Exhibit 2iE
ATTACHMENT E
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement") by and between Optelecom, Inc., a
Delaware corporation ("the Company"), and the person identified on the signature
page of this Agreement as the Employee (the "Employee");
WHEREAS, the Company, in connection with its acquisition of a company
with which the Employee was associated as an officer, director and stockholder
(the "Acquired Company"), desires to secure the services of the Employee and to
enter into an agreement embodying the terms of such employment; and
WHEREAS, the Employee desires to accept such employment and enter into
such agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants herein contained, the parties hereto mutually agree as
follows:
1. Employment. The Company hereby employs the Employee for the term and
upon the terms and subject to the conditions hereinafter set forth. The Employee
hereby accepts such employment.
2. Term. The Company shall employ the Employee for the term specified
in Appendix A hereto (the "Minimum Term"). Following the expiration of the
Minimum Term, the Employee's employment by the Company shall continue subject to
termination by either party upon at least 90- days written notice to the other.
For the avoidance of doubt, such notice may be given not less than 90 days prior
to the end of the Minimum Term therein to be effective following the expiration
of the Minimum Term. Upon expiration of this Agreement pursuant to this Section
2, the Employee shall have no statutory or regulatory claim for unfair dismissal
or for redundancy payment.
3. Duties. During the term of this Agreement, the Employee shall serve
in the position specified in Appendix A hereto, or in such other positions with
the Company or its affiliates as the Board of Directors or the President of the
Company shall from time to time specify. As used hereinafter, the term
"Employer" refers to the Company or to the affiliate of the Company referred to
in Appendix A in specifying the Employee's primary position. The Employee shall
devote his full time and attention and his best efforts to the business of the
Employer and the furthering of its interests and to the discharge of the duties,
functions and responsibilities that are customary for the position for which he
is employed. The Employee shall comply with all Company rules and regulations of
the Employer and the Company applicable to their respective executive employees
or to employees generally and with all policies approved by the Board of
Directors of the Company. The Employee represents that his employment hereunder
and compliance by him with the terms and conditions of this Agreement will not
conflict with, result in the breach of or a default under, or require the
consent of any person under any other agreement to which he is a party or which
purports to bind him.
4. Compensation. As the Employee's compensation during the term of the
Employee's employment hereunder, the Employer shall pay to the Employee, and the
Employee shall accept, a base salary at the annual rate set forth on Appendix A
hereto, to be paid in equal monthly installments or pursuant to such other
schedule to which the parties may subsequently agree. Any increases in the base
salary of the Employee shall be within the sole discretion of the Board of
Directors of the Company, which at its option, from time to time may authorize
an annual base salary at a higher rate than provided herein. The Employee shall
also be entitled to such bonuses and such other compensation arrangements, if
any, as may be set forth in Appendix A hereto.
5. Expenses. The Employee is authorized to incur reasonable expenses in
performing his services hereunder, including expenses for business entertainment
and travel. The Employer shall promptly reimburse the Employee for such expenses
upon presentation of an itemized expense statement together with supporting
vouchers therefor and such other information as the Employer may from time to
time reasonably require.
6. Fringe Benefits. The Employee shall have the right to participate,
on the same terms and subject to the same conditions, limitations, restrictions
and requirements as the other executive employees of the Employer, in such
medical, health, insurance, pension, profit sharing and other plans, if any, as
the Company or the Employer may from time to time provide for the benefit of the
employees of the Employer and in which the other executive employees of the
Employer are eligible to participate.
7. Proprietary Property; Confidential Information.
(a) Proprietary Property. The term "Proprietary Property"
includes any and all ideas, creations, developments, improvements, inventions,
trade secrets, patents, copyrights, trademarks, trade names, logos, processes,
computer programs, databases, spread sheets, documentation, models,
methodologies, strategies, material works of authorship, know-how and methods of
applying and putting into practice any such items that are created, developed or
discovered by or for the Company or are acquired or licensed on a proprietary
basis by the Company from others. Proprietary Property does not include
proprietary technical information generally known in the business in which the
Company operates, even if disclosed to the Employee or known or developed by
Employee as a consequence of or through his employment.
