Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), made as of the 1st day of
May, 1998, is entered into by Intelligent Controls, Inc., a Maine
corporation with its principal place of business at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual
residing at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Executive").
Recitals:
A. The Company desires to have the Executive serve as the President
and Chief Executive Officer of the Company upon the terms and conditions
hereinafter set forth.
B. The Executive desires to be employed in such capacities upon the
terms and conditions hereinafter set forth.
C. Concurrently with the execution of this Agreement, the Company is
completing the sale of 1,538,462 shares of its common stock to Ampersand
Specialty Materials and Chemicals III Limited Partnership, a Delaware
limited partnership, and Ampersand Specialty Materials and Chemicals III
Companion Fund Limited Partnership, a Delaware limited partnership (the
"Investors"), pursuant to an Investment Agreement dated as of March 26, 1998
by and among the Company, the Investors and the Executive (the "Investment
Agreement").
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the
parties agree as follows:
1. TERM OF EMPLOYMENT. Upon the other terms and conditions set forth
in this Agreement, the Company hereby agrees to employ the Executive, and
the Executive hereby accepts employment with the Company, commencing on May
1, 1998 (the "Commencement Date") and ending on June 30, 2000; provided,
however, that the term of the Executive's employment hereunder shall be
automatically extended for periods of one (1) year after such date, unless
and until the Company or the Executive shall have delivered to the other
written notice of its or his election to terminate this Agreement as of such
date or the end of any one-year extension period, such notice to be
delivered at least ninety (90) days prior to the date of termination. The
period of time during which the Executive is employed hereunder is hereafter
referred to as the "Employment Period".
2. TITLES; DUTIES. The Executive shall serve as the President and
Chief Executive Officer of the Company, subject to the general direction and
control of the board of directors of the Company (the "Board"). The
Executive hereby accepts such employment and agrees to undertake the duties
and responsibilities inherent in such positions and such other executive
duties and responsibilities as the board of directors shall from time to
time assign to him. The Executive agrees to devote his entire business
time, attention and energies to the business and interests of the Company
during the Employment Period; provided, however, that the Executive shall
have the right to continue serving on the advisory board of American MSI
Corporation and to serve as a director of up to one other company. The
Executive agrees to abide by the rules, regulations, instructions, personnel
practices and policies of the Company and any changes therein which may be
adopted from time to time by the Company.
3. COMPENSATION AND BENEFITS.
(a) SALARY; CAR ALLOWANCE. During the Employment Period, the Company
shall pay the Executive, in equal bi-weekly installments, a base salary at
the rate of $175,000 per year, subject to annual increases in the discretion
of the Board based on the Executive's performance. In addition, the Company
shall pay the Executive a car allowance at the rate of $600 per month.
(b) BONUSES. During the Employment Period, the Executive shall be
eligible to receive an annual bonus of up to 30% of the Executive's annual
base salary, the first of such bonuses to accrue beginning on the date as of
which the Investment Agreement is executed. The Executive's eligibility to
receive such bonus shall be dependent on the achievement of financial and
operating objectives determined by the Board.
(c) EXECUTIVE BENEFIT PLANS. During the Employment Period, the
Executive shall be eligible to participate in any life insurance, medical,
retirement, pension or profit-sharing or other benefit plans or arrangements
now or hereafter generally made available by the Company to executive
officers of the Company to the extent the Executive qualifies under the
provisions of any such plans (collectively, the "Benefits").
(d) VACATION. During the Employment Period, the Executive shall be
entitled to vacations (taken consecutively or in segments), not to exceed an
aggregate of four (4) weeks per year.
(e) APARTMENT. For a period ending on the earlier of (i) the first
anniversary of the Commencement Date and (ii) the date the Executive secures
a permanent residence in the State of Maine, the Company shall reimburse
Executive, or pay directly, all reasonable expenses associated with a
furnished apartment.
