Exhibit 10.2
FLIR SYSTEMS, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
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PARTIES: FLIR Systems, Inc. (an Oregon Corporation) ("FSI")
00000 X.X. 00xx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
("Executive")
c/o FLIR Systems, Inc.
00000 XX 00xx Xxxxxx
Xxxxxxxx, XX 00000
DATE: May 5, 1997
RECITALS:
A. FSI wishes to obtain the services of Executive for at least the duration of
this Agreement, and the Executive wishes to provide his services for such
period, all upon the terms and conditions set out in this Agreement.
B. It is expressly recognized by the parties that Executive's continuance in
Executive's position with FSI and agreement to be bound by the terms of
this Agreement represents a substantial commitment to FSI in terms of
Executive's personal and professional career and a foregoing of present and
future career options by Executive, for all of which FSI receives
substantial value.
C. The parties recognize that a Change of Control (as defined below) may
result in material alteration or diminishment of Executive's position and
responsibilities and substantially frustrate the purpose of Executive's
commitment to FSI and forbearance of options.
D. The parties recognize that in light of the above-described commitment and
forbearance of options, it is essential that, for the benefit of FSI and
its stockholders, provision be made for a Change of Control Termination (as
defined below) in order to enable Executive to accept and effectively
continue in Executive's position in the face of inherently disruptive
circumstances arising from the possibility of a Change of Control (as
defined below), although no such change is now contemplated or foreseen.
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1 - EXECUTIVE EMPLOYMENT AGREEMENT
NOW, THEREFORE, for valuable consideration the receipt and sufficiency of which
is hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
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1.1 "BASE SALARY" shall mean regular cash compensation paid on a periodic
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basis exclusive of benefits, bonuses or incentive payments.
1.2 "BOARD" shall mean the Board of Directors of Flir Systems, Inc. (the
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"Parent Corporation").
1.3 "DISABILITY" shall mean the inability of Executive to perform his
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duties under this Agreement with or without reasonable accommodation because of
physical or mental incapacity for a continuous period of five (5) months, as
reasonably determined by the Board after consultation with a qualified physician
selected by the Board.
1.4 "PARENT CORPORATION" shall mean FSI and, except as otherwise provided
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in Article VII and Section 8.2 of Article VIII, any successor in interest by way
of consolidation, operation of law, merger or otherwise. "Parent Corporation"
shall not include any Subsidiary.
1.5 "SUBSIDIARY" shall mean: (a) any corporation at least a majority of
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whose securities having ordinary voting power for the election of directors
(other than securities having such power only by reason of the occurrence of a
contingency) is at the time owned by Parent Corporation and/or one or more
Subsidiaries; and (b) any division or business unit (or portion thereof) of
Parent Corporation or a corporation described in clause (a) of this Section.
ARTICLE II
EMPLOYMENT, DUTIES AND TERM
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2.1 EMPLOYMENT. Upon the terms and conditions set forth in this
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Agreement, FSI hereby employs Executive, and Executive accepts such employment.
Except as expressly provided herein, termination of this Agreement by either
party shall also terminate Executive's employment by FSI.
2.2 DUTIES. Executive shall devote his full-time and best efforts to FSI
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and to fulfilling the duties of his position which shall include such duties as
may from time to time be assigned him by the Board, provided that such duties
are reasonably consistent with Executive's education, experience and background.
Executive shall comply with FSI's policies and procedures to the extent they are
not inconsistent with this Agreement in which case the provisions of this
Agreement prevail.
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2 - EXECUTIVE EMPLOYMENT AGREEMENT
2.3 TERM. Subject to the provisions of Articles IV, VI and VII, the term
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of this Agreement shall continue until December 31, 1999, provided however, that
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if a Change of Control occurs at any time before December 31, 1999, the term of
this Agreement shall continue until the date two (2) years after the Change of
Control.
ARTICLE III
COMPENSATION AND EXPENSES
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3.1 BASE SALARY. For all services rendered under this Agreement during
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the term of Executive's employment, FSI shall pay Executive a Base Salary at the
annual rate currently being paid. If Executive's salary is increased from time
to time during the term of this Agreement, the increased amount shall be the
Base Salary for the remainder of the term and any extensions. All amounts
payable to Executive shall be net of amounts required to be withheld by law.
