TRANSITIONAL SERVICES AND DEPARTURE AGREEMENT
Exhibit 10.2
This Transitional Services and Departure Agreement (the “Agreement”) is entered into
by and between iRobot Corporation (the “Company”) and Xxxxxxxx X. Clear
(“Executive”) as of April 30, 2008.
WITNESSETH:
WHEREAS, as of the date of this Agreement, Executive is employed by the Company as its
Principal Financial Officer (“PFO”);
WHEREAS, Executive has indicated his decision to transition from his employment at the
Company, and Executive and the Company have mutually agreed that his employment will end on or
before December 31, 2008 (the actual last day of Executive’s employment shall be referred to herein
as the “Departure Date”);
WHEREAS, on a later date, the Company and the Executive may mutually agree to enter into a
supplementary agreement pursuant to which the Executive provides services to the Company that are
outside of the usual course of the Company’s business on a part-time, independent contractor basis,
at the rate of $1500 per full work day of services;
WHEREAS, Executive wishes to pursue consulting opportunities in emerging growth companies with
revenues of $50 to $300 million;
WHEREAS, Executive and the Company now desire to extinguish all prior agreements relating to
severance pay and benefits including, without limitation, the Executive Agreement by and among
iRobot Corporation and Executive dated March 15, 2006 (the “Executive Agreement”) (except
to the extent certain sections of the Executive Agreement are specifically preserved herein) and
replace all such agreements with this Agreement which sets forth the terms and conditions of the
Executive’s transition and ending of his employment with the Company.
NOW THEREFORE, in consideration of the mutual promises contained in this Agreement, Executive
and Company agree as follows:
1. Continuation of Services. The Company will continue to employ Executive on an
at-will basis through the Departure Date and, unless otherwise directed by the Company, Executive
shall continue to work and provide services as PFO to the Company on a regular full-time basis
through the Departure Date; provided, however, the Company may, in its discretion, reduce
Executive’s duties, responsibilities and required time commitment (but not his Salary (as defined
below)). It is understood that the Company has commenced a search for a replacement PFO. If the
Company’s search efforts are successful and a new PFO commences his employment prior to December
31, 2008, the Executive shall work cooperatively with the Company for as long as the Company pays
the Executive his Salary pursuant to Section 2(a) and, regardless of whether Executive remains an
employee, to transition his responsibilities to the new PFO (“Transitional Services”). It
is further understood and agreed that, from the date a new PFO commences employment at the Company
through the Departure Date, the Executive shall no longer be PFO and shall be the “Senior
Finance Advisor to the CEO.” As Senior Finance Advisor to the CEO, Executive will no longer be
a member of the Company’s senior management team and, among other things, he will not be eligible
to participate in the Senior Executive Incentive Compensation Plan.
2. Payments and Benefits to Executive.
(a) Salary Continuation. Executive will continue to receive his current salary at the rate of
$10,700 per bi-weekly pay period, less applicable deductions and withholdings (“Salary”)
on the Company’s regular payroll dates through the Departure Date; provided however, if the
Departure Date occurs prior to December 31, 2008 because (i) the Company
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terminates Executive’s employment without Cause, or (ii) Executive resigns from employment at
the Company in order to commence alternative employment at a non-competitive entity, the Company
shall continue Executive’s Salary through December 31, 2008 provided Executive signs and does not
revoke (within the time frames set forth in the document) a general release of claims in a form
acceptable to the Company (“General Release”) and Executive continues to provide Company
with Transitional Services and/or such other post-employment assistance that the Company may
reasonably require until December 31, 2008. For purposes of this Agreement, “Cause” shall mean any
one or more of the following: (i) Executive’s willful failure or refusal (except due to disability
or a condition reasonably likely to be deemed a disability with the passage of time) to perform
substantially his/her duties on behalf of the Company for a period of thirty (30) days after
receiving written notice identifying in reasonable detail the nature of such failure or refusal;
(ii) Executive’s conviction of, entry of a plea of guilty or nolo contendere to, or admission of
guilt in connection with a felony; (iii) disloyalty, willful misconduct or breach of fiduciary duty
by Executive which causes material harm to the Company; or (iv) Executive’s willful violation of
any confidentiality, inventions or non-competition agreement which causes material harm to the
Company. Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for
Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted
by the Company’s Board of Directors (the “Board”) (excluding Executive if he is a Director)
at a meeting of the Board called and held for (but not necessarily exclusively for) that purpose
(after reasonable notice to Executive and an opportunity for Executive, together with counsel of
his choice, to be heard by the Board) finding that Executive has, in the good faith opinion of the
Board, engaged in conduct constituting Cause and specifying the particulars thereof in reasonable
detail.
