EMPLOYMENT AGREEMENT
Exhibit
10.1
This
EMPLOYMENT AGREEMENT (this “Agreement”), dated as of February 15, 2006
(“Effective Date”), is between Competitive Technologies, Inc., a Delaware
corporation (the “Company”) and Xx. Xxxxxxx X. Xxxxx (the “Executive”). In
consideration of the mutual covenants contained in this Agreement, and other
good and valuable consideration, the receipt and sufficiency of which is
acknowledged, the parties agree as follows:
1. Employment.
The
Company hereby employs the Executive, and the Executive hereby accepts such
employment with the Company, upon all the terms and conditions set forth below.
Executive represents and warrants that: (a) he has full power and authority
to
enter into this Agreement, (b) he is not restricted in any manner whatsoever
from performing the duties described below, and (c) no agreement, covenant
or
other matter prohibits or limits his ability or authority to enter into this
Agreement or perform all of the duties described below. Executive's employment
with the Company shall include service for the Company's direct and indirect
subsidiaries and affiliated entities (the “Subsidiaries”).
2. Employment
Term.
The
“Employment Term” and Executive's employment under this Agreement shall commence
on the Effective Date and shall continue until the date on which the Agreement
is terminated in accordance with the provisions of Section 7 below. The Company
and the Executive acknowledge that the Executive's employment is at will and
can
be terminated by either party at any time and for any reason. If the Executive's
employment terminates for any reason, with or without Cause, the Executive
shall
not be entitled to any payments, benefits, damages, awards, or compensation
other than as provided in Section 7 below. The parties acknowledge that certain
obligations under this Agreement survive the end of Executive's employment.
3. Position
and Duties.
(a) Executive
Vice-President and Chief Technology Officer.
The
Company shall employ the Executive as its Executive Vice-President and Chief
Technology Officer. Executive shall report to the President and Chief Executive
Officer (the “CEO”). Executive shall have such responsibilities and duties as
are commensurate with the position of chief technology officer in an entity
comparable to the Company, including, without limitation, developing and
implementing an overall strategic technology plan for the Company and annual
strategic plans, and supervising day-to-day technology operations of the
Company. The CEO shall have the right to modify Executive's duties and
responsibilities from time to time as the CEO may deem necessary or appropriate.
(b) Manner
of Employment.
Executive shall faithfully, diligently and competently perform his
responsibilities and duties. The Executive shall devote his exclusive and full
business efforts and time to the Company. This Section 3(b), however, shall
not
preclude the Executive, outside normal business hours, from engaging in
appropriate civic or charitable activities, or from serving as a director of
any
not-for profit entity, as long as such activities do not interfere or conflict
with his responsibilities to the Company. With the Board's consent, Executive
may serve as a director of a for-profit entity.
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4. Base
Compensation.
The
Company shall pay the Executive base compensation in the gross amount of $
225,000.00 per year, subject to reviews and increases recommended by the CEO
and
approved by the Compensation Committee of the Board (“Base Compensation”). Base
Compensation shall be paid periodically in accordance with normal Company
payroll practices.
5. Employment
Benefits.
Executive shall be entitled to the following benefits during the Employment
Term:
(a) Expense
Allowance.
Executive shall be reimbursed for business related expenses reasonably and
necessarily incurred and advanced by Executive in performing his duties for
the
Company, subject to and in accordance with Company policy as it exists from
time
to time.
(b) Other
Benefits.
Executive may participate in all other employee benefit plans and programs
as
the Company may, from time to time, offer to its executive employees, subject
to
the same terms and conditions as such benefits are generally provided by the
Company and, if applicable, the discretion of the CEO. All such benefits are
subject to plan documents (where applicable) and the Company's policies and
procedures. Nothing in this Section 5(b) guarantees that any specific benefit
will be provided or offered by the Company which has the right to add, modify,
or terminate benefits at any time.
6. Bonus.
For the
period from the Effective Date through July 31, 2006 (the end of the 2006 fiscal
year), and in each fiscal year during the Employment Term thereafter, Executive
shall be eligible to participate in the Company’s Annual Incentive Plan receive
a bonus based upon the Company's and the Executive's performance of objectives
during those time periods, all as provided in the Annual Incentive Plan. The
Company has the right to add, modify, or terminate the Annual Incentive Plan
at
any time.