(b) Confidential Information. The term "Confidential
Information" includes any and all information which relates to the Company's
products and services (including their development, manufacture, marketing and
sale), the financial, marketing and other aspects of the Company's operations,
and the intellectual property and business and other rights which it owns,
licenses or otherwise has the right to use, which is not generally known outside
the Company (other than to the Company's customers or suppliers or other third
parties in connection with their business with the Company) and which is
disclosed or accessible to Employee or known or developed by Employee as a
consequence of or through his employment. It includes, but is not limited to,
memoranda, files, books and records, financial and accounting methodologies,
catalogs, lists of customers or prospects, price lists, advertising and
promotional materials, packaging design, business plans, operating policies and
manuals, internal controls, policies, procedures and guidelines, and other
business information and records used in the conduct of business (whether in
tangible -- including written documents,
magnetic tapes, disks or other media -- or intangible form), agreements and
understandings between the Company and third parties, and trade secrets,
software and other licenses, source codes and object codes, designs, drawings,
plans, and other such information and rights, intangible or otherwise, whether
or not such information comes with the term "Proprietary Property."
(c) Rights to Proprietary Property. The Employee agrees that,
except as the Company may otherwise expressly agree in writing, (i) the Employee
shall have no rights and shall acquire no rights to any Proprietary Property
that comes within the Employee's knowledge or possession through or as a
consequence of his employment with the Company, and (ii) any information or
other property that is invented, created, discovered, written, developed,
furnished or produced by the Employee, solely or jointly, wholly or partly,
while employed by the Company or with information proprietary to the Company
("Developments") shall be the exclusive property of the Company, and the
Employee shall have no right, title or interest of any kind in and to the
Developments, including any results or proceeds therefrom. The Employee hereby
sells, transfers, and assigns to the Company all right, title and interest which
the Employee may be deemed to have in and to the Developments, including the
right to patent, register copyrights for or obtain legal protection for the
Developments, and agrees to communicate promptly and disclose to the Company, in
such form as the Company requests, all information, details and data pertaining
to any Developments. At any time during or subsequent to employment, upon the
request and at the election and expense of the Company, the Employee will
patent, register copyrights for or obtain other legal protection for, or permit
the Company to patent, register copyrights for or obtain other legal protection
for, any Developments and execute any and all assignments, instruments of
transfer, or other documents that the Company deems necessary or appropriate to
transfer to the Company all rights in or to the Developments or to evidence the
Company's ownership of such rights or any of them.
(d) Use and Disclosure. Except as may be otherwise expressly
authorized in writing by the Company, the Employee shall not use any Proprietary
Property or Confidential Information except for the benefit of the Company and
shall not disclose any Confidential Information to any other person. As used in
this Agreement, unless the context otherwise requires, the term "person"
includes, but is not limited to, any individual, partnership, association, firm,
corporation, trust, unincorporated organization, joint venture or other entity.
This restriction on use and disclosure applies without limitation as to time or
place.
(e) Applicability to the Company and Its Affiliates. For
purposes of this Section and Sections 8, 9 and 10 of this Agreement, references
to the Company shall be deemed to include the Company and any corporations or
other business entities affiliated with it, including the Acquired Company.
8. Company Property. Following termination of the Employee's employment
with the Company for any reason, the Employee shall promptly return to the
Company all property of the Company in his possession or control (and any and
all copies thereof) including, without limitation, all Proprietary Property and
Confidential Information.
9. Non-Competition. During the period commencing on this date of this
Agreement and ending on the date on which the Post-Employment Restricted Period
(as set forth in Appendix A
hereto) ends (the "Restricted Period"), the Employee shall not, either on his
own account or for any other person or entity, directly or indirectly, (a)
engage in any activities or render any services, which are similar or reasonably
related to those performed for or rendered to or on behalf of the Company or the
Acquired Company during the Restricted Period or the one-year period preceding
the date of this Agreement (together, the "Extended Period"), to any business
which competes with the Company in any place where the Company is engaged or, to
the knowledge of the Employee, intends to engage in business or (b) own a
greater than five percent equity interest in or be connected with the
management, operation, or control of any such business, but the foregoing shall
not be deemed to exclude the Employee from acting as a director of or consultant
to other businesses for the benefit of the Company with the consent of the
Company's Board of Directors.
