MEASUREMENT SPECIALTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
EXHIBIT 10 -- MATERIAL CONTRACT:
CONSULTANT AND REPRESENTATIVE AGREEMENT
This Consultant and Representative Agreement (the "Agreement") is made and
entered into as of April 4, 1995, by and between Measurement Specialties, Inc.,
("MSI" or the "Company"), a New Jersey corporation with its principal offices
at 00 Xxxxxx Xxxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000 and Xxxxxx Xxxxx
("Consultant" and/or "Representative"), an individual whose principal residence
is at 000 Xxxxxxx Xxxxx, Xxxxxxxxx Xxxx, X.X. 00000.
WHEREAS: Consultant has served as the President and Chief Executive Officer of
the Company; and
WHEREAS: Consultant and the Company have entered into an Employment Agreement
dated as of July 1, 1988, as amended, under the terms of which the Company has
made certain compensation and other commitments to Consultant; and
WHEREAS: The Board of Directors of the Company at a meeting held on March 31,
1995, has decided to make a change in the management of the Company; and
WHEREAS: The Company and Consultant desire to set forth their respective future
obligations and commitments to each other with respect to such management
change.
NOW THEREFORE, in consideration of the mutual promises and covenants contained
herein, the adequacy and receipt of which are hereby acknowledged, the parties
hereto hereby agree as follows:
1. DEFINITIONS
1.1 "Consultant Date" shall mean February 1, 1996.
1.2 "Product" shall mean a Company product which the Company and Representative
shall agree to make subject to the terms of this Agreement. When the Company
and Representative agree upon the inclusion of product under this Agreement
they shall list it on Exhibit A hereto. The Company shall be under no
obligation to continue the manufacture or sale of any product during the terms
of this Agreement whether or not it becomes subject to the terms of this
Agreement.
1.3 "Net Sales" shall mean the amounts actually received by the Company from
its customer with respect to the sale of Products and shall exclude charges for
service or maintenance, handling, freight, sales taxes, C.O.D. charges, insur-
ance, import duties, trade discounts, and the like. The Company shall have the
right to set such cash discounts, to make such allowances and adjustments, and
to accept such returns from its customers as it deems advisable and such
amounts shall either not be included or deducted from Net Sales if previously
included. If payment for Products is rendered in currencies other than United
States dollars, the net sales price shall be converted into U.S. dollars based
upon the rate of exchange used by the Company in the preparation of its
financial statements for the period in which such invoice is issued.
1.4 "Territory" shall mean the World.
2. CONSULTANCY
The Company hereby agrees to engage the services of the Consultant and the
Consultant hereby accepts such engagement by the Company to perform consulting
services for the Company on the following terms and conditions:
2.1 DUTIES. During the period from the date of this Agreement through January
31, 1996, Consultant shall make himself available to consult on a full time
basis with the Company's officers and its technical, marketing and sales
personnel concerning the Company's new product development, strategic marketing
programs and its overall sales and marketing activities and to perform such
other duties as shall be mutually agreeable to Consultant and the Company. The
Company agrees that during the term that Consultant is providing consulting
services to the Company hereunder that Consultant may use a reasonable amount
of Company administrative services, office phones and other office support
services for Consultant's personal business activities (consistent with Section
6 hereof) provided that such activities do not interfere with his duties to the
Company. After January 31, 1996, Consultant shall have no further consulting
duties to the Company.
2.2 COMPENSATION. In consideration of Consultant making himself available to
render consulting services to the Company under this Agreement and in
consideration of the actual consulting services rendered by the Consultant to
the Company hereunder, the Company agrees to pay Consultant consulting fees as
follows:
(a) For the period from the date hereof to January 31, 1996, the Company shall
pay consultant a consulting fee of $156,677 to be paid in ten (10) equal
monthly installments on the last business day of each month in accordance with
the Company's regular payroll practices. During this period, the Company shall
provide Consultant with medical insurance in accordance with the Company plan
in effect from time to time, reimbursement for authorized expenses including
the expenses for an automobile comparable to the Consultant's currently leased
car, coverage under the Company's officers and directors insurance policy and
the transportable disability policy and 401(k) benefits currently in effect.
Also during this period, the Company will provide Consultant with three weeks
of paid vacation, holiday and sick leave and other employee benefits under its
employee benefit plans as from time to time in effect in the same manner as
afforded its full time employees.
(b) The Company will pay Consultant a bonus for FY 1995 in the amount
determined by the Compensation Committee of the Company's Board of Directors
and consistent with other management bonuses on or about July __, 1995 and a
pro-rata share of the bonus, if any, under the Company's management bonus plan
for FY 1996.
