Exhibit 10(I)
2001 RESTATEMENT OF EMPLOYMENT,
NON-DISCLOSURE AND NON-COMPETE AGREEMENT
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This restatement (which may be referred to as the "2001 Amended Agreement")
is a restatement and an amendment to the Employment, Non-Disclosure and Non-
Compete Agreement dated June 20, 1994 (hereinafter referred to as the "1994
Agreement"). This 2001 Amended Agreement is made as of this 13th day of
September, 2001 by and between International Electronics, Inc. a duly organized
and existing Massachusetts corporation with a usual place of business at 000
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (hereinafter referred to as the
"Company") and Xxxx Xxxxxxxxx of 00 Xxxxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx
00000 (hereinafter referred to as the "Employee"). This 2001 Amended Agreement
is meant to incorporate the 1994 Agreement as it has been amended from time to
time since 1994, including an amendment in December 1994, an amendment in May
1998, an amendment in July 1999 and amendments made earlier in 2001. The
purpose of this 2001 Amended Agreement is to consolidate and restate the various
changes and amendments that have been made to the 1994 Agreement and to
eliminate certain provisions which have expired or which no longer apply.
1. Employment.
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The Company hereby employs the Employee, and the Employee hereby accepts
employment, on the terms and conditions hereinafter set forth. Prior to the
1994 Agreement, Employee was employed by the Company pursuant to an Employment,
Non-Disclosure and Non-Competition Agreement dated August 1, 1992 (the "1992
Agreement"). During the term of this 2001 Amended Agreement, the Company shall
not change the status of the Employee. A change of status ("Change of Status")
shall mean the occurrence of any of the following events without the express
written approval of the Employee: (i) any diminution or change in any manner
adverse to the Employee of (x) his positions, duties, responsibilities, or
status with the Company; (y) his reporting responsibilities, titles, offices or
the manner in which he is held out to the public or the industry; or (z) his
salary, bonus or other benefits, or (ii) the Company requiring him to be based
at any office or location more than thirty miles from the Company's current main
office in Massachusetts.
2. Freedom to Contract.
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The Employee represents that he is free to enter into this 2001 Amended
Agreement, that he has not made and will not make any agreements in conflict
with this 2001 Amended Agreement, and will not disclose to the Company, or use
for the Company's benefit, any trade secrets or confidential information which
are the property of any other party, now or hereafter in the Employee's
possession. The Employee and the Company agree that upon this 2001 Amended
Agreement becoming effective, all prior agreements, including without limitation
the 1992 Agreement relating to employment, non-disclosure and non-competition
between the Employee and the Company shall be terminated and have no further
force or effect.
3. Title and Extent of Services.
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The Employee agrees to devote his best efforts and all of his working time
to diligently promote the business and affairs of the Company and to perform
such other duties and carry out
such assignments, consistent with his ability and experience, as may be assigned
to him from time to time by the Board of Directors of the Company. The Employee
will be President, Chief Executive Officer and Treasurer of the Company.
4. Location.
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The Employee shall perform service under this 2001 Amended Agreement at the
Company's principal offices. The Employee shall also be available to make
business trips both within and outside of the United States for purposes of
consulting with other members of the Company's management as well as with
present and proposed customers, suppliers and licensors of the Company.
5. Compensation and Other Benefits.
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For calendar year 2001, the Company shall pay the Employee a base salary at
the annual rate of One Hundred Sixty Thousand and Sixteen ($160,016) Dollars,
payable in accordance with the Company's usual payroll practices. Employee's
salary may be increased based on performance review and annual adjustment by the
compensation committee, as approved by the Board of Directors of the Company.
The Employee shall be entitled to participate in any stock option, bonus or
profit sharing plans of the Company, if any, adopted by the Company for the
benefit of its officers or employees. Reasonable business related travel and
entertainment allowances and procedures relating thereto shall be established
for the Employee by the Board of Directors of the Company. During the term of
this 2001 Amended Agreement, the Company will nominate the Employee to be a
director of the Company each year that his term of office as director expires.
