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EMPLOYMENT AGREEMENT
This AGREEMENT is made this 27th day of July 1999, by and between Napco
Security Systems, Inc. and/or its related subsidiaries and/or affiliates (herein
referred to collectively as "NAPCO"), a Delaware corporation having its
principle place of business at 000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxx 00000
and Xxxxxxx Xxxxxxxx (hereinafter "EXECUTIVE") residing at .
WHEREAS, NAPCO desires to employ EXECUTIVE as Vice President of
Engineering Development and EXECUTIVE desires to be employed by NAPCO.
NOW THEREFORE:
I. EMPLOYMENT:
Subject to the terms and conditions hereinafter set forth, NAPCO hereby
employs EXECUTIVE and EXECUTIVE agrees to be employed by NAPCO as its Vice
President of Engineering Development. EXECUTIVE agrees to devote his full time
and best efforts to the business of NAPCO.
II. DUTIES:
EXECUTIVE shall, during the continuance of his employment hereunder:
(a) Devote the whole of his time and attention and abilities
to the business of NAPCO during regular working hours and at such other
times as may
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be necessary;
(b) Perform such duties as are usually performed by an
EXECUTIVE serving in his capacity and such other duties as may be
assigned to him from time to time by the Chairman of NAPCO;
(c) Use his best efforts to promote the business of NAPCO; and
(d) Perform his duties subject to the direction of the
Chairman of NAPCO.
III. COMPENSATION:
For the services to be rendered under this AGREEMENT, NAPCO agrees to
pay the EXECUTIVE the following compensation:
(a) SALARY - An annual salary of $150,000.00 subject to annual
reviews and compensation adjustments hereinafter on the anniversary
date of the commencement of employment. Upon being promoted to Senior
Vice President of Engineering Development (anticipated to occur
approximately May 2000 depending on performance), EXECUTIVE's annual
salary will be increased to $160,000.00. The annual salary will be paid
periodically in accordance with NAPCO's standard payroll practices,
which is presently on a weekly basis.
(b) BONUS PLAN - A bonus of $30,000.00 may be earned by
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EXECUTIVE based on getting each of the new products on the Phoenix #1
program into the shipping department on or before March 2000, and by
getting the Phoenix #2 Program products into the shipping department by
August 2000. The $30,000.00 could be prorated to reflect the portions
of the Phoenix #1 and Phoenix #2 programs that are already shipped by
March 2000 and the August 2000 dates. But it is understood that
shipping 100% of the products of the Phoenix #1 and #2 programs by
March 2000 and August 2000 respectively are the goals.
In addition, the EXECUTIVE will receive $5,000.00 for meeting
the Engineering budget for the fiscal year ending June 30, 2000.
(c) STOCK OPTIONS - 15,000 stock options, in accordance with
NAPCO's Incentive Stock Option Plan, will be awarded to EXECUTIVE upon
employment, at the fair market value price of NAPCO stock (Nasdaq:
"NSSC") at that time. These stock options will be recorded according to
regulations set forth by the Securities and Exchange Commission ("SEC")
and/or other government entities. EXECUTIVE will also receive an
additional 10,000 stock options upon being promoted to Senior Vice
President of Engineering Development. Thereafter, future stock options
may be granted based on performance.
(d) SEVERANCE AND HEALTH INSURANCE - In consideration for
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EXECUTIVE entering a new industry, upon any termination of employment
not based on cause, EXECUTIVE will be entitled to severance pay
equaling six (6) months' salary and continued health insurance for a
period of six (6) months. The payment of any such severance or
continued health insurance will be paid according to the same payment
schedule as if EXECUTIVE was still employed during that time frame.
(e) VACATION - EXECUTIVE will be granted three (3) weeks'
vacation time.
(f) 401(K) PLAN - NAPCO will provide EXECUTIVE with 401(k)
benefits in accordance with the terms and conditions of its corporate
plan in effect.
IV. RESTRICTIVE COVENANTS:
(a) EXECUTIVE acknowledges that technical, financial and other
confidential information of NAPCO or any third party with which NAPCO
is in technical or commercial cooperation, or which EXECUTIVE may
obtain knowledge in the course of and by virtue of his employment,
constitutes valuable and confidential assets and that unauthorized
disclosure or utilization thereof would be detrimental to NAPCO.
