CONFIDENTIAL Mr. James V. Dyke c/o Psychemedics Corporation Acton, MA 01720 Dear Jim:
Exhibit
10.2
April 7, 2010
CONFIDENTIAL
Xx. Xxxxx
X. Xxxx
c/o
Psychemedics Corporation
000 Xxxxx
Xxxx, Xxxxx 000
Acton,
MA 01720
Dear
Xxx:
This
letter sets forth the agreements we have made regarding your employment with
Psychemedics Corporation (the “Company”).
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1.
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If at any time after
the effective date hereof and prior to the date which is five (5) years
following the date hereof, your employment is terminated by the Company
without “Cause” (as defined in paragraph 13 below), or you
voluntarily terminate your employment for “Good Reason” (as defined in
paragraph 13 below), in either case at the time of, or within twelve (12)
months following, a “Change of Control of the Company” (as defined in
paragraph 13 below), then you will continue to be paid monthly an amount
equal to your average monthly compensation for the twelve full months
preceding the date of such termination ("Termination Pay") for a period of
twelve (12) months from the date of such termination. For
purposes of the foregoing sentence, average monthly compensation shall be
determined with reference to the aggregate base salary, commission and
bonus compensation, if any, earned by you during such period, including
any bonus compensation accrued for such period or any portion of such
period but not paid as of the date of such termination) provided, however, that the amount of
commission and bonus compensation for a fiscal year included in
Termination Pay shall in no event exceed twenty-five percent (25%) of your
base salary for such fiscal year, and provided further, however,
that Termination Pay otherwise payable hereunder during any
month shall be reduced by any salary continuation payments payable during
such month under your employment offer letter dated April 7,
2010. Your
Termination Pay will be subject to normal deductions for taxes, benefit
plan contributions, other payroll deductions and any amount due the
Company as a result of cash advances. The Company agrees to continue to
make health insurance available to you under such health insurance plan as
the Company has in effect for so long as you are receiving Termination Pay
and so long as you contribute such portion of the premiums for such
insurance as is required of employees under such plan. You agree, however,
that if you obtain health insurance coverage through another employer
while you are eligible to receive health insurance under this Agreement,
the Company shall no longer be required to make health insurance available
to you under this Agreement. You agree to give the Company at least
fourteen (14) days prior written notice of the termination of your
employment in the event of your voluntary termination without Good
Reason. You shall not be entitled to Termination Pay as a
result of termination by reason of your death or “Disability” (as defined
in paragraph 13 below) following a Change of Control of the
Company.
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2.
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Notwithstanding
any other provision of this Agreement, the Termination Pay contemplated to
be paid to you under certain circumstances set forth in this Agreement
shall only be paid in consideration of the execution and delivery by you
of a release reasonably satisfactory to the Company waiving all claims
you, your heirs, or legal representatives have or may have against the
Company or any of its shareholders, officers, directors, employees or
agents with respect to your employment or the termination thereof, or any
other claim.
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3.
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You
acknowledge that, as the Company’s Vice President - Sales, you are in
possession of specialized information concerning the total operations,
conduct, management, and strategy of the Company, as well as proprietary
information concerning the Company’s products and services and that the
applicability of your knowledge of these matters is applicable to all
geographic areas in which the Company does business. You
further acknowledge that the Company has a legitimate business interest in
protecting its hair testing business from unfair
competition.
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4.
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In
addition to any other confidentiality obligations you may have as an
employee of the Company, you shall not, without the prior and express
written approval of the Company, either during or subsequent to the term
of your employment, disclose or use or enable another to disclose or use
any secret, private or confidential information, trade secret or other
proprietary knowledge of the Company, or its subsidiaries, divisions,
employees or agents. Upon termination of your employment with
the Company, you shall deliver to the Company all equipment, records and
copies of records, notes, data, memoranda, prototypes, designs, customer
lists and other information which is embodied in physical media and
documents belonging to the Company which are then in your possession. You
agree that all such information and documents shall be the property of the
Company and that the obligations set forth in this paragraph shall survive
termination of your employment.
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5.
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You
agree that, In addition to any other covenant not to compete with the
Company following termination of your employment, if you or the Company
shall terminate your employment in such a manner as to entitle you to
Termination Pay under paragraph 1, above, you shall not, for so
long as you are entitled to receive such Termination
Pay:
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(a) directly
or indirectly own, manage, operate or control, or participate in the ownership,
management, operation or control of, or become associated in any capacity with
any business enterprise, firm, corporation or company related to the field of
testing for the detection of drug use, which is in competition with the business
of the Company, or directly or indirectly accept employment with or render
services on behalf of a competitor of the Company, or any other third party, in
any capacity which may reasonably be considered to be useful to the competitor
or such other third party to become a competitor, without receiving the
Company’s prior written approval; or
(b)
induce or attempt to induce any employee, officer, consultant, or agent
of the Company to leave the employ thereof or in any way interfere with the
relationship between the Company and any employee, officer, consultant, or agent
thereof; hire directly or through another entity any person who was an employee
of the Company at any time during the six (6) months prior to the date such
person is to be so hired; or induce or attempt to induce any customer, client,
supplier, licensee, or other business relation of the Company to cease doing
business with the Company or in any way interfere with the relationship between
any such customer, client, supplier, licensee, or business relation and the
Company (including, without limitation, making any negative statements or
communications concerning the Company).
