EXHIBIT 99(c)(4)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement"), dated as of October 20, 1999,
by and between FERROFLUIDICS CORPORATION, a Massachusetts corporation (the
"Company"), whose principal place of business is 00 Xxxxx Xxxxxx, Xxxxxx, Xxx
Xxxxxxxxx, 00000, FERROTEC CORPORATION, a corporation organized under the laws
of Japan ("Ferrotec"), whose principal place of business is Sumitomo Xxxx. #0,
0-00-0 Xxxxxxx Xxxx, Xxxxx-Xx, Xxxxx 000-0000, Japan, and XXXXXXX X. XXXX, an
individual (the "Executive"), whose address is 00 Xxxxxxxx Xxxxx, Xxxxxx, Xxx
Xxxxxxxxx, 00000.
W I T N E S S E T H:
WHEREAS, the Company, Ferrotec Corporation, a Japanese corporation, and
Ferrotec Acquisition, Inc., a Massachusetts corporation, are parties to that
certain Agreement and Plan of Merger, dated as of the same date herewith (the
"Merger Agreement);
WHEREAS, in connection with the Merger Agreement, an offer (the
"Offer") will be made to acquire all of the issued and outstanding common stock,
par value $.004 per share, of the Company (the "Common Stock"), in accordance
with the terms and subject to the conditions set forth in the Merger Agreement;
WHEREAS, pursuant to the terms of the Merger Agreement, Executive is to
be employed by the Company subsequent to the consummation of the transactions
contemplated pursuant to and in accordance with that certain Merger Agreement;
WHEREAS, the Company desires to employ the Executive and to ensure the
continued availability to the Company of the Executive's services, and the
Executive is willing to accept such employment and render such services, all
upon and subject to the terms and conditions contained in this Agreement; and
WHEREAS, the parties intend for this Agreement to supersede and replace
all prior agreements between Executive and the Company, including, but not
limited to, the Employment Agreement dated September 23, 1996 (the "Employment
Agreement").
NOW, THEREFORE, in consideration of the mutual premises set forth
herein, and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereto do hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive in the capacity
described in Section 3 of this Agreement, and the Executive hereby accepts such
employment, upon the terms and conditions hereinafter set forth.
2. TERM. The Term of employment hereunder will commence on the
Acceptance Date, as hereinafter defined, and will end on March 31, 2000
("Term"), unless otherwise sooner terminated hereunder, provided that the
Executive and the Company may upon the expiration of the then current Term
hereof, renew this Agreement for an additional term as mutually acceptable to
the parties hereto ("Renewal Term"). For purposes of this Agreement, "Acceptance
Date" has the same meaning as set forth in the Merger Agreement. The parties
acknowledge and agree that Employee's employment with the Company pursuant to
the Employment Agreement and any other agreement or understanding pursuant to
which the Employee is providing services to or on behalf of the Company and/or
its subsidiaries shall be terminated effective as of the Acceptance Date; and
that the Employment Agreement and any of such other agreements or understandings
pursuant to which the Employee is providing services to or on behalf of the
Company and/or its subsidiaries shall be deemed to have been terminated as of
the Acceptance Date and shall be of no further force or effect thereafter,
except to the extent expressly provided hereunder.
3. DUTIES DURING EMPLOYMENT PERIOD.
a. During the Term (including any Renewal Term), the Executive shall
devote substantially all of the Executive's business time to the business and
affairs of the Company. The Executive shall have such duties and powers that are
commensurate and consistent with those of an executive officer, subject to the
authority and direction of the Company's Board of Directors.
b. Executive shall devote substantially all of his business time,
his best efforts, business judgment, skill and knowledge to the advancement of
the business and interests of the Company and its affiliates, and to the
discharge of his duties and responsibilities hereunder. In accordance with the
foregoing, Executive shall not engage in any other business activity, except as
may be approved by the Board of Directors; provided, however, that nothing
herein shall be construed as preventing Executive from investing his assets in a
manner not otherwise prohibited by this Agreement, and in such form or manner as
shall not require any material services on his part in the operations or affairs
of the companies or other entities in which such investments are made.
c. Except for required travel on the Company's business, Executive
shall not be required to work on a regular basis at any location outside of
Hillsborough County in the State of New Hampshire.