10. Non-Solicitation. During the Restricted Period, the Employee shall
not directly or indirectly: (a) attempt to induce, or assist others to attempt
to induce, any person who was or was actively negotiating to become a customer
of the Company or the Acquired Company at any time during the Extended Period to
reduce or terminate such customer's business with the Company or to direct any
of its business that is then being or may be done with the Company to any other
person; (b) attempt to induce, or assist others to attempt to induce, any
employee of the Company to terminate his or her employment with the Company; and
(c) whether in his individual capacity or as the owner, partner, employee or
agent of any entity, employ or offer employment to any person who is or was
employed by the Company during the Restricted Period unless such person shall
cease to have been employed by the Company in any capacity for a period of at
least six months.
11. Termination.
(a) For cause. The Company shall have the right to terminate
this Agreement at any time during the Minimum Term for cause upon 10 days'
written notice of such termination specifying the reasons therefor. In the event
of such termination for cause, Employee shall only be entitled to receive
accrued base pay and benefits as of the date of termination. The term "cause"
shall mean any act or omission to act, or series of acts or omissions to act, or
course of conduct of the Employee that, in the reasonable opinion of the Board
of Directors of the Company acting in good faith, constitutes gross negligence,
dishonesty, willful malfeasance, unlawful or unethical activity, other serious
misconduct or material breach in the performance of his duties under this
Agreement.
(b) Upon death or disability. This Agreement will terminate
upon the Employee's death or upon a determination by a qualified physician
selected by the Board of Directors of the Company that the Employee is incapable
of substantially fulfilling the duties and responsibilities of his position due
to physical, emotional or mental incapacity. In the case of such termination,
the Employee shall be entitled to receive three months' base salary, at the rate
being paid as of the date of death or disability, against which the Employer
shall be entitled to offset any amounts due to the Employee or his estate under
death or disability insurance policies maintained by the Employer or the Company
on behalf of the Employee.
(c) General. All rights to damages or other remedies that
either party may have (under this Agreement or otherwise) by reason of any acts
or omissions of the other party prior to termination shall survive such
termination.
12. Notices. Notices, demands and all other communications provided for
in this Agreement shall be in writing and shall be deemed to have been duly
given when delivered by hand or overnight package delivery service or mailed by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Company: Optelecom, Inc.
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
If to the Employee: As set forth in Appendix A
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
13. Survival. Sections 7, 8, 9, 10, 14 and 16 shall survive the
termination of this Agreement, except as otherwise provided in such sections.
14. Remedies for Breach of Agreement. If the Employee commits a breach
or threatens to commit a breach of any of the provisions of this Agreement, the
Company shall have the right to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction without having to
prove the inadequacy of the available remedies at law or irreparable injury, it
being acknowledged and agreed as between the parties hereto that any such breach
or threatened breach will cause irreparable injury to the Company and that money
damages may not provide an adequate remedy to the Company. In addition, the
Company may take and pursue all such other actions and remedies as may be
available to the Company at law or in equity and shall be entitled to such
damages as the Company can show the Company has sustained by reason of such
breach, together with court costs and attorneys fees.
15. Other Terms and Conditions of Employment. The written Additional
Terms and Conditions of Employment between the Company and the Employee in the
form attached hereto as Appendix B shall govern the matters set forth therein,
except to the extent the Company and the Employee have expressly agreed
otherwise in this Agreement.
