IDS
INTELLIGENT DETECTION SYSTEMS
EMPLOYMENT AGREEMENT
THIS AGREEMENT Dated as of the 28th day of September 1998.
BETWEEN:
Xxxx Xxxxxxxx, of the Town of Burlington and the Province of Ontario in Canada
(Herein called the "Employee")
OF THE FIRST PART
- and -
IDS INTELLIGENT DETECTION SYSTEMS INC., a corporation incorporated
under the laws of the Province of Ontario (hereinafter called the
"Corporation")
OF THE SECOND PART
WHEREAS the Employee has been an employee of Scintrex
Limited since April 7th 1989; and was employed by EDA
Instruments Inc. prior to its acquisition by Scintrex in
1989.
AND WHEREAS the Corporation has acquired substantially all the outstanding
shares of Scintrex Ltd.;
AND WHEREAS the Employee entered into a written
employment agreement with Scintrex Ltd. on April 7th
1989.
AND WHEREAS the Corporation wishes to confirm the basis
upon which the Employee will, as of and from the date
hereof, be employed to work for the corporation and its
affiliates, including Scintrex Ltd.;
AND WHEREAS the Employee will receive, inter alia,
increased salary and incentive compensation in
consideration for executing the within Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSES that in
consideration of the mutual covenants and agreements in
this Agreement, it is agreed by and between the Employee
and the Corporation as follows:
1. EMPLOYMENT
The Employee shall serve the Corporation as Vice President and General
Manager of the Earth Sciences Instrumentation Division (ESID) and shall
perform such duties and exercise such powers as may from time to time
be assigned to or vested in him by the senior management acting on the
authority of the Board of Directors. In the capacity of Vice President,
the Employee shall initially report directly to the Chief Operating
Officer: it is understood that the reporting structure for the Employee
may change to meet the Company's requirements and changing structure.
A current draft job description is attached in Appendix A which is
subject to change as the requirements of the Company change: the
Employee will work to finalize any changes the COO may have to this job
description when the COO joins in September 1998. In a senior role
there are no set working hours nor overtime or travel time as senior
employees are expected to dedicate as much time is required to fulfil
their responsibilities
2. CONTRACT TERM
The employment of the Employee shall continue for a three (3) year term
unless terminated earlier by the Corporation in accordance with the
provisions hereof. Notwithstanding the termination of the Employee's
employment hereunder, Sections 7.1,7.3,7.4, and 7.5 hereof shall
continue to be in force. Notwithstanding the termination of the
Employee's employment hereunder, section 7.2 shall only continue in
force for the duration of either 12 months or the remainder of the
initial term which ever is less.
3. REMUNERATION
3.1 Salary and Bonus
Except as the Corporation and the Employee may otherwise agree, in
writing, the Employee shall be entitled to the following salary and
bonus arrangement
(a) The Employee shall receive a base salary of $110,000
Canadian per annum paid in biweekly installments (the "base
salary"). The Base Salary shall be reviewed at least annually
by the Compensation committee of the Corporation's Board of
Directors to determine if an increase is appropriate, which
increases shall be in the sole discretion of the Corporation's
Compensation Committee: and
(b) The Employee shall be entitled to participate in an annual
Bonus Plan approved and subject to the final authority of the
Board of the Corporation. The Bonus Plan is based on the
achievement of Board approved performance targets set by
senior management following the completion of the budget
process for the year. On achievement of these annual targets
the Employee shall receive a sum equal to 20% of the
Employee's annual base salary. This sum is payable to
Employees annually following the completion of the audited
results for the Corporation. The basis for the Bonus Plan for
the last half of 1998 is set out in Appendix B.
(c) Subject to Board approval, the Employee may be entitled to
participate in a Super Bonus Plan based on incremental revenue
over and above the Divisional target. The Super Bonus Plan
will be determined by the senior management acting on the
Board's authority. The basis for the Super Bonus Plan for the
last half of 1998 is set out in Appendix B.
3.2 Benefits
The Employee and his dependents shall be entitled to participation in
the benefits offered by the Corporation including, in particular, the
following benefits (the "Benefits"):
a) participation in the Corporation's medical and
group health insurance plan (the "Plan");
participation in such improvement to the Plan as the
Corporation may introduce from time to time; it is
expressly understood and agreed that coverage under
the Plan should continue while the Employee is
employed and, subject to section 5.3, for the twelve
(12) month period following termination under Section
5.2; and
b) Car allowance of $500.00 Canadian per month;
c) Health club membership allowance not to exceed
$50.00 Canadian per month payable upon presentation
of valid receipts; and
d) Continued participation in the Pension Plan.