4. COMPENSATION AND BENEFITS.
a. Salary. The Executive shall be paid a base salary (the "Base
Salary"), payable not less than twice per month, at an annual rate of no less
than One Hundred Forty Five Thousand Dollars ($145,000).
b. Benefit Plans. During the Term hereof, Executive shall be
entitled to participate in and enjoy the benefit of the retirement,
supplementary retirement, deferred compensation, health, medical, dental,
cafeteria, reimbursement, death (including life insurance), accident, travel
insurance, long-term disability, short-term disability, sick leave, other leaves
of
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absence, holidays and other similar welfare, fringe-benefit or
employment-related plans, programs, arrangements, policies or perquisites
available to the Company's management from time to time. Participation in the
foregoing shall be subject to the terms of the applicable plan documents and the
discretion of the Board of Directors or any administrative or other committee
provided for in or contemplated by such plan. The Company may alter, modify, add
to or delete its employee benefit plans as they apply to the Company's
management at such times and in such manner as the Company determines to be
appropriate, without recourse by Executive.
c. Vacation. During the Term of employment hereunder, the Executive
will be entitled to four (4) weeks of vacation time to be utilized or paid for
each year to be taken at such times and intervals as shall be determined by
Executive; provided, however, that the Executive will evidence reasonable
judgment with regard to appropriate vacation scheduling subject to the
reasonable business needs of the Company. The number of vacation days during the
Term (or any Renewal Term) will accrue on a daily basis at the rate of four
weeks per year of employment. Accrued but unused vacation time at the end of the
Term of this Agreement will be paid to Executive upon the expiration of such
Term. Executive shall be given credit under all of the Company's employee
benefit plans and policies, including without limitation, for accrued vacation
time, for all services prior to the Acceptance Date; and provided further that
the Company shall upon the termination of Executive's employment hereunder pay
Executive for all accrued vacation time as of the termination date in accordance
with Company policy.
d. Business Expense Reimbursement. The Executive shall be entitled
to be paid for, or receive proper reimbursement for, all reasonable,
out-of-pocket expenses incurred directly by the Executive (in accordance with
the policies and procedures established by the Company for its senior executive
officers), including business class accommodations for international air travel,
and first class rates for any other form of travel, in performing services
hereunder, provided the Executive properly accounts therefor. Employee shall
submit to the Company itemized monthly statements, in a form reasonably
satisfactory to the Company, of such expenses incurred in the previous month.
x. Xxxxxxxxx Payments. Executive shall be entitled to receive One
Hundred Forty Nine Thousand Dollars ($149,000). This amount will be payable in
the following installments:
(1) Forty Five Thousand Dollars ($45,000) on the first payroll
date following January 1, 2000; and
(2) One Hundred Four Thousand Dollars ($104,000), inclusive of
earned interest therein, at a rate of 4% on the first payroll date
following January 1, 2001.
f. Options. Executive shall be entitled to receive for each option
to acquire Common Stock of the Company that is outstanding immediately prior to
the Acceptance Date, whether or not then vested or exercisable, an amount equal
to the product of (1) the number of shares of common stock subject to such
options and (2) the excess, if any, of the Cash Consideration over
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the exercise price per share of such option (the "Option Payment"). For purposes
of this Agreement, "Cash Consideration" shall have the same meaning as set forth
in the Merger Agreement. This amount will be payable in the following
installments, notwithstanding anything in the Merger Agreement to the contrary
with respect to the timing of any such payments:
(1) Fifty Thousand Dollars ($50,000) on January 2,
2000; and
(2) On January 2, 2001, an amount equal to Forty Eight Thousand
Seven Hundred Fifty Dollars ($48,750) inclusive of earned interest at
the rate of 4% (the "Second Installment").
