EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement"), dated as of
December 7, 1999 ("Effective Date"), is between Competitive
Technologies, Inc., (the "Company") and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. (the
"Executive").
WHEREAS, the Company desires to continue to employ Executive
as its President and Chief Operating Officer, and Executive
desires to accept such employment, on the terms and conditions
set forth below.
NOW THEREFORE, in consideration of the mutual covenants
herein, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties
hereto 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 he has full power and
authority to enter into this Employment Agreement and that he is
not restricted in any manner whatsoever from performing the
duties described below. Executive's employment with the Company
shall include service for the Company's direct and indirect
subsidiaries (the "Subsidiaries").
2. Employment Term.
a. Unless earlier terminated as provided below, the term
of the Executive's employment under this Agreement
("Employment Term") shall commence on the Effective Date and
shall continue until the date three years after the
Effective Date ("Ending Date"). By agreement of the parties,
the Employment Term and Ending Date may be extended from
year to year thereafter in accordance with Section 2(b)
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 with or without Cause (as defined
below). 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 this Agreement.
b. Executive agrees that not less than 180 days prior to
the Ending Date, he will notify the Company in writing
regarding whether he is willing to continue in the Company's
employ after the Ending Date on substantially the same terms
as provided in this Agreement ("Continuation Notice"). The
Company agrees to respond to the Continuation Notice within
30 days of receipt and inform Executive regarding whether it
will offer Executive continuing employment for the next year
after the Ending Date on substantially the same terms as
provided in this Agreement ("Continuation Response"). The
Company shall pay to Executive continuation of his Base
Compensation then in effect for a period of six months after
the Ending Date if: (i) Executive provides a Continuation
Notice; (ii) the Company elects not to offer Executive
continued employment at the end of the Employment Term on at
least substantially the same terms as provided in this
Agreement unless the reason(s) for such non-renewal
constitutes Cause (as defined below); and (iii) Executive
remains employed by the Company through the Ending Date.
3. Position and Duties.
a. Executive Officer. The Company shall employ the
Executive as its President and Chief Operating Officer.
Executive shall report to the Company's Board of Directors
(the "Board") or its chief executive officer, if any, or
other Board designee. Without any additional compensation,
Executive will serve in the discretion of the Board and/or
if so elected by the Company's stockholders, as a member of
the Board and as an officer and/or director of any
affiliated entities or Subsidiaries. Executive shall have
such responsibilities and duties as are commensurate with
such positions in an entity comparable to the Company,
including, without limitation, development of business
strategy and annual business plans, supervision of all day-
to-day operations of the Company, development of the
Company's organization plan, establishment of the Company's
management team, and establishing and maintaining
communications and relationships with the Board. The Board
may assign other duties to Executive from time to time. The
Board shall have the right to modify the responsibilities of
the Executive from time to time as the Board 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.
4. Base Compensation. The Company shall pay the Executive
as compensation for his services an aggregate base compensation
in the amount of $185,000 per year, subject to annual reviews and
increases in the sole discretion 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, in accordance with Company policy as it
exists from time to time.
b. Vacation. The Executive shall be entitled to 25 days
of paid vacation per calendar year to be earned and used in
accordance with the Company's vacation policy as it exists
from time to time. Vacations cannot be carried over from
year to year and are forfeited if not taken prior to the end
of the year. If Executive does not use all of Executive's
vacation in any calendar year, Executive may receive pay in
lieu of such vacation, up to a maximum of two weeks per
year.
c. 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. All such benefits are subject to
plan documents (where applicable) and the Company's policies
and procedures. Nothing in this Section 5(c) guarantees
that any specific benefits will be provided or offered by
the Company which has the sole right to modify, add to, or
terminate such benefits at any time.
6. Bonus. Executive may participate in any executive
bonus plan adopted by the Company. The terms of such bonus plan
and the payment of any bonuses to Executive shall be in the sole
discretion of the Board or its Compensation Committee.
7. Stock Options.
a. The Company shall grant to Executive certain options
("Options") for the purchase of an aggregate of 100,000
shares of the Company's common stock ("Common Stock") at the
price of $5.5625 per share, the mean between the high and
low price for such shares on December 7, 1999, the date the
Company's Compensation Committee approved the grant. Such
Options shall vest as follows:
i. Options for the purchase of 25,000 shares of
Common Stock, of which 7,025 shall be non-statutory
stock options ("NSOs") and 17,975 shall be incentive
stock options ("ISOs"), shall vest on the Effective
Date;
ii. Options for the purchase of 12,500 shares of
Common Stock, all of which shall be ISOs, to vest on
the first annual anniversary of the Effective Date;
iii. Options to purchase 12,500 shares of Common Stock,
all of which shall be ISOs, to vest on the second
annual anniversary of the Effective Date.
iv. Options for the purchase of 25,000 shares of
Common Stock, all of which shall be NSOs, to vest on
the ninth annual anniversary after the Effective Date;
provided however that if and only if during the one
year period immediately after the Effective Date, the
average closing trading price for the Common Stock for
any consecutive 20 trading day period shall be $8.00
per share or higher, then the vesting of such Options
shall be accelerated and such Options shall vest
immediately at the end of such 20 day period.
