EMPLOYMENT AGREEMENT
This Agreement is entered into as of this 1st day of May, 2002, by and
between ▇▇▇▇ ▇▇▇▇▇▇▇▇ ("Employee"), and Hauppauge Digital Inc. of ▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ("▇▇▇▇▇▇▇▇▇") New York, hereinafter collectively referred to
as "the parties" or "we."
As Hauppauge desires to employ Employee and Employee desires to be employed
by Hauppauge as President and Chief Operating Officer, and we mutually wish to
define the duties and responsibilities of each of us herein, it is therefore
agreed:
1. Employment and Duties: Hauppauge hereby employs Employee and
Employee agrees to be employed by Hauppauge as of the date of this Agreement.
Employee shall perform such duties as are required in his position as President
and Chief Operating Officer and such other duties as mutually agreed.
2. Term: The Term of this Agreement shall begin not later than the
date of this Agreement and shall terminate, except for those clauses contained
in this Agreement regarding post employment obligations which shall survive
Employee's employment, on the earlier of (i) two years after the signing of this
Agreement or (ii) any one of the following:
a.) The death, permanent disability resulting in Employee's
inability to satisfactorily perform the essential functions
of President and Chief Operating Officer, or adjudication of
physical or mental incompetence by a medical board,
authority or practitioner.
b.) Immediately upon written notice of termination by the
Employer for cause (cause as defined in Par. 2 (e)(1)
herein).
c.) Upon the expiration of 90 days after Hauppauge has notified
the Employee in writing of his termination without cause
pursuant to Par. 2(e) (2).
d.) Upon the expiration of 90 days after Hauppauge receives
written notice of voluntary resignation by Employee in
accordance with Par. 2(f) below.
e.) Hauppauge's Termination of Employee:
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(1) For Cause: In the event that Employee shall have (a)
committed any act of dishonesty material with respect to
Hauppauge or its employees, (b) been convicted of a crime
involving moral turpitude, or (c) intentionally disregarded
the provisions of this Agreement or the express instructions
of Hauppauge with respect to matters of policy continuing
(in the case of clause (c) for a period of not less than
thirty (30) days after notice of such disregard), Hauppauge
may terminate this Agreement and the Employee's employment
with Hauppauge effective at such date as it shall, in its
sole
and absolute discretion, specify in a written notice to
Employee. Any such termination by Hauppauge shall be deemed
to be termination "for cause." Upon delivery to Employee of
such termination, together with payment of any salary
accrued under Par. 3 hereof, Employee's employment and all
obligations of Hauppauge pursuant to this Agreement shall
forthwith terminate. Any termination for cause pursuant to
this said Clause shall not prejudice any accrued rights that
Hauppauge may have against the Employee. In the event
Employee is terminated for cause, he will not be eligible
for the termination payments provided for in Par. 2(g).
(2) Without Cause: Employee's employment hereunder may be
terminated at any time by Hauppauge without cause upon 90
days prior written notice to the Employee, subject to the
termination payment provisions of Par. 2(g) hereof.
f.) Employee's Termination: Employee may terminate his
employment at any time upon (90) days prior written notice
to Hauppauge. Simultaneously with such notice, Employee
shall inform Hauppauge in writing as to his employment plans
following the termination of his employment with Hauppauge.
In the event Employee terminates his employment because,
there has been: 1) a material downgrading in Employee's
duties or responsibilities, 2) a permanent change in
Hauppauge's principal office to a location not within 20
miles of its present locationor 3) any permanent relocation
of Employee to a place of business more than 20 miles of its
present location. Employee shall be entitled to the
compensation provided for in Par. 2(g) upon such
termination.
g.) Termination Payments- Discharge Without Cause: If Hauppauge
terminates Employee's employment prior to the end of the
Term without cause pursuant to Par. 2(e)(2) or Employee
tenders his resignation pursuant to Par. 2(f) because of 1)
a material downgrading in Employee's duties or
responsibilities, 2) a permanent change in Hauppauge's
principal office to a location not within 20 miles of its
present location or 3) any permanent relocation of Employee
to a place of business more than 20 miles of its present
location, Employee shall be entitled to termination payments
totaling twelve (12) months of Base Salary then in effect,
with such payment to be made in a lump sum within sixty (60)
days of termination. No payments shall be made under this
provision if the Employee's employment is terminated by
reason of the expiration of the Term of this Agreement. This
sub-clause shall survive any termination of this Agreement
and shall expire upon the said payment being made to the
Employee in full and final satisfaction of Hauppauge's
obligation to Employee.