Also, during the term of this 2001 Amended Agreement:
a. Company shall provide the Employee with short term disability insurance
or direct payments by the Company of $8,000 per month for six months and long
term disability insurance of $8,000 per month with a six month waiting period.
b. Company shall provide the Employee with and pay for life insurance in
an amount of not less than $50,000.
c. Company shall provide the Employee with and pay for an automobile for
business use and will pay all costs associated therewith for maintenance,
insurance, repairs, taxes and the like.
d. Company shall provide the Employee with and pay for Blue Cross/Blue
Shield or comparable medical health insurance family coverage and to such
additional health and other insurance coverage and benefits, if any, offered or
generally made available to the Company's officers or employees, at the expense
of the Company.
e. Company shall provide the Employee with and pay for a split dollar
whole life insurance policy of at least One Million ($1,000,000) Dollars which
the Employee, at the termination of his employment shall have the opportunity to
purchase for the amount of the cash value of said policy as of August 31, 2001.
The amount of this insurance may be increased by
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the Board of Directors or by the Company's compensation committee on such terms
as they and the Employee agree to.
f. On January 1, 2002 and each January 1 thereafter, the base salary
described in this Paragraph 5 shall be adjusted at a minimum for inflation
during the prior year. The adjustment shall be based on the Consumer Price
Index for Urban Wage Earners and Clerical Workers for Boston, Massachusetts
published by the Bureau of Labor Statistics of the U.S. Department of Labor, all
items, unadjusted for seasonal variations (1982-1984=100) or any index published
by the United States government in substitution thereof. The adjustment shall
be based on the change in the Consumer Price Index from January of 2001 to
January of the year in which the calculation is performed.
g. If (i) the Employee is involuntarily terminated for any reason other
than pursuant to the causes set forth in Paragraph 6(a), 6(c) or 6(d), or (ii)
there is a Change of Status as defined in Paragraph 1, then an amount equal to
the Total Compensation due to the Employee over the term of this 2001 Amended
Agreement, as it may be amended from time to time, shall be calculated, and such
Total Compensation as calculated shall be paid in a single payment to the
Employee no later than 10 days following his termination. Without limiting the
generality of the foregoing, not later than 10 days following such a
termination, the Company shall pay to the Employee an amount equal to the
Employee's current annual Total Compensation multiplied by three and adjusted
for cost of living under Paragraph 5(f) using the most recent annual adjustment
calculation as the basis for adjustment over the three years. Total
Compensation as used herein and in Paragraph 21(c) shall include all base
salary, bonus, and other benefits to which the Employee is entitled. In
calculating bonuses to which the Employee is entitled under this Paragraph 5(g),
the Employee shall be entitled to the bonus that he could have earned, with the
amount of the bonus in each year of the three years to be based on the greatest
of the prior year's bonus, the bonus referred to in Paragraph 5(i) or the bonus
made available to the Employee by the Board of Directors based on the
performance of the Company during the year of termination or Change of Status or
election as aforesaid.
h. If the Employee is terminated for disability, as herein defined, any
unvested options and warrants which would have vested within one year of such
termination, shall be vested and then currently exercisable.
i. The Company, through its Board of Directors or Compensation Committee,
shall provide the Employee with an opportunity to earn a bonus annually of a
minimum of $50,000 upon the achievement of reasonably specified goals and
objectives. Additionally, the Company, through its Board of Directors or
Compensation Committee, may provide additional bonus or other additional
incentives to the Employee.
j. The Company shall pay to the Employee an amount sufficient to enable
the Employee to receive the accelerated compensation payments and acceleration
of stock options and warrants provided for under Paragraphs 5 and 21, net of any
tax required to be paid by the Employee under Internal Revenue Code, Section
280G, if applicable, on accelerated compensation payments and acceleration of
stock options and warrants to the Employee.
k. If the Employee is terminated for any reason other than pursuant to the
causes set forth in Paragraphs 6(a), 6(b), 6(c) or 6(d), or if there is a change
of status as defined in
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Paragraph 1, all of the Employee's options and warrants which are then unvested
shall vest. If the Employee then exercises such options and warrants, the
Company shall provide to the Employee a loan in the amount of the payments due
to the Company for the options and warrants. The Employee shall be personally
responsible for the loan. The loan shall be secured by the stock of the Company
purchased by the exercise of the options and warrants, and otherwise the terms
of such loan shall provide that the amount of the loan shall be at the Wall
Street Journal Prime Rate plus one (1%) percent, shall require repayment to the
Company within two years of the date of such termination and shall provide that
any monies received by the Employee from the sale of stock which was issued as a
result of the exercise of options and warrants paid for by such loan shall be
paid to the Company to reduce such loan.