5. CONSEQUENCES OF TERMINATION OF EMPLOYMENT.
a. Death or Disability. In the event Executive dies or becomes
disabled during the Term this Agreement, his employment hereunder shall
automatically terminate. In such case, the Company shall pay to Executive or his
beneficiary, as the case may be, any earned but unpaid salary as of the date of
his death or disability. For the purpose of this Agreement, "disability" shall
refer to a situation in which Executive is totally disabled from performing his
duties for the Company during a period of thirteen (13) consecutive weeks. If
any question shall arise as to whether during any period Executive has suffered
disability, Executive may, and at the request of the Company will, submit to the
Company a certification in reasonable detail by a physician selected by
Executive or his guardian to whom the Company has no reasonable objection as to
whether Executive was so disabled and such certification shall for the purposes
of this Agreement be conclusive of the issue. If such question shall arise and
Executive shall fail to submit such certification, the Company's determination
of such issue shall be binding on Executive.
b. By the Company for Cause. The Company may terminate Executive's
employment hereunder for cause at any time upon notice to Executive setting
forth in reasonable detail the nature of such cause. The following, as
determined by the Board of Directors in its reasonable judgment, shall
constitute "cause" for termination:
(1) Executive's falsification of the accounts of the Company,
embezzlement of funds of the Company or other material dishonesty with
respect to the Company or any of its affiliates; or
(2) Conviction of, or plea of nolo contendere to, a felony or
other crime involving moral turpitude (it being understood that
violation of a motor vehicle code does not constitute such a crime); or
(3) Conduct engaged in or action taken or omitted to be taken by
Executive which is in material breach of this Agreement; or
(4) Material failure to perform Executive's duties and
responsibilities hereunder, which failure continues for more than
thirty (30) days after written notice given
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to Executive pursuant to a vote of the Board of Directors, such vote to
set forth in reasonable detail the nature of such failure; or
(5) Gross or willful misconduct of Executive with
respect to the Company or any subsidiary or affiliate thereof.
Upon the giving of notice of termination of Executive's employment under this
Section 5, the Company shall have no further obligation or liability to
Executive, other than (i) payments of amounts set forth in Sections 4c, 4d, 4e
and 4f; (ii) the payment of salary earned and unpaid at the date of termination;
and (iii) the contribution by the Company to the cost of Executive's
participation (subject to any required employee contribution by Executive under
the terms of the applicable plans) in the Company's group medical and dental
insurance plans as the same are in effect from time to time for so long as
Executive is entitled to continue such participation under applicable law and
plan terms. Executive hereby agrees to release the Company, Ferrotec and Merger
Sub and their respective officers, directors, shareholders and affiliates from
any and all claims and/or liabilities arising under the Employment Agreement or
arising from the Executive's employment or retention by the Company and/or its
subsidiaries prior to the Acceptance Date; provided, however, that nothing
herein shall in any way limit Executive's indemnification rights under Section
6.6 of the Merger Agreement or under the Articles of Organization or Bylaws of
the Company.
6. COVENANT OF NON DISCLOSURE AND NON-COMPETITION.
a. The Executive acknowledges that the success of the business of
the Company depends upon both the absence of competition from the Executive and
the continued preservation of the confidentiality of certain information
possessed by the Executive, that an absence of such competition and the
preservation of the confidentiality of such information is an essential term of
this Agreement, and that the Company would be unwilling to enter into this
Agreement in the absence of this Section. Accordingly, the Executive hereby
agrees with the Company as follows:
(1) The Executive will not, at any time, directly or indirectly,
without the prior written consent of the Company, disclose or use, in
any way harmful to the business, operations, assets, prospects or
condition, financial or otherwise, of the Company, or otherwise
contrary to the interests of the Company, any proprietary or
Confidential Information (as defined below) involving or relating to
the Company past, present or future, actual or prospective; provided,
however, that such information shall not include any information known
generally to the public (other than as a result of disclosure in
violation hereof by the Executive); and provided, further, that the
provisions of this Section shall not prohibit any disclosure required
by law in connection with any judicial or administrative proceeding or
inquiry. "Confidential Information" includes, but is not limited to,
information relating to the Company which is not generally known to
those outside of the Company relating to (i) the business, conduct or
operations of the Company, (ii) any materials, apparatus, processes,
methods, ways of business, programs, formulae, technology, research,
development, or intellectual property, (iii) any customer lists, or
customer requirements and preferences, (iv) any supplier lists or
supplier requirements and preferences, (v) financial
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information or business plans, or (vi) any other information about or
generated by the Company which could, if disclosed, be useful to any
competitors of the Company.