16. Other. This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof, supersedes all prior
agreements and understandings between the parties regarding that subject matter,
may be executed in two or more counterparts which together shall constitute a
single agreement, may be amended only by a written instrument executed by the
parties hereto, may not be assigned by either party without the written consent
of the other (except that it may be assigned by the Company to any affiliated
company or to a successor in connection with a merger, consolidation or sale of
all or substantially all of the assets of the Company or any such assignee), and
shall inure to the benefit of and be binding upon the parties and their
respective successors. Forbearance by either party to require performance of any
provision hereof shall not constitute or be deemed a waiver by such party of
such provision or of the right thereafter to enforce
the same, and no waiver by either party of any breach or default hereunder shall
constitute or be deemed a waiver of any subsequent breach or default, whether of
the same or similar nature or of any other nature, or a waiver of the provision
or provisions breached or with respect to which such default occurred. In the
event any of Sections 7, 8, 9 or 10 is held not to be enforceable in accordance
with its terms, the Employee and the Company hereby agree that such Section
shall be reformed to make such Section enforceable in a manner which provides
the Company the maximum rights permitted by law. Unless the context otherwise
requires, this Agreement shall be governed in all respects by the laws of the
State of Maryland, without reference to the principles of conflict or choice of
law thereof, and both the Company and the Employee hereby agree to submit to the
exclusive jurisdiction of the federal and state courts within the State of
Maryland in any action or proceeding arising out of or relating to this
Agreement, agree that process may be served upon them in any manner authorized
for those courts and covenant not to assert or plead any objection which they
might otherwise have to such jurisdiction and such process.
IN WITNESS WHEREOF, the parties have duly executed this Agreement this
12th day of December, 1997.
OPTELECOM, INC. EMPLOYEE
By
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President
EMPLOYMENT AGREEMENT
APPENDIX A
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Employee: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Minimum Term (Section 2): Three years commencing December 12, 1997
Position (Section 3): Chairman and Marketing Director of
Paragon Audio Visual Limited
Annual Base Salary
(Section 4): 62,000 Pounds Sterling, subject to deductions
of Tax and Employee National Insurance
Contributions
Additional Compensation
Arrangements (Section 4): See Attachment A - Paragon Executive Bonus Plan
Post-Employment Restricted
Period (Section 9): Six months
Employee Address
(Section 12): Paragon Audio Visual Limited
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Worlds End
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EMPLOYMENT AGREEMENT
APPENDIX A
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Employee: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Minimum Term (Section 2): Three years commencing December 12, 1997
Position (Section 3): Managing Director of
Paragon Audio Visual Limited
Annual Base Salary
(Section 4): 62,000 Pounds Sterling, subject to deductions
of Tax and Employee National Insurance
Contributions
Additional Compensation
Arrangements (Section 4): See Attachment A - Paragon Executive Bonus Plan
Post-Employment Restricted
Period (Section 9): Six months
Employee Address
(Section 12): Paragon Audio Visual Limited
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Worlds End
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EMPLOYMENT AGREEMENT
APPENDIX A
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Employee: ▇▇▇▇ ▇. ▇▇▇▇▇
Minimum Term (Section 2): Three years commencing December 12, 1997
Position (Section 3): Sales Director of
Paragon Audio Visual Limited
Annual Base Salary
(Section 4): 62,000 Pounds Sterling, subject to deductions
of Tax and Employee National Insurance
Contributions
Additional Compensation
Arrangements (Section 4): See Attachment A - Paragon Executive Bonus Plan
Post-Employment Restricted
Period (Section 9): Six months
Employee Address
(Section 12): Paragon Audio Visual Limited
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Worlds End
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EMPLOYMENT AGREEMENT
APPENDIX A
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Employee: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Minimum Term (Section 2): Three years commencing December 12, 1997
Position (Section 3): Operations Director of
Paragon Audio Visual Limited
Annual Base Salary
(Section 4): 62,000 Pounds Sterling, subject to deductions
of Tax and Employee National Insurance
Contributions
Additional Compensation
Arrangements (Section 4): See Attachment A - Paragon Executive Bonus Plan
Post-Employment Restricted
Period (Section 9): Six months