6. Term/Termination.
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The Employee's employment may be terminated by the Company at any time for
cause, for voluntary resignation, or upon death or permanent disability of the
Employee, all as defined in this Paragraph 6. Unless the Employee is terminated
pursuant to the causes set forth in Paragraph 6(a), 6(b), 6(c) or 6(d), the term
of the Employee's employment shall be for a continuing period of three years
following each day of employment. In further clarification of this provision,
it is intended that the employment term of the Employee, at all times following
the effective date of this Third Amendment, will be a continuing three year
period unless the Employee's employment is terminated pursuant to Paragraph
6(a), 6(b), 6(c) or 6(d).
a. "Termination for Cause" shall mean the termination of employment of the
Employee because of the Employee's dishonesty, theft, gross misconduct,
disclosure of trade secrets or aid of a competitor.
b. "Termination by Voluntary Resignation" shall mean the termination of
employment as a result of the voluntary resignation or withdrawal, for any
reason, by the Employee.
c. "Termination by Death" shall mean the termination of employment as a
result of the death of the Employee.
d. "Termination by Disability" shall mean the termination of employment as
a result of the disability, as herein defined, of the Employee.
e. "Disability" shall mean the Employee's inability to perform the
services which he is to provide to the Company for any 100 weekdays in any
continuous period of six months by reason of physical or mental illness or
incapacity. In the event of any dispute between the parties regarding the
existence of a permanent disability, the matter shall be determined by a
licensed physician selected by the Company, and such determination shall be
conclusive and binding upon the Company and Employee.
f. If the Company's principal office changes so that it would be
inconvenient for the Employee to perform his duties at the Company's principal
office without changing his primary residence, and if the Employee refuses to
perform his services at the Company's new principal office, such refusal shall
not be a grounds for termination for cause.
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7. Proprietary Information.
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7.1. The Employee hereby agrees to hold and maintain confidential and
private in trust for the benefit of the Company all papers, plans, drawings,
specifications, methods, processes, techniques, know-how, formulae, customer and
supplier lists, personnel and financial data, plans, trade secrets and all
proprietary information belonging to the Company or any company or business with
which the Company does business of which the Employee may have knowledge or
acquire knowledge during the term of his employment with the Company, and to
maintain as confidential and secret any new processes, formulations, designs,
devices, research data, machines or compositions of matter of the Company or of
any persons granting rights to the Company revealed to the Employee or invented,
discovered, originated, made or conceived by the Employee in connection with the
furnishing of employment or consulting services to the Company.
7.2. The Employee hereby agrees that he shall not at any time, either
during or subsequent to the term of this Agreement, use for himself or others,
or disclose or divulge to any person, other than to the Company's officers and
other employees as required by the Employee's duties under this Agreement and to
third parties when authorized by the prior written consent of the Company, any
of the information specified in Section 7.1 above or any trade or business
secrets or any other confidential information belonging to the Company of which
the Employee may acquire knowledge while he is employed by the Company;
provided, however, that the confidentiality and non-disclosure provisions
contained in this Section shall not apply to any information or data, if such
information or data is: (1) previously known and free of an obligation to
maintain same in confidence; or (2) if and when such information and data
becomes a part of the public knowledge or literature through no fault of the
Employee or anyone who controls the Employee or is under the control of the
Employee.