EXECUTIVE therefore agrees that he will not
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disclose or utilize, either during his employment or thereafter, any
such technical or other confidential information, without first
obtaining NAPCO's written consent thereto, except as such disclosure or
utilization may be required by EXECUTIVE's service to NAPCO or by law.
(b) All trade secrets and proprietary information including,
but not limited to, all formulas, patterns, designs, sales and business
plans, plant secrets, processes, methods for determination of costs,
customer lists, and other confidential secrets, or internal information
which heretofore have been or hereafter may be conceived by or
disclosed to EXECUTIVE in the course of EXECUTIVE's employment, shall
at all times be and remain the sole and exclusive property of NAPCO,
except as required by law or by EXECUTIVE's employment at NAPCO, and
shall be kept confidential by EXECUTIVE and not be utilized personally
be EXECUTIVE or divulged by EXECUTIVE to any third party or company.
(c) All inventions, improvements, patent pendings, ideas
concerning patents or improvements relating thereto (collectively
hereinafter referred to as "Inventions") which EXECUTIVE solely, or
with others, receives or reduces to practice or may conceive in the
course of such employment or with the use of NAPCO time, material or
facilities, or relating to any subject matter with which
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my work for NAPCO is or may be concerned or reduced to practice during
the term of my employment by NAPCO, shall be the sole property of
NAPCO.
(d) EXECUTIVE shall promptly disclose in writing to NAPCO and
maintain adequate and current written records of such Inventions, in
the form of notes, sketches, drawings or reports, which shall be the
property of NAPCO, shall specifically assign to NAPCO all such
Inventions and shall executed all papers and perform all other lawful
acts which NAPCO deems necessary or advisable for the preparation and
prosecution of patent applications and the procurement and maintenance
of United States and foreign patents and for the transfer of interests
therein to NAPCO. It is understood and agreed that all expenses
incurred with respect to the obligations of this paragraph shall be by
NAPCO or its nominee. EXECUTIVE shall make no other application for
intellectual property relating to such Inventions without the express
written approval of NAPCO.
(e) EXECUTIVE shall not make or permit to be made, except
pursuant to his duties hereunder and for the sole use and account of
NAPCO, any papers or documents, including drawings and records of
research, made by EXECUTIVE or at EXECUTIVE's directions or which may
come into EXECUTIVE's possession in any way, and EXECUTIVE shall
deliver to NAPCO on the termination of employment, all such materials
in EXECUTIVE'S
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possession.
(f) EXECUTIVE agrees that during the term of employment
hereunder, he will not, except with the prior written consent of NAPCO,
directly or indirectly engage in, or accept any position as an agent,
employee, officer or director of, or consult, advise with, invest in,
or otherwise in any way give assistance to aid any person, firm or
corporation (or any of their related entities) in the security alarm,
fire alarm, security lock, security hardware or entry access products
industry either as a manufacturer, installer and/or distributor. For a
period of three (3) years after the termination of EXECUTIVE's
employment hereunder, he will not, without the prior written consent of
NAPCO, directly or indirectly engage in, or accept any position as
agent, employee, officer or director of, or consult, advise with,
invest in (except in insignificant amounts) or otherwise in anyway give
assistance or aid to any person, firm, or corporation (or any of their
related entities) engaging in business which relates directly or
indirectly with the business of NAPCO or which would be competitive or
a competitive substitute with any product(s) or product lines in the
security alarm, fire alarm, security lock, security hardware or entry
access products industry either as a manufacturer, installer, and/or
distributor of which NAPCO was involved with at the time of termination
of EXECUTIVE's employment hereunder. This provision applies to any
aforementioned affiliation of EXECUTIVE to any person, firm, or
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corporation (or any of their related entities) engaging in business
which relates directly or indirectly with the business of NAPCO or
which would be competitive or a competitive substitute with any
product(s) or product lines in the security alarm, fire alarm, security
lock, security hardware or entry access products industry either as a
manufacturer, installer, and/or distributor which is conducting any
business in the United States of America. EXECUTIVE explicitly
acknowledges the reasonableness of the scope of this paragraph in view
of the fact that EXECUTIVE was never previously engaged in any
businesses relating to NAPCO, and in view of the fact that EXECUTIVE's
position at NAPCO will enable him to become privy to significant and
sensitive information.