3.3 Vacation
The Employee shall be entitled to four (4) weeks paid vacation per
year. Such vacation will be taken at such time as is most convenient
(with approval of the Chief Operating Officer for any vacation time
more than a week in length or with less than a month of advance
notice), considering the demands of the business of the corporation and
the personal plan of the Employee
3.4 Stock Option Plan
The Employee will receive options to buy 60,000 of the Corporations
shares under the IDS 1997 Stock Option Plan. The exercise price of
these options will be $2.00 per share. The options will vest over three
years with 1/12 of the total options vesting at the end of every
calendar quarter starting from the completion of the first full
calendar quarter ending after the date of this contract. Thus every
calendar quarter 5000 options will vest and be exercisable.
4. EXPENSES
4.1 General
The Corporation shall reimburse the Employee for all traveling and
entertainment expenses and other disbursements actually and properly
incurred by him in connection with his duties hereunder or otherwise
properly incurred by him for and on behalf of the Corporation, upon
presentation of reasonably acceptable evidence of the Employee having
incurred such expenses and disbursements.
5. TERMINATION OF EMPLOYMENT
5.1 Termination by Corporation for Cause
The employment of the Employee may be terminated at any time by notice
in writing from the Corporation to the Employee, for cause, in which
event the Employee shall not be entitled to a notice period or
compensation in lieu of notice. The Employee agrees that in determining
whether or not his termination has been for cause, the terms and
provision in the Scintrex Policies & Procedures Manual, as amended from
time to time, shall be binding and the employee acknowledges having
read and understood the aforementioned Manual.
5.2 Termination by Corporation Without Cause
The employment of the Employee may be terminated without cause at any
time during the term of this Agreement by the Corporation upon twelve
(12) months written notice or upon payment to the Employee of a lump
sum amount equivalent to twelve (12) months cash compensation together
with Group Health benefits continuation for twelve months. In the event
of Termination without cause, a reference letter will be provided to
the Employee at the time of termination.
The employment of the Employee may be terminated without cause at the
conclusion of the term of this Agreement by the Corporation upon six
(6) months written notice or upon payment to the Employee of a lump sum
amount equivalent to six (6) months cash compensation together with
Group Health benefits continuation for six months. In the
event of Termination without cause, a reference letter will be provided
to the Employee at the time of termination.
5.3 Exception of Benefits Continuance
Notwithstanding Sections 3.2 and 5.2, to the extent that the
Corporation, acting reasonably, is unable to continue a particular
Benefit following the Employee's termination (which for instance, it
expects to be case with respect to long-term disability insurance and
accidental death & dismemberment insurance, if any), the Corporation
may, at its option, make one or more cash payments equal to the value
of the relevant benefit to the Employee or pay to the Employee the
amount that would have been required, as and when the same would have
been required, to maintain the relevant benefit in place had the
Employee continued to be employed by the Corporation.
5.4 Fair and Reasonable
The parties confirm that the provision contained in this Article 5 are
fair and reasonable and the parties agree that upon termination of this
Agreement pursuant to any of the provisions hereof, the Employee shall
have no action, cause of action, claim or demand against the
Corporation or any other person as a consequence of such termination,
so long as the Corporation fulfills its obligations hereunder. The
parties acknowledge that the terms of this Agreement constitute a
better benefit on account of termination pay and severance pay that the
minimum requirements of the Employment Standards Act.
5.5 Resignation by Employee
In the event that the Employee decides on his own accord to resign from
IDS, it is agreed that he must give the Corporation 3 month's notice.
The Corporation at its discretion may decide to shorten this period to
a shorter period.
5.6 Termination in the Event of Disability
The Employee's employment with the Corporation may be terminated, upon
15 days written notice, and without notice or termination pay by reason
of the Employee's Disability. "Disability" means an illness or other
physical or mental disability or incapacity which, in the Corporation's
reasonable good faith judgement, has prevented the Employee from
substantially performing his duties during any period of ninety (90)
days during any period of one hundred and twenty (120) consecutive
days. Such Disability must be substantiated by a doctor's certificate
from a doctor referred to by the Corporation which suggests that the
Employee's Disability is likely to continue to prevent the Employee
from fulfilling his obligations under this agreement.
