EXHIBIT 10.14
IMAGE SENSING SYSTEMS, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
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THIS AGREEMENT ("Agreement") is effective as of December 21, 1999 by and between
Image Sensing Systems, Inc. ("the Corporation"), a Minnesota corporation with
its principal offices at 500 Spruce Tree Centre, 0000 Xxxxxxxxxx Xxxxxx Xxxx,
Xx. Xxxx, XX 00000-0000, and Xxxxxxx Xxxxxx ("Employee") a Minnesota resident,
whose residence address is 0000 Xxxxxxx Xxxxx, Xxxxxxx Xxxxxxx, XX 00000.
RECITALS
A. Employee possesses certain skills, talents, contacts, judgement
and knowledge of the Corporation's industry, including its various businesses,
technology strategies and objectives.
B. The Corporation desires to offer employment to Employee, and
Employee desires to accept such employment, subject to the terms and conditions
herein.
NOW, THEREFORE, in consideration of the foregoing premises and the parties'
mutual covenants and undertakings contained in this Agreement, the Corporation
and Employee hereby agree as follows:
ARTICLE 1.0 DEFINITIONS
Capitalized terms used in this Agreement shall have their defined
meaning throughout the Agreement. The following terms shall have the meaning set
forth below, unless the context clearly requires otherwise.
1.1 BOARD. "Board" shall mean the Board of Directors of the
Corporation.
1.2 CHANGE IN CONTROL. "Change In Control" shall mean any of the
following: (i) a public announcement that any person has acquired or has the
right to acquire beneficial ownership of fifty-one percent (51%) or more of the
then outstanding share of common stock of the Corporation and, for this purpose,
the terms "person" and "beneficial ownership" shall have the meanings provided
in Section 13(d) of the Securities and Exchange Commission; (ii) the
commencement of or public announcement of an intention to make a tender or
exchange offer for fifty-one percent (51%) or more of the then outstanding
shares of the common stock of the Corporation; (iii) a sale of all or
substantially all of the assets of the Corporation; or (iv) the Board of
Directors of the Corporation, in its sole and absolute discretion, determines
that there has been a sufficient change in the stock ownership of the
Corporation to constitute a change in control of the Corporation.
1.3 CONFIDENTIAL INFORMATION. "Confidential Information" shall mean
information that is proprietary to the Corporation or its members or others and
that is entrusted to the Corporation, whether or not trade secrets. Confidential
Information
includes, but is not limited to, information relating to designs, software (in
source and object code), technology strategies, business plans and to the
business as conducted or anticipated to be conducted by the Corporation or its
members, and to past or current or anticipated products or services of the
Corporation of its members. Confidential Information also includes, without
limitation, information concerning research, development, purchasing,
accounting, marketing, selling and services. All information that Employee has a
reasonable basis to consider confidential is Confidential Information, whether
or not originated by Employee and without regard to the manner in which Employee
obtains access to this and any other proprietary information.
1.4 DISABILITY. "Disability" shall mean the unwillingness or
inability of Employee to perform his duties on a full-time basis under this
Agreement because of continuous incapacity due to physical or mental illness,
bodily injury or disease for a period of three (3) months or more.
1.5 EFFECTIVE DATE. "Effective Date" shall mean the date on page 1
hereof.
1.6 INVENTIONS. "Inventions" shall mean ideas, improvements and
discoveries, whether or not such are patentable or copyrightable, and whether or
not in writing or reduced to practice.
1.7 WORKS OF AUTHORSHIP. "Works of Authorship" shall mean any
writings, drawings, diagrams, charts, tables, databases, software (in object or
source code and recorded on any medium), and any other works of authorship,
whether or not such are copyrightable.
ARTICLE 2.0 EMPLOYMENT
2.1 EMPLOYMENT. Upon the terms and conditions set forth herein and
his appointment by the President & CEO, the Corporation hereby employs Employee,
and Employee accepts such employment, as Chief Financial Officer, commencing on
December 21, 1999 at the Corporation's principal place of business in St. Xxxx,
Minnesota. (Termination of this Agreement by either party or by mutual agreement
of the parties under Article 4.0 below shall also terminate Employee's
employment by the Corporation.)
