Exhibit 10.2
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EMPLOYMENT AGREEMENT
AGREEMENT dated as of the 1st day of January,
2005 by and between ASSESSMENT AND EVALUATION CONCEPTS INC., a
Massachusetts corporation with its principal place of business
at 00 Xxxxxx Xxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx, 00000 (the
"Corporation") and XXXXXXX X. XXXXXX, ED.D., an individual
residing at 00 Xxxxxx Xxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx, 00000
("Employee").
W I T N E S S E T H:
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WHEREAS, on the Effective Date hereof, the Corporation has
become a wholly-owned subsidiary of Touchstone Applied Science
Associates, Inc. ("TASA"), a Delaware corporation; and
WHEREAS, the Corporation recognizes the importance of
retaining its highly qualified employees by offering a certain
degree of security to such individuals against personnel
changes; and
WHEREAS, the Corporation desires to assure fair treatment
of such qualified employees and thereby increasing their
willingness to remain with the Corporation; and
WHEREAS, the Board of Directors (the "Board") of the
Corporation in recognition of the acquisition of the Corporation
by TASA, believes it is essential to provide Employee with such
degree of security and secure the services of Employee for the
Corporation, and, in order to accomplish these objectives, the
Board has caused the Corporation to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements set forth herein, the parties hereto,
intending to be legally bound, agree as follows:
1. EMPLOYMENT AND TERM. Subject to the terms and
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conditions of this Agreement, the Corporation agrees to employ
Employee, and Employee hereby accepts employment by the
Corporation, for a term beginning as of January 1, 2005 (the
"Effective Date") and, except as provided below, ending on the
second anniversary of the Effective Date (the "Expiration Date");
provided, however, on the Expiration Date and each annual
anniversary of the Expiration Date (such date and each annual
anniversary thereof is hereafter referred to as the "Renewal
Date"), the term of this Agreement shall be automatically
extended so as to terminate one (1) year from such Renewal Date,
unless (i) for each of years three and four at least six (6)
months prior to the applicable Renewal Date (January 1, 2007 and
January 1, 2008) or (ii) for each year thereafter at least three
(3) months prior to the Renewal Date, TASA, the Corporation or
Employee shall give written notice to the others that the term
of the Agreement shall not be so extended.
2. CERTAIN DEFINITIONS.
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(a) "The Code" A reference herein to a section of the
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Internal Revenue Code of 1986, as amended (the "Code") or a
subdivision thereof shall be construed to incorporate reference
to any section or subdivision of the Code enacted as a successor
thereto, any applicable proposed, temporary or final regulations
promulgated pursuant to such sections and any applicable
interpretation thereof by the Internal Revenue Service.
(b) "The Exchange Act" A reference herein to a section of
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the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or any rule or regulation promulgated thereunder shall be
construed to incorporate reference to any section of the
Exchange Act or any rule or regulation enacted or promulgated as
a successor thereto.
(c) "Subsidiary(ies)" means a company fifty (50%) percent
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or more of the voting securities of which are owned by the
Corporation or TASA or a subsidiary of TASA.
(d) "Employee Benefit Plan" means any written plan
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providing benefits for employees of the Corporation, TASA or any
Subsidiary.
3. EMPLOYEE DUTIES AND REPRESENTATIONS.
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(a) Employee Duties. During the Employment Term, Employee
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shall serve in a capacity as Chief Executive Officer of the
Corporation and its Clerk, or in such other related capacity or
capacities as may be determined by the Board. Employee shall
perform such services as are customary for the Chief Executive
Officer of a corporation the principal business of which is test
assessment and evaluation and such other services as may be
required or requested by the Board or the Chief Executive
Officer of TASA in connection with the operation of the
Corporation, TASA or its Subsidiaries. Employee shall report
directly to the Chief Executive Officer of TASA. Employee shall
be headquartered at Raynham, Massachusetts, or any office or
location of the Corporation as the Board or the President shall
reasonably request.
