CONSULTING AGREEMENT
THIS
CONSULTING AGREEMENT (this “Agreement”) is entered into as of June 20, 2006 (the
“Effective Date”) between XXXXXX XXXXXX (“Xxxxxx”), an individual residing in
the State of Florida, and FARO TECHNOLOGIES, INC. (the “Company”), a Florida
corporation having its principal place of business at 000 Xxxxxxxxxx Xxxx,
Xxxx
Xxxx, XX 00000.
RECITALS
WHEREAS,
Xxxxxx
previously was employed full-time by Company as a Senior Vice President;
and
WHEREAS,
the
Company considers it desirable to retain the services of Xxxxxx on the terms
and
conditions set forth in this Agreement; and
NOW
THEREFORE,
in
consideration of the covenants set forth herein, the parties agree as
follows:
OPERATIVE
TERMS
1. RESPONSIBILITIES
A. Subject
to the terms and conditions of this Agreement, including, but not limited to,
the provisions for termination set forth herein, the Company hereby engages
Xxxxxx as a consultant to the Company from the Effective Date until March 20,
2007 (“Term”) for compensation equal to $17,500.00 per month, less any
applicable withholding taxes (payable in accordance with the Company’s standard
payroll practice for its employees).
B. As
a
consultant to the Company, Xxxxxx shall report to the Company’s Co-Chief
Executive Officers (the “Co-CEOs”), shall have only the responsibilities,
duties, and authority given to her by the Co-CEOs, and shall have no other
responsibilities, duties, or authority, implied or otherwise. The Company
anticipates that these responsibilities will include, as and when requested
by
the Company, assisting in the hiring of a replacement person and transitioning
her role to the new individual and other related functions. Xxxxxx agrees to
devote her best efforts and business time, skill, and attention to the
performance of such duties, provided that Xxxxxx shall not be obligated to
provide more than 40 hours per week of service to the Company. Notwithstanding
the foregoing, nothing shall preclude Xxxxxx from seeking new employment and
devoting reasonable time during work hours to do so, engaging in appropriate
civic, charitable, religious and non-profit activities or to accept other
employment during the Term (provided such employment does not violate any
provisions of this Agreement or any other agreement between Xxxxxx and the
Company, including Sections 8 and 9 herein).
C. The
Company is currently defending or involved in, and may in the future become
involved or be required to defend additional, various claims, including civil
actions, disputes with third parties, civil and criminal investigations,
inquiries by federal and state law enforcement officials, inquiries by
regulatory or self-regulatory organizations, about which Xxxxxx may have
personal knowledge (collectively, “Claims”). It is possible that such Claims
will concern matters relating to Xxxxxx’x employment, or her areas of
responsibility at the Company. It is also possible that he may be named as
a
defendant in connection with Claims.
X. Xxxxxx
has cooperated with the Company in the past regarding the Claims. Xxxxxx, during
and after the Term, shall:
i. continue
to cooperate fully with the Company and with federal and state law enforcement
or regulatory agencies and self-regulatory organizations with respect to the
Claims, whether or not Xxxxxx is named as a party therein; provided, however,
that the Company shall (to the extent it can reasonably do so) (A) provide
Xxxxxx reasonable notice relating to meetings and document requests and (B)
schedule such meetings and document productions at a place which is mutually
convenient.
ii. provide
the Company with copies of all documents in her possession or control relating
to the Claims (to the extent Xxxxxx has not already provided such documents
to
the Company).
E. Consistent
with the Company’s Restated Certificate of Incorporation and By-laws (each as
amended), the Company shall promptly reimburse Xxxxxx for all reasonable legal
fees (including such legal fees for counsel retained by Xxxxxx to assist and
advise regarding her cooperative efforts if cooperation is requested by the
Company in connection with Claims) and reasonable expenses incidental to such
cooperation.
2. TERMINATION
X. Xxxxxx’x
employment with the Company has terminated on the Effective Date.