8. Invention Rights.
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8.1. The Employee hereby agrees that any and all inventions,
improvements, modifications, ideas, trademarks and innovations (all of which are
hereinafter referred to generally as "Developments") whether patentable or not,
which he may invent, discover, originate, or make during the course of his
employment with the Company whether or not reduced to writing or practice,
either solely or jointly with others and whether or not during working hours or
by or with the facilities of the Company, and which directly relate to the
business of the Company shall be the sole and exclusive property of the Company
and shall be assigned by the Employee to the Company or to the Company's
nominees without the payment of additional compensation to the Employee. The
Employee and each such other person shall promptly and fully disclose each and
all such Developments to the Company or to the Company's nominees.
8.2. The Employee further agrees to participate in the preparation of
and to execute at any time, upon the request and at the expense of the Company,
for the benefit of the Company or the Company's nominees, any and all
applications, instruments, assignments and other documents, which the Company
shall deem necessary or desirable to protect its entire right, title and
interest in and to any of the Developments described in Section 8.1 hereof.
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8.3. The Employee agrees, upon the request and at the expense of the
Company or any person to whom the Company may have granted or grants rights, to
execute any and all applications, assignments, instruments and papers, which the
Company shall deem necessary or desirable for the protection or perfection of
such rights, including the execution of new, divisional, continuing and reissue
patent applications, to make all rightful oaths, to testify in any proceeding in
the Patent Office or in the courts, and generally to do everything lawfully
possible to aid the Company, its successors, assigns and nominees to obtain,
enjoy and enforce proper patent or other protection in the United States and in
foreign countries for the Developments to be assigned under this Agreement. The
obligations set forth in this Section with respect to such Developments shall
continue beyond the termination of this Agreement.
9. Technical Records.
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The Employee agrees to make and maintain adequate and current written
records of all Developments on which he works during his employment by the
Company. Immediately upon the Company's request and promptly upon termination
of the Employee's employment by the Company, the Employee shall deliver to the
Company all memoranda, notes, records, reports, photographs, drawings, plans,
papers or other documents made or compiled by the Employee or made available to
the Employee during the course of his employment by the Company, and any copies
or abstracts thereof, whether or not of a secret or confidential nature, and all
of such memoranda or other documents shall, during and after the employment of
the Employee by the Company, be and shall be deemed to be the property of the
Company.
10. Non-Competition.
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10.1. So long as the Employee is employed as an Employee or as a
Consultant by the Company, and for a period of one year following the
termination of the Employee's employment with the Company for any reason, so
long as during said one year period the Company pays to the Employee the
payments to which the Employee is entitled, the Employee, during said one year
period, shall not engage, directly or indirectly, in any business activity or
own, directly or indirectly, any interest in any business which competes with
the business of the Company as conducted or as planned to be conducted by the
Company during the Employee's employment at any place within the United States
or the world where the Company then conducts business, whether for his own
account or as an employee, partner, officer or director of, or consultant or
independent contractor to, or holder of more than five percent (5%) of the
equity interest in, any other person, firm, partnership or corporation. The
foregoing non-competition covenant shall not apply to lines of business,
products or services of the Company unless the Employee has had substantial
involvement with or been responsible for such lines of business, products or
services of the Company. If at any time the foregoing provisions shall be
deemed to be invalid or unenforceable or are prohibited by the laws of the state
or place where they are to be enforced, by reason of being vague or unreasonable
as to duration or place of performance, this section shall be considered
divisible and shall become and be immediately amended to include only such time
and such area as shall be determined to be reasonable and enforceable by the
court or other body having jurisdiction over this Agreement. The Company and
the Employee expressly agree that this section, as so amended, shall be valid
and binding as though any invalid or unenforceable provision had not been
included herein.
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10.2. The Employee agrees further that for so long as he is employed
by the Company and for one (1) year thereafter, he shall not, directly or
indirectly, (a) solicit, hire, or in any manner persuade or attempt to persuade
any employee, consultant or agent of the Company to terminate his relationship
with the Company, or (b) encourage or cause any customers or suppliers of the
Company to cease doing business with the Company.