3.2 BONUS AND INCENTIVE. Bonus or incentive compensation shall be in the
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sole discretion of the Board. Except as otherwise provided in Article VI, FSI
shall have the right in accordance with the terms of any bonus or incentive plan
to alter, amend or eliminate all or any part of such plan, or Executive's
participation therein, without compensation to Executive.
3.3 BUSINESS EXPENSES. FSI shall, in accordance with, and to the extent
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of, its policies in effect from time to time, bear all ordinary and necessary
business expenses reasonably incurred by Executive in performing his duties as
an employee of FSI, provided that Executive accounts promptly for such expenses
to FSI in the manner prescribed from time to time by FSI.
ARTICLE IV
EARLY TERMINATION
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4.1 EARLY TERMINATION. Subject to the respective continuing obligations
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of the parties pursuant to Articles VI and VII, this Article sets forth the
terms for early termination of this Agreement; provided, however, that this
Article shall not apply to a Change of Control Termination which is governed
solely by the provisions of Article VI.
4.2 TERMINATION FOR CAUSE. FSI may terminate this Agreement for cause
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immediately upon written notice to Executive. "Cause" means any of (a) fraud,
(b) misrepresentation, (c) theft or embezzlement of FSI assets, (d) intentional
violations of law involving moral turpitude, (e) the continued failure by
Executive to satisfactorily perform his duties as reasonably assigned to
Executive pursuant to Section 2.2 of this Agreement for a period of sixty (60)
days after a written demand for such satisfactory performance which specifically
and with reasonable detail identifies the manner in which it is alleged
Executive has not satisfactorily performed such duties, and (f) any material
breach of the Confidentiality Agreement (defined below). In the event of
termination for cause pursuant to this Section 4.2,
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3 - EXECUTIVE EMPLOYMENT AGREEMENT
Executive shall be paid at the then current rate of Executive's annual Base
Salary through the date of termination specified in any notice of termination.
4.3 TERMINATION IN THE EVENT OF DEATH OR DISABILITY. This Agreement shall
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terminate in the event of death or Disability of Executive.
(a) In the event of Executive's death, FSI shall pay an amount equal
to twelve (12) months of Base Salary at the rate in effect at the
time of Executive's death. Such amount shall be paid (1) to the
beneficiary or beneficiaries designated in writing to FSI by
Executive, (2) in the absence of such designation, to the
surviving spouse, or (3) if there is no surviving spouse, or such
surviving spouse disclaims all or any part, then the full amount,
or such disclaimed portion, shall be paid to the executor,
administrator or other personal representative of Executive's
estate. The amount shall be paid as a lump sum as soon as
practicable following FSI's receipt of notice of Executive's
death.
(b) In the event of Disability, Base Salary shall be terminated as of
the final day of the fifth month referenced in the definition of
"Disability."
4.4 ACCRUED VACATION. In the event of termination pursuant to Section 4.2
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or Section 4.3 or in the event of a Change of Control Termination, Executive
shall be paid at the then current rate of Executive's Base Salary for all
accrued but unused vacation time through the date of termination. Nothing
contained herein shall extend the term of Executive's employment by the amount
of any accrued vacation for vesting or other purposes.
4.5 ENTIRE TERMINATION PAYMENT. The compensation provided for in this
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Article IV shall constitute Executive's sole remedy for termination pursuant to
this Article. Executive shall not be entitled to any other termination or
severance payment which may be payable to Executive under any other agreement
between Executive and FSI or under any policy in effect at, preceding or
following the date of termination.
ARTICLE V
CONFIDENTIALITY; CONFLICT OF INTEREST
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5.1 CONFIDENTIALITY. Executive is a party to a certain Confidentiality
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and Non-Solicitation Agreement with FSI dated ________________________________
("Confidentiality Agreement"). Executive represents and warrants to FSI that as
of the date of this Agreement, he has fully complied with the terms of the
Confidentiality Agreement. Executive agrees that nothing contained in this
Agreement shall operate to limit Executive's obligations under the
Confidentiality Agreement, and Executive shall continue to be bound by the terms
of the Confidentiality Agreement.
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5.2 CONFLICT OF INTEREST. During the term of employment with FSI,
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Executive will engage in no activity or employment which may conflict with the
interest of FSI, and will comply with FSI's policies and guidelines pertaining
to business conduct and ethics.