(2) During the term hereof and for a period of two
(2) years thereafter (or, if Executive's employment hereunder is
terminated, two (2) years from the date of such termination),
irrespective of the reasons for any such termination (the
"Non-Competition Term"), the Executive shall not, directly or
indirectly, (i) acquire, own, manage, operate, control or participate
directly or indirectly in any manner in the acquisition, ownership,
management, operation or control of, or be connected as an officer,
employee, partner, director, principal, consultant, agent or otherwise
with, or have any financial interest in (other than solely as an owner
for investment purposes of not more than 5% of the outstanding capital
stock of any company engaged in the same business as that of the
Company), or aid or assist anyone else in the conduct of, any business,
venture or activity whose activities, products or services are
competitive with the current activities, products or services of the
Company or Ferrotec or the contemplated activities, products or
services of the Company as set forth in the Company's Annual Operating
Plan for Fiscal 2000, (ii) recruit or otherwise seek to induce any
employee or consultant of the Company to terminate his or her
employment or consulting relationship with the Company, (iii) solicit
or encourage any person who is a customer or supplier of the Company to
terminate its relationship with the Company, or (iv) encourage any of
the Company employees or consultants to become engaged or retained by
or on behalf of any person whose activities, products or services are
competitive with the current or contemplated, as set forth in the
Company's current business plan, activities, products or services of
the Company or Ferrotec or the contemplated activities, products or
services of the Company as set forth in the Company's Annual Operating
Plan for Fiscal 2000.
(3) The Executive acknowledges and agrees that,
because the legal remedies of the Company may be inadequate in the
event of a breach of, or other failure to perform, any of the covenants
and obligations set forth in this Section, the Company may, in addition
to obtaining any other remedy or relief available to it (including
without limitation, consequential and other damages at law), enforce
this Section by injunction and other equitable remedies.
(4) The parties agree that the provisions set forth
in this Section, including without limitation as to duration and
geographic scope, are reasonable to protect the legitimate interests of
the Company. The provisions of this Section are severable, and in the
event that any provision hereof should, for any reason, be held invalid
or unenforceable in any respect, it shall not invalidate, render
unenforceable or otherwise affect any other provision hereof, and such
invalid or unenforceable provision shall be construed by limiting it so
as to be valid and enforceable to the maximum extent compatible with,
and possible under, applicable law.
7. WITHHOLDING. All payments made by the Company under this Agreement
shall be reduced by any tax or other amounts required to be withheld by the
Company under applicable law.
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8. EFFECT ON PRIOR AGREEMENTS. This Agreement supersedes any and all
prior or written agreements in their entirety between the parties, which shall
be void and of no further force and effect after the Effective Time of this
Agreement.
9. NOTICES. Any notice required or permitted to be given under the
terms of this Agreement shall be sufficient if in writing and if sent postage
prepaid by registered or certified mail, return receipt requested, by overnight
delivery, by courier, or by confirmed telecopy, in the case of the Executive to
the Executive's last place of business or residence as shown on the records of
the Company, or in the case of the Company to its principal office as set forth
in the introductory paragraph, or such other place as it may designate.
10. WAIVER. Unless agreed in writing, the failure of either party, at
any time, to require performance by the other of any provisions hereunder shall
not affect its right thereafter to enforce the same, nor shall a waiver by
either party of any breach of any provision hereof be taken or held to be a
waiver of any other preceding or succeeding breach of any term or provision of
this Agreement. No extension of time for the performance of any obligation or
act shall be deemed to be an extension of time for the performance of any other
obligation or act hereunder.
11. COMPLETE AGREEMENT. This Agreement contains the entire agreement
between the parties hereto with respect to the contents hereof and supersedes
all prior agreements and understandings between the parties with respect to such
matters, whether written or oral. Neither this Agreement nor any term or
provision hereof may be changed, waived, discharged or amended in any manner
other than by an instrument in writing, signed by the party against which the
enforcement of the change, waiver, discharge or amendment is sought.
12. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one agreement.
