Executive may be paid, in cash, Common Stock, options to purchase Common Stock
or any combination thereof, a bonus for fiscal 2002, 2003 or 2004, or any parts
of such fiscal years, in such an amount, if any, and based upon such criteria
as the Compensation Committee of the Company’s

5

 

Board of Directors may from time to time consider appropriate based upon
the Executive’s performance during each such period.

     (f)  All stock options pursuant to this Section 5 may be exercised in any
amount at any time after being vested until three (3) years from date of
termination of the Executive’s employment hereunder (other than For Cause) and
shall be irrevocable during that period. Should there not be sufficient
options available or useable under the Company’s then existing stock option
plans to satisfy any grant hereunder then, unless otherwise agreed to by the
Executive, the Company will use its best efforts to cause a new stock option
plan to be adopted which covers such options and to register the shares of
Common Stock underlying the options within 180 days of the issuance of such
options.

     (g)  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: (i) then as part of that transaction, the Company will require
the surviving entity to adopt this Agreement whole or to enter into such other
agreement with the Executive that provides the Executive the same or
substantially similar compensation and benefits that he is entitled to earn
pursuant to this Agreement and (ii) all stock options granted to the Executive
prior to the date hereof or granted pursuant to Section 5 of this Agreement
shall become immediately exercisable in full.

     Section 6. 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)  The Executive shall be entitled to four (4) weeks of vacation for each
year during the Employment Term. For each year during the Employment Term any
unused vacation shall accrue in accordance with the Company’s regular vacation
policies. 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 divided by 2,080 hours, such payment to be
made through the Company’s normal payroll and tax withholding processes.

     (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)  The Company agrees to maintain in full force and effect a life
insurance policy in the face amount aggregating five hundred thousand dollars
($500,000), which is made payable to such beneficiary or beneficiaries who are
designated by the Executive. The Company shall pay all premiums due on such
policy during the Employment Term. After the termination or

6

 

expiration of the Employment Term, at the request of the Executive, the
Company shall assign to pay such insurance policy to the Executive, whereupon
the Executive shall assume the obligation for all future premiums.

     Section 7. Business Expenses. The Executive shall be entitled to
reimbursement for ordinary 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 documentation as may be
reasonably required by the Company in accordance with the Company’s policies.

     Section 8. 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 (i) pay the Salary then in effect for a one (1) year period
following the month of Executive’s death (which shall be paid on a monthly
basis); (ii) pay any amounts which have not been paid pursuant to Section 5(b)
hereof and Section 5(d), if applicable; (iii) pay for any accrued and unpaid
vacation as provided in Section 6(b) hereof; and (iv) reimburse the Executive
for any unpaid business expenses which are properly payable pursuant to Section
7 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 (i) pay the Salary then in effect for a one (1)
year period from the date of termination (which shall be paid on a monthly
basis), less any amounts received by the Executive under any disability
insurance policy maintained by the Company; (ii) pay any amounts which have not
been paid pursuant to Section 5(b) hereof and Section 5(d), if applicable;
(iii) pay for any accrued and unpaid vacation as provided in Section 6(b)
hereof; and (iv) reimburse the Executive for any unpaid business expenses which
are properly payable pursuant to Section 7 hereof.

     (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 and vacation pay 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 7 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 twenty (20) days’ prior
written notice to the Executive. If the Company terminates the Executive’s
employment hereunder Without Cause, the Company shall (i) continue to pay
Salary to the Executive provided for hereunder for a period equal to the
remaining period of the Employment Term, but in no event for a period of less
than one (1) year (which in either case shall be paid on a monthly basis, in
equal installments); (ii) pay any amounts which have not been paid pursuant to
Section 5(b) hereof and

7

 

Section 5(d), if applicable; (iii) pay for any accrued and unpaid vacation
as provided in Section 6(b) hereof; and (iv) reimburse the Executive for any
unpaid business expenses which are properly payable pursuant to Section 7
hereof.. The Executive shall not be under any obligation to mitigate the
Company’s obligation pursuant to this Section 8(d) by securing other employment
or otherwise.