B. If
Xxxxxx
accepts other full-time employment during the Term, she is permitted to
terminate her consulting engagement under this Agreement and she will no longer
be obligated to perform any consulting services for the Company pursuant to
Section 1 herein; provided, however, that, notwithstanding any such termination,
the Company shall continue to pay to Xxxxxx all compensation pursuant to Section
1 herein through the Term (provided such employment does not violate any
provisions of this Agreement or any other agreement between Xxxxxx and the
Company, including Sections 8 and 9 herein).
C. The
Company may terminate Xxxxxx’x consulting engagement under this Agreement at any
time with or without cause and with or without notice; provided, however, that,
notwithstanding any such termination (unless such termination is for Good Cause
(as defined below)), the Company shall continue to pay to Xxxxxx all
compensation pursuant to Section 1 herein through the Term.
D. The
Company shall have “Cause” to terminate Xxxxxx’x engagement under this Agreement
before the end of the Term only upon the occurrence of the following events:
(i)
the conviction of Xxxxxx of a felony, or a misdemeanor involving moral
turpitude; (ii) gross and willful misconduct by Xxxxxx that is demonstrably
and
materially injurious to the Company, whether monetarily or otherwise; or (iii)
a
material breach of this Agreement by Xxxxxx, which is not cured within twenty
(20) days of written notice to Executive of the fact and circumstances of
breach.
2
E. In
the
event Xxxxxx is terminated for Cause before the end of the Term,, any right
of
Executive to compensation or benefits from the Company, whether under Section
1
herein or otherwise, shall terminate as of the date of the for Cause
termination, except to the extent it was already earned before her for Cause
termination.
F. In
the
event of Xxxxxx’x death or disability, Xxxxxx’x consulting engagement with the
Company shall be terminated;
provided, however, that, notwithstanding any such termination, the Company
shall
continue to pay to Xxxxxx (or, in the event of her death, to her estate or
as
her representatives direct) all compensation pursuant to Section 1 herein
through the Term.
Xxxxxx’x
disability means, for purposes of this Agreement, such physical or mental
incapacity of Xxxxxx that renders her completely unable to perform her
responsibilities hereunder during any consecutive period of 90 days, as
determined by an independent physician agreed to by the Board and Xxxxxx.
3.
EXPENSES
The
Company will reimburse Xxxxxx for all out-of-pocket expenses reasonably incurred
by her in connection with performing her consulting duties under this Agreement,
provided that such expenses are approved in advance in writing by the Company.
Such reimbursement also shall be subject to the Company’s requirements with
respect to reporting and documentation of such expenses.
4. BENEFIT
PROGRAMS
Xxxxxx'x
benefits with the Company shall cease as of Effective Date; provided, however,
that, in accordance with applicable law, Xxxxxx shall be entitled to participate
in the COBRA benefit continuation program at the Company’s sole expense until
June 15, 2007 at her discretion.
5. RETURN
OF
COMPANY PROPERTY
All
records, designs, patents, business plans, financial statements, manuals,
memoranda, lists and other property delivered to or compiled by Xxxxxx by or
on
behalf of the Company or their representatives, vendors or customers which
pertain to the business of the Company shall be and remain the property of
the
Company and be subject at all times to its discretion and control. Likewise,
all
correspondence, reports, records, charts, advertising materials and other
similar data pertaining to the business, activities or future plans of the
Company which is collected by Xxxxxx shall be delivered promptly to the Company
without request by it upon termination of Xxxxxx’x consulting
engagement.
3
6. INDEMNIFICATION
A. The
Company’s Amended and Restated Articles of Incorporation and Bylaws (each as
amended to date) require that the Company indemnify Xxxxxx to the fullest extent
permitted or required by the Florida Business Corporation Act (the “FBCA”)
against any and all liabilities, and advance any and all reasonable expenses,
incurred thereby in any Proceeding (as defined in Section 607.0850 of the FBCA)
to which Xxxxxx is a party or in which Xxxxxx is deposed or called to testify
as
a witness because she is or was an executive officer of the Company. The
Company’s Board of Directors previously adopted resolutions whereby the Company
agreed to advance certain reasonable expenses incurred by Xxxxxx (each, an
“Advance”), in each instance upon receipt of an undertaking by Xxxxxx to repay
such amount if she is ultimately found not to be entitled to indemnification
by
the Company pursuant to Section 607.0850 of the FBCA.