13. BINDING-EFFECT/ASSIGNMENT. Neither the Company nor Executive may
make any assignment of this Agreement or any interest herein, by operation of
law or otherwise, without the prior written consent of the other; provided,
however, that the Company may assign its rights and obligations under this
Agreement without the consent of Executive in the event that the Company shall
hereafter affect a reorganization, consolidate with, or merge into, any other
person or entity or transfer all of its properties or assets to any other person
or entity. This Agreement shall inure to the benefit of and be binding upon the
Company and Executive, their respective successors, executors, administrators,
heirs and permitted assigns.
14. GOVERNING LAW. This is a Massachusetts contract and shall be
construed and enforced under and be governed in all respects by the laws of the
Commonwealth of Massachusetts, without regard to the conflict of laws principles
thereof and the parties shall submit to the exclusive jurisdiction of the courts
of the Commonwealth of Massachusetts for all matters relating to the subject
matter of this Agreement and hereby waive any claim of non-convenient forum or
lack of personal jurisdiction or improper venue.
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15. HEADINGS. The headings of the sections are for convenience only and
shall not control or affect the meaning or construction or limit the scope or
intent of any of the provisions of this Agreement.
16. SURVIVAL. Any termination of this Agreement shall not affect the
ongoing provisions of this Agreement which shall survive such termination in
accordance with their terms.
17. SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein. If any court
determines that any provision of Sections 6 or 7 hereof is unenforceable because
of the duration or scope of such provision, such court shall have the power to
reduce the scope or duration of such provision, as the case may be, and, in its
reduced form, such provision shall then be enforceable.
18. CONSTRUCTION. This Agreement shall be construed within the fair
meaning of each of its terms and not against the party drafting the document.
19. EFFECTIVENESS. This Agreement is conditioned upon and shall become
effective only upon the occurrence of the Acceptance Date, and shall not become
effective in the event that the Offer is terminated or abandoned or the Merger
Agreement is terminated in accordance with its terms.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written in ____________, Massachusetts.
FERROFLUIDICS CORPORATION
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
FERROTEC CORPORATION
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
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EXECUTIVE
--------------------------------
Xxxxxxx X. Xxxx
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Ferrofluidics Corporation
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
October 20, 1999
Ferrotec Corporation
0-00-0
Xxxxxxx-Xxxx
Xxxxx-xx
Xxxxx, Xxxxx 000-0000
Attn: Xxxxx Xxxxxxxx
Ladies and Gentlemen:
In connection with and as a condition to entering into the transactions
contemplated by the Agreement and Plan of Merger (the "Merger Agreement") by and
between Ferrofluidics Corporation (the "Company"), a Massachusetts corporation,
Ferrotec Corporation ("Ferrotec"), a corporation organized under the laws of
Japan, and Ferrotec Acquisition, Inc., a Massachusetts corporation and a
wholly-owned subsidiary of Ferrotec ("Merger Sub"), the Company, Ferrotec,
Merger Sub and the undersigned individual, Xxxx X. Xxxxx, Xx. ("Xxxxx"), hereby
agree that, notwithstanding any other arrangement between any of the foregoing
parties, from and after the Acceptance Date (as defined in the Merger
Agreement), Xxxxx shall perform such advisory and related services for the
Company as may be reasonably requested from time to time by the Company (the
"Services"). Xxxxx shall perform the Services under the direction and
restriction of the Company. The Company shall pay to Xxxxx an advisory fee of
$50,000 per annum payable monthly in arrears commencing on the first day of the
next month after the date first set forth above. The parties further agree that
the Company or Xxxxx may terminate Xxxxx'x engagement as an advisor hereunder at
any time upon thirty (30) days' written notice to the other parties hereto,
whereupon upon such termination all payments due hereunder shall cease.
[signature page to follow]
Please acknowledge your agreement to the foregoing by countersigning
this agreement in the place provided below and returning it to the undersigned.
Very truly yours,
---------------------------
Xxxx X. Xxxxx, Xx.
Accepted and Agreed to,
this 20th day of October, 1999
FERROTEC CORPORATION
By:
-----------------------------
Name:
Title:
FERROTEC ACQUISITION, INC.
By:
-----------------------------
Name:
Title:
FERROFLUIDICS CORPORATION
By:
-----------------------------
Name: Xxxxxxx X. Xxxx
Title: Chief Financial Officer
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