11. Indemnification.
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The Company shall indemnify the Employee against all judgments, fines,
settlement payments and expenses including reasonable attorneys' fees, paid or
incurred in connection with any claim, action, suit or proceeding, civil or
criminal, to which he may be made a party or with which he may be threatened by
reason of his being or having been an employee of the Company, or, at its
request, a director, officer, stockholder, consultant or member of any other
corporation, firm or association of which the Company is an Affiliate (as
defined hereafter), a subsidiary or a stockholder or creditor and by which he is
not so indemnified, or by reason of any action or omission by him in such
capacity, whether or not he continues to be an employee at the time of incurring
such expenses or at the time the indemnification is made. No indemnification
shall be made hereunder (a) with respect to payment and expenses incurred in
relation to matters as to which he shall be finally adjudged in such action,
suit or proceeding not to have acted in good faith and in the reasonable belief
that his action was in the best interests of the Company, or (b) as otherwise
prohibited by law, or (c) with respect to payment and expenses incurred in
relation to any matters arising out of a violation of the terms of this
Agreement. The foregoing right of indemnification shall not be exclusive of
other rights to which the Employee may otherwise be entitled and shall inure to
the benefit of the executor or administrator of the Employee.
12. Assignment.
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The rights and obligations of the parties hereto shall inure to the benefit
of, and shall be binding upon, the successors and assigns of each of them;
provided, however, that the Employee shall not, during the continuance of this
Agreement, assign this Agreement without the previous written consent of the
Company, and, provided, further, that nothing contained in this Agreement shall
restrict or limit the Company, in any manner whatsoever, from assigning any or
all of its rights, benefits or obligations under this Agreement to any successor
corporation or to any Affiliate of the Company without the necessity of
obtaining the consent of the Employee. "Affiliate" as used throughout this
Agreement, means any person or entity which, directly or indirectly, controls or
is controlled by or is under common control with the Company.
13. Specific Performance.
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If there is any violation of the Employee's obligations herein contained,
the Company shall have the right to specific performance in addition to any
other remedy which may be available at law or equity.
14. Survival of Paragraphs 7, 8, 9, 10 and 11.
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The provisions of Paragraphs 7, 8, 9, 10 and 11 hereof shall continue in
force so long as the Employee remains employed by the Company whether under this
Agreement or not, and shall survive any termination of employment under
Paragraph 6 hereof.
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15. Amendment and Waiver.
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Neither this Agreement nor any term, covenant, condition or other provision
hereof may be changed, waived, discharged or terminated except by an instrument
in writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.
16. Governing Law.
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This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts.
17. Entire Agreement.
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This Agreement embodies the entire agreement between the Company and the
Employee, and, except as otherwise expressly provided herein, this Agreement
shall not be affected by reference to any other document.
18. Headings, Etc.
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The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be a part of this
Agreement.
19. Counterparts.
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This Agreement may be executed in several identical counterparts, each of
which when executed by the parties hereto and delivered shall be an original,
but all of which together shall constitute a single instrument. In making proof
of this Agreement, it shall not be necessary to produce or account for more than
one such counterpart.
20. Notices.
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Any notice required or permitted to be given under this Agreement shall be
deemed delivered when given by registered or certified mail addressed to the
party to whom such notice is given at the address of such party hereinafter set
forth or at such address as such party may provide to the other in writing from
time to time.
If to the Company, to:
International Electronics, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
If to the Employee, to:
Xxxx Xxxxxxxxx
00 Xxxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
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21. Acquisition Matters.
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If an Acquisition Event, as hereinafter defined, occurs, the following
provisions shall apply to the Employee:
a. If an Acquisition Event occurs, the Employee's base salary shall
increase to annualized compensation of the greater of $175,000 per year or the
annualized compensation of the Employee on the date of such Acquisition Event,
commencing on the Acquisition Event. Such amount shall be increased by a
minimum amount each January 1 commencing on January 1 following the Acquisition
Event in accordance with the formula described in Paragraph 5(f).
b. On the occurrence of any Acquisition Event, all of the Employee's then
unvested stock options and warrants shall be vested and then currently
exercisable.