ARTICLE 3.0 COMPENSATION AND BENEFITS
3.1 BASE SALARY. The Corporation shall pay Employee an initial Base
Salary at a monthly rate of Eight Thousand Seven Hundred Fifty dollars ($8,750)
per month. Such Base Salary shall be paid in accordance with the Corporation's
regular payroll practices and subject to any applicable income tax, Social
Security or other withholding. Employee's Base Salary shall be reviewed for
potential adjustment on the basis of performance from time to time.
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3.2 INCENTIVE COMPENSATION. The Corporation shall make Employee
eligible for incentive compensation ("Incentive Compensation"), in addition to
the Base Salary then applicable. Payment of Incentive Compensation will be
subject to Employee's achieving certain objectives set annually by Employee and
the Board.
3.3 EQUITY PARTICIPATION. The Corporation shall make employee
eligible to receive options to purchase stock in the Corporation, subject to the
terms and conditions of the Corporation's 1995 long Term Incentive Stock Option
Plan ("the Plan"). The Corporation shall offer Employee an initial stock option
of 25,000 common shares at an exercise price to the fair market value of common
shares at the date of grant, with options on Twenty-five percent (25%) of the
shares vesting one (1) year from the effective date of the Agreement. The
balance of the option will vest over the three years following the beginning one
(1) year from the initial vesting period in equal annual installments. If at any
time, the Employee's employment with the Corporation is terminated for any
reason or Employee becomes ineligible to participate in the Plan, all unvested
options will be canceled immediately. Any vested options that have not been
exercised by Employee will be canceled if not exercised by Employee within the
time set forth in the Plan. If at any time during the term of this Agreement a
Change In Control occurs, all unexercised options may be exercised in full on or
after the eleventh business day following the date of the Change in Control.
3.4 HEALTH, DEATH, DISABILITY, AND RETIREMENT BENEFITS. Employee
shall also be entitled to participate in the health and group life insurance
benefit plans of the Corporation to the extent that his position, title, tenure,
salary, age, health, and other qualifications make him eligible to participate.
Employee shall also be entitled to participate in disability programs and
employee pension plans of the Corporation to the extent the Corporation
establishes these plans and to the extent that his position, title tenure,
salary, age, health, and other qualifications make him eligible to participate.
The Corporation does not guarantee the adoption or continuance of any particular
employee benefit plan or program during the term of this Agreement, and the
Employee's participation in any such plan or program shall be subject to the
provisions, rules, and regulations applicable thereto. Employee will receive not
less than 20 days vacation allotment per year.
ARTICLE 4.0 TERM; TERMINATION
4.1 TERM. Employee's employment under this Agreement shall commence
upon the Effective Date and shall continue until terminated by either party for
any reason or no reason upon a notice of ninety (90) days.
4.2 TERMINATION BY THE CORPORATION FOR GOOD CAUSE. Notwithstanding
Section 4.1 above, the Corporation may terminate this Agreement at any time
without notice for Good Cause. For purposes of this Agreement, "Good Cause"
shall mean:
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(a) repeated violations by Employee of any of his duties or
repeated failures or omissions to carry out lawful and
reasonable orders of the Corporation's Board which, in
the reasonable judgement of the President, are willful
and deliberate and which are not cured within reasonable
period after Employee's receipt of written notice
thereof from the Corporation.
(b) any absence from Employee's regular full-time employment
in excess of two (2) weeks that is not due to a
vacation, bona fide illness, Disability, death or other
reason expressly authorized by the President; or
(c) any act or acts of (i) personal dishonesty by Employee
and intended to result in substantial personal
enrichment of Employee at the expense of the
Corporation; (ii) any willful and deliberate misconduct
that is materially and demonstrably injurious to the
Corporation; or (iii) any criminal indictment,
presentment or conviction for a felony, whether or not
the Corporation is the victim of such offense.
4.3 TERMINATION IN THE EVENT OF EMPLOYEE'S DEATH OR DISABILITY.
Notwithstanding Section 4.1 above, Employee's employment under this Agreement
shall terminate in the event of his death or disability.
4.4 TERMINATION BY MUTUAL AGREEMENT. Notwithstanding Section 4.1
above, the parties may terminate this Agreement at any time and upon any other
terms or conditions by mutual written agreement.
4.5 COMPENSATION UPON TERMINATION BY THE CORPORATION. As Employee's
sole and exclusive compensation for his termination by the Corporation, the
Corporation shall pay Employee as follow:
(a) If due to termination by the Corporation for Good Cause
or by Employee for any reason, within ten (10) days
after the termination date, the Corporation shall pay
Employee any amounts due to him for salary through the
termination date together with any other unpaid and pro
rata amounts of accrued vacation pay, sick leave, and/or
business expense reimbursements that may be due.