6. RETURN OF PROPERTY
Upon any termination of this Agreement, the Employee shall at once
deliver, or cause to be delivered, to the Corporation all books,
documents, effects, money, securities or other property belonging to
the Corporation (or any affiliate of the Corporation), or for which the
Corporation (or any affiliate of the Corporation), is liable to others,
which are in the possession, charge, care, control or custody of the
Employee.
7. COVENANTS OF EMPLOYEE
7.1 Non-Disclosure
The Employee shall not (either during the continuance of this
employment hereunder or at any time thereafter) disclose the private
affairs of the Corporation or any secrets of the Corporation to any
person other than the directors of the Corporation or for the
Corporation's purposes and shall not (either during the continuance of
this employment hereunder or at any time thereafter) use for his own
purpose or for any purposes other that those of the Corporation any
information he may acquire relating to the private affairs of the
Corporation or its trade information secrets. The Employee shall also
execute, in favor of the Corporation, the Corporations standard form of
Intellectual Property and Confidential Information Agreement.
7.2 Non Competition
Subject to the provisions in Section 2, the Employee covenants and
agrees with the Corporation that he will not (without the prior written
consent of the Corporation) at any time during his employment, or for a
period of:
a) Twelve (12) months following the date of the termination of his employment by
the Corporation without cause during the term of this contract; or
b) Twelve (12) months following the date of: (i) the
termination of his employment by the Corporation during the
term of this contract with cause or (ii) his resignation from
employment with the Corporation during the term of this
contract.
individually or in partnership or in conjunction with any person or
persons, firm, association, syndicate, company or corporation as
principal, agent shareholder or in any other manner whatsoever carry on
or be engaged in or be concerned with or interested in or advised, lend
money to, guarantee to the debts or obligations of or permit his name
or any part thereof to be used or employed by any person or persons,
firm, association, syndicate, company or corporation engaged in or
concerned with or interested in any business directly competitive with
the business being carried on by the Corporation presently and/or at
the time of such termination of employment, except as an officer,
director and/or Employee of the Corporation.
7.3 Non-Solicitation of Clients.
The Employee agrees that during the term of this Agreement, and for a
period of:
a) twelve (12) months following the date of the termination of his employment by
the Corporation without cause; or
b) Twenty-four (24) months following the date of: (i) the
termination of his employment by the Corporation with cause or
(ii) his resignation from employment with the Corporation,
he shall not, directly or indirectly, contact or solicit any Clients of
the Corporation (as hereinafter defined) for the purpose of selling or
supplying to Clients of the Corporation any products or services which
are competitive with the products or services sold or supplied by the
Corporation at the time of the termination of this Agreement. The term
"Client of the Corporation" in this Section 6.3 means any business or
organization that:
(i) Was a client or customer of the Corporation at the time of the termination
of this Agreement; or
(ii) Became a client or a customer of the Corporation
within six (6) months after the termination of this
Agreement if the Employee was involved with the
marketing efforts in respect of such client prior to
the termination of this Agreement.
7.4 Solicitation of Employees
The Employee covenants and agrees that during the term of this
Agreement and for a period of:
(a) twelve (12) months following the date of termination of his employment by
the Corporation without cause; or
(b) Twenty four (24) months following the date of (I) the
termination of his employment by the Corporation with cause or
(ii) his resignation from employment with the Corporation,
he shall not directly or indirectly hire any Employees of or
consultants to the Corporation nor shall he solicit or induce or
attempt to induce any persons who were Employees of or consultants to
the Corporation at the time of such termination or during the ninety
(90) days immediately preceding such termination, to terminate their
employment or consulting agreement with the Corporation.
7.5 Reasonableness of Non-Disclosure, Non-Competition and Non Solicitation
Obligations
The Employee acknowledges and agrees that the obligations in Sections
7.1, 7.2, 7.3 and 7.4 are fair and reasonable given that, among other
reasons the sustained contact he will have with the clients and
customers of the Corporation will expose him to confidential
information regarding the particular requirements of these clients and
the Corporation's unique methods of satisfying the particular
requirements of these clients, all of which the Employee agrees not to
act upon to the detriment of the Corporation. The Employee agrees that
the obligations in Sections 7.1, 7.2, 7.3 and 7.4, together with his
other obligations under this Agreement, are reasonably necessary for
the protection of the Corporation's proprietary interests. The Employee
further confirms that the unlimited geographic scope of the obligation
in Section 6.2 is reasonable given the international nature of the
market for the products and services of the Corporation. The Employee
hereby agrees that all restrictions in Article 6 are reasonable and
valid and all defenses to strict enforcement thereof by the Corporation
are hereby waived by the Employee.