     (e)  The Executive shall have the right to terminate his employment with
the Company hereunder for Good Reason, upon not less than twenty (20) business
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 8(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 twenty-six (26) month Employment Term shall not
be considered a termination of employment for purposes of this Agreement.

     Section 9. 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 Employment Term 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 the Inventions. The Executive hereby
grants to the Company a power of attorney, which is irrevocable and coupled
with an interest, to execute any such documents and instruments if the
Executive is unable or fails to do so, after the request by the Company as
provided in the immediately preceding sentence. The Executive shall have no
right to receive any royalties or other payments from the Company with respect
to any inventions.

     Section 10. 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 all aspects of the Company’s business, affairs and operations and
will have access to all significant aspects of the business and operations of
the Company and to Confidential and Proprietary Information. The Executive
acknowledges and agrees that the Company will be damaged if the Executive were
to breach any of the provisions of this Section 10 or if the Executive were to
disclose or make unauthorized use of any Confidential and Proprietary
Information. Accordingly, the Executive expressly acknowledges and agrees that
the Executive is voluntarily entering into this Agreement and that the terms,

8

 

provisions and conditions of this Section 10 are fair and reasonable and
necessary to adequately protect the Company.

     (a)  The Executive hereby covenants and agrees that, during the Employment
Term and thereafter, unless otherwise authorized by the Company in writing, 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 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 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. 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 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.

9

 

     (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)  Because the breach of any of the provisions of this Section 10 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 remedies, to a decree of specific performance
of the restrictive covenants contained in this Section 10 and to a temporary
and permanent injunction enjoining such breach, without posting a bond or
furnishing similar security, upon proof of such breach.

     Section 11. 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 12. 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 or other similar transaction.

     Section 13. Amendment; Entire Agreement. 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.

     Section 14. Waivers. 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

10

 

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.

     Section 15. 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:

	 	 	 	Mr. Thomas D. Davis

Xybernaut Corporation

12701 Fair Lakes Circle, Suite 550

Fairfax, VA 22033

Telecopier: (703) 631-3903

     If to the Company:

	 	 	 	Xybernaut Corporation

12701 Fair Lakes Circle, Suite 550

Fairfax, VA 22033

Attention: Secretary

Telecopier: (703) 631-7070

     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 15 shall be effective after it is received by the intended recipient.

     Section 16. Governing Law; Jurisdiction. 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

11

 

PERFORMED THEREIN, 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.

     Section 17. 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”), before a single arbitrator chosen from an AAA panel of
arbitrators experienced in complex contractual matters who is mutually
agreeable to the parties. If the parties cannot agree on a single arbitrator,
the parties shall request an odd numbered panel of proposed arbitrators from
the AAA in complex contractual matters, the parties must alternatively strike
one name each from the list of panel members. Unless the parties agree
otherwise, the party selecting first will be determined by the flip of a coin.
The last remaining name will be designated as the sole arbitrator. The
determination of the single arbitrator shall be final, conclusive and binding
on the parties and not subject to any appeal or judicial review. An
arbitration conducted pursuant to this Section 17 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 arbitrator 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 arbitrator 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 18. 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.

     IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement as of the date first above written.