ARTICLE VI
CHANGE OF CONTROL
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6.1 DEFINITIONS. For purposes of this Article VI, the following
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definitions shall be applied:
(a) "Change of Control" shall mean any of the following events:
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(1) a merger or consolidation to which Parent Corporation is a
party if the individuals and entities who were stockholders of
Parent Corporation immediately prior to the effective date of
such merger or consolidation have beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of less than fifty percent (50%) of the total combined voting
power for election of directors of the surviving corporation
immediately following the effective date of such merger or
consolidation; or
(2) the direct or indirect beneficial ownership (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934), in the
aggregate, of securities of Parent Corporation, representing
twenty percent (20%) or more of the total combined voting power
of Parent Corporation's then issued and outstanding securities,
by any person or entity, or group of associated persons or
entities acting in concert; or
(3) the sale of all or substantially all of the assets of Parent
Corporation to any person or entity which is not a Subsidiary of
Parent Corporation.
(4) the stockholders of Parent Corporation approve any plan or
proposal for the liquidation of Parent Corporation; or
(5) a change in the composition of the Board at any time during
any consecutive 24-month period such that the Continuity
Directors cease for any reason to constitute at least a seventy
percent (70%) majority of the Board. For purposes of this
clause, "Continuity Directors" means those members of the Board
who either:
(A) were directors at the beginning of such consecutive 24-
month period; or
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(B) were elected by, or on the nomination or recommendation
of, at least a two-thirds (2/3) majority of the then-
existing Board.
(b) "Change of Control Actions" shall mean any payment (including any
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benefit or transfer of property) in the nature of compensation, to or
for the benefit of Executive under any arrangement, which is
considered contingent on a Change of Control for purposes of Section
280G of the Internal Revenue Code. As used in this definition, the
term "arrangement" includes, without limitation, any agreement between
Executive and FSI and any and all of FSI's salary, bonus, incentive,
restricted stock, stock option, compensation or benefit plans,
programs or arrangements, and shall include this Agreement.
(c) "Change of Control Termination" shall mean, with respect to
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Executive, any of the following events occurring within two (2) years
after a Change of Control:
(1) Termination of Executive's employment by FSI for any reason
other than for cause, as cause is defined in Article IV, Section
4.2 of this Agreement.
(2) Termination of employment with FSI by Executive pursuant to
Section 6.2 of this Article VI. A Change of Control Termination
shall not, however, include termination by reason of death or
Disability.
(d) "Good Reason" shall mean a good faith determination by Executive,
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in Executive's reasonable judgment, that any one or more of the
following events has occurred without Executive's express written
consent, after a Change of Control:
(1) A change in Executive's reporting responsibilities, titles or
offices as in effect immediately prior to the Change of Control,
or any removal of Executive from, or any failure to re-elect
Executive to, any of such positions, which has the effect of
materially diminishing Executive's responsibility or authority;
(2) A reduction by FSI in Executive's Base Salary as in effect
immediately prior to the Change of Control;
(3) A requirement by FSI that Executive be based anywhere other
than within twenty-five (25) miles of Executives's job location
at the time of the Change of Control;
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(4) Without replacement by plans, programs, or arrangements
which, taken as a whole, provide benefits to Executive at least
reasonably comparable to those discontinued or adversely
affected, (A) the failure by FSI to continue in effect, within
its maximum stated term (exclusive of renewals or extensions),
any pension, bonus, incentive, stock ownership, purchase, option,
life insurance, health, accident, disability, or any other
employee compensation or benefit plan, program or arrangement
and/or any membership (collectively, "Benefit Plans"), in which
Executive is participating immediately prior to a Change of
Control; or (B) the taking of any action by FSI that would
materially adversely affect Executive's participation or
materially reduce Executive's benefits under any Benefit Plans or
Benefit Plan;
(5) The failure by FSI to provide office space, furniture, and
secretarial support at least comparable to that provided
Executive immediately prior to the Change of Control or the
taking of any similar action by FSI that would materially
adversely affect the working conditions in or under which
Executive performs his or her employment duties;
(6) If Executive's primary employment duties are with a
Subsidiary, the sale, merger, contribution, transfer or any other
transaction in conjunction with which Parent Corporation's
ownership interest in such Subsidiary decreases below the level
specified in Section 1.5 of Article I unless (A) this Agreement
is assigned to the purchaser/transferee with the provisions of
Article VI in full force and effect and operative as if a Change
of Control has occurred with respect to the purchaser/transferee
as Parent Corporation immediately after the purchase/transfer
becomes effective, and (B) such purchaser/transferee has a
creditworthiness reasonably equivalent to Parent Corporation's;
or
(7) Any material breach of this Agreement by FSI.