(f) EXPENSE REIMBURSEMENT. The Company shall reimburse the Executive
for all reasonable expenses properly incurred by him on behalf of the
Company in the performance of his duties hereunder and in accordance with
policies set by the Board; provided that proper vouchers are submitted to
the Company by the Executive evidencing such expenses and the purposes for
which the same were incurred.
(g) RESTRICTED STOCK. As additional consideration for his provision
of services hereunder, the Company will offer the Executive the opportunity
to purchase on, or within thirty (30) days following, the Commencement Date
486,923 shares of the Company's common stock, no par value (the "Common
Stock"), at $3.25 per share pursuant to a Restricted Stock Agreement in form
of Exhibit A hereto.
(h) LOAN. In connection with the purchase of Common Stock pursuant
to Section 3(g), the Company shall extend a loan to the Executive in the
original principal amount of $1,332,500 and bearing interest at the
applicable federal rate determined under Section 1274 of the Internal
Revenue Code of 1986, as amended (the "Loan"). The Loan shall be fully
recourse only with respect to $200,000 of the principal amount thereof and
the interest on such portion of the principal amount, and shall be evidenced
by a promissory note in the form of Exhibit B hereto. The Loan shall be
secured by a pledge of shares of Common Stock owned by the Executive
pursuant to a Pledge Agreement in the form of Exhibit C hereto.
4. EMPLOYMENT TERMINATION. The employment of the Executive pursuant
to this Agreement shall terminate upon the occurrence of any of the
following:
(a) At the election of the Company, for cause, immediately upon
written notice by the Company to the Executive. For purposes of this
Agreement, "cause" shall be deemed to exist upon a good faith finding by the
Board that the Executive has (i) committed an act constituting fraud,
embezzlement or other felony, (ii) breached his fiduciary duties to the
Company or (iii) willfully failed to perform his duties and responsibilities
hereunder.
(b) At the election of the Company, without cause, immediately upon
written notice by the Company to the Executive, subject to the provisions of
Section 5(b).
(c) The death or disability of the Executive. For purposes of this
Agreement, "disability" shall mean the degree of incapacitation as a result
of illness or accident and whether physical or mental which, in the opinion
of an independent medical expert selected by the Company and approved by the
Executive (which approval shall not be unreasonably withheld), makes it
reasonably unlikely that the Executive will be able to perform his normal
duties for a period of one hundred twenty (120) days, whether or not
consecutive, during any 360-day period.
(d) At the election of the Executive, for any reason, upon at least
ninety (90) days prior written notice to the Company.
5. EFFECT OF TERMINATION.
(a) TERMINATION BY THE COMPANY FOR CAUSE. In the event the
Executive's employment is terminated for cause pursuant to Section 4(a), the
Company shall pay or provide to the Executive the compensation and Benefits
otherwise payable to him under Section 3 through the last day of his actual
employment by the Company, but shall have no responsibility for any
compensation or benefits to the Executive for any time period subsequent to
such termination.
(b) TERMINATION BY THE COMPANY WITHOUT CAUSE. In the event the
Executive's employment is terminated without cause pursuant to Section 4(b),
the Company shall (i) continue to pay him, on a [bi-weekly] basis, his base
salary specified in Section 3(a), as in effect at the time of such
termination, for the twelve-month period commencing on the date of such
termination, and (ii) continue to provide him, for the twelve-month period
commencing on the date of such termination, with the Benefits to which he
would otherwise have been entitled hereunder had his employment not been
terminated; provided, however, that if pursuant to terms of any plan or
arrangement under which Benefits are provided the Company is unable to
continue to provide those Benefits to the Executive for all or a portion of
such twelve-month period at a cost comparable to that which would apply if
the Executive remained an employee of the Company, the Company shall have
the right to discontinue providing those Benefits to the Executive and in
lieu thereof to pay the Executive a cash amount equal to the cost to the
Company of continuing to provide those Benefits for the remainder of such
twelve-month period, assuming the Executive remained an employee of the
Company; and provided further, that in the event Executive has secured full
time employment in a comparable position, any such obligation on the part of
the Company shall cease upon the later of the date Executive has secured
such comparable employment, or six (6) months from the date of termination.