(b) If due to termination by the Corporation for other than
Good Cause after Employee's first year of employment,
the Corporation shall pay Employee his salary in effect
at the termination date and provide him with the medical
and group life insurance benefits in effect at the
termination date for a term of three months from the
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termination date subject to withholding, deductions and
taxation in accordance with applicable law.
4.6 SURVIVAL. The provisions of Article 4.0 (relating to termination
rights and the provision of compensation and benefits beyond the termination of
this Agreement), the provisions of Article 6.0 (relating to Confidential
Information and intellectual property rights of the Corporation), the provisions
of Article 7.0 (relating to non-competition and no solicitations), the
provisions of Article 8.0 (relating to dispute resolution) and the provisions of
Article 9.0 (relating to miscellaneous terms and conditions) shall survive
termination of this Agreement for any reason.
ARTICLE 5.0 EMPLOYMENT UPON A CHANGE IN CONTROL
5.1 CONTINUED EMPLOYMENT. If a Change In Control occurs and the
Corporation or its successor desires that Employee remain in his employment with
the Corporation or its successor, Employee agrees to remain in the employment of
the Corporation or its successor for a term not to exceed one (1) year at the
compensation rate in effect at the Change In Control, or as mutually agreed upon
by the parties.
5.2 CONTINUED COMPENSATION. If a Change In Control occurs and the
Corporation or its successor does not desire that Employee remain in his
employment with the Corporation or its successor, the Corporation or its
successor agrees to pay Employee his salary in effect at the termination date
for a term of one (1) year from the termination date or until Employee obtains
new employment, whichever is earlier, subject to withholding, deductions and
taxation in accordance with applicable law.
ARTICLE 6.0 CONFIDENTIAL INFORMATION; INTELLECTUAL PROPERTY
6.1 PROHIBITIONS AGAINST UNAUTHORIZED USE. Employees shall not use
or disclose, other than in connection with Employee's employment with the
Corporation, any Confidential Information to any person not employed by the
Corporation or not authorized by the Corporation to receive such Confidential
Information, without the prior written consent of the Corporation during the
term of this Agreement or at any time thereafter. Employee shall use reasonable
and prudent care to safeguard and protect and prevent the unauthorized use and
disclosure of Confidential Information.
6.2 EXCLUSION. The obligations under Section 6.1 above shall not
apply to any information that:
(a) is now or becomes generally available to the public
through no fault of Employee;
(b) was already known to Employee, as shown by his books and
records, prior to disclosure of same by the Corporation;
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(c) is or was independently developed or acquired by
Employee without any use of or reliance on Confidential
Information;
(d) is or was provided to Employee by a third party not
under any obligation of confidentiality to the
Corporation; or
(e) is required to be disclosed by law, provided, however,
employee shall render reasonable cooperation, at the
Corporation's expense, to lawfully prevent or minimize
any such public disclosure of Confidential Information
through protective orders or other similar measures.
6.3 OWNERSHIP AND RETURN OF CORPORATION PROPERTY. All Confidential
Information or other Corporation property in Employee's possession, custody or
control, including without limitation, all documents, reports, manuals, business
plans, minutes, memoranda, computer software, computer databases, computer
print-outs, member or customer lists, credit cards, keys, identification,
products, access cards, and all other tangible or intangible property relating
in any way to the business of the Corporation are the exclusive property of the
Corporation, even if Employee authored, created or assisted in authoring or
creating such property. Employee shall return to the Corporation all such
Confidential Information or other property immediately upon termination of
employment for any reason whatsoever or at such earlier time as the Corporation
may reasonably request.
6.4 DISCLOSURE AND ASSIGNMENT OF INVENTIONS AND OTHER WORKS.
Employee shall promptly disclose to the Corporation in writing all Inventions
and Works of Authorship which are conceived, made, discovered, written or
created by Employee alone or jointly with another person, group or entity,
whether during the normal hours of his employment at the Corporation or on
Employee's own time, during the term of this Agreement and for one (1) year
after termination of this Agreement. Employee hereby assigns all rights to all
such Inventions and Works of Authorship to the Corporation. Employee shall give
the Corporation all the assistance is reasonably requires for the Corporation to
perfect, protect, and use its rights to such Inventions and Works of Authorship.