(b) Employee Best Efforts. During the Employment Term,
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and excluding any periods of vacation and sick leave, Employee
agrees to devote best efforts on a part-time (50%) basis to the
business and affairs of the Corporation, to discharge the
responsibilities assigned to Employee hereunder, and to perform
faithfully and efficiently such responsibilities. Any
modifications to the part-time (50%) commitment shall be
mutually agreed to in writing.
(c) Permitted Activities. During the Employment Term it
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shall not be a violation of this Agreement for Employee to (A)
serve on corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at
educational institutions, and (C) manage personal investments,
so long as Employee's duties in connection with any of (A), (B)
and (C) do not unreasonably interfere with Employee's duties
under this Agreement.
(d) Employee Representations and Warranties. Employee
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represents and warrants to the Corporation that the execution
and delivery of this Agreement shall not conflict with, or
violate the terms of, or constitute a breach of any other
agreement or document to which he is a party, including, but not
limited to any employment, consulting, non-competition,
restrictive covenant or other form of confidentiality agreement.
4. COMPENSATION.
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(a) Base Salary. During the Employment Term, the
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Corporation shall pay to Employee, in equal installments no less
frequently than monthly (or at such other intervals as are in
effect from time to time for other key employees of TASA), an
annual base salary (the "Base Salary") of Sixty-Six Thousand
($66,000.00) Dollars.
(b) Annual Bonus. In addition to Base Salary, Executive
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shall be awarded, for each of the first four (4) years of this
Agreement, beginning with the first year of this Agreement, an
annual bonus provided "Annual Gross Revenues" of the Corporation
are in excess of one hundred twenty-five (125%) percent of the
immediately prior year's Annual Gross Revenues ("Annual Bonus").
Annual Gross Revenues for calendar year 2004 shall be determined
by the accountant for the Corporation as soon as practicable
within calendar year 2005 and shall be binding upon the parties
hereto.
"Annual Gross Revenues" shall mean (i) the aggregate
of all revenues of the Corporation as reported by the
accountants for the Corporation in accordance with generally
accepted accounting principles consistently applied, plus (ii)
shadow earnings. "Shadow earnings" shall be defined as all
revenues reported by TASA or any Subsidiary (other than the
Corporation) from services performed by employees of the
Corporation at the request of TASA or such Subsidiary, but
specifically excluding any such revenues from "located" projects
as defined in 4(c) below. Shadow earnings shall be calculated
by applying the ratio of the direct labor cost for the project
involved for the hours of the project against the hours of
service performed by all employees in the Corporation in
connection with such project.
The Annual Bonus shall be a percentage (the "Annual
Bonus Percentage") applied to such excess of Annual Gross
Revenues. The Annual Bonus Percentages are as follows:
Calendar Year Percentage
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2005 Five (5%) Percent
2006 Three (3%) Percent
2007 Two (2%) Percent
2008 One (1%) Percent
(c) Referral Bonus. In addition to Base Salary and the
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Annual Bonus, if any, during the term of this Agreement Employee
shall be entitled to a Referral Bonus based on revenues
generated by TASA or any Subsidiary, other than the Corporation,
from sole source, non-bid, non-RFP projects "located" by
Employee or the Corporation and performed by TASA or such other
Subsidiary and not otherwise known to TASA or such other
Subsidiary prior to referral thereof by Employee or the
Corporation. The final determination of which projects were
known shall be made in good faith by the Chief Executive Officer
of TASA. For purposes of this bonus, the term "located" shall
mean receipt by TASA or such other Subsidiary from Employee or
the Corporation of written communication of the existence of
such project, and shall not mean the date in which a project bid
is submitted or the project awarded. The Referral Bonus for
each project shall be calculated on the "Annual Gross Revenues"
for such project. "Annual Gross Revenues" shall be defined as
the aggregate of all revenues of TASA and such other Subsidiary
for each unknown project awarded to TASA or such other
Subsidiary for each fiscal year which revenues are actually
received (not accrued). The Referral Bonus shall be calculated
as:
Two (2%) Percent of Annual Gross Revenues for projects located
in FY 2005 and 2006
One (1%) Percent of Annual Gross Revenues for projects located
in FY 2007 and 2008
The Referral Bonus shall be payable for the entire initial term
of the unknown project based on year located and regardless of
the date of payment. No Referral Bonus will be paid on any
extensions or renewals of a project. For example, a two year
project located in 2005 which generates Annual Gross Revenues of
$50,000 in each of March and December of 2005 and 2006 shall
earn a Referral Bonus as follows:
As of the end of the first fiscal year (10/31/05) $50,000
in Annual Gross Revenues (March 2005) would have been received
and 2% shall be due and payable to Employee ($50,000 x 2% =
$1,000).