(e) "Internal Revenue Code" -- Any references to a section of the
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Internal Revenue Code shall mean that section of the Internal Revenue
Code of 1986, or to the corresponding section of such Code, as from
time to time amended.
6.2 CHANGE OF CONTROL TERMINATION RIGHT. For a period of two (2) years
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following a Change of Control, Executive shall have the right, at any time and
within Executive's sole discretion, to terminate employment with FSI for Good
Reason. Such termination shall be accomplished by, and effective upon,
Executive giving written notice to FSI of Executive's decision to terminate.
Except as otherwise expressly provided in this Agreement, upon the
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7 - EXECUTIVE EMPLOYMENT AGREEMENT
exercise of said right, all obligations and duties of Executive under this
Agreement shall be of no further force and effect.
6.3 CHANGE OF CONTROL TERMINATION PAYMENT. In the event of a Change of
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Control Termination, without further action by the Board, Parent Corporation
shall, within five (5) days of such termination, make a lump sum payment to
Executive in an amount equal to one dollar ($1.00) less than two (2) times the
average annualized compensation as defined by Section 280G of the Internal
Revenue Code, received by Executive from FSI and includible in Executive's gross
income for federal income tax purposes for the five (5) most recent taxable
years of the Executive ending before the date upon which the Change in Control
occurred (or such portion of such period during which Executive was an employee
of FSI).
6.4 INTEREST. In the event Parent Corporation does not make timely
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payment in full of the Change of Control Termination payment described in
Section 6.3, Executive shall be entitled to receive interest on any unpaid
amount at the lower of: (a) prime rate of interest (or such comparable index as
may be adopted) established from time to time by the lending institution with
which FSI has its primary lending relationship at the time of the Change of
Control Termination; or (b) the maximum rate permitted under Section 280G(d)(4)
of the Internal Revenue Code.
6.5 BENEFITS CONTINUATION. In the event of a Change of Control
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Termination, Executive (and anyone entitled to claim under or through Executive)
shall until the earlier of (i) expiration of two (2) years from the Change of
Control Termination, and (ii) such time as Executive obtains suitable employment
that provides for insurance and benefit plans, programs and arrangements
reasonably comparable to that provided by FSI to Executive immediately prior to
the Change of Control, be entitled to receive from FSI the same or equivalent
health, dental, accidental death and dismemberment, short and long-term
disability, life insurance coverages, and all other insurance policies and
health and welfare benefits programs, policies or arrangements, at the same
levels and coverages as Executive was receiving on the day immediately prior to
the Change of Control and shall be furnished with such memberships as provided
to Executive on the day immediately prior to the Change of Control. Executive
shall be required to pay no more for continuation than is required of such
Executive on the day immediately prior to the Change of Control. If no such
continuation program is available, Executive shall be required to pay no more
than he/she paid as an active employee, or if provided by FSI at no cost to
employees on the day immediately prior to the Change of Control, they shall
continue to be made available to Executive on this basis. In addition, for the
period described in the first sentence of this Section 6.5, FSI shall reimburse
Executive for uninsured medical expenses incurred by Executive, to the extent
and under the same terms and conditions as such reimbursement was available to
Executive immediately prior to his termination.