7. Termination
and Severance Benefits.
(a) Death.
The
death of Executive shall automatically terminate the Company's obligations
under
this Agreement; provided however, that: (i) the Company shall pay to Executive's
estate Executive's Base Compensation and accrued benefits through the date
of
termination; and (ii) any unvested Plan Options granted under this Agreement
will upon such termination become fully vested and immediately exercisable.
(b) Disability.
If
Executive is unable, in the reasonable determination of the Board, to render
services of substantially the kind and nature, and to substantially the extent,
required to be rendered by Executive under this Agreement due to illness,
injury, physical or mental incapacity or other disability, for ninety (90)
days,
whether consecutive or not, within any twelve (12) month period, Executive's
employment may be terminated by the Company and: (i) the Company's sole
obligation shall be to pay to Executive his Base Compensation and accrued
benefits through the date of termination; and (ii) any unvested Plan Options
granted under this Agreement will upon such termination become fully vested
and
immediately exercisable.
(c) Resignation.
If
Executive resigns his employment during the Employment Term other than for
Good
Reason (as defined below), the Company shall have no liability to Executive
except to pay Executive's Base Compensation and any accrued benefits through
his
last day worked, and Executive shall not be entitled to receive severance or
other benefits.
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(d) Resignation
for Good Reason.
If
Executive resigns his employment for Good Reason (as defined below), he shall
be
entitled to receive all accrued but unpaid salary and benefits through the
date
of termination plus the Severance Benefit (as defined below).
(e) Termination
By Company for Cause.
If the
Executive's employment is terminated for Cause (as defined below), the Company
shall have no liability to Executive except to pay Executive Base Compensation
and any accrued benefits through his last day worked and Executive shall not
be
entitled to receive severance or other benefits.
(f) Termination
By Company Without Cause.
If the
Company terminates Executive's employment during the Employment Term without
Cause (and for reasons other than death or Disability), Executive shall be
entitled to receive all accrued but unpaid salary and benefits through the
date
of termination plus the Severance Benefit.
(g) Termination
Due to Change in Control.
If the
Company terminates Executive's employment without Cause (and for reasons other
than death or Disability) in conjunction with a Change in Control (as defined
below), Executive shall be entitled to receive all accrued but unpaid salary
and
benefits through the date of termination plus the Change in Control Benefit
(as
defined below).
(h) Cause.
The
following acts by Executive, as determined by the Board in its reasonable
discretion, shall constitute “Cause” for termination:
(i) theft
or
embezzlement, or attempted theft or embezzlement, of money or material tangible
or intangible assets or property of the Company or its employees or business
relations;
(ii) a
violation of any law or any act or acts of moral turpitude which negatively
affects the interests, property, business, operations or reputation of the
Company;
(iii) other
than as a result of a disability, a material failure to carry out effectively
Executive's duties and obligations to the Company, or failure to devote to
the
Company's business the time required in Section 3(b) above, upon not less than
ten (10) days' advance written notice of the asserted problem and a reasonable
opportunity to cure;
(iv) gross
negligence or willful misconduct in the performance of Executive's duties;
(v) Executive's
material breach of this Agreement which, after written notice by the Company
of
such breach, is not cured within ten (10) days of such notice.
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(i) Resignation
for Good Reason.
Resignation by Executive of his employment for “Good Reason” shall mean a
resignation by Executive within sixty (60) days after the following events
which
occur without Executive's consent:
(i) a
material diminution in Executive's position, duties or responsibilities;
(ii) a
relocation of the Company's headquarters more than fifty (50) miles from its
present location;
(iii) a
reduction in Executive's then Base Compensation; or
(iv) the
Company's material breach of this Agreement.
Prior
to
a Resignation for Good Reason, Executive shall give the Company written notice
of the basis for his claim that he has Good Reason to terminate his employment
and ten (10) days to cure.
(j) Change
in Control.