As of the end of the second fiscal year (10/31/06) $100,000
in Annual Gross Revenues (December 2005 and March 2006) would
have been received and 2% shall be due and payable to Employee
($100,000 x 2% = $2,000).
As of the end of the third fiscal year (10/31/07) $50,000
in Annual Gross Revenues (December 2006) would have been
received and 2% shall be due and payable to Employee ($50,000 x
2% = $1,000).
(d) First Year Bonus Adjustment. As a result of the
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acquisition of the Corporation by TASA, the Corporation will
effect a change in its fiscal year such that it will have a
short fiscal year in 2005 of ten months (ending October 31,
2005). All relevant bonus formulas for 2005 shall be calculated
on a 10/12 ratio as a result.
(e) Payment of Bonuses. Each of the Annual Bonus and
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Referral Bonus, if any, will be estimated and paid within thirty
(30) days of fiscal year end of the Corporation, provided that
each Bonus shall be subject to a final adjustment based on the
audited financial statements of the Corporation and TASA and any
other Subsidiary. In the event of a termination of employment
prior to the end of any calendar year of this Agreement, the
Annual Bonus and Referral Bonus shall each be calculated as
described above as at the applicable fiscal year end, and, if
applicable, a pro rata portion of each such bonus shall be paid,
based upon the actual number of completed months that Employee
was employed in the applicable bonus year.
(f) Incentive, Savings, Welfare Benefit Plans and
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Retirement Plans. In addition to Base Salary, Employee shall be
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eligible to participate in or benefit from, such medical
insurance, life insurance, disability insurance, pension, bonus,
profit-sharing, stock option, stock purchase and any other
fringe benefit plans, practices, programs or policies provided
by the Corporation or TASA to Employee in accordance with the
terms of such plans, practices, programs and policies, as
amended from time to time.
(g) Key Man Insurance. Employee agrees that, subject to
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approval of the Chief Executive Officer of TASA, the Corporation
or TASA may obtain key man life insurance with respect to
Employee, and in connection therewith, Employee agrees to submit
to all reasonable and customary examinations requested by the
provider of such life insurance.
(h) Expenses. Employee shall be entitled to reimbursement
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for all normal and reasonable travel, entertainment and other
expenses necessarily incurred by him in the performance of his
duties hereunder in accordance with the policies, practices and
procedures of TASA as amended from time to time.
(i) Disability. Except as hereinafter provided, the
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Corporation shall pay Employee for a period, during the
Employment Term in which he is unable fully to perform his
duties because of physical or mental disability or incapacity,
an amount and for the period of time required under the TASA
Personnel Handbook, as it may be amended by TASA from time to
time.
(j) Vacation. During the Employment Term, Employee shall
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be entitled to paid vacation in accordance with the plans,
practices, policies and programs of TASA as amended from time to
time. Vacation based on part-time (50%) employment is currently
ten (10) days.
5. STOCK OPTIONS.
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(a) As part of the consideration to be paid to Employee
for his services hereunder, Employee shall be eligible to
participate in any stock incentive plan adopted by TASA (the
"Plan") for which an executive level employee may participate.