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6.
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You
agree that your obligations under paragraphs 4 and 5 are special, unique,
and extraordinary and that any breach by you of such obligations shall be
deemed material, and shall be deemed to cause irreparable injury not
properly compensable by damages in an action at law, and the rights and
remedies of the Company under paragraphs 4 and 5 may, therefore, be
enforced both at law and in equity, by injunction or
otherwise. For purposes of paragraphs 4 and 5, the term
"Company" shall include any and all subsidiaries or divisions of the
Company.
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7.
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The
five year period set forth in paragraph 1 above may be extended only with
the mutual written agreement of the
parties.
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8.
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If
at any time a controversy between you and the Company arises as to the
meaning or operation of this Agreement, such controversy shall be
submitted to arbitration by either party in Boston, Massachusetts, before
an arbitrator to be named by the President of the Boston Branch of the
American Arbitration Association, provided however, that the Company shall
also have the rights set forth in paragraph 6 above. Such
arbitration proceedings shall be conducted in accordance with the rules
and procedures then in effect of the American Arbitration
Association. The decision of the arbitrator shall be binding
upon the parties and judgment on any award made by the arbitrator may be
entered in any court having jurisdiction thereof. The costs of
the arbitrator shall be borne equally by you and the
Company. Each party will bear his or its own legal
costs.
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9.
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This
Agreement shall be governed by and interpreted in accordance with the laws
of the Commonwealth of Massachusetts without reference to principles of
conflict of laws.
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10.
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This
Agreement, together with your offer letter dated the date hereof, contains
the entire agreement of the parties in respect of this transaction and
supersedes any prior agreement or understanding relating to your
employment by the Company, other than any
existing nondisclosure or confidentiality agreements you may have with the
Company. No amendment or modification of any provision
of this Agreement will be valid unless in writing signed by both
parties. Any waiver must be in writing and signed by you or an
authorized officer of the Company, as the case may
be.
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11.
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This
Agreement shall be binding upon and inure to the benefit
of:
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(a) the
Company, and any successors or assigns of the Company, whether by way of a
merger or consolidation, or liquidation of the Company, or by way of the Company
selling all or substantially all of the assets and
business of the Company to a successor entity; and, subject to the Company's
right to terminate your employment at any time, the Company agrees to require
any successor entity to expressly assume or unconditionally guarantee the
Company's obligations under this Agreement (unless such obligations are assumed
by operation of law); and (b) you and your heirs, executors and
administrators.
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12.
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Any
notice or other communication required hereunder shall be in writing,
shall be deemed to have been given and received when delivered in person,
or, if mailed, shall be deemed to have been given when deposited in the
United States mail, first class, registered or certified, return receipt
requested, with proper postage prepaid, and shall be deemed to have been
received on the third business day thereafter, and shall be addressed as
follows:
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If to the
Company, addressed to:
Psychemedics
Corporation
000 Xxxxx
Xxxx, Xxxxx 000
Acton,
MA 01720
Attn: President
If to
you, addressed to:
Xxxxx X.
Xxxx
c/o
Psychemedics Corporation
000 Xxxxx
Xxxx, Xxxxx 000
Acton,
MA 01720
or such
other address as to which any party hereto may have notified the other in
writing.
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13.
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Definitions.