B. Consistent
with its obligations described above under the Company’s Amended and Restated
Articles of Incorporation and Bylaws (each as amended to date), the Company
shall indemnify Xxxxxx and make Advances to Xxxxxx as set forth above. Xxxxxx
hereby undertakes to repay to the Company all such Advances if Xxxxxx is
ultimately found not to be entitled to indemnification by the Company pursuant
to Section 607.0850 of the FBCA in connection with any of the matters described
above.
7. ARBITRATION
Any
controversy or claim arising out of or relating to this Agreement or to the
breach thereof or Executive’s employment with the Company shall be settled
exclusively by binding arbitration conducted in Orlando, Florida in accordance
with the Employment Rules of the American Arbitration Association then in
effect, by a single independent arbitrator selected mutually by the Company
and
Xxxxxx. If the parties cannot agree on an arbitrator, within 30 days of
commencement of an arbitration proceeding hereunder, either party may request
that the American Arbitration Association select a candidate in accordance
with
the rules. The decision of the arbitrator shall be final and binding. Judgment
upon the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The Company agrees to pay all expenses of the AAA and
all
fees, costs and expenses of the arbitrator and of the arbitration. The parties
further agree that any arbitration shall be conducted in a confidential manner,
and the arbitrator is hereby authorized to adopt any rules and procedures
reasonably appropriate to ensure the confidentiality of the arbitration. In
any
such arbitration, the arbitrator shall have the authority to award Reasonable
Attorney’s Fees and Attorney Costs to the prevailing party, pursuant to this
Agreement. “Reasonable Attorney’s Fees and Attorney Costs” include, but are not
limited to, the following: all reasonable attorney’s fees, all reasonable
attorney costs, all reasonable witness fees and other related expenses,
including reasonable paralegal fees, travel and lodging expenses and costs,
through trial and appeal, and/or through the finalization of the arbitration
and
the entering of the arbitrators award, including but not limited to all
litigation in any court pursuant to this Agreement. Reimbursement is due within
30 days of written notice after prevailing.
4
8. CONFIDENTIALITY
COMMITMENTS
A. Executive
shall hold in strict confidence and not divulge to others, destroy, nor make
use
thereof (either for the benefit of herself or for the benefit of any person
or
entity), except for the purposes of the Company, or to enforce her rights under
this Agreement, both during and after Executive’s employment by the Company, any
and all Proprietary Information or documents containing Proprietary Information
that Executive has obtained or will obtain in the course of employment by the
Company. All Proprietary Information is the exclusive property of the Company.
All files, letters, memos, reports, sketches, drawings, notebooks or other
written material containing such information, that are now or in the future
comes into Executive’s custody or possession, shall be used by Executive only in
the performance of her Company duties, or in connection with her obligations
under Section 5 of this Agreement. “Proprietary Information” means the following
information that is not generally known about the Company: (a) information
identifying or tending to identify any of the existing or prospective
acquisition candidates, clients, customers, suppliers, employees, and
independent contractors of the Company; (b) information regarding any
intellectual property of the Company, including all patents, trademarks, trade
names, service marks, and copyrighted materials, and all ideas, designs,
methods, scripts, concepts, inventions, research and development, and design
projects, and computer programs, software, and source codes, whether or not
protected under any law; and (c) information pertaining to the plans, methods,
services, processes, prospects, potential acquisitions of other businesses
or
companies. product costs, price lists, production methods, engineering standards
and specifications, marketing and development plans, price and cost data, price
and fee amounts, pricing and billing policies, quoting procedures, marketing
techniques and methods of obtaining business, forecasts and forecast assumptions
and volumes, and future plans and potential strategies, contracts and their
contents, customer or client services, data provided by customers or clients
and
the type, quantity and specifications of products and services purchased by
customers of the Company, and financial information
B. Executive
agrees, prior to the end of the Term, to make a reasonable effort to identify
all Company documents or records in her possession which contain Proprietary
Information. All such documents shall be returned to the Company prior to the
end of the Term.