(b) As an incentive to enter into this Agreement and
pursuant to the terms of the Stock Purchase Agreement dated as
of December 31, 2005, TASA, immediately upon the Effective Date
of this Agreement, shall deliver to Employee a Stock Option
Agreement pursuant to TASA's 2000 Stock Option Incentive Plan,
granting to Employee options for twenty-five thousand (25,000)
shares of the common stock of TASA at fair market value as of
the Effective Date.
6. RIGHTS OF TERMINATION.
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(a) Cause. During the Employment Term, the Chief
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Executive Officer of TASA shall have the right, at any time
effective upon notice to Employee, to terminate Employee's
employment for "Cause" (as hereinafter defined). For purposes
of this Agreement, "Cause" shall mean (i) an act or acts of
personal dishonesty engaged in by Employee, (ii) violations by
Employee of Employee's obligations under Section 3 of this
Agreement, which are not remedied within thirty (30) days after
receipt of written notice from the Corporation or TASA; (iii)
commission by Employee of a felony or any act of embezzlement or
misappropriation of funds; or (iv) material breach of any
representation or warranty hereunder or fraud or gross
negligence in the performance of his duties hereunder.
(b) Disability; Death. In the event that Employee, due
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to physical or mental disability or incapacity, is unable to
substantially perform his duties hereunder in the reasonable
opinion of the Chief Executive Officer of TASA for (i) a period
of three (3) or more successive months, or (ii) forty-two days
in any six month period, the Corporation or Employee shall have
the right to terminate this Agreement and Employee's employment
hereunder upon thirty (30) days' prior written notice and
termination shall be effective on the 30th day after receipt of
such notice (the "Disability Effective Date"). If Employee dies
during the Term, this Agreement shall terminate immediately upon
his death.
(c) Voluntary Termination. Employee may terminate this
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Agreement on six (6) months prior written notice to the
Corporation at any time after the second anniversary of the
Effective Date.
(d) Notice of Termination. Any termination of Employee's
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employment by the Corporation or by Employee shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 16 of this Agreement.
(e) Date of Termination. "Date of Termination" means the
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date of receipt of the Notice of Termination or any later date
specified therein, as the case may be; provided, however, that
if Employee's employment is terminated by reason of death,
Disability or Voluntary Withdrawal, the Date of Termination
shall be the date of death of Employee, the Disability effective
date or the last date of employment, as the case may be.
(f) Liquidated Damages. If this Agreement is terminated
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at any time prior to the fourth anniversary of the Effective
Date, either (i) by the Corporation for Cause, or (ii) by the
Employee (except as a result of his death or Disability),
Employee shall pay the following amounts to the Corporation in
connection with the Termination Date as liquidated damages for
losses to the Corporation from its investment in the Employee:
1. Termination in the first or second year - $50,000.
2. Termination in the third or fourth year - $25,000.
7. EFFECTS OF TERMINATION.
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(a) Termination other than Cause or Voluntary Withdrawal.
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In the event that Employee's employment is terminated other than
pursuant to Section 6(a) or 6(c) hereof, Employee's employment
hereunder shall terminate without further obligations to
Employee, other than those obligations accrued or earned and
vested (if applicable) by Employee through the Date of
Termination, including for this purpose all "Accrued
Obligations", defined as those obligations accrued or earned and
vested (if applicable) by Employee as of the Date of
Termination, including, for this purpose (i) Employee's pro rata
Base Salary accrued but unpaid as of the Date of Termination;
(ii) any compensation previously deferred by Employee (together
with any accrued earning thereon) and not yet paid by the
Corporation and any accrued vacation pay not yet paid by the
Company; (iii) if applicable, all amounts payable to the estate
or designated beneficiaries of Employee under any pension,
savings, life insurance or other plans, practices, policies and
programs of the Corporation, and/or all other amounts payable
pursuant to Section 4 hereof; and (iv) the pro rata share, if
any, of any Annual Bonus or Referral Bonus payable to Employee
under the terms of Section 4.