For
purposes of this Agreement, a “Change in Control” shall mean the occurrence of
any of the following events:
(i) a
merger
or consolidation involving the Company or any subsidiary of the
Company
after
the completion of which: (A) in the case of a merger (other than a triangular
merger) or a consolidation involving the Company, the stockholders of the
Company immediately prior to the completion of such merger or consolidation
beneficially own (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), or comparable
successor rules), directly or indirectly, outstanding voting securities
representing less than fifty percent (50%) of the combined voting power of
the
surviving entity in such merger or consolidation, and (B) in the case of a
triangular merger involving the Company or a subsidiary of the Company, the
stockholders of the Company immediately prior to the completion of such merger
beneficially own (within the meaning of Rule 13d-3 promulgated under the
Exchange Act, or comparable successor rules), directly or indirectly,
outstanding voting securities representing less than fifty percent (50%) of
the
combined voting power of the surviving entity in such merger and less than
fifty
percent (50%) of the combined voting power of the parent of the surviving entity
in such merger;
(ii) an
acquisition by any person, entity or “group” (within the meaning of Section
13(d) or 14(d) of the Exchange Act or any comparable successor provisions),
other than any employee benefit plan, or related trust, sponsored or maintained
by the Company or an affiliate of the Company and other than in a merger or
consolidation of the type referred to in clause “(i)” of this Section 7(j), of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act, or comparable successor rules) of outstanding voting securities
of
the Company representing more than fifty percent (50%) of the combined voting
power of the Company (in a single transaction or series of related
transactions); or
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(iii) in
the
event that the individuals who, as of the Effective Date, are members of the
Board (the “Incumbent Board”), cease for any reason to constitute at least fifty
percent (50%) of the Board. (However, if the subsequent election, or nomination
by the Board for election by the Company's stockholders, of any new member
of
the Board is approved by a vote of at least fifty percent (50%) of the Incumbent
Board, such new member of the Board shall be considered as a member of the
Incumbent Board.)
(k) Severance
Benefit.
The
“Severance Benefit” shall mean:
(i)
continuation of Executive's Base Compensation in effect immediately prior to
such termination or resignation for a period of six (6) months (“Severance
Benefit Period”), such compensation to be paid according to the Company’s
regular payroll schedule for Executive; (ii) continuation of Executive's group
insurance benefits (to the extent such can be continued under the terms of
the
governing plans) for the Severance Benefit Period; and (iii) continued vesting
of the Plan Options through the end of the Severance Benefit Period or the
next
employment anniversary date, whichever is longer.
(l) Change
in Control Benefit.
The
“Change in Control Benefit” shall mean: (i) continuation of Executive's Base
Compensation in effect immediately prior to such termination or resignation
for
a period of twelve (12) months (“Change in Control Benefit Period”), such
compensation to be paid according to the Company’s regular payroll schedule for
Executive; (ii) continuation of Executive's group insurance benefits (to the
extent such can be continued under the terms of the governing plans) for the
Change in Control Benefit Period; and (iii) any unvested Plan Options granted
under this Agreement will become fully vested and immediately exercisable.
(m) Six-Month
Delay in Payment.
Notwithstanding anything contained herein to the contrary, in the event that
payment of any Severance Benefit or Change in Control Benefit hereunder is
subject to section 409A(2)(b)(i) of the Internal Revenue Code of 1986, as
amended, or any successor provision thereto (the “Code”), and if Executive is a
“Specified Employee”, then payment of such benefit shall be made no earlier than
6 months after Executive’s termination of employment by accumulating
all payments which would otherwise be payable during the first six (6) months
following the termination of employment and shall instead be paid on the date
that immediately follows the end of such six-month period, or as soon as
administratively practicable thereafter.
Any
payments which would otherwise have been made after the end of such six-month
period, shall be paid at the time provided for herein. For purposes of this
section, a “Specified Employee” is a key employee as defined in section 416(i)
of the Code (without regard to paragraph (5) thereof), for purposes of the
top-heavy provisions applicable to tax-qualified plans.
(n) Resignations.
Upon
the end of Executive's employment for any reason, Executive shall be deemed
to
have resigned from any positions which he holds as a director or officer of
the
Company and any of its Subsidiaries or affiliates.
(o) Release.
Payment
of the Severance Benefit or the Change in Control Benefit will be subject to
Executive signing an agreement reconfirming his post-employment obligations
contained in this Agreement and releasing the Company and all Subsidiaries
and
related parties from any claims, such agreement to be prepared by the Company
or
its designee.
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8. Key
Executive Insurance.