	 	 	 
	 

Thomas D. Davis
	 
	XYBERNAUT CORPORATION
	 
	By:	 	 
	 	

Name:	 
	 	
Title:	 

12exv10w9

 

Exhibit 10.9

SECURED PROMISSORY NOTE

	 	 	 
	$447,600.00	 	
March 21, 2002

     FOR VALUE RECEIVED, the undersigned, Mitchell J. Kelly, residing at 730
Fifth Avenue, New York, New York 10019 (the “Director”) hereby promises to pay
to Novavax, Inc., a Delaware corporation with an address 8320 Guilford Road,
Columbia, Maryland 21046 (hereinafter with any subsequent holder called the
“Holder”) the principal sum of FOUR HUNDRED AND FORTY SEVEN THOUSAND SIX
HUNDRED DOLLARS ($447,600.00), in lawful money of the United States of America
or by delivery to the Holder of shares of Common Stock of Novavax, Inc. or in
any combination of the foregoing, with interest from the date hereof on the
whole amount of such principal sum remaining from time to time unpaid at the
rate per annum of five and seven one-hundredths percent (5.07%), payable upon
the earlier to occur of the following: (i) payable in full upon the date on
which the Director ceases for any reason to be a director of Novavax, Inc.,
(ii) payable in part, to the extent of net proceeds, upon the date on which the
Director sells all or any portion of the Pledged Shares (as defined below) or
(iii) payable in full on March 21, 2007. Interest shall accrue and be payable
whenever any payment of principal is due hereunder. Interest shall be computed
on the basis of a 365 or 366-day year, as applicable, and shall be paid for the
actual number of days on which principal is outstanding. Whenever shares of
Novavax, Inc. Common Stock are delivered in payment of all or any portion of
the principal or interest due hereunder, such shares shall be valued at the
closing price of the Novavax Inc. Common Stock on the principal market for such
stock on the date of payment.

     This Note is secured by the pledge of 95,000 shares of common stock of
Novavax, Inc. (the “Pledged Shares”) pursuant to a Pledge Agreement of even
date herewith.

     The Director may prepay the principal amount outstanding under this Note,
in whole or in part, at any time without premium or penalty. Any partial
prepayment shall be applied first against all accrued interest through the date
of the prepayment and second against the principal amount outstanding.

     All payments of principal and interest on this Note shall be payable to
the Holder at the above address, or at such other place in the United States of
America as the Holder may from time to time designate in writing at least ten
days before such payment is due.

     The entire unpaid balance of principal of, and all accrued unpaid interest
on, this Note shall, at the option of the Holder, become forthwith due and
payable without notice or demand upon the happening of any of the following
events of default: (a) default in payment as required hereunder and such
default continues for 15 days after written notice that such payment is past
due; or (b) appointment of a receiver of any property, common law assignment or
trust mortgage for the benefit of creditors, the commencement of any kind of
insolvency proceedings, or the filing of any proceedings under any bankruptcy
or other law relating to the relief of debtors (and, if such action or
proceeding is involuntary

 

 

on the part of the Director, such action or proceeding is not dismissed within
60 days), of, by or against the Director.

     No delay or omission by the Holder in exercising or enforcing any of its
powers, rights, privileges, remedies or discretions hereunder shall operate as
a waiver thereof on that or any other occasion, and no single or partial
exercise of any right hereunder shall preclude other or future exercise
thereof. No waiver of any right or remedy hereunder on any occasion shall be
construed as a bar or waiver of any such right or remedy on any future
occasion, nor as a continuing waiver. The Director agrees that no variance,
extension or renewal of this Note shall affect the absolute and unconditional
liability of the Director hereunder.

     The Director hereby waives presentment, demand, notice of protest,
suretyship defenses, and all other demands and notices in connection with the
delivery, acceptance, performance, default and/or enforcement of this Note or
of any rights hereunder. The Director will pay to the Holder on demand all
reasonable costs and expenses, including attorneys’ fees, relating to the
collection and/or enforcement of this Note or of any rights hereunder.

     This Note shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware. If any provision of this Note is held
to be invalid or unenforceable by a court of competent jurisdiction, the other
provisions of this Note shall remain in full force and effect.

     IN WITNESS WHEREOF, the Director has caused this Note to be executed as a
sealed instrument, all as of the day, month, and year first written above.

	 	 	 
	 	 	 
	

Witness	 	

Mitchell J. Kelly

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}]]