3. Compensation:
a) Salary: Employee will be paid an annual Base Salary of
$175,000.00 for the first year of this Agreement, with
annual performance evaluations and upward adjustments to
Base Salary as determined by the Compensation Committee of
the Board of Directors, based on Employee's performance.
Base Salary shall not be adjusted downward during the term
of this Agreement.
b) Bonuses: Employee shall receive a yearly bonus totaling one
percent (1%) of the operating income of Hauppauge, provided
that earnings are at least 120% of the prior fiscal year's
earnings.
c) Stock Options: Employee shall receive a reasonable stock
option package, commensurate with the level of his position,
to be determined and set forth in writing within 60 days of
the date of this Agreement. The Stock Option Package will be
governed by the terms and conditions of the 2000 ISO or Non
Qualified Stock Option Plan, whichever appropriate, as
approved by the Hauppauge Digital Inc.'s shareholders.
d) Benefits: At all times during the Term, Employee shall have
the right to participate in and receive benefits under and
in accordance with the then-current provisions of all
incentive, profit sharing, retirement, life, disability,
health and accident insurance, hospitalization and other
incentive and benefit plans or programs (except for any such
plan in which the President may not participate pursuant to
the terms of such plan, or which calls for vesting after
term of employment) which Hauppaugemay at any time or from
time to time have in effect for executive employees of
Hauppauge or its subsidiaries, Employee's participation to
be on a basis commensurate with other executive employees
considering their respective responsibilities and
compensation. Employee shall also be entitled to be
reimbursed for all reasonable expenses incurred by him in
the performance of his duties hereunder. Employee shall
receive 10 days of paid vacation per year with an additional
day after completion of every year of service with
Hauppaugesubject to a maximum of 15 paid vacation days
annually.
e) Relocation Reimbursement: Hauppauge shall pay all reasonable
relocation costs for Employee, provided that such relocation
expenses are approved in advance by the Board of Directors.
f) Housing expenses: Until Employee relocates to the Hauppauge
New York area which is anticipated to be within 6 months of
joining Hauppauge, Hauppauge agrees to pay reasonable
housing expenses. To this end, Hauppauge will arrange for
either hotel accommodations from Monday
through Friday or for the use of an apartment with the
provision of utilities, electricity and the use of telephone
services only.
4. Other Agreements: Employee warrants that the performance of the
terms of this Agreement will not conflict with or result in the breach
of any other agreement to which Employee is a party or by which
Employee is bound. Employee will enter into a separate Confidentiality
and Non-Competition Agreement with Hauppauge, on such terms as would
be agreed between with the parties.
5. Waiver: The waiver by either party of a breach of any provision of
this Agreement shall not operate or be constructed as a waiver of any
subsequent breach thereof.
6. Assignment: The rights and benefits of Hauppauge under this
Agreement shall be transferable, and all covenants and agreements
hereunder shall inure to the benefit of, and be enforceable by its
successors and assigns. Hauppauge's successors and assigns shall be
bound by this agreement to the benefit of, and such provisions shall
be enforceable by, Employee.
7. Applicable Law: This Agreement shall be governed by and constructed
in accordance with the substantive and procedural laws of the State of
New York.
8. Severability: The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any
other provision.
9. Arbitration: Any dispute between Hauppauge and Employee arising
from this Agreement shall be submitted to the American Arbitration
Association for arbitration in accordance with the rules of the
American Arbitration Association within one (1) year of the date on
which the party demanding arbitration first had notice of the claim.
IN WITNESS WHEREOF, the parties have read and executed this Agreement as of
the day and year first above written.
Employee Hauppauge Digital, Inc.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Chief Executive Officer