IDS
INTELLIGENT DETECTION SYSTEMS
EMPLOYMENT AGREEMENT
THIS AGREEMENT Dated as of the 1st day of September 1998
BETWEEN:
Xxxx Xxxxx, of the Town of Ottawa and the Province of Ontario in Canada
(Here in called the "Executive")
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
AND WHEREAS the Executive entered into a written employment agreement with the
Corporation on October 15th, 1997.
AND WHEREAS the Corporation wishes to continue to employ the Executive and the
Executive wishes to be employed by the Corporation on the terms and conditions
hereinafter provided:
AND WHEREAS the Executive 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
Executive and the Corporation as follows:
1. EMPLOYMENT
The Executive shall serve the Corporation as Vice President and General Manager
of the Security & Analytical Division of IDS 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 Executive shall initially report directly to
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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 Executive 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 Executives are expected to dedicate as much time is
required to fulfil their responsibilities
This position is subject to reconfirmation by the Board every year following or
at the time of the Annual General Meeting and your employment may be subject to
transfers within the Company to meet the Corporation's needs.
2. The employment of the Executive shall continue for an initial three (3) years
(the "Initial Term") unless terminated earlier by the Corporation in accordance
with the provisions hereof. Following the completion of the Initial Term, this
Agreement shall renew for successive one (1) year terms on an annual basis until
terminated in accordance with the provisions hereof. Notwithstanding the
termination of the Executive's employment hereunder, Sections 7.1 ,7.2,7.3,7.4,
and 7.5 hereof shall continue to be in force.
3. REMUNERATION
3.1 Salary and Bonus
Except as the Corporation and the Executive may otherwise agree, in writing, the
Executive shall be entitled to the following salary and bonus arrangement:
(a) The Executive shall receive a base salary of $170,000 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 Executive 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
Executive shall receive a sum equal to 40%% of the Executive's annual base
salary. This sum is payable to Executives 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
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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 Executive 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 Executive 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; and
c) Health club membership allowance not to exceed $50.00 Canadian per
month upon presentation of valid receipt; and
3.3 Vacation
The Executive shall be entitled to four (4) week's 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 Executive. No
vacation time will be carried over from one calendar year to another.
3.4 Stock Option Plan
In addition to the stock options already granted to the Executive, the
Executive will receive options to buy a further 90,000 of the Corporations
shares under the IDS 1997 Stock Option Plan. The exercise price of these options
will be $2.00 per share .The shares 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 7.500 options will vest and be
exercisable.
4. EXPENSES
4.1 General
The Corporation shall reimburse the Executive 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
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presentation of reasonably acceptable evidence of the Executive having incurred
such expenses and disbursements.
5. TERMINATION OF EMPLOYMENT
5.1 Termination by Corporation for Cause
The employment of the Executive may be terminated at any time by
notice in writing from the Corporation to the Executive, for cause, in which
event the Executive 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 Executive may be terminated without cause at
any time by the Corporation upon twelve (12) months written notice or upon
payment to the Executive of a lump sum amount equivalent to twelve (12) months
cash compensation together with benefits continuation for twelve months.
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 Executive'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
Executive or pay to the Executive 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 Executive 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 Executive 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.
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5.5 Resignation by Executive
In the event that the Executive 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.
6. RETURN OF PROPERTY
Upon any termination of this Agreement, the Executive 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 Executive.
7. COVENANTS OF EXECUTIVE
7.1 Non-Disclosure
The Executive 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 Executive shall also
execute, in favor of the Corporation, the Corporations standard form of
Intellectual Property and Confidential Information Agreement.
7.2 Non Competition
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, 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 Executive of the Corporation.
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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 Non-Solicitation of Executives
The Executive 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
Executives of or consultants to the Corporation nor shall he solicit or induce
or attempt to induce any persons who were Executives 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 Executive acknowledges and agrees that the obligations in Sections
6.1, 6.2, 6.3 and 6.4 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
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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 Executive agrees not to act upon to the detriment of the
Corporation. The Executive agrees that the obligations in Sections 6.1, 6.2, 6.3
and 6.4 , together with his other obligations under this Agreement, are
reasonably necessary for the protection of the Corporation's proprietary
interests. The Executive 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 Executive
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 Executive.
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 addition to the Corporation's rights and the Executive's
obligations under this Agreement. The Executive 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
Executive and the successors and permitted assigns of the Corporation
respectively.
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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 Executive 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. 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
8.7 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 Xxxxx
0000 Xxxx Xxxxx Xxxxx
Xxxxxx, Xxxxxxx
XXX 0X0
To the Corporation at:
00 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxx
XXX 5H1
Telecopier
Attention: The Board of Directors
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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 shalt 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.
9.0 SUCCESSION
In the event that the Analytical & Security Division has been spun off
into a public company or separately listed and the Executive ahs not been
appointed the CEO of that company, he will be entitled to 100% of the options
granted to the new CEO on the same exercise terms and vesting periods.
IN WITNESS WHEREOF the parties have executed this Agreement.
SIGNED, SEALED AND DELIVERED) in the presence of )
Witness )
/s/Xxxx Xxxxx
Xxxx Xxxxx
21/09/98
Dated
/s/Xxxxxxx Xxxxx
IDS Intelligent Detection Systems Inc.
Xxxxxxx Xxxxx
Chairman, IDS
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APPENDIX A
DRAFT JOB DESCRIPTION FOR VICE PRESIDENT & GENERAL
MANAGER ANALYTICAL & SECURITY DIVISION OF
IDS
TITLE: Executive Vice President & General Manager of the
Analytical & Security Division (A&S), IDS.
REPORTS TO: Chief Operating Officer of IDS.
JOB DESCRIPTION: The General Manager of the A&S
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 R&D Engineering efforts
of his Division.
RESPONSIBILITIES: Amongst the various duties, responsibilities and activities,
the General Manager 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
COO.
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.
o proposing new products and R&D 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 on a weekly basis
o maintain competitive information database
o conducting performance reviews for staff
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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 and marketing purposes
o ongoing evaluation of advances and changes in technology as it relates to
IDS, 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 than $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 in emergency situations 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.
o to sign and approve budgeted expenditure for advertising & marketing
materials subject to budgetary approval to $5,000
00
Xxxxxxxx X
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 Executive of 40 % of the
salary earned by the Executives in the period July 1st to December 31~ 1998. The
amount of the Bonus Sum payable will be dependent on the achievement of the
following condition(s)
Conditions: 1. One third of the Bonus Sum will be payable on achieving the
A&S Divisional Revenue target for the Second Half of 1998
2. Two thirds of the Bonus Sum will be payable on achieving
the A&S Divisional Earnings before tax target for the Second
Half of 1998
SUPER BONUS PLAN FOR SECOND HALF 1998
Subject to meeting the division's budgeted earnings before tax for the period,
for every $ dollar above the second half revenue target, the Executive will be
entitled to the difference between the target and the actual audited revenue
figure according to the following percentages:
Up to $1 m above Budgeted divisional revenue 1% Between $1 m and $2m
above Budgeted divisional revenue 2(degree)% Between $2m and $3m above
Budgeted divisional revenue 3% Between $3m and $4m above Budgeted
divisional revenue 4% Above $4m above Budgeted divisional revenue 5%
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