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| Xxxxx 00, 0000 |
(x) Usual Benefits. Consistent with the Company’s policies, Executive shall continue to be
eligible for employee benefits, including medical and dental benefits, and shall continue to accrue
vacation through the Departure Date. The Company shall pay Executive any accrued but unused
vacation no later than the next regular payroll date following the Departure Date. In addition,
the Company shall reimburse Executive for business expenses incurred on or before the Departure
Date, in accordance with Company’s expense reimbursement practices. Executive’s eligibility to
participate in other employee benefits, including in the Company’s 401(k) Savings Plan, ceases as
of the Departure Date consistent with the terms of those plans.
(c) Health Benefit Continuation. In the event (i) Executive’s employment is terminated by the
Company without Cause or (ii) Executive resigns from employment at the Company in order to commence
alternative employment at a noncompetitive entity prior to December 31, 2008, Executive will be
provided with the opportunity to receive Company-paid health benefit continuation. Specifically,
if Executive signs and does not revoke a General Release, and continues to provide the Company
Transitional Services and/or such other post-employment assistance that the Company may reasonably
require until December 31, 2008, and elects to continue his medical and dental insurance coverage
after the Departure Date under the law known as COBRA, the Company shall pay a percentage of the
medical and dental insurance premiums for Executive and his dependents, equal to the same
percentage of such premiums paid by the Company during the Executive’s employment, from the
Departure Date until the earlier of: (i) December 31, 2008, (ii) the date Executive and his
dependents become eligible for health or dental insurance through another employer, or (iii) the
date Executive and his dependents become ineligible for COBRA for any reason (the “Benefit
Continuation Period”). Executive shall promptly notify the Company upon becoming eligible for
health or dental insurance from
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another employer or upon becoming otherwise ineligible for COBRA. If Executive elects COBRA
continuation coverage, he may continue coverage for himself and any dependents after the end of the
Benefit Continuation Period at his own expense for the remainder of the COBRA period, to the extent
he and they remain eligible.
(d) Acceleration of Unvested Stock Options and Restricted Stock. Schedule A hereto
sets forth a summary of certain outstanding stock options and restricted stock awards granted to
Executive by the Company pursuant to the Company’s stock option and incentive plans (“Stock
Option Plans”) and the relevant award agreements related to such grants (collectively, the
“Award Agreements”). Subject to the Executive satisfying each of the Separation
Conditions, any then unvested options and restricted stock shall vest effective on the Departure
Date. All provisions of the Award Agreements shall remain in full force and effect in accordance
with their respective terms. Nothing in this Section 2(d) shall be construed to amend, change or
alter Executive’s rights and obligations with respect to exercising his vested options, including
those pursuant to his December 19, 2002 Option Grant under the Amended and Restated 1994 Stock Plan
which provides, among other things, that Executive has 60 days from the Departure Date to exercise
his vested options. For purposes of this Agreement “Separation Conditions” shall mean,
Executive: (i) fulfills his service duties and responsibilities as set forth in Sections 1 and
2(a) of this Agreement in a satisfactory manner as determined in good faith by the Board of
Directors through the Departure Date; (ii) is not terminated by the Company for Cause, and (iii)
after the Departure Date, signs (within 21 days after receipt) and does not revoke (within seven
days after signing) a General Release.
(e) Bonus Payment. Executive has the opportunity to earn a bonus payment (the “Bonus
Payment”) provided that each of the following conditions are met: (i) bonuses are
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paid pursuant to either (x) the Senior Executive Incentive Compensation Plan in effect for the
Company’s 2008 fiscal year (“FY2008”) or (y) bonuses are paid pursuant to the Company’s
2008 Incentive Compensation Plan, and (ii) Executive satisfies each of the Separation Conditions
set forth in Section 2(d). Executive’s Bonus Payment, if any, shall be calculated as follows:
(Executive’s Salary) x (the percentage of FY2008 during which Executive was employed by the Company
as PFO) x (the percentage that the Company would have used to calculate the Executive’s bonus
pursuant to the Senior Executive 2008 Incentive Compensation Plan if Executive had satisfied the
employee conditions of the Plan, such percentage not to exceed 40%) + (Executive’s Salary) x (the
percentage of FY2008 during which Executive was employed by the Company as Senior Finance Advisor
to the CEO) x (the percentage that the Company would have used to calculate the Executive’s bonus
pursuant to the 2008 Incentive Compensation Plan if Executive had satisfied the employee conditions
of the Plan, such percentage not to exceed 40%). The Bonus Payment shall not be earned unless and
until all of the Separation Conditions are fully satisfied and provided the Company is satisfied
that the Executive continued to provide Company with Transitional Services and/or such other
post-employment assistance that the Company reasonably required through December 31, 2008. The
Bonus Payment shall be paid at such time as when the Company’s other employees receive bonus
payments but in no event later than March 15, 2009. The Bonus Payment opportunity set forth in
this Section 2(e) shall be in lieu of and fully supersede any rights Executive may have or have had
to bonus or other incentive compensation.