(c) TERMINATION DUE TO DEATH. In the event the Executive's
employment is terminated due to his death, the Company shall pay or provide
to the estate of the Executive the compensation and Benefits which would
otherwise be payable to the Executive under Section 3 through the date of
termination of his employment, but the Company shall have no responsibility
for any compensation or benefits to the Executive or his estate for any time
period subsequent to such termination.
(d) TERMINATION DUE TO DISABILITY. In the event the Executive's
employment is terminated due to his disability, the Company shall for the
twelve-month period commencing on the date of such termination (i) continue
to pay him, on a bi-weekly basis, an amount equal to the difference between
(A) his base salary specified in Section 3(a), as in effect at the time of
such termination, and (B) the pre-tax equivalent amount received by the
Executive pursuant to any disability insurance provided to the Executive by
the Company and (ii) continue to provide him with the Benefits to which he
would otherwise have been entitled hereunder had his employment not been
terminated; provided, however, that if pursuant to terms of any plan or
arrangement under which Benefits are provided the Company is unable to
continue to provide those Benefits to the Executive for all or a portion of
such twelve-month period at a cost comparable to that which would apply if
the Executive remained an Executive of the Company, the Company shall have
the right to discontinue providing those Benefits to the Executive and in
lieu thereof to pay the Executive a cash amount equal to the cost to the
Company of continuing to provide those Benefits for the remainder of such
twelve-month period, assuming the Executive remained an Executive of the
Company.
(e) VOLUNTARY TERMINATION BY THE EXECUTIVE. In the event the
Executive's employment is terminated by the Executive pursuant to Section
4(d), the Company shall pay or provide to the Executive the compensation and
Benefits otherwise payable to him under Section 3 through the last day of
his actual employment by the Company, but shall have no responsibility for
any compensation or benefits to the Executive for any time period subsequent
to such termination. Provided, however, that for all purposes of this
Agreement, the Executive's resignation of his employment following the
occurrence of any of the following shall constitute a termination of the
Executive's employment by the Company without cause pursuant to Section
4(b):
(i) any material reduction in the Executive's duties,
responsibilities, or authority, as described herein;
(ii) any modification or termination of, or adjustment of the
terms of the Executive's participation in, any bonus, incentive, or
other employee benefit plan unless such modification, termination, or
adjustment is applicable to employees or executives of the Company
generally or unless after taking into account all such modifications,
terminations, and adjustments not generally applicable to employees or
executives, the economic value to the Executive of all such plans in
the aggregate remains substantially equivalent, in the aggregate, to
their value as of the Commencement Date; or
(iii) any material failure of the Company to comply with the
terms of this Agreement.
(f) TERMINATION UPON NONRENEWAL. If the Executive's employment
terminates on or before June 30, 2001 because the Company (but not the
Executive) has given notice of nonrenewal in accordance with Section 1
above, then the Executive shall thereupon be entitled to the same severance
pay and Benefits as would be provided under Section 5(b) upon a termination
by the Company without cause.
6. CONFIDENTIAL INFORMATION.
(a) CONFIDENTIAL INFORMATION. The Executive acknowledges and
understands that in the performance of his service as an employee under this
Agreement, he will obtain knowledge of Confidential Information. The
Executive agrees that he shall not, either during the Employment Period or
at any time thereafter, except as required in the performance of his
services for the Company, (i) use or disclose any Confidential Information
outside the Company, or (ii) remove or aid in the removal from the premises
of the Company any Confidential Information or any property or material
relating thereto.
(b) DELIVERY OF MATERIAL. The Executive shall deliver promptly to
the Company on the termination of his employment, or at any other time the
Company may so request, all memoranda, notes, records, reports, manuals,
computer disks, videotapes, drawings, blueprints and other documents (and
all copies thereof) which, and to the extent they, embody Confidential
Information which he may then possess or have under his control.