C. Nothing
in this Section 8 shall preclude Xxxxxx from disclosing or using Proprietary
Information at any time if:
i. such
Proprietary Information is available to the public or in the public domain
at
the time of such disclosure or use, without breach of this Agreement;
or
ii. disclosure
of such Proprietary Information is required to be made by any law, regulation,
governmental body, or authority or by court order or other lawful process;
provided that before disclosure is made, notice of the requirement is provided
to the Company (unless such disclosure is prohibited by a governmental agency),
and to the extent possible in the circumstances, the Company is afforded an
opportunity to dispute the requirement; or
5
iii. such
Proprietary Information becomes available to Xxxxxx on a non-confidential basis
from a source other than the Company or its customers or clients without breach
of this Agreement.
9. NON-COMPETITION
AGREEMENT
X. Xxxxxx
recognizes that the Company’s willingness to enter into this Agreement is based
in material part on Xxxxxx’x agreement to the provisions of this Section 9 and
that Xxxxxx’x breach of the provisions of this Section 9 could materially damage
the Company. Subject to the further provisions of this Agreement and in
consideration of the Company’s agreement to provide Xxxxxx access to
Confidential Information as defined below, Xxxxxx will not, for a period of
two
(2) years from the expiration or termination of the Term, directly or
indirectly, for herself or on behalf of or in conjunction with any other person,
company, partnership, corporation or business of whatever nature:
i. Engage
or
assist in any way, as an employee, agent, representative, officer, member,
director, shareholder, owner, partner, joint venturer, or in any capacity,
whether as an employee, independent contractor, consultant or advisor, or as
a
sales representative, in (A) the design, development, manufacturing, marketing,
or support of computerized measurement systems (including, without limitation,
articulated arm measuring devices, laser trackers, laser scanners, and CAD-based
measurement and statistical process control software), (B) in the computer-aided
manufacturing business, or (C) in any business in direct competition with the
Company or any majority-owned subsidiary or affiliate of the Company
(collectively, the “Companies”);
ii. for
a
period of two (2) years from the expiration or termination of the Term call
upon
any person who is, at that time, an employee of any of the Companies for the
purpose or with the intent of enticing such employee away from or out of the
employ of any of the Companies;
iii. call
upon
any person or entity which is, at that time, or which has been, within one
year
prior to that time, a customer of any of the Companies for the purpose of
soliciting or selling products or services in direct competition with any of
the
Companies;
iv. call
upon
any prospective acquisition candidate, on Xxxxxx’x own behalf or on behalf of
any competitor, which candidate was, to Xxxxxx’x knowledge, within the preceding
one year, either called upon by any of the Companies or for which any of the
Companies made an acquisition analysis, for the purpose of acquiring such
entity; or
v. disclose
customers, whether in existence or proposed, of any of the Companies to any
person, firm, partnership, corporation or business for any reason or purpose
whatsoever except to the extent that any of the Companies has in the past
disclosed such information to the public for valid business reasons.
Notwithstanding
the above, the foregoing covenant shall not be deemed to prohibit Xxxxxx from
acquiring
as an
investment not more than 1% of the capital stock of a competing business, whose
stock is traded on a national securities exchange, the Nasdaq Stock Market
or
similar market.
6
B. Because
of the difficulty of measuring economic losses to the Company as a result of
a
breach of the foregoing covenant, and because of the immediate and irreparable
damage that could be caused to the Company for which it would have no other
adequate remedy, Xxxxxx agrees that, in the event of breach by her, the Company
shall be entitled to specific performance, including immediate issuance of
a
temporary restraining order and/or preliminary or permanent injunctive relief
enforcing this Agreement, and to judgment for damages caused by her breach,
and
to any other remedies provided by applicable law. In the event any of the terms
or conditions of this Agreement are found unreasonable by a court of competent
jurisdiction, Xxxxxx agrees to accept as binding in lieu thereof, any such
lesser restrictions which said court may deem reasonable.