(b) Termination for Cause or Voluntary Withdrawal. In the
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event Employee is terminated pursuant to Section 6(a) or 6(c)
above, the Corporation shall pay to Employee all Accrued
Obligations listed in Section 7(a) (i), (ii), (iii) and (iv)
above only.
(c) Payment of Accrued Obligations and Options. Upon
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termination of the employment of Employee for any reason:
(i) the Corporation shall pay to Employee all Accrued
Obligations such that the Accrued Obligations specified in
Section 4 hereof, shall be paid to Employee in a lump sum in
cash within 30 (thirty) days of the Date of Termination, and the
other Accrued Obligations shall be paid in accordance with
Employee's specific elections pursuant to, and otherwise in
accordance with the terms of, any plan, practice, policy or program
providing benefits forming a part of the Accrued Obligations; and
(ii) all then unexercised options shall immediately
and automatically terminate.
8. CONFIDENTIALITY.
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(a) Confidential Information. Employee understands and
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acknowledges that as a result of Employee's employment with the
Corporation and involvement with the business of the Corporation
and TASA and its Subsidiaries (collectively, the "TASA
Entities"), he is or shall necessarily become informed of, and
have access to, confidential information of the TASA Entities,
including, without limitation, inventions, patents, patent
applications, trade secrets, technical information, know-how,
plans, specifications, financial information and business
strategy, marketing plans and information, pricing information,
identity of customers and prospective customers and identity of
suppliers, and that such information, even though it may have
been or may be developed or otherwise acquired by Employee, is
the exclusive property of the TASA Entities, as applicable, to
be held by Employee in trust and solely for the benefit of the
TASA Entities. Employee shall not at any time, either during or
subsequent to his employment hereunder, reveal, report, publish,
transfer or otherwise disclose to any person, corporation or
other entity, or use, any of the confidential information of the
TASA Entities, without the written consent of the Board of the
entity involved, except for use on behalf of the TASA Entities
in connection with their business, and except for such
information which legally and legitimately is or becomes of
general public knowledge from authorized sources other than
Employee.
(b) Return of Materials. Upon the termination of his
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employment with the Corporation for any reason, Employee shall
promptly deliver to the Corporation all drawings, manuals,
letters, notes, notebooks, reports and copies thereof and all
other materials, including, without limitation, those of a
secret or confidential nature, relating to the business of all
TASA Entities which are in Employee's possession or control.
9. NON-COMPETITION.
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(a) Employee agrees that, for a period commencing on the
date hereof and ending one (1) year after the termination of his
employment with the Corporation for any reason, he shall not,
anywhere in the United States (or for such lesser area or such
lesser period as may be determined by a court of competent
jurisdiction to be a reasonable limitation on the competitive
activity of Employee) directly or indirectly:
(i) solicit or attempt to solicit business of any
customers of any TASA Entity (including prospective customers
solicited by any TASA Entity during the term of his employment)
for products or services the same or similar to those offered,
sold, produced or under development by any TASA Entity during
the term of his employment therewith or dealt in by Employee
during his employment with the Corporation;
(ii) solicit or attempt to solicit for any business
endeavor any employee of any TASA Entity;
(iii) interfere with any business relationship
between any TASA Entity and any other person or entity;
(iv) use the name of the Corporation, TASA, a
Subsidiary or a name similar thereto; or
(v) except as permitted in Section 9(b) below, render
any services as an officer, director, employee, partner, member,
consultant, subcontractor or otherwise to, or have any interest
as a stockholder, partner, member, lender or otherwise in, any
entity which is engaged in activities which, if performed by
Employee would violate this Section 9.
(b) Employee shall not be deemed to have violated the
provisions of Section 9(v) if he is rendering services to, or
has an interest in, an entity in which he, or he and Xxxxxxxx X.