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(a) "Cause"
shall mean: (i) theft or embezzlement, or attempted theft or embezzlement, by
you of money or property of the Company, your perpetration or
attempted perpetration of fraud, or your participation in a fraud or attempted
fraud upon the Company; (ii) your unauthorized appropriation of, or attempt to
misappropriate, any tangible or intangible assets or property of the Company, or
your appropriation of, or attempt to appropriate, a business opportunity of the
Company, including but not limited to attempting to secure or securing any
profit for yourself or any of your family members or personal associates in
connection with any transaction entered into on behalf of the Company; (iii) any
act or acts of disloyalty, misconduct, or moral turpitude by you, including but
not limited to violation of the Company’s sexual harassment or non-harassment
policy, any of which the Board of Directors of the Company determines in good
faith has been or is likely to be materially injurious to the interest,
property, operations, business, or reputation of the Company, or its directors,
employees or shareholders; (iv) any act or omission constituting gross
negligence in connection with the performance of your duties on behalf of the
Company which is materially injurious to the interest, property, operations,
business, or reputation of the Company; (v) your conviction of a crime other
than minor traffic violations or other similar minor offenses (including
pleading guilty or entering a plea of no contest), or your indictment for a
felony or its equivalent, or your being charged with a violent crime, a crime
involving moral turpitude, or any other crime for which imprisonment is a
possible punishment; (vi) your willful refusal or material failure (other than
by reason of Disability) to carry out reasonable and lawful instructions and
directives from the Board of Directors and your failure to cure or correct such
refusal or failure within ten (10) days after receiving written notice from the
Board of Directors describing such refusal or failure; or (vii) the material
breach by you of your obligations under paragraphs 4 or 5 hereof or under any
other confidentiality, non-compete, non-solicitation, non-disparagement or
similar agreement with the Company.
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(b) “Change
in Control of the Company” shall mean
(i) any
person or group as defined in Rule 13d-3 under the Securities Exchange Act of
1934 (the “Exchange Act”) shall own more than 30% of the then outstanding shares
of the outstanding Common Stock of the Company; or
(ii) the
consummation of a reorganization, merger or consolidation or sale or disposition
of all or substantially all of the assets of the Company (a “Business
Combination”), unless, in each case following such Business Combination, (A) all
or substantially all of the individuals and entities who were the beneficial
owners of the Common Stock of the Company immediately before the consummation of
such Business Combination beneficially own, directly or indirectly, more than
50% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation that as a result of the transaction owns the Company or all or
substantially all of the assets of the Company either directly or indirectly
through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the Common Stock
of the Company; and (B) no person or group (as defined in Section 13(d) of the
Exchange Act) of the Company or the corporation resulting from the Business
Combination) beneficially owns, directly or indirectly, more than 30% of the
then outstanding shares of the common stock of the corporation resulting from
the Business Combination or of the combined voting power of the then outstanding
voting securities of the corporation; or
(iii)
Individuals who, as of the date of this Agreement, constitute the Board of
Directors of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors of the Company,
provided, however, that any individual's becoming a director after the date of
this Agreement whose election, or nomination for election by the stockholders of
the Company, was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board will be considered as though the individual were
a member of the Incumbent Board, but excluding, for this purpose, any individual
whose initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board.
(c) "Disability"
shall mean your inability because of physical or mental incapacity to perform
your usual duties at the Company for a period of one hundred eighty (180) days
in any consecutive twelve (12) month period.
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(d)
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"Good
Reason" shall mean: (i) reduction in your base salary below $215,000 or
such higher base salary as is in effect immediately prior to such
reduction; or (ii) a material decrease in your duties or
responsibilities.
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14.
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Section
409A.
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(a) Anything
in this Agreement to the contrary notwithstanding, if at the time of your
separation from service within the meaning of Section 409A of the Internal
Revenue Code of 1986, as amended, and the regulations thereunder (the “Code”),
following a Change in Control as defined in paragraph 13(b) above, you are a
“specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code,
then to the extent any payment or benefit that you become entitled to under this
Agreement would be considered deferred compensation subject to the twenty
percent (20%) additional tax imposed pursuant to Section 409A(a) of the Code as
a result of the application of Section 409A(a)(2)(B)(i) of the Code, such
payment shall not be payable and such benefit shall not be provided until the
date that is the earlier of (i) six (6) months and one (1) day after your
separation from service, or (ii) your death.
(b) This
Agreement is intended to be in compliance with the provisions of Section 409A of
the Code. To the extent that any provision of this Agreement is
ambiguous as to its compliance with Section 409A of the Code, the provision
shall be read in such a manner so that all payments hereunder comply with said
Section. The parties agree that this Agreement may be amended, as
reasonably requested by either party, and as may be necessary to fully comply
with Section 409A of the Code and all related rules and regulations in order to
preserve the payments and benefits provided hereunder without additional cost to
either party.
(c) Solely
for the purposes of Section 409A of the Code, each installment payment of
Termination Pay shall be considered a separate payment.
(d) The
Company makes no representation or warranty and shall have no liability to you
or any other person if any provisions of this Agreement are determined to
constitute deferred compensation subject to Section 409A of the Code but do not
satisfy an exemption from, or the conditions of, said Section.
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If this
letter correctly sets forth our understanding and agreement, please indicate
your acceptance by signing both copies of this letter and returning one
copy.
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Very
truly yours,
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PSYCHEMEDICS
CORPORATION
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By:
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/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx
X. Xxxxxxx, President
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Agreed
to: April 7, 2010
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/s/ Xxxxx X. Xxxx
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Xxxxx
X. Xxxx
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