Employee shall sign all such documents, take all such actions and supply all
such information that the Corporation considers necessary or desirable to
transfer or record the transfer of Employee's entire right, title and interest
in such Inventions and Works of Authorship and to enable the Corporation to
obtain exclusive patent, copyright, or other legal protection for Inventions and
Works of Authorship anywhere in the world, provided, the Corporation shall bear
all reasonable expenses of Employee in such rendering cooperation.
6.5 EXCLUSIONS. Notwithstanding Section 6.4 above, the following
shall not be deemed Inventions or Works of Authorship assigned to Corporation by
Employee hereunder:
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(a) Any invention or work of authorship for which no
equipment, supplies, facility, or Confidential
Information of the Corporation was used and which was
developed entirely on Employee's own time, and which (i)
does no relate (1) directly to the business of the
Corporation or (2) to the Corporation's actual or
demonstrably anticipated research or development, or
(ii) which does not result from any work performed by
Employee for the Corporation.
ARTICLE 7.0 NON-COMPETITION AND NO RAID COVENANTS
7.1 NON-COMPETITION COVENANT. Subject to Section 7.2 and 7.3 below,
during the term of this Agreement and for a period of one (1) year following
termination of his employment with the Corporation for any reason, Employee
shall not directly or indirectly engage in any business activity on his own
behalf or as a partner, shareholder, director, trustee, principal, agent,
officer, employee, consultant, or otherwise of any person or entity the business
of which is the same as, similar to, or competitive of any business of the
Corporation, or which is engaged in the development or production of products
intended to compete with the Corporation, or assist, solicit, entice, or induce
any other person to engage in any such activity. For purpose hereof,
"shareholder" shall not included beneficial ownership of less that five percent
(5%) of the combined voting power of all issued and outstanding voting
securities of a publicly held corporation whose stock is traded on a major stock
exchange or quoted on NASDAQ.
7.2 CORPORATION'S OPTION TO REVISE. At its sole option, the
Corporation may, by written notice to Employee, within thirty (30) days after
the effective date of the termination of Employee's employment, waive or limit
the line of business, time period, and/or geographic area in which Employee is
prohibited from engaging in competitive activity under Section 7.1 above.
7.3 COVENANT NOT TO RECRUIT. Employee hereby acknowledges that the
corporation's employees, consultants and other contractors constitute vital and
valuable aspects of its business and missions on a world-wide basis. In
recognition of that fact, for a period of one (1) year following the termination
of the Agreement for any reason whatsoever, Employee shall not solicit, or
assist anyone else in the solicitation of, any of the Corporation's then-current
employees, consultants or other contractors to terminate their respective
relationships with the Corporation and to become employees, consultants or
contractors by any enterprise with which the Employee may then be associated,
affiliated or connected.
7.4 COVENANT NOT TO SOLICIT. Employee hereby acknowledges that the
Corporation's customers constitute vital and valuable aspects of its business on
a world-wide basis. In recognition of that fact, for a period of one (1) year
following the termination of this Agreement for any reason whatsoever, Employee
shall not solicit, or assist anyone else in the solicitation of, any of the
Corporation's then-current customers to terminate their respective relationships
with the Corporation and to become customers
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of any enterprise with which the Employee may then be associated, affiliated or
connected.
ARTICLE 8.0 DISPUTE RESOLUTION
8.1 PROCEDURE FOR ARBITRATION. Except as provided in Section 8.2
below, any dispute, claim or controversy arising out of or in connection with
this Agreement which has not been settled through negotiation within a period of
thirty (30) day after the date on which either party shall first have notified
the other party in writing of the existence of a dispute shall be settled by
final and binding arbitration under the then-applicable Commercial Arbitration
Rules of the American Arbitration Association ("AAA"). Any such arbitration
shall be conducted by one (1) neutral arbitrator appointed by mutual agreement
of the parties or, failing such agreement, in accordance with said Rules. Such
arbitrator shall be an experienced attorney with a background in employment law.
Any such arbitration shall be conducted in St. Xxxx, Minnesota. An arbitral
award may be enforced in any court of competent jurisdiction. Notwithstanding
any contrary provision in the AAA Rules, the following additional procedures and
rules shall apply to any such arbitration:
(a) Each party shall have the right to request from the
arbitrator, and the arbitrator shall order upon good
cause shown, reasonable and limited pre-hearing
discovery, including (i) exchange of witness lists, (ii)
depositions under oath of named witnesses at a mutually
convenient location, (iii) written interrogatories, and
(iv) document requests.