v. Options for the purchase of 25,000 shares of
Common Stock, all of which shall be NSOs, to vest on
the ninth annual anniversary after the Effective Date;
provided however that if and only if during the two
year period immediately after the Effective Date, the
average closing trading price for the Common Stock for
any consecutive 20 trading day period shall be $10.00
per share or higher, then the vesting of such Options
shall be accelerated and such Options shall vest
immediately at the end of such 20 day period.
b. The grant and exercisability of all Options described
in Section 7(a) are subject to: (i) the terms and
conditions contained in the Company's Stock Option Plan as
may be amended from time to time in the Company's sole
discretion ("Option Plan"); and (ii) the terms and
conditions of a definitive Stock Option Agreement (the
"Option Agreement") to be entered into as of the Effective
Date between the parties pursuant to the Option Plan that
will set forth all of the rights, duties and obligations
regarding such Options.
8. Termination and Severance Benefits.
a. Death. The death of Executive shall automatically
terminate the Company's obligations under this Agreement;
provided however, the Company shall pay to Executive's
estate Executive's Base Compensation and accrued benefits
through the date of termination.
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 120 days, whether
consecutive or not, within any 12 month period, Executive's
employment may be terminated by the Company and Executive
shall only be entitled to Base Compensation and accrued
benefits through the date of termination.
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.
d. Resignation for Good Reason. If Executive resigns his
employment for Good Reason, he shall be entitled to the
Severance Amount (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 (as defined below), Executive shall be
entitled to receive the Severance Amount (as defined below).
g. Cause. The following acts by Executive 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. any felony conviction or any 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, as determined in the reasonable judgment of the
Board, 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.
h. Resignation for Good Reason. Resignation by Executive
of his employment for "Good Reason" shall mean a resignation
by Executive:
i. within 2 months after the Company's determination
that Executive shall no longer serve as President or
Chief Operating Officer, it expressly being understood
that so long as he holds at least one of those titles,
Executive shall not have grounds for a resignation for
Good Reason; or
ii. within 6 months after a Change in Control (as
defined below), and either a material reduction in
Executive's total compensation package or the Company's
determination the Executive shall no longer serve in
either of the positions set forth in Section 8(h)(i)
above.
i. 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(b), 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 forty percent (40%) of the
combined voting power of the Company (in a single
transaction or series of related transactions); or
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 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.).
▇. ▇▇▇▇▇▇▇▇▇ Amount. The "Severance Amount" shall mean
the lesser of (i) one year's Base Compensation in effect
immediately prior to such termination or resignation; or
(ii) the Base Compensation payable over the remainder of the
Employment Term, but in no event less than six months.
Severance Amount shall be paid as a salary continuation to
be paid on the Company's regular pay days or on an
accelerated basis as determined in the Board's sole
discretion.
k. 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.
9. 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.
10. Confidential and Proprietary Information.
a. Executive agrees that after the Effective Date, he will
not use or disclose to any person, entity, association, firm
or corporation, any of the Company's Confidential
Information, 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 10
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 10 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.
11. Non-Solicitation. Executive agrees that he will not
through the date one 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; 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.
12. 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 is competitive
with the business of the Company within the United States or
any other geographic area in which the Company does material
business during the Restrictive Period (the "Restricted
Territory").
b. The term "Restrictive Period" shall mean the Employment
Term plus a period of six months after the end of the
Employment Term; provided that the six month period
following the end of the Employment Term shall not apply if:
(i) Executive's employment is terminated by the Company
without Cause, (ii) Employee resigns his employment for Good
Reason, or (iii) Employee provides the Company with a timely
Continuation Notice but the Company decides not to continue
Executive's employment after the Ending Date.
c. The phrase "business that is competitive with the
business of the Company" shall mean any business in which
the Company is engaged, including, without limitation,
digital, life sciences, and physical sciences technology
development, management and commercialization.
d. Passive investment of less than two percent 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 12.
13. Intellectual Property Rights. Executive will, during
the period of his employment, disclose to the Company promptly
and fully all Intellectual Property 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 Paragraph 13 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.
14. 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.
15. 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.
16. 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.
17. Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Connecticut.
18. 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.
19. Remedies. Executive and Company acknowledge and agree
that damages would not adequately compensate Company if Executive
were to breach any of his covenants contained in this Agreement.
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 set off against
any amounts due Executive by Company and termination of
Executive's employment for Cause.
20. 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.
21. 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, including without limitation the Employment
Agreement dated as of January 7, 1997; provided however that any
Stock Option Agreement between the parties signed on or before
the Effective Date shall remain in full force and effect. This
Agreement may be modified or amended only by an instrument in
writing signed by both parties.
22. Employment and Income Taxes. All payments made to
Executive pursuant to this Agreement will be subject to
withholding of employment taxes and other lawful deductions, as
applicable.
COMPETITIVE TECHNOLOGIES, INC.
s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. By: s/ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. Title: Chairman