The
Company, at its discretion, may apply for and procure in its own name for its
own benefit life and/or disability insurance on Executive in any amount
specified by the Company. Executive agrees to cooperate in any medical or other
examination, supply information and execute such applications as may be
reasonably necessary to obtain and continue such insurance at the Company's
expense. Executive represents that he has no reason to believe his life is
not
insurable at prevailing rates for men of his age.
9. Confidential
and Proprietary Information.
(a) Executive
agrees that he will not use or disclose to any person, entity, association,
firm
or corporation, any of the Company's Confidential Information (as defined
below), except with the written authorization of the Board or as necessary
to
perform his duties under this Agreement. The term “Confidential Information”
means information and data not generally known outside of the Company (unless
as
a result of Executive's breach of any of the obligations imposed by this
Agreement or the duties imposed by any then existing statute, regulation,
ordinance or common law) concerning the Company's business and technical
information, and includes, without limitation, information relating to: (i)
the
identities of clients and the Company's other Business Relations (as defined
below) and their purchasing habits, needs, business information, contact
personnel and other information; (ii) suppliers' and vendors' costs, products,
contact personnel and other information; and (iii) the Company's trade secrets,
products, research and development, financial and marketing information,
personnel and compensation information, and business plans. Executive
understands that this Section 9 applies to computerized as well as written
information and to other information, whether or not in written form. It is
expressly understood, however, that the obligations of this Section 9 shall
only
apply for as long as and to the extent that the Confidential Information has
not
become generally known to or available for use by the public other than by
Executive's act or omission in violation of this Agreement.
(b) Executive
agrees that upon the end of his employment with the Company for any reason,
he
will not take with him any Confidential Information that is in written,
computerized, machine readable, model, sample, or other form capable of physical
delivery, without the prior written consent of the Board. The Executive also
agrees that upon the end of his employment with the Company for any reason
or at
any other time that the Company may request, he will deliver promptly and return
to the Company all such documents and materials in his possession or control,
along with all other property and documents of the Company or relating to the
Company's employees, suppliers, customers, and business, including but not
limited to keys or key cards to Company property, Company credit cards, cell
phones, computers, supplier and customer lists, etc.
10. Non-Solicitation.
Executive agrees that he will not through the date one (1) year after the end
of
his employment with the Company for any reason, directly or indirectly, on
his
own behalf or on behalf of any other person or entity, without the express
written permission of the Board: (a) solicit or attempt to solicit any employee
or representative of the Company to terminate or modify his or her relationship
with the Company or to work for or provide services to another person or entity;
or (b) solicit or attempt to solicit, any client, vendor, service provider
or
other business relation of the Company (each a “Business Relation”), about whom
he learned or with whom he came into contact during his employment with the
Company on behalf of any entity or with respect to any service or products
which
is or may be competitive with the Company or its services or products.
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11. Non-Competition.
(a) Executive
agrees that during the Restrictive Period (as defined below), he will not,
without the express written consent of the Board, be associated with or engage
in, directly or indirectly, as employee, consultant, proprietor, stockholder,
partner, agent, representative, officer, or otherwise, the operation of any
business that directly competes with the Company in business activities that
are
the same or substantially similar to the business activities engaged in by
the
Company within the United States or any other geographic area in which the
Company does business during the Restrictive Period (the “Restricted
Territory”).
(b) The
term
“Restrictive Period” shall mean the Employment Term plus a period of twelve (12)
months after the end of the Employment Term; provided that the twelve (12)
month
period following the end of the Employment Term shall apply if Executive's
employment is terminated by reason of voluntary resignation, Disability, Cause,
or Change of Control, and shall instead be a six (6) month period if Executive’s
employment is terminated by the Company without Cause or Employee resigns his
employment for Good Reason.
(c) Passive
investment in less than two percent (2%) of the outstanding equity securities
of
an entity which is listed on a national or regional securities exchange shall
not, in itself, constitute a violation of this Section 11.
12. Intellectual
Property Rights.
Executive will, during the period of his employment, disclose to the Company
promptly and fully all Intellectual Property (as defined below) made or
conceived by Executive (either solely or jointly with others) including but
not
limited to Intellectual Property which relate to the business of the Company
or
the Company's actual or anticipated research or development, or result from
work
performed by him for the Company. All Intellectual Property and all records
related to Intellectual Property, whether or not patentable, shall be and remain
the sole and exclusive property of the Company. “Intellectual Property” means
all copyrights, trademarks, trade names, trade secrets, proprietary information,
inventions, designs, developments, and ideas, and all know-how related thereto.