C. It
is
agreed by the parties that the foregoing covenants in this Section 9 impose
a
reasonable restraint on Xxxxxx in light of the activities and business of the
Companies on the date of the execution of this Agreement and the current plans
of the Companies; but it is also the intent of the Company and Xxxxxx that
such
covenants be construed and enforced in accordance with the changing activities,
business and locations of the Companies throughout the term of this Agreement.
D. The
Company and the Companies have international operations and conduct business
throughout the world. In her employment with the Company, Xxxxxx has performed
services for the Company throughout the United States and in various foreign
jurisdictions. The provisions of this Section 9 is intended to apply to the
fullest extent possible in all of the United States and in every foreign
jurisdiction in which the Company conducts business.
E. The
covenants in this Section 9 are severable and separate, and the unenforceability
of any specific covenant shall not affect the provisions of any other covenant.
Moreover, in the event any court of competent jurisdiction shall determine
that
the scope, time or territorial restrictions set forth are unreasonable, then
it
is the intention of the parties that such restrictions be enforced to the
fullest extent which the court deems reasonable, and the Agreement shall thereby
be reformed.
F. The
Company and Xxxxxx hereby agree that this covenant is a material and substantial
part of this Agreement.
G. The
parties agree that the covenants in this Section 9 shall apply in the event
the
Term expires.
10. MISCELLANEOUS
A. Entire
Agreement.
This
Agreement embodies the entire Agreement and understanding between the Company
and Xxxxxx relating to the subject matter hereof. This Agreement supersedes
and
cancels all prior agreements between the Company and Xxxxxx, whether written
or
oral, relating to the engagement of Xxxxxx as a consultant and relating to
her
prior employment by the Company, other than the Employment, Assignment of
Inventions, and Confidentiality Agreement previously executed by Xxxxxx and
the
Company. To
the
extent such Employment, Assignment of Inventions, and Confidentiality Agreement
contradicts the terms of this Agreement, such agreement is superseded by this
Agreement; however, with this exception, such Employment, Assignment of
Inventions, and Confidentiality Agreement shall remain in full force and effect.
7
B. Vesting
under all stock options, restricted stock, restricted stock units, and other
rights to purchase shares of common stock of the Company shall terminate on
the
Effective Date; provided, however, that neither this Agreement nor Xxxxxx’x
separation from employment with the Company shall in any way impact the
exercisability or right to receive the shares of common stock underlying any
stock options, restricted stock, restricted stock units, and other rights to
purchase shares of common stock of the Company held by Xxxxxx, all of which
will
continue to be controlled by the applicable governing agreements and
plans.
C. Survival.
The
parties intend that a number of provisions in this Agreement, as is evident
from
their terms, will remain in force after the termination or expiration of the
Term.
D. Legal
Matters.
The
laws of the State of Florida and the federal laws of the United States of
America, excluding the laws of those jurisdictions pertaining to resolution
of
conflicts with laws of other jurisdictions, govern the validity, enforcement,
construction, and interpretation of this Agreement. In the event that there
is
any litigation under this Agreement, Xxxxxx and the Company (a) consent to
the
personal jurisdiction of the state and federal courts having jurisdiction in
Orange County, Florida, (b) stipulate that the proper, convenient, and exclusive
venue for any legal proceeding arising out of this Agreement is Orange County,
Florida, for a state court proceeding, or the Middle District of Florida,
Orlando Division, for a federal court proceeding, and (c) waive any defense,
whether asserted by motion or pleading, that Orange County, Florida, or the
Middle District of Florida, Orlando Division, is an improper or inconvenient
venue.
E. Severability.
If any
of the provisions of this Agreement are held invalid for any reason, the
remainder will not be affected and will remain in full force and effect in
accordance with its terms.