(g) EXECUTIVE covenants and agrees that so long as he is in
the employ of NAPCO and after leaving the employ of NAPCO, he will not
directly or indirectly disclose, communicate, divulge or furnish to or
use for the benefit of himself (except while he is in the employ solely
and in the pursuit of the activities of NAPCO) or any other person,
firm or corporation, any other of the trade secrets, designs,
improvements, marketing plans, inventions of NAPCO belonging to NAPCO,
or the designs, or processes of distribution, or processes of
manufacture of any product or article sold or distributed by NAPCO,
which EXECUTIVE may learn by virtue by his activities or which he may
develop for NAPCO.
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V. EXCEPTION TO SECTION IV:
Based on EXECUTIVE's representation that he has conceived an
invention in the field of telephone answering machines ("the
Invention") that is unrelated to NAPCO's business, the parties agree to
exclude the Invention from the obligations of Section IV herewith. In
order to avoid any future disputes as to the nature and scope of the
Invention and to avoid disclosure of the Invention at this time,
EXECUTIVE has agreed to provide Attachment A hereto which is a sealed
envelope that EXECUTIVE represents contains a written description of
the Invention. NAPCO agrees not to unseal Attachment A unless either
authorized by EXECUTIVE to do so or if a dispute arises under this
Section.
In order to avoid any potential conflict of interest,
EXECUTIVE agrees not to directly market his Invention or any patent
received thereon to any known customer or vendor of NAPCO without prior
authorization from NAPCO's Chairman of the Board.
VI. REMEDIES:
The parties hereto recognize that, in the event of any breach or
threatened breach by the EXECUTIVE of the provisions of Section IV hereunder of,
NAPCO will suffer irreparable injury in connection with which damages would be
difficult, if not impossible, to ascertain and it is therefore agreed that
NAPCO, in addition to and without limiting any other remedy or right it may have
under this AGREEMENT, or at law or in equity, shall be entitled to an injunction
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against the EXECUTIVE issued by any court of competent jurisdiction enjoining
any such breach or threatened breach.
VII. EFFECT OF WAIVER:
The waiver by either party of a breach of any provision of this
AGREEMENT shall not operate or be construed as a waiver of any subsequent breach
thereof.
VIII. NOTICE:
Any and all notices referred to hereunder shall be sufficient if
furnished in writing and sent by registered or certified mail to the parties at
the addresses given herein, or to such other addresses as may hereafter be
designated by notice in writing given in accordance with the provisions of this
paragraph.
IX. GOVERNING LAW:
The parties agree that this AGREEMENT shall be governed, interpreted
and construed in accordance with the substantive laws of the State of New York.
X. SEVERABILITY:
If any provision of this AGREEMENT shall, to any extent, be deemed
invalid or unenforceable, the remainder of this AGREEMENT shall not be affected,
and each term shall be valid and shall be enforced to the extent permitted by
law.
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XI. AMENDMENTS TO AGREEMENT:
No amendment of this AGREEMENT shall be effective unless reduced to
writing and executed by a duly authorized officer of NAPCO and by EXECUTIVE.
XII. TERM:
This AGREEMENT shall be for a term of two years from the first date of
employment and may be renewed upon mutual written agreement by the parties. The
AGREEMENT will be reviewed with respect to a possible renewal one (1) year prior
to its expiration date. However, nothing in this provision requires NAPCO to pay
severance greater than that established in Section III.
XIII. TERMINATION OF EMPLOYMENT:
In the event that EXECUTIVE voluntarily leaves the employ of employer
without cause or he is terminated with cause, all benefits of this AGREEMENT
shall cease.
XIV. MISCELLANEOUS:
This AGREEMENT is to be read in conjunction with the rights and
obligations presented in NAPCO's Salaried Employee Handbook. Furthermore,
nothing in this AGREEMENT is intended or should be interpreted to circumvent any
obligations applicable to NAPCO pursuant to federal, state or local laws.
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Napco Security Systems, Inc. EXECUTIVE
By: /s/ Xxxxxxx X. Xxxxxxx /s/ Xxxxxxx Xxxxxxxx
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Xxxxxxx X. Xxxxxxx Xxxxxxx Xxxxxxxx
Chairman of the Board
Dated: 7/15/99 Dated: 7/26/99
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