c. If an Acquisition Event occurs and there is no Change of Status as
defined in Paragraph 1, the Company or the acquirer shall be obligated to pay to
the Employee a severance payment equal to one year of Total Compensation if the
Employee works for the first six months after the Acquisition Event, and the
Company or the acquirer shall be obligated to pay to the Employee a severance
payment equal to six months of Total Compensation for each six months after the
first six months that the Employee works after the Acquisition Event, with such
cumulative severance payments to be made within ten (10) days of such time as
the Employee voluntarily resigns his employment or is terminated by death or
disability, provided however, that the Employee's severance payment shall not
exceed three years of Total Compensation. "Total Compensation" as used herein
and in Paragraph 5(g) shall include all base salary, bonus, and other benefits
to which the Employee is entitled, with such amount to be calculated as provided
in Paragraph 5(g). To avoid any confusion about the relationship of this
Paragraph 21(c) with Paragraph 5(g) the Employee shall not be entitled to the
severance payments described in this Paragraph 21(c) if the Employee has been
paid the amounts required to be paid to the Employee under Paragraph 5(g).
d. If an Acquisition Event occurs, the Company shall not change the status
of the Employee. If the Company makes a Change of Status of the Employee after
an Acquisition Event, or if the Company, after an Acquisition Event, requires
the Employee to travel on Company business to a greater extent than the Employee
traveled before such Acquisition Event, the Employee shall be deemed to have
been involuntarily terminated without cause and shall be entitled to the
payments under Paragraph 5(g).
e. An "Acquisition Event" is defined as any event in which the Company
merges or consolidates with another party or sells all or substantially all of
its assets to an unaffiliated third party or an event in which more than 50% of
the outstanding common stock of the Company is acquired by a third party or the
third party and its affiliates. An Acquisition Event will also be the election
of a slate of Directors not approved by the Employee.
22. Enforcement Matters.
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The following provisions shall apply to the parties to the 1994 Agreement,
as amended:
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a. In the event of any controversy, claim or dispute between the parties
hereto arising out of or relating to the 2001 Amended Agreement, as it may be
amended from time to time, or the Employee's employment by the Company, such
controversy, claim or dispute shall be settled in accordance with the rules of
arbitration of the American Arbitration Association under the rules then
pertaining in Boston, Massachusetts, and shall be conducted under the Expedited
Procedures thereof. The arbitrator shall be a person with significant experience
in businesses similar to the business conducted by the Company. The parties
agree that such arbitration shall be binding and conclusive upon them. At the
request of either party, arbitration proceedings will be conducted in secrecy,
and in such case, all documents, testimony and records shall be received, heard
and maintained by the arbitrators in confidence and available for inspection
only by the parties or any court in which an award is finally entered. Judgment
upon any award so rendered may be entered in any court of competent
jurisdiction.
b. In the event of litigation or arbitration relating to the 2001 Amended
Agreement, as it may be amended from time to time, the Employee, if the
prevailing party, shall be paid its reasonable expenses and reasonable
attorney's fees by the other party.
c. In the event of litigation or arbitration relating to the payment of
the obligations by the Company under the 2001 Amended Agreement, as it may be
amended from time to time, the Employee, if the prevailing party, shall be paid
treble damages by the other party.
d. In the event of litigation or arbitration relating to the 2001 Amended
Agreement, as it may be amended from time to time, the Employee, if the
prevailing party, shall be paid interest by the other party on any amounts due
at the rate of 12% per annum, calculated on a daily basis.
e. Any litigation or arbitration relating to the 2001 Amended Agreement,
as it may be amended from time to time shall be decided in the federal or state
courts of Massachusetts as to litigation, or in Boston, Massachusetts as to
arbitration.
IN WITNESS WHEREOF, the Company has caused this 2001 Amended Agreement to
be executed by a member of the Board of Directors duly authorized thereunto by
its Board of Directors and the Employee has hereunto set his hand and seal, all
as of the date and year above.
International Electronics, Inc.
/s/ Xxxx Xxxxxxxxx By:/s/ Xxxxxxx Xxxxx
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Xxxx Xxxxxxxxx, Employee Director
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