2.3 OTHER COMPENSATION. On January 31, 1996, the Company will pay Consultant
$194,833 in respect to the Company's severance obligations to Consultant under
his existing employment agreement. The payment of such sum is unrelated to the
quality of the consulting or representative services rendered by
Consultant/Representative hereunder, and no claim may be raised with respect to
the quality of such consulting or representative services as either an offset
or defense for the payment of such severance compensation.
2.4 DEATH OF CONSULTANT. This Agreement shall terminate without notice upon
Consultant's death. In such event Consultant's estate shall be entitled to
receive (i) all compensation to be paid to Consultant under the terms of
Sections 2.2 and 2.3 hereof but unpaid as of the date of death, (ii) payment of
all commissions if any due Consultant under the terms of Section 3.3 hereof
through the date of death and (iii) to any rights that shall have accrued to
the benefit of Consultant's estate upon the death of Consultant under any other
plan, employee benefit or other arrangement covering Employee pursuant to
Section 2.2(a) hereof.
2.5 DISABILITY. During the term of Consultant's consulting relationship with
the Company under the terms of this Agreement, the Company shall bear the
expenses of a transportable disability policy which shall provide disability
coverage to the Consultant in the event of his mental or physical disability
for an annual amount which shall be no less than 60% of Consultant's annual
consulting rate under section 2.2(a) hereof and which such disability policy
shall provide for the commencement of benefit payments thereunder after the
first 180 days of disability. In the event of Consultant's physical or mental
disability, the term of Consultant's consulting to the Company hereunder shall
remain in effect for a period of 180 days following the disability or February
1, 1996 if earlier. The disability of Consultant shall not affect or impair the
Company's obligation to make the payments set forth in Sections 2.2(b) and 2.3
to the Consultant.
2.6 OPTION TREATMENT. Consultant currently holds the following options to
purchase Common Stock (the "Options") issued under MSI's 1985 Stock Option
Plan, as amended to date (the "Plan"):
Incentive Stock Option Agreement dated November 5, 1992, relating to 10,000
shares of the Company's Common Stock at an exercise price of $1.65 per share;
and
Incentive Stock Option Agreement dated September 10, 1993, relating to 20,000
shares of the Company's Common Stock at an exercise price of $6.1875.
With respect to the Options, MSI and the Consultant have agreed that
notwithstanding the provisions of Section 5(e) of the Plan and the
corresponding provisions of the Options, the Board of Directors of the Company
acting pursuant to Sections 5(h) and 10 of the Plan, has agreed to waive the
provisions of such sections requiring exercise of the options during a
prescribed period following termination of Consultant's employment by the
Company and to provide that the Options shall remain exercisable by Consultant
following expiration or termination of this Agreement for the full remainder of
the specified term thereof subject only to the provisions of the Options
related to exercise of the Options upon the death of Employee (Section 5(e)(ii)
of the Plan).
Employee acknowledges that the amendment to the Options set forth above shall
result in the Options no longer qualifying as "incentive stock options" under
the Plan and therefore that the Options will not qualify for the favorable tax
treatment afforded incentive stock options under Section 422 of the Internal
Revenue Code. Accordingly, the Options shall hereafter be subject to taxation
as "non-statutory options" for tax purposes and will have the tax treatment
afforded such type of options including the applicable withholding requirement
upon exercise of the Options.
In the event that the shares subject to the Options are not then registered
with the Securities and Exchange Commission under an effective registration
statement on Form S-8 (or other applicable form) and further in the event that
such shares may in the opinion of counsel to the Company be subject to
restrictions on their resale under the federal securities laws (other than a
filing of a notice of sale under Rule 144 of the federal securities laws), then
the Company grants to Consultant "piggyback" registration rights with respect
to the shares issuable upon exercise of the Options with regard to
registrations of Company Common Stock under the Securities Act of 1933, as
amended, initiated by the Company or by holders of outstanding shares of Common
Stock of the Company pursuant to a contractual right requiring the Company to
do so. The Company will bear the expenses associated with such registration
provided, however, that Consultant shall bear the cost of the underwriting
discount (or other sales commission) with respect to the shares sold to him in
the offering and the costs of his counsel in connection with such registration.
The registration rights granted to Consultant hereunder shall expire as to any
shares issued upon exercise of the Options five (5) years following the date of
their issuance upon exercise of the Options.
3. APPOINTMENT OF REPRESENTATIVE
3.1 REPRESENTATION. Subject to the terms and conditions herein, the Company
hereby appoints Representative as it's non-exclusive representative for the
Products in the Territory, and Representative hereby accepts such appointment.