F. Notice.
Any
notice, request, or instruction to be given hereunder shall be in writing and
shall be deemed given when personally delivered or sent by telecopy transmission
or three (3) days after being sent by United States mail, postage prepaid to
the
parties at their respective address set forth below.
|
(i)
|
To
the Company:
|
|
|
FARO
TECHNOLOGIES, INC.
|
||
|
Attention:
Chief Financial Officer
|
||
|
000
Xxxxxxxxxx Xxxx
|
||
|
Xxxx
Xxxx, XX 00000
|
||
|
(ii)
|
To
Xxxxxx:
|
|
|
To
Xxxxxx’x address contained in the Company’s
records.
|
8
G. Amendment
and Waiver. No
waiver
of any provision of this Agreement will be valid unless in writing and signed
by
the person against whom it is sought to be enforced. The failure by either
party
to insist upon strict performance of any provision will not be construed as
a
waiver or relinquishment of the right to insist upon strict performance of
the
same provision at any other time, or any other provision of this
Agreement.
H. Survival
of Rights and Obligations. All
post-termination rights and obligations of Xxxxxx and the Company pursuant
to
this Agreement survive the termination of this Agreement. This Agreement shall
inure to the benefit of successors and assigns.
I. Further
Assurances. Each
party hereto shall cooperate and shall take such further action and shall
execute and deliver such further documents as may be reasonably necessary in
order to carry out the provisions and purposes of this Agreement.
J. No
Strict Construction.
The
parties have jointly participated in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
hereto, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions
of
this Agreement.
K. Counterparts.
This
Agreement may be executed in multiple counterparts, each of which is an original
but which shall together constitute one and the same instrument.
L. Costs.
In any
mediation, arbitration, or legal proceeding between Xxxxxx and the Company
arising out of this Agreement, the losing party shall reimburse the prevailing
party, on demand, for all costs incurred by the prevailing party in enforcing,
defending, or prosecuting this Agreement.
M. Assignment;
Successors.
Xxxxxx
shall not assign her rights or delegate any of her obligations under this
Agreement, and any attempted assignment or delegation by Xxxxxx will be invalid
and ineffective against the Company. The
Company may assign its rights under this Agreement without Xxxxxx’x consent to
any assignee or successor in interest of its business, whether pursuant to
a
sale, merger, or sale or exchange of assets or outstanding stock of the Company.
This Agreement is binding on, and inures to the benefit of, the Company’s
authorized assignees and successors. Upon assignment of the Company’s rights
under this Agreement, (a) every reference in this Agreement to the “Company”
will include the assignee, and (b) if the assignee expressly assumes in writing
or by operation of law all the liabilities of the assignor generally or under
this Agreement specifically, the assignor will be released from all its
obligations to Xxxxxx under this Agreement.
N. Notices.
Every
notice, demand, consent, or other communication required or permitted under
this
Agreement will be valid only if it is in writing (whether or not this Agreement
expressly states that it must be in writing) and delivered personally or by
telecopy, commercial courier, or first-class, postage-prepaid, United States
mail (whether or not certified or registered, and regardless of whether a return
receipt is requested or received by the sender), and addressed to the addresses
for the parties listed below. A validly given notice, demand, consent, or other
communication will be effective on the earlier of its receipt, if delivered
personally or by telecopy or commercial courier, or the third day after it
is
postmarked by the United States Postal Service, if delivered by first-class,
postage-prepaid, United States mail.
9
X. XXXXXX
ACKNOWLEDGES THAT SHE HAS CAREFULLY READ THIS AGREEMENT, WAS AFFORDED SUFFICIENT
OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL OF HER CHOICE, AND TO ASK QUESTIONS
AND RECEIVE SATISFACTORY ANSWERS REGARDING THIS AGREEMENT, UNDERSTANDS HER
RIGHTS AND OBLIGATIONS UNDER IT, AND SIGNED IT OF HER OWN FREE WILL AND
VOLITION.
IN
WITNESS WHEREOF
the
parties have executed this Consulting Agreement effective the day and year
set
forth above.
|
FARO
TECHNOLOGIES, INC.
|
|
|
By:
/s/ Xxx X. Xxxxxxxx
Name:
Xxx X. Xxxxxxxx
Title:
President & Co-CEO
|
|
|
/s/ Xxxxxx Xxxxxx
|
|
| XXXXXX XXXXXX |
10