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ARTICLE VII
CHANGE OF SUBSIDIARY STATUS
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In the event that, prior to a Change of Control: (a) a Subsidiary is sold,
merged, contributed, or in any other manner transferred to any person or entity
other than Parent Corporation or a Subsidiary, or if for any reason Parent
Corporation's ownership interest in any such Subsidiary falls below the level
specified in Section 1.5, (b) Executive's primary employment duties are with the
Subsidiary at the time of the occurrence of such event, and (c) Executive does
not, in conjunction therewith, transfer employment directly to Parent
Corporation or another Subsidiary, then:
(1) If Executive gives his or her written consent to the assignment of this
Agreement to such Subsidiary, or to the purchaser or new majority interest
holder of such Subsidiary, (and such assignment is accepted) this Agreement
shall remain in full force and effect between Executive and this assignee,
except that the provisions of Article VI of this Agreement shall become
null and void;
(2) If such assignment is not accepted by the Subsidiary or purchaser on or
before the effective date of the sale or merger, then this Agreement shall
be deemed to have been terminated by FSI as of the date of the sale or
merger, and within ten (10) days of the sale or merger Executive shall
receive a lump sum payment equivalent to sixty (60) days of compensation at
the then current rate of Executive's annual Base Salary; and
(3) In all other cases, this Agreement shall be deemed terminated for cause
pursuant to Section 4.2 of Article IV.
ARTICLE VIII
GENERAL PROVISIONS
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8.1 NO ADEQUATE TO REMEDY. The parties declare that it is impossible to
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measure in money the damages which will accrue to either party by reason of a
failure to perform any of the obligations under this Agreement. Therefore, if
either party shall institute any action or proceeding to enforce the provisions
hereof, such party against whom such action or proceeding is brought hereby
waives the claim or defense that such party has an adequate remedy at law, and
such party shall not urge in any such action or proceeding the claim or defense
that such party has an adequate remedy at law.
8.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided in Article VII,
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this Agreement shall be binding upon and inure to the benefit of the successors
and assigns of Parent Corporation and each Subsidiary, whether by way of merger,
consolidation, operation of law, assignment, purchase or other acquisition of
substantially all of the assets or business of FSI, and any such successor or
assign shall absolutely and unconditionally assume all of FSI's obligations
hereunder.
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8.3 NOTICES. All notices, requests and demands given to or made pursuant
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hereto shall, except as otherwise specified herein, be in writing and be
delivered or mailed to any such party at its address as set forth at the
beginning of this Agreement. Either party may change its address, by notice to
the other party given in the manner set forth in this Section. Any notice, if
mailed properly addressed, postage prepaid, registered or certified mail, shall
be deemed dispatched on the registered date or that stamped on the certified
mail receipt, and shall be deemed received within the third business day
thereafter or when it is actually received, whichever is sooner.
8.4 CAPTION. The various headings or captions in this Agreement are for
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convenience only and shall not affect the meaning or interpretation of this
Agreement.
8.5 GOVERNING LAW. The validity, construction and performance of this
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Agreement shall be governed by the laws of the State of Oregon
8.6 MEDIATION. In case of any dispute arising under this Agreement which
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cannot be settled by reasonable discussion, the parties agree that, prior to
commencing any arbitration proceeding as contemplated by Section 8.7, they will
first engage the services of a professional mediator agreed upon by the parties
and attempt in good faith to resolve the dispute through confidential nonbinding
mediation. Each party shall bear one-half (1/2) of the mediator's fees and
expenses and shall pay all of its own attorneys' fees and expenses related to
the mediation.
8.7 ATTORNEY FEES. If any action at law, in equity or by arbitration is
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taken to enforce or interpret the terms of this Agreement, the prevailing party
shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled, including fees and expenses on appeal.
8.8 CONSTRUCTION. Wherever possible, each provision of this Agreement
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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.
8.9 WAIVERS. No failure on the part of either party to exercise, and no
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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.
8.10 ASSIGNMENT. This Agreement shall be binding upon and inure to the
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benefit of the Company and its successors and assigns, and shall be binding upon
Executive, his administrators, executors, legatees, and heirs. In that this
Agreement is a personal services contract, it shall not be assigned by
Executive.
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8.11 MODIFICATION. This Agreement may not be and shall not be modified or
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amended except by written instrument signed by the parties hereto.
8.12 ENTIRE AGREEMENT. This Agreement together with the Confidentiality
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Agreement constitutes the entire agreement and understanding between the parties
hereto in reference to all the matters herein agreed upon. This Agreement
together with the Confidentiality Agreement replaces and supersedes all prior
employment agreements or understandings of the parties hereto.
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.
EXECUTIVE FLIR SYSTEMS, INC.
By:
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Title:
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