3. General Release of Claims. Executive hereby irrevocably and unconditionally
releases, acquits and forever discharges the Company, its affiliated and related entities, its and
their respective predecessors, successors and assigns, its and their respective employee benefit
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plans and fiduciaries of such plans, and the current and former officers, directors,
shareholders, employees, attorneys, accountants and agents of each of the foregoing in their
official and personal capacities (collectively referred to as the “Releasees”) generally
from all claims, demands, debts, damages and liabilities of every name and nature, known or unknown
(“Claims”) that, as of the date when Executive signs this Agreement, Executive has, ever
had, now claims to have or ever claimed to have had against any or all of the Releasees. This
release includes, without limitation, all Claims: relating to Executive’s employment by and
termination of employment with the Company; of wrongful discharge; of breach of contract; of breach
of the Executive Agreement; of retaliation or discrimination under federal, state or local law of
the United States (including, without limitation, Claims of age discrimination or retaliation under
the Age Discrimination in Employment Act, Claims of disability discrimination or retaliation under
the Americans with Disabilities Act, and Claims of discrimination or retaliation under Title VII of
the Civil Rights Act of 1964); under any other federal or state statute; of defamation or other
torts; of violation of public policy; for wages, bonuses, incentive compensation, stock, stock
options, vacation pay or any other compensation or benefits; and for damages or other remedies of
any sort, including, without limitation, compensatory damages, punitive damages, injunctive relief
and attorney’s fees; provided, however, that this release shall not affect his rights under this
Agreement. As a material inducement to the Company to enter into this Agreement, Executive
represents that he has not assigned to any third party and has not filed with any agency or court
any Claim released by this Agreement.
4. Change in Control Benefits. In the event of a Change in Control (as defined in the
Executive Agreement), prior to the Departure Date Executive shall be entitled to immediate
accelerated vesting as set forth in Section 6 of the Executive Agreement. In addition, Section 10
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of the Executive Agreement shall remain in full force and effect and is hereby incorporated by
reference. In all other respects, the Executive Agreement is superseded by this Agreement.
5. Tax Treatment. The Company shall undertake to make deductions, withholdings and
tax reports with respect to payments and benefits under this Agreement to the extent that it
reasonably and in good faith determines that it is required to make such deductions, withholdings
and tax reports. Payments under this Agreement shall be subject to any such deductions or
withholdings. Nothing in this Agreement shall be construed to require the Company to make any
payments to compensate Executive for any adverse tax effect associated with any payments or
benefits or for any deduction or withholding from any payment or benefit.
6. Return of Property. Executive acknowledges that all documents, records, apparatus,
equipment and other physical property which were furnished or will be furnished to Executive in
connection with his employment at the Company remain and will remain the sole property of the
Company. Executive will return to the Company all such materials and property when requested by
the Company. In any event, Executive will return all such materials and property on or before the
Departure Date, including, without limitation, all computer equipment, laptops, software, keys and
access cards, credit cards, cell phone, files and any documents (including computerized data and
any copies made of any computerized data or software) containing information concerning the
Company, its business or its business relationships (in the latter two cases, actual or
prospective). In the event that Executive discovers that he continues to retain any such property
after the termination of his employment, he shall return it to the Company immediately. After
fulfilling his return of property obligations, Executive shall delete and finally purge any
duplicates of files or documents that may contain Company information from any computer or other
device that remains his property after the Departure Date.
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Notwithstanding the above, Executive will be allowed to keep his current laptop computer and
PDA/cell phone, including portability of the cell phone number, provided all company data has been
removed (restored to its original purchase condition) by the Company’s IT department.
7. Confidentiality and Existing Restrictive Covenants. Executive shall not disclose
to any third party any information which, during his employment, he knew, or reasonably should have
known, is considered by the Company to be confidential and/or proprietary. The foregoing
obligation is in addition to, and not in lieu of, any obligation set forth in any confidentiality
or non-disclosure agreement previously signed by Executive including the iRobot Corp. Invention
Confidentiality Agreement dated February 3, 2003 which terms and conditions shall remain in full
force and effect and are hereby incorporated by reference. Similarly, the terms of any existing
agreement between the Company and Executive containing restrictive covenants, including, without
limitation, the Noncompetition and Nonsolicitation Agreement between Executive and the Company
dated March 15, 2006 (all such agreements referred to in this Section 6 shall be collectively
referred to as “Restrictive Covenants”) shall remain in full force and effect and are
hereby incorporated by reference.