Representative's sole authority shall be to solicit orders for the Products in
the Territory in accordance with the terms of this Agreement.
3.2 LIMITATION ON AUTHORITY. Representative shall not have the authority to
make any commitments whatsoever on behalf of the Company. Representative shall
quote to customers only those authorized prices, delivery schedules, warranty
terms and other terms and conditions conveyed to Representative by the Company.
The Company may alter at will the prices, delivery schedules, warranty terms
and other terms and conditions quoted by it, provided only that it gives prior
written notice to Representative of any changes. All orders obtained by
Representative shall be subject to acceptance by the Company at its principal
office currently located at the address listed for it at the beginning of this
Agreement, and all quotations by Representative shall contain a statement to
that effect. The Company shall have the sole right of credit approval or credit
refusal for customers in all cases. Representative shall have no authority to
make any acceptance or delivery commitments to customers. The Company
specifically reserves the right to reject any order or any part thereof for any
reason.
3.3 COMMISSION. Representative's sole compensation under the terms of this
Agreement for acting as the Company's representative pursuant to this Section 3
is payment of a commission based upon the annual cumulative aggregate Net Sales
of Products for each year this Agreement remains in force computed in
accordance with the schedule set forth below:
Aggregate Net Sales Commission
------------------- ----------
The first $0 - $200,000 10 %
the next $200,00 to $500,000 7.5
the next $500,000 to $1,000,000 5
the next $1,000,000 and above 4
The commission shall apply to the Net Sales received by the Company from all
orders for Products from the Territory that have been accepted by the Company
and for which shipment has occurred. The parties acknowledge that the above
commission structure represents the Company's standard and usual commission
arrangement, but that special cost or competitive circumstances relating to a
proposed Product may require the negotiation by the Company and Representative
of different commission rates at the time a Product becomes subject to this
agreement. In addition, it is the intention of the parties that the Company
shall have no obligations to any sales representative or other sales agent with
respect to products that become subject to this agreement. However, in the
event that the Company shall have any obligation to pay a sales commission to a
third party with respect to sales of any Product, then the Company and
Representative shall mutually agree upon a split of commissions to
Representative and the Company's sales representative for such Product at the
time that the Product becomes subject to this Agreement such that the Company
will not be obligated to pay multiple commissions with respect to such Product.
3.4 PAYMENT OF COMMISSION. Commissions earned by Representative hereunder
shall be due and payable quarterly within 30 days from the end of each calendar
quarter with respect to Net Sales of Products received by the Company within
such quarter. Payment of the commission due hereunder shall be accompanied by a
statement setting forth the Net Sales for such month and the calculation of the
commissions due and payable to Representative under the terms of this
Agreement.
3.5 INSPECTION OF RECORDS. Representative shall have the right, at its own
expense and not more than once in any twelve (12) month period, to authorize
the Company's independent auditors to inspect at reasonable times the Company's
relevant accounting records to verify the accuracy of commissions paid by the
Company to Representative under the terms of this Agreement.
4. INDEPENDENT CONTRACTORS
The relationship of the Company and Representative established by this
Agreement is that of independent contractors, and nothing contained in this
Agreement shall be construed to (i) give either party the power to direct and
control the day-to-day activities of the other, (ii) constitute the parties as
partners, joint venturers, co-owners or otherwise as participants in a joint
undertaking, or (iii) allow either party to create or assume any obligation on
behalf of the other for any purpose whatsoever. All financial and other
obligations associated with Representative's activities as the Company's
representative under Section 3 hereof are the sole responsibility of Repre-
sentative.
5. TERM AND TERMINATION
5.1 TERM. The consulting portion of this Agreement (generally Section 2
hereof) shall commence on April 4, 1995, and shall terminate on January 31,
1996. The sales representative portion of this Agreement (generally Section 3
hereof) shall commence on February 1, 1996 and terminate on April 4, 1997. This
Agreement may be terminated at any time prior to such dates under the
provisions of Section 5.2. On April 4, 1997, this Agreement shall terminate
automatically without notice unless prior to that time the term of the
Agreement is extended by the mutual written consent of the parties.
5.2 TERMINATION FOR CAUSE. If either party defaults in the performance of any
material provision of this Agreement, then the non-defaulting party may give
written notice to the defaulting party that if the default is not cured within
sixty (60) days the Agreement will be terminated. If the non-defaulting party
gives such notice and the default is not cured during the sixty-day period,
then the Agreement shall automatically terminate at the end of that period.