7.6 Cumulative Rights
The various rights and remedies of the Corporation hereunder are
cumulative and non-exclusive of one another. The use of or resort to
any one such right or remedy shall not preclude or limit the exercise
of any other right or remedy by the Corporation. The provisions of the
Agreement shall not in any way limit or abridge the rights of the
Corporation in the obligations of the Employee at common law or under
statue, including but not limited to the laws of unfair competition,
copyright, trade secrets, and trade-xxxx, all of which shall be in
addition to the Corporation's rights and the Employee's obligations
under this Agreement. The Employee shall be deemed to be a fiduciary of
the Corporation.
8. GENERAL
8.1 Sections and Headings
The division of the Agreement into Articles and Sections and the
insertion of heading are for the convenience of reference only and
shall not affect the construction or interpretation of this Agreement.
The terms "this Agreement", "hereof", "hereunder", and similar
expressions refer to this Agreement and not to any particular Article,
Section, or other portion hereof and include any agreement or
instrument supplemental or ancillary hereto. Unless something in the
subject matter or context is inconsistent therewith, references herein
to Articles and Sections are to Articles and Sections of this
Agreement.
8.2 Number and Gender
In this Agreement words importing the singular number only shall
include the plural and vice versa and words importing the masculine
gender shall include the feminine and neuter genders and vice versa and
words importing persons shall include individuals, partnerships,
associations, trusts, unincorporated organizations and corporations and
vice versa.
8.3 Benefit of Agreement
This agreement shall ensure to the benefit of and be binding upon the
heirs, executors, administrators and legal personal representatives of
the Employee and the successors and permitted assigns of the
Corporation respectively.
8.4 Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the Laws of Canada applicable
therein.
8.5 Entire Agreement
This Agreement, together with the separate Intellectual Property and
Confidential Information Agreement executed by the Employee in favor of
the Corporation, constitutes the entire agreement between the parties
with respect to the subject matter hereof and cancels and supersedes
any prior understandings and agreements between the parties hereto with
respect thereto, including but not limited to an employment agreement
dated April 7th, 1989 between Scintrex Ltd. and the Employee and
subsequent amendments thereto. There are no representations,
warranties, forms, conditions, undertakings or collateral agreements,
express, implied or statutory between the parties other than as
expressly set forth in this Agreement.
8.6 Severability
If any provision of this agreement is determined to be invalid or
unenforceable in whole or in part, such invalidity or unenforceability
shall attach only to such provision or part there of and the remaining
part of such provisions and all other provisions hereof shall continue
in full force and effect.
8.7 Notice
Any demand, notice or other communication (hereinafter in this Section
7.7 referred to as a "communication") to be given in connection with
this Agreement shall be given by personal delivery or transmitted by
telecopier or other form of recorded communication, tested prior to
transmission to such party, addressed to the recipient as follows:
Xxxx Xxxxxxxx
000 Xxxxxxxx Xxxxxxxx
Xxxxxxxxxx
Xxxxxxx
X0X 0X0
Telecopier 000 000-0000
To the Corporation at:
#1 First Canadian Place
000 Xxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: The Board of Directors
or such other address or individual as may be designated by notice by
either party to the other. Any Communication given by personal delivery
shall be conclusively deemed to have been given on the day of actual
delivery thereof and, if made or given by or transmitted by telecopier
or other form of recorded communication shall be deemed to have been
given and received on the date of its transmission provided that if
such date is not a business day or if it is received after the end of
the normal business hours on the date of its transmission then shall be
deemed to have been given and received at the opening of business in
the office of the addressee on the first business day next following
the transmission hereof. For the purpose of this Agreement, a business
day shall mean any day other than Saturday, Sunday or statutory holiday
in the Province of Ontario.
Any party may change its address for service from time to time by
giving seven (7) days' notice to the other party in accordance with the
foregoing.
8.8 Independent Legal Advise
The Employee acknowledges that he has had the opportunity to obtain independent
legal advise and: a) that he has been fully informed as to his rights and
obligations under the terms of this Agreement; and b) with such knowledge, he
has executed this agreement freely and voluntarily and without any duress.