(c) CUSTOMER LISTS. The Executive acknowledges that (i) all existing
lists of customers, vendors and advertisers of the Company developed during
the course of the Executive's employment by the Company are and shall be the
sole and exclusive property of the Company and that the Executive neither
has nor shall have any right, title or interest therein, (ii) such lists are
and must continue to be confidential, and (iii) such lists are not readily
accessible to competitors of the Company.
(d) DEFINITIONS. For the purposes of this Section 6, "Confidential
Information" shall mean any information, including, without limitation,
trade "know-how", trade secrets, subscriber, advertiser and customer lists,
pricing policies, operational methods, methods of doing business, technical
processes, formulae, designs and design projects, inventions, software
programs, business plans, projects, research projects, and other business
affairs of the Company which (i) is or is designed to be used in the
business of the Company or results from its research or development
activities, and (ii) is conceived, developed, discovered or received by, or
made available to, the Executive during the period that the Executive is
employed by the Company, in the course of his employment with the Company.
Confidential Information does not include, and no restriction of the
Executive contained in this Agreement shall apply to, any of the following
information: (i) that at or prior to the time of its availability,
disclosure to or development, conception or discovery by the Executive, was
generally known by the public; (ii) was available to the public on a non-
confidential basis prior to its availability, disclosure to or development,
conception or discovery by the Executive; or (iii) is now or subsequently
becomes rightfully known in the industry of which the Company is a part.
The phrase "business of the Company" in Sections 6 and 7 shall mean the
business in which the Company is now engaged or which may hereafter become
engaged during the course of the Executive's employment by the Company. The
term "Company" in Sections 6, 7 and 8 shall mean the Company and any
subsidiary of the Company.
7. NON-COMPETITION COVENANTS.
(a) NON-COMPETITION COVENANTS. The Executive agrees that he will
not, during the Non-Competition Period, compete directly or indirectly with
the business of the Company. The phrase "compete directly or indirectly
with the business of the Company" shall mean (1) engaging or having a
material interest, directly or indirectly, as owner, employee, officer,
director, partner, sales representative, stockholder, capital investor,
lessor, renderer of consultation services or advice, either alone or in
association with others, in the operation of any aspect of a business or
enterprise which is competitive with the business in which the Company is
engaged during the Employment Period; (2) soliciting any employee of the
Company to leave the employ of the Company; (3) soliciting any of the
employees of the Company to become employees of any other person or entity;
or (4) soliciting any customer of the Company with respect to the business
of the Company.
(b) NON-COMPETITION PERIOD. For the purposes of this Section 7,
"Non-Competition Period" shall mean the period during which the Executive is
employed by the Company and the one-year period commencing on the last day
of the Executive's employment by the Company.
8. INJUNCTIVE AND OTHER EQUITABLE RELIEF.
(a) The Executive acknowledges that the services to be rendered by
him under the terms of this Agreement are of a special, unique and
extraordinary character, which gives them a peculiar value, the loss of
which cannot be reasonably or adequately compensated in damages in any
action at law. By reason of this, the Executive consents and agrees that if
he violates any of the provisions of Section 6 and 7 hereof, the Company
shall be entitled, in addition to any other remedies it may have at law, to
the remedies of injunction, specific performance and other equitable relief
for a breach by the Executive of Sections 6 and 7 of this Agreement. This
Section 8 shall not, however, be construed as a waiver of any of the rights
which the Company may have for damages or otherwise.
(b) Any waiver by the Company of a breach of any provision of Section
6 and 7 hereof shall not operate or be construed as a waiver of any
subsequent breach of such provision or any other provision hereof.
(c) The Executive agrees that each provision of Section 6 and 7 shall
be treated as a separate and independent clause, and the unenforceability of
any one clause shall in no way impair the enforceability of the other
clauses herein. Moreover, if one or more of the provisions contained in
Section 6 and 7 shall for any reason be held to be excessively broad as to
scope, activity or subject so as to be unenforceable at law, such provision
or provisions shall be construed by the appropriate judicial body by
limiting and reducing it or them so as to be enforceable to the maximum
extent compatible with the applicable law as it shall then appear.