8. Future Cooperation. During his employment and thereafter, Executive agrees to
cooperate reasonably with the Company and all of its affiliates and related entities, including its
and their outside counsel, in connection with the contemplation, prosecution and defense of all
phases of existing, past and future litigation about which the Company believes Executive may have
knowledge or information. Executive further agrees to make himself available at mutually
convenient times during and outside of regular business hours as reasonably deemed necessary by the
Company’s counsel. Executive agrees to appear without the necessity of a subpoena and to testify
truthfully in any legal proceedings in which the Company calls him as a witness. The
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Company shall reimburse Executive for out-of-pocket business expenses incurred directly as the
result of requested future cooperation, in accordance with Company’s expense reimbursement
practices.
9. Suspension /Termination of Payments. In the event that Executive fails to comply
with any of his obligations under this Agreement including but not limited to the provisions of the
Agreement which have been incorporated by reference, in addition to any other legal or equitable
remedies it may have for such breach the Company shall have the right to terminate or suspend its
payments or benefits to or made on behalf of Executive under this Agreement. The termination or
suspension of such payments in the event of such breach by Executive will not affect his continuing
obligations under this Agreement.
10. Legal Representation. This Agreement is a legally binding document and his
signature will commit Executive to its terms. Executive acknowledges that he has been advised to
discuss all aspects of this Agreement with his attorney, and that he has carefully read and fully
understands all of the provisions of this Agreement and that he is voluntarily entering into this
Agreement.
11. Absence of Reliance. In signing this Agreement, Executive is not relying upon any
promises or representations made by anyone at or on behalf of the Company.
12. Non-Admission. This Agreement shall not in any way be construed as an admission
by the Company of any liability or any act of wrongdoing whatsoever against Executive. The Company
specifically disclaims any liability or wrongdoing whatsoever against Executive or any other person
on the part of the Company, its affiliates, and their current and former agents, employees and
shareholders.
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13. Enforceability. If any portion or provision of this Agreement (including, without
limitation, any portion or provision of any section of this Agreement or portions of the Agreement
that have been incorporated by reference) shall to any extent be declared illegal or unenforceable
by a court of competent jurisdiction, then the remainder of this Agreement, or the application of
such portion or provision in circumstances other than those as to which it is so declared illegal
or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement
shall be valid and enforceable to the fullest extent permitted by law.
14. Waiver. No waiver of any provision of this Agreement shall be effective unless
made in writing and signed by the waiving party. The failure of any party to require the
performance of any term or obligation of this Agreement, or the waiver by any party of any breach
of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be
deemed a waiver of any subsequent breach.
15. Enforcement.
(a) Jurisdiction. Executive and the Company hereby agree that the courts of the Commonwealth
of Massachusetts shall have the exclusive jurisdiction to consider any matters related to this
Agreement, including without limitation any claim for violation of this Agreement. With respect to
any such court action, Executive (i) submits to the jurisdiction of such courts, (ii) consents to
service of process, and (iii) waives any other requirement (whether imposed by statute, rule of
court or otherwise) with respect to personal jurisdiction or venue.
(b) Relief. Executive agrees that it would be difficult to measure any harm caused to the
Company that might result from any breach by Executive of his promises set forth in Sections 6, 7
or 8 and that in any event money damages would be an inadequate remedy for any such breach.
Accordingly, if Executive breaches, or proposes to breach, any portion of his
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obligations under Sections 6, 7 or 8, the Company shall be entitled, in addition to all other
remedies it may have, to an injunction or other appropriate equitable relief to restrain any such
breach, without showing or proving any actual damage to the Company and without the necessity of
posting a bond.
16. Governing Law; Interpretation. This Agreement shall be interpreted and enforced
under the laws of the Commonwealth of Massachusetts without regard to conflict of laws principles.
In the event of any dispute, this Agreement is intended by the parties to be construed as a whole,
to be interpreted in accordance with its fair meaning, and not to be construed strictly for or
against either Executive or the Company or the “drafter” of all or any portion of this
Agreement.
17. Entire Agreement. This Agreement, including all provisions that are incorporated
by reference, the Indemnification Agreement, the Stock Option Plan, Award Agreements, and the
Restrictive Covenants between Executive and the Company constitute the entire agreement between
Executive and the Company. This Agreement supersedes any previous agreements or understandings
between Executive and the Company relating to the subject matter herein including, without
limitation, the Executive Agreement, except as specifically provided in Section 4 of this
Agreement.