(b) Upon conclusion of the pre-hearing discovery, the
arbitrator shall promptly hold a hearing upon the
evidence to be adduced by the parties and shall promptly
render a written opinion and award.
(c) The arbitrator shall adhere strictly to the sole and
exclusive remedies set forth in Article 4.0 above and
may not award or assess punitive damages against either
party.
(d) Each party shall bear its own costs and expenses of the
arbitration and one-half (1/2) of the fees and costs of
the arbitrator, subject to the power of the arbitrator,
in his or her sold discretion, to award all such
reasonable costs, expenses and fees to the prevailing
party.
8.2 LITIGATION RIGHTS RESERVED. If any dispute arises with regard to
the unauthorized use or infringement of Confidential Information by Employee or
with regard to Employee's breach or threatened breach of covenants in Article
7.0, the Corporation may seek any available remedy at law or in equity from a
court of competent jurisdiction.
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ARTICLE 9.0 GENERAL PROVISIONS
9.1 INDEMNIFICATION. To the fullest extent required by law, the
Corporation shall indemnify employee with respect to any actions commenced
against employee in his capacity as an officer or director of the Corporation,
and the Corporation shall advance on a timely basis any costs or expenses
(including legal fees) incurred in defending such actions, subject only to
Employee's agreement to repay such amount if later found not entitled to be
indemnified. The obligation to indemnify hereunder shall survive the termination
of this Agreement. The Corporation acknowledges that the indemnification
obligations generally available to directors, officers or employees of the
Corporation pursuant to the Corporation's articles of incorporation or bylaws
will available to Employee.
9.2 SUCCESSORS AND ASSIGNS. This Agreement constitutes a personal
service agreement on the part of Employee and his duties hereunder may not be
assigned or delegated to any other person without the prior written consent of
the Corporation, but all rights of Employee hereunder shall inure to the benefit
of and be enforceable by Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees, and
legatees. If Employee should die while any amounts would still be payable to
Employee hereunder if Employee had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Employee's devisee, legatee, or other designee or, it there be no
such designee, to Employee's estate.
9.3 NOTICES. All notices, requests and demands required or permitted
hereunder shall be in writing and be personally or courier delivered or mailed
postage prepaid, registered or certified U.S. mail to the other party at its
address set forth on the last page of this Agreement. Either party may, by
notice hereunder, designate a changed address. Any notice hereunder shall be
deemed effectively given and received: (a) if personally or courier delivered,
upon delivery; or (b) if mailed, on the third (3rd) day after deposit in the
mail.
9.4 CAPTIONS. The various heading or captions in this Agreement are
for convenience only and shall not affect the meaning or interpretation of this
Agreement.
9.5 GOVERNING LAW; CHOICE OF FORUM. The validity, interpretation,
construction, performance, enforcement and remedies of or relating to this
Agreement, and the rights and obligations of the parties hereunder, shall be
governed by the substantive laws of the State of Minnesota (without regard to
the conflict of laws ruled or statutes of any jurisdiction), and, expressly
subject to the dispute resolution mechanism in Article 8.0 above, any and every
other legal proceeding arising our of or in connection with this Agreement shall
be brought in the appropriate courts of the State of Minnesota, each of the
parties hereby consenting to the exclusive jurisdiction of said courts for this
purpose.
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9.6 CONSTRUCTION. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
9.7 WAIVERS. No failure on the part of either party to exercise and
no delay in exercising, any right or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right or remedy granted hereby or by any related document or by law.
9.8 MODIFICATION. This Agreement may not be modified or amended
except by written instrument signed by Employee and another senior Executive of
the Corporation who is a member of the Board and is acting pursuant to the
authority of the Board.
9.9 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding between the parties hereto in reference to all the
matters herein agreed upon. This Agreement replaced in full all prior employment
offers, discussions, requests, agreements or understandings of the parties
hereto, and any and all such prior offers, discussions, requests, agreements or
understandings are hereby rescinded by mutual agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first above written in St. Xxxx,
Minnesota.
IMAGE SENSING SYSTEMS, INC.
By _____________________
Its _______________________
By _____________________
Its________________________
Address:
000 Xxxxxx Xxxx Xxxxxx
0000 Xxxxxxxxxx Xxxxxx Xxxx
Xx. Xxxx, XX 00000-0000
___________________________
Employee
Address:
0000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx, XX 00000
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