(d) The Executive's obligations under Section 6 and 7 shall survive
the termination of his employment regardless of the manner of such
termination and shall be binding upon his heirs, executors, administrators
and legal representatives.
9. OTHER AGREEMENTS. The Executive hereby represents and warrants
that he is not bound by the terms of any agreement with any previous
employer or other party to refrain from using or disclosing any trade secret
or confidential or proprietary information in the course of his employment
with the Company or to refrain from competing, directly or indirectly, with
the business of such previous employer or any other party. The Executive
further represents and warrants that his performance of all the terms of
this Agreement and as an Executive of the Company does not and will not
breach any agreement to keep in confidence proprietary information,
knowledge or data acquired by him in confidence or in trust prior to his
employment with the Company.
10. ENTIRE AGREEMENT; AMENDMENTS. This Agreement sets forth the
entire understanding of the parties with respect to the subject matter
hereof, and no statement, representation, warranty or covenant has been made
by any party except as expressly set forth herein. This Agreement
supersedes and cancels all prior agreements between the parties, whether
written or oral, relating to the employment of the Executive. No
alteration, amendment or modification of any of the terms and provisions
hereof shall be valid unless made pursuant to an instrument in writing
signed by all of the parties hereto.
11. APPLICABLE LAW. This Agreement shall be governed by, construed
and enforced in accordance with the laws of the State of Maine.
12. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally or mailed, first class, postage prepaid, certified
mail, return receipt requested, or sent by nationally recognized overnight
courier service, to each of the parties at its or his address as set forth
at the beginning of this Agreement or as any of the parties may designate in
conformity with the foregoing.
13. HEADINGS. The Section headings set forth in this Agreement are
for reference purposes only and shall not be considered as part of this
Agreement in any respect nor shall they in any way affect the substance of
any provisions contained in this Agreement.
14. SUCCESSOR AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Company. In
addition, this Agreement shall be binding upon and inure to the benefit of
the Executive and his heirs, legal representatives and assigns; provided,
however, that the obligations of the Executive hereunder may not be assigned
without the prior written approval of the Board.
15. SEVERABILITY. If at any time subsequent to the date hereof, any
provision of this Agreement shall be held by any court of competent
jurisdiction to be illegal, void or unenforceable, such provision shall be
of no force and effect, but the illegality or unenforceability of such
provision shall have no effect upon and shall not impair the enforceability
of any other provision of this Agreement.
16. DISPUTE RESOLUTION. In the event of any controversy or claim
arising out of or relating to the Executive's employment, this Agreement or
any act or omission of a party hereunder (a "dispute"), either party (by
written notice to the other) may invoke the procedures of this Section.
Promptly after such notice is given, the Executive and one or more
disinterested representatives of the Company's Board of Directors will meet
to attempt to negotiate a settlement of all pending disputes. If for any
reason the Executive and the Company have not entered into a written
settlement of the dispute(s) within 30 days after the original notice,
either party may within one year of the original notice give notice
demanding arbitration. Thereafter all pending disputes shall be settled by
arbitration before a panel of three arbitrators, in accordance with the
rules of the American Arbitration Association pertaining to commercial
disputes (or such other rules and procedures as the parties may hereafter
consent to in writing). The arbitration shall occur in Portland, Maine, or
such other location as is mutually acceptable to the parties. Except as the
parties may hereafter consent in writing, the arbitrator(s) shall be
required to decide each claim in accordance with applicable law and to set
forth briefly in writing the award, the rationale of the decision, and those
facts considered by the arbitrator(s) to be material to such decision. The
arbitral award shall be deemed binding upon each party, and judgment on the
award may be entered in any court having jurisdiction thereof. This
agreement to arbitrate shall be enforceable under the Uniform Arbitration
Act.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
INTELLIGENT CONTROLS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
Title: President
EXECUTIVE:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
EXHIBIT A: Form of Restricted Stock Agreement
dated as of May 1, 1998
EXHIBIT B: Form of Promissory Note
of ▇▇▇▇▇▇ dated May 6, 1998
EXHIBIT C: Form of Pledge Agreement