5.3 POST TERMINATION COMMISSIONS. In the event of the expiration of this
Agreement in accordance with the provisions of Section 5.1 hereof, then in
addition to commissions due him under Section 3 hereof, Representative shall
also be entitled to commissions on (i) the sale of Products for which the
Company has received a purchase order prior to the expiration date of this
Agreement notwithstanding that the shipment of such products shall occur after
the expiration date and (ii) all Products shipped by the Company within six (6)
months following the expiration date. For purposes of determining the amount of
commissions payable with respect to such post expiration sales, such sales
shall be deemed to have been made in the year during which the expiration
occurred. Commissions payable to Representative under this subsection 5.3 shall
be payable following shipment of the Products in accordance with the provisions
of subsection 3.4 hereof.
5.4 LIMITATION ON LIABILITY. In the event of termination by either party in
accordance with any of the provisions of this Agreement, neither party shall be
liable to the other, because of such termination, for compensation,
reimbursement or damages on account of the loss of prospective profits or
anticipated sales or on account of expenditures, investments, leases or
commitments in connection with the business or goodwill of the Company or
Representative.
6. COMPETITION/OTHER ACTIVITIES
During the term of this Agreement, except on behalf of the Company or its
subsidiaries and affiliates, Consultant/Representative will not directly or
indirectly, whether as an officer, director, stockholder, partner, proprietor,
associate, representative, employee, consultant or otherwise, become or be
interested in any other person, corporation, firm, partnership or other entity
whatsoever which produces, markets and/or sells bathroom, kitchen, postal or
fish scales; tire pressure gauges; shock sensing devices for packaging
applications or ultrasonic distance measurement devices for consumer use, of
any type and in any location; provided, however, that anything above to the
contrary notwithstanding, Consultant/Distributor may own, as a passive
investor, securities of any corporation which engages in such businesses which
is publicly traded, so long as his holdings in any one such corporation shall
not in the aggregate constitute more than 5% of the voting stock of such
corporation.
7. CONFIDENTIAL INFORMATION AND INVENTIONS
7.1 PROTECTION OF CONFIDENTIAL INFORMATION. Consultant/Representative agrees at
all times during the term of this Agreement and thereafter to hold in strictest
confidence, and not to use, except for the benefit of the Company, or to
disclose to any person, firm or corporation without written authorization of
the Board of Directors of the Company, any trade secrets, confidential
knowledge, data or other proprietary information relating to products,
processes, know-how, design, formulas, developmental or experimental work,
computer programs, data bases, other original works of authorship, customer
lists, business plans, financial information or other subject matter pertaining
to any business of the Company or any of its clients, consultants or licensees
(the "Confidential Information"). Confidential Information shall be either be
(i) identified as "proprietary" or "confidential," (ii) actually known to the
Consultant as being proprietary and/or confidential in nature or (iii)
information with regard to which Consultant has actual knowledge that the
public disclosure of which would cause the Company material injury to its
business or properties.
7.2 PUBLIC DOMAIN EXCEPTION. "Confidential Information" does not include any
such information, technical data, or know-how which:
(i)is already or otherwise enters the public domain, not as a result of any
action or inaction by Consultant/Representative in violation of this Agreement;
(ii)is in the receiving party's possession prior to disclosure by
Consultant/Representative;
(iii) is approved for release by the Company or the Company makes such
information available to third parties without an obligation of
confidentiality;
(iv)relates to Consultant's general business knowledge acquired as a result of
his employment by the Company.
7.3 INVENTIONS. Consultant agrees that he will promptly make full written dis-
closure to the Company, will hold in trust for the sole right and benefit of
the Company, and will assign to the Company all of his right, title, and
interest in and to any and all inventions, original works of authorship,
developments, improvements or trade secrets which Consultant may solely or
jointly conceive or develop or reduce to practice, or cause to be conceived or
developed or reduced to practice, which relate to the Company's business and
are developed by Consultant during the course of his rendering of consulting
services to the Company hereunder or are developed by Consultant during the
term of Consultant's consultancy hereunder through the use of any property,
equipment or other assets of the Company. Consultant acknowledge that all
original works of authorship which are made by him (solely or jointly with
others) within the scope of his consulting services and which are protectable
by copyright are "works made for hire," as that term is defined in the United
States Copyright Act (17 USCA, Section 101).