XxXxxx, Ph.D., are the sole shareholders, members, partners or
proprietors of such entity.
10. REMEDIES AND SURVIVAL. Because the Corporation does
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not have an adequate remedy at law to protect its interest in
its trade secrets, privileged, proprietary or confidential
information and similar commercial assets, or its business from
Employee's competition, the Corporation, TASA and each of its
Subsidiaries shall be entitled to injunctive relief, in addition
to such other remedies and relief that would, in the event of a
breach of the provisions of Sections 8 or 9, be available to the
Corporation, TASA and each of its Subsidiaries. The provisions
of Sections 8 and 9 and this Section 10 shall survive any
termination of Employee's employment with the Corporation for
any reason whatsoever.
11. SET-OFF. The payments and performance by the
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Corporation as provided for in this Agreement shall be subject
to any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Corporation may have against
Employee.
12. ENTIRE AGREEMENT. This Agreement sets forth the
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entire understanding of the parties hereto with respect to its
subject matter, merges and supersedes any prior or
contemporaneous agreements or understandings with respect to its
subject matter, and shall not be modified or terminated except
by another agreement in writing executed by the Corporation TASA
and Employee. Failure of a party to enforce one or more of the
provisions of this Agreement or to require at any time
performance of any of the obligations hereof shall not be
construed to be a waiver of such provisions by such party nor to
in any way affect the validity of this Agreement or such party's
right thereafter to enforce any provision of this Agreement, nor
to preclude such party from taking any other action at any time
which it would legally be entitled to take.
13. SEVERABILITY. If any provision of this Agreement is
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held to be invalid or unenforceable by any court or tribunal of
competent jurisdiction, the remainder of this Agreement shall
not be affected by such judgment and such provision shall be
carried out as nearly as possible according to its original
terms and intent to eliminate such invalidity or
unenforceability.
14. ASSIGNMENT; SUCCESSORS AND ASSIGNS. This Agreement is
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personal to Employee and without the prior written consent of
the Corporation shall not be assignable by Employee. This
Agreement is binding upon and shall inure to the benefit of the
parties, and each of their successors and assigns.
15. COMMUNICATIONS AND NOTICES. All notices and other
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communications under this Agreement shall be in writing and
shall be deemed to have been duly given three (3) business days
after they are mailed in any United States post office enclosed
in a registered or certified postage-paid envelope and addressed
as set forth at the beginning of this Agreement, or to such
other address as any party may specify by notice to the other
parties, or delivered by Federal Express or a similar overnight
courier to such address with evidence of delivery; provided,
however, that any notice of change of address shall be effective
only upon receipt.
16. CONSTRUCTION; COUNTERPARTS. The headings contained in
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this Agreement are for convenience only and shall in no way
restrict or otherwise affect the construction of the provisions
hereof. This Agreement may be executed in multiple
counterparts, each of which shall be an original and all of
which together shall constitute one and the same instrument.
17. VALIDITY. The invalidity or unenforceability of any
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provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement. A
party's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such
provision. This Agreement contains the entire understanding of
the Corporation and Employee with respect to the subject matter
hereof but does not supersede or override the provisions of any
stock option, employee benefit or other plan, program, policy or
practice in which Employee is a participant or under which
Employee is a beneficiary.
18. GOVERNING LAW. This Agreement shall be governed by
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and construed under the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned parties have executed
and delivered this Agreement as of the date first above written.
ASSESSMENT and EVALUATION
CONCEPTS INC.
By:______________________________
Name: Xxxxxxxx X. XxXxxx, Ph.D.
Title: President
EMPLOYEE:
____________________________
Xxxxxxx X. Xxxxxx, Ed.X.
XXXXXXXXXX APPLIED SCIENCE
ASSOCIATES, INC.
By:____________________________
Name: Xxxxxx X. Xxxxx
Title: President