18. Time for Consideration and Effective Date. Executive acknowledges and agrees that
he had the opportunity to consider this Agreement for more than twenty-one (21) days before signing
it and that no modifications to this Agreement had the effect of restarting the twenty one day
consideration period. To accept this Agreement, Executive must return a signed original of this
Agreement so that it is received by the undersigned at or before April 24, 2008. If Executive
signs this Agreement before April 24, 2008, he acknowledges by signing this
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Agreement that such decision was entirely voluntary and that he had the opportunity to
consider this Agreement for more than a twenty-one (21) day period. For the period of seven (7)
days from the date when this Agreement becomes fully executed, Executive has the right to revoke
this Agreement by written notice to the undersigned. For such a revocation to be effective, it
must be delivered so that it is received by the undersigned at or before the expiration of the
seven (7) day revocation period. This Agreement shall not become effective or enforceable during
the revocation period. This Agreement shall become effective on the first business day following
the expiration of the revocation period (the “Effective Date”). Notwithstanding the
foregoing, the Company may withdraw the offer of this Agreement or may void this Agreement before
the Effective Date if Executive (i) is terminated by the Company for Cause; (ii) fails to cooperate
reasonably with requests by the Company; (iii) breaches any other provision of this Agreement.
19. Attorneys’ Fees. Each party shall bear his or its own costs and attorney’s fees
in connection with the negotiation and drafting of this Agreement. In the event of any legal
action to enforce this Agreement, including those provisions that have been incorporated by
reference, the party that prevails in such action shall be entitled to recover his, or its
attorney’s fees and costs from the non-prevailing party or parties.
20. No Transfer. Executive represents that he has not assigned or transferred, or
purported to assign or transfer, to any person or entity, any Claim against any of the Releasees or
any portion thereof or interest therein.
21. Binding Nature of Agreement. This Agreement shall be binding upon each of the
parties and upon the heirs, administrators, representatives, executors, successors and assigns of
each of them, and shall inure to the benefit of each party and to the heirs, administrators,
representatives, executors, successors, and assigns of each of them.
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22. Modification of Agreement. This Agreement may be amended, revoked, changed, or
modified only upon a written agreement executed by both parties. No waiver of any provision of
this Agreement will be valid unless it is in writing and signed by the party against whom such
waiver is charged.
23. Counterparts. This Agreement may be executed in counterparts, and each
counterpart, when executed, shall have the efficacy of a signed original.
(The remainder of this page is intentionally blank.)
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24. Definition. For purposes of this Agreement, the term “Company” shall include the
Company and its affiliated and related entities, and its and their respective predecessors,
successors and assigns.
This Agreement has been executed as a sealed instrument by Executive and the Company.
| EXECUTIVE | ||||||||||
/s/ Xxxxxxxx X. Clear |
April 30, 2008 | |||||||||
| Xxxxxxxx X. Clear | Date | |||||||||
| iRobot Corporation | ||||||||||
By: |
/s/ Xxxxx Xxxxx | April 30, 2008 | ||||||||
| Name: | Xxxxx Xxxxx | Date | ||||||||
| Title: | CEO | |||||||||
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EXHIBIT A
Stock Options
| Number of | ||||||||||||||
| Number of | Unexercised | |||||||||||||
| Date of Option | Unexercised | Options Vested | Name of Stock | |||||||||||
| Grant | Exercise Price | Options | as of 4/30/08 | Plan | ||||||||||
| 12/19/2002 | $ | 0.55 | 46,440 | 46,440 | Amended and
Restated 1994 Stock
Plan |
|||||||||
| 2/8/2005 | $ | 4.96 | 12,000 | 6,000 | Amended and
Restated 2004 Stock
Option and
Incentive Plan |
|||||||||
| 5/25/2007 | $ | 16.03 | 12,000 | 0 | 2005 Stock Option
and Incentive Plan |
|||||||||
Restricted Stock and Restricted Stock Units (RSU)
| Date of Restricted | Number of | Number of Restricted | ||||||||
| Stock or RSU | Restricted Shares | Shares or RSUs Vested | ||||||||
| Grant | or RSUs | as of 4/30/08 | Name of Stock Plan | |||||||
| 5/25/2007 | 3,000 | [0 | 2005 Stock Option
and Incentive Plan |
|||||||
| 3/28/2008 | 3,350 | 0 | 2005 Stock Option
and Incentive Plan |
|||||||
Clear Separation Agreement
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