7.4 INTELLECTUAL PROPERTY PROTECTION. Consultant agrees that his obligation to
assist the Company to obtain United States or foreign letters patent and
copyright registrations covering inventions and original works of authorship
assigned hereunder to the Company shall continue beyond the termination of this
Agreement, but the Company shall compensate Consultant at a reasonable rate for
time actually spent by him at the Company's request on such assistance. If the
Company is unable because of Consultant's mental or physical incapacity or for
any other reason to secure his signature to apply for or to pursue any
application for and United States or foreign letters patent or copyright
registrations covering inventions or original works of authorship assigned to
the Company as above, then Consultant hereby irrevocably designates and
appoints the Company and its duly authorized officers and agents as his agent
and attorney in fact, to act for and in the Consultant's behalf and stead to
execute and file any such applications and to do all other lawfully permitted
acts to further the prosecution and issuance of letters patent or copyright
registrations thereon with the same legal force and effect as if executed by
Consultant. Consultant hereby waives and quitclaims to the Company any and all
claims, of any nature whatsoever, which Consultant now or may hereafter have
for infringement of any patents or copyright resulting from any such
application for letters patent or copyright registrations assigned hereunder to
the Company.
8. ASSIGNMENT
This Agreement and the rights and obligations of the parties hereto shall bind
and inure to the benefit of any successor or successors of the Company by
reorganization, merger or consolidation and any assignee of all or
substantially all of its business and properties provided that in the case of
an assignment that the assignee assumes all of the Company's obligations
hereunder, but, except as to any such successor or assignee of the Company,
neither this Agreement nor any rights or benefits hereunder may be assigned by
the Company or by Consultant/Representative.
9. NOTICES
Any notice which the Company is required or may desire to give to
Consultant/Representative shall be given by personal delivery or registered or
certified mail, return receipt requested, addressed to him at his address set
forth above, or at such other place as Consultant/Representative may from time
to time designate in writing. Any notice which Consultant/Representative is
required or may desire to give to the Company hereunder shall be given by
personal delivery or by registered or certified mail, return receipt requested,
addressed to the Company at its principal office, or at such other office as
the Company may from time to time designate in writing. The date of personal
delivery or the date of mailing of any such notice shall be deemed to be the
date of delivery thereof.
10. WAIVERS
If either party should waive any breach of any provision of this Agreement, he
or it shall not thereby be deemed to have waived any preceding or succeeding
breach of the same or any other provision of this Agreement.
11. COMPLETE AGREEMENT; AMENDMENTS
This Agreement foregoing constitutes the entire agreement of the parties with
respect to the subject matter hereof and may not be amended, supplemented,
canceled or discharged except by written instrument executed by both parties
hereto. This Agreement specifically supersedes that certain Employment
Agreement dated as of July 1, 1988, between Consultant and the Company and all
amendments thereto, all of which shall be of no further force or effect after
the date hereof.
12. RELEASE AND WAIVER
12.1 RELEASE. Effective upon execution of this Agreement, MSI and Consultant,
on behalf of themselves, their predecessors and successors, spouses and
descendants, agents and assigns, officers, partners, directors, administrators,
assigns, affiliates and successors forever release and discharge the other with
respect to any and all claims, actions and causes of action of any kind or
nature whatsoever, in law, equity or otherwise, whether fixed or contingent,
whether known or unknown, suspected or unsuspected, and whether or not
concealed or hidden, which now exist or heretofore have existed or may
hereafter exist as against one another. Nothing contained in this Section 12
shall be construed to abrogate or otherwise affect the parties' surviving
obligations under this Agreement and the Options (as modified above). Each
party hereto expressly waives any right to assert that any claim or demand was
excluded from this Agreement through ignorance, oversight or error.
13. HEADINGS
The headings of the sections hereof are inserted for convenience only and shall
not be deemed to constitute a part hereof nor to affect the meaning thereof.
14. GOVERNING LAW
This Agreement and the obligations of the parties hereunder shall be governed
by the law of the State of New Jersey excepting the provisions of New Jersey
law regarding the conflict of laws.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth above.
MEASUREMENT SPECIALTIES, INC.
By: s/Xxxxxx X. Xxxxxx Xx.
Title: Chief Executive Officer
s/Xxxxxx Xxxxx
Xxxxxx Xxxxx
EXHIBIT A
Description of Additional Products
The Company's "Shockwriter" product together with all components, services,
improvements or enhancements thereto; provided, however, that with respect to
such Product the commissions to be paid to Consultant/Representative under
Section 3.1 hereof shall be as follows:
Aggregate Net Sales Commission
------------------- ----------
The first $0 - $200,000 6%
the next $200,00 to $500,000 5
the next $500,000 to $1,000,000 4
the next $1,000,000 and above 3
Other products to be agreed upon after the Consultant Date.