IN WITNESS WHEREOF the parties have executed this Agreement.
SIGNED, SEALED AND DELIVERED) in the presence of )
Witness )
/s/Xxxx Xxxxxxxx
Xxxx Xxxxxxxx
September 27/98
Dated:
/s/Xxxxx Xxxxxxxxx, COO
IDS Intelligent Detection Systems Inc.
Xxxxxxx Xxxxx
Chairman, IDS
APPENDIX A
DRAFT JOB DESCRIPTION FOR VICE PRESIDENT & GENERAL MANAGER
EARTH SCIENCE INSTRUMENTATION DIVISION OF
IDS
TITLE: Vice President & General Manager of the Earth Science
Instrumentation Division, IDS.
REPORTS TO: Chief Operating Officer of IDS.
JOB DESCRIPTION: The General Manager of the
Earth Science Instrumentation Division shall
be a member of the senior management team of
the company. He or she shall be responsible
for the overall excellence of the Sales and
Marketing, Customer Service and Engineering
efforts of this division.
RESPONSIBILITIES: Amongst the various duties, responsibilities and activities,
the Employee shall be responsible for:
o preparation of an annual budget which includes strategic sales, marketing and
engineering planning that goes with it for acceptance and approval of the
C.O.O..
o responsible for ongoing business development initiatives o prepare quota &
commission plans for sales personnel (as part of above) o the timely execution
of sales marketing programs o collaborating with the manufacturing operations of
the Company to minimize working capital employed in serving the division's
needs, particularly through timely scheduling of production to meet sales
requirements
o staffing and evaluations of division personnel o evaluation and proposing of
potential engineering projects o maintaining competitive information database o
developing sales & marketing literature o launching new products and services
o responsible for ensuring that a high level of quality, service and
profitability are maintained in the Customer Service Department.
o review and approve offers made by sales people
DUTIES:
o proposing new products and ideas to expand the company's product offering o
collaborative supervision of related engineering projects working with the
Director of
Engineering for Geo Products
o timely reports of sales results o maintain competitive information database o
conducting performance reviews for staff o supervising lead generation and
follow-ups o maintaining database for sales
o assisting in the overall computer upgrade of the systems at IDS o review and
approve commission statements of sales people with accounting o international
travel for sales & marketing purposes o ongoing evaluation of advances and
changes in technology as it relates to lDS, its customers
and competitors
o attendance at various conferences and presenting technical papers
o other duties assigned to you by the COO
o engineering proposals requiring more that $25,000.00 of resources shall have
a formal project plan including engineering costs and sales projections etc.
for review and approval by the COO.
OTHER:
o training of sales/marketing personnel for the Division
AUTHORITY:
o to sign and approve unbudgeted purchases up to $2,000
o to sign and approve travel requisitions for the Division
o to approve trade show booths and related expenditures, providing they have
been budgeted for up to $5,000
o to hire personnel for the Division, subject to budgets and approvals, or in
special cases in consultation with the COO except for senior division
managers reporting to General Manager
o to sign and approve budgeted expenditure for advertising & marketing materials
subject to budgetary approval to $5,000
o to sign and approve engineering projects up to $25,000.00
It is understood that the nature of the responsibilities of the Employee will
change as the requirements of IDS change.
Appendix B
BONUS PLAN FOR SECOND HALF 1998
Objective: To motivate senior management and employees to meet the budget for
the second half of the year
Plan: The Corporation will pay a bonus to the Employee of 20% of the salary
earned by the Employees in the period July 1st to December 31st 1998.
Conditions: 1. One third of the Bonus Sum will be payable on achieving the ESID
Divisional Revenue target for the Second Half of 1998
2. Two thirds of the Bonus Sum will be payable on
achieving the ESID Divisional Earnings before tax
target for the Second Half of 1998
SUPER BONUS PLAN FOR SECOND HALF 1998
Subject to meeting the ESID division's budgeted
earnings before tax for the period, for every $
dollar above the second half divisional revenue
target, the Employee will be entitled to the
difference between the target and the actual audited
revenue figure according to the following
percentages:
Up to $500,000 above Budgeted divisional revenue 1% Between $500,000 and $lm
above Budgeted divisional revenue 2%Between $lm and $2m above Budgeted
divisional revenue 3% Above $2m above Budgeted divisional revenue 5%