Executive hereby assigns and agrees to assign to the Company all his rights
to
Intellectual Property and any patents, trademarks, or copyrights which may
be
issued with respect to Intellectual Property. Executive further acknowledges
that all work shall be work made for hire. During and after the Employment
Term,
Executive agrees to assist the Company, without charge to the Company but at
its
request and expense, to obtain and retain rights in Intellectual Property,
and
will execute all appropriate related documents at the request of the Company.
Executive
understands that this Section 12 shall not apply to any Intellectual Property
for which no equipment, supplies, facilities, trade secret, or other
confidential information of the Company was used and which was developed
entirely on his own time, and does not relate to the business of the Company,
its actual or anticipated research, and does not result from any work performed
by him for the Company.
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13. Employment
and Income Taxes.
All
payments made to Executive by the Company will be subject to withholding of
income and employment taxes and other lawful deductions, as applicable.
14. Section
409A Compliance.
To
the
extent applicable, it is intended that this Agreement comply with the provisions
of section 409A of the Code. The Agreement shall be administered in a manner
consistent with this intent, and, if either party determines that any provision
would cause the Agreement to fail to satisfy section 409A of the Code, the
parties shall cooperate in preparing an amendment to comply with section 409A
of
the Code (which amendment may be retroactive to the extent permitted under
section 409A of the Code).
15. Successors
and Assignees.
This
Agreement may be assigned by the Company to any successor or assignee of a
substantial portion of the business of the Company (whether by transfer of
assets or stock, merger or other business combination). Executive may not assign
his rights or obligations under this Agreement.
16. Binding
Effect.
This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective heirs, successors, legal representatives and permitted assigns.
17. Notices.
Any
notice required or permitted to be given under this Agreement shall be
sufficient if in writing and either delivered in person by reputable messenger
or overnight delivery service, by telecopy (with confirmation of receipt) or
sent by certified mail, postage prepaid, if to the Company at the Company's
principal place of business, c/o Chairman of the Board, and if to the Executive,
at his home address most recently filed with the Company, or to such other
address as either party shall have designated in writing to the other party.
18. Law
Governing.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Connecticut for contracts to be performed in that State.
19. Severability
and Construction.
If any
provision of this Agreement is declared void or unenforceable or against public
policy, such provision shall be deemed severable and severed from this Agreement
and the balance of this Agreement shall remain in full force and effect. If
a
court of competent jurisdiction determines that any restriction in this
Agreement is overbroad or unreasonable under the circumstances, such restriction
shall be modified or revised by such court to include the maximum reasonable
restriction allowed by law.
20. Reasonable
Restrictions/Remedies.
Executive acknowledges that the provisions contained in Sections 9 through
12 of
this Agreement are reasonable in scope, area and duration and are necessary
for
the Company to protect its legitimate business interests, including its
Confidential Information and business relationships. Executive and Company
acknowledge and agree that damages would not adequately compensate Company
if
Executive were to breach any of his covenants contained in Sections 9 through
12
above. Consequently, Executive agrees that in the event of any such breach,
Company shall be entitled to enforce this Agreement by means of an injunction
or
other equitable relief, in addition to any other remedies including without
limitation monetary damages, set off against any amounts due Executive by
Company and termination of Executive's employment for Cause.
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21. Waiver.
Failure
to insist upon strict compliance with any of the terms, covenants or conditions
hereof shall not be deemed a waiver of such term, covenant or condition.
22. Entire
Agreement;
Modifications. This Agreement constitutes the entire agreement of the parties
with respect to its subject matter and supersedes all prior agreements, oral
and
written, between the parties with respect to the subject matter of this
Agreement. This Agreement may be modified or amended only by an instrument
in
writing signed by both parties.
| EXECUTIVE | COMPETITIVE TECHNOLOGIES, INC. |
| By: /s/ Xxxxxxx X. Xxxxx | By: /s/ Xxxxxx X. Xxxxx |
| Xxxxxxx X. Xxxxx, Ph.D. | Xxxxxx X. Xxxxx, Ph.D. |
| President and CEO |
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