Employee Address
(Section 12): Paragon Audio Visual Limited
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Worlds End
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ATTACHMENT A
TO APPENDIX A OF
EMPLOYMENT AGREEMENT
Executive Bonus Plan
For
Paragon Audio Visual Limited
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Under the Plan, a bonus is payable to designated key executives of
Paragon Audio Visual Limited ("Paragon") for each of the five fiscal years of
Optelecom, Inc. (the "Company") beginning January 1, 1998. The Employee shall be
entitled to participate in the Plan and to receive for each year an amount equal
to 25% of the Bonus Pool for that year. The Bonus Pool shall be an amount equal
to 25% of Paragon's Gross Operating Profits in excess of US$400,000 for each of
1998,1999 and 2000 and equal to 10% of Paragon's Gross Operating Profits in
excess of US $1 million for each of 2001 and 2002. The Company's independent
public accountants shall determine Paragon's Gross Operating Profits for each
year in connection with their audit of the Company's financial statements for
that year. Paragon's Gross Operating Profits for a year shall be determined by
adding to the annual net income of Paragon, before accrual of any expense for
bonuses payable under the Plan, an amount equal to the sum of the expenses
included in such determination of net income for (i) amortization of goodwill,
(ii) license fees and interest related to the acquisition of Paragon by the
Company (including, without limitation, the annual payments of $175,000 under
the License Agreement) (iii) income taxes, and (iv) research and development and
other forms of developmental expenditures beyond Paragon's average historic
levels of such costs. In determining Paragon's Gross Operating Profit for any
year, the Company's independent public accountants shall also make an
appropriate adjustment to (i) render neutral any distorting effects of sales
discounts within the Optelecom group of companies, (ii) give credit for sales
made directly by other Optelecom companies that, prior to the acquisition of
Paragon, would have been made by Paragon and (iii) give compensatory credit for
any loss or diminution of revenue resulting from the actions or omissions of any
person employed by or company within the Optelecom group of companies not under
the supervision or managerial control of one or more of the Browns. The
Employee's bonus for each year shall be paid in cash within 15 days after
completion of the audit of the Company's financial statements for that year.
If the Employee shall voluntarily terminate his employment (for reasons
other than death, disability, or unreasonable or oppressive conduct by the
Company) or shall conduct himself in the discharge of his duties in a manner
that he knew or ought to have known to be likely to result in a material
financial impairment of the Company or its prospects, the Employee shall not be
entitled to payment of a bonus for the year in which such election is made or
such conduct occurs or for any succeeding year. For the avoidance of doubt, the
standard for termination for cause under the Employment Agreement to which this
Attachment relates is distinct, separate and different from the standards giving
rise to a forfeiture of bonus set forth in the preceding sentence.
EMPLOYMENT AGREEMENT
APPENDIX B
Terms and Conditions of Employment
The particulars herein contained satisfy the requirements of the
Employment Rights ▇▇▇ ▇▇▇▇.
COMMENCEMENT OF CONTINUOUS EMPLOYMENT
The Employee's employment with the Company began on December 12, 1997.
The Employee's employment with his previous employer (Paragon Audio Visual
Limited) commencing on 1st July 1994 counts as part of his continuous period of
employment.
LOCATION
The Employee's employment will be based at Beedon or such other
location within a 25 mile radius of Beedon as the Company may from time to time
direct, but he may be required to travel in the course of his duties. All
traveling and out-of-pocket expenses reasonably incurred by the Employee in the
course of his duties and supported by receipts will be reimbursed to him by the
Employer.
WORKING HOURS
Normal working hours are 37.5 hours per week, commencing 08:30 to
17:00, with a lunch break between the hours of 13:00 - 14:00. The Employee will
work such additional hours as are necessary for the proper performance of his
duties.
HOLIDAYS
The holiday year will run from 1st January to 31st December.
The annual holiday allowance is 20 working days. Up to 3 days of the
annual allowance may be determined by the Company to arrange the Christmas
holiday dependant on when Christmas falls.
Holiday pay will be accrued at a rate calculated by the total annual
holiday, excluding statutory public holidays, divided by 12 per month. One
additional day's holiday will be given for each completed calendar year of
service (Jan-Dec) working up to a maximum of 5 days per year.
In the last calendar year of employment the amount of paid holiday will
be calculated proportionately for each calendar month served in that year. The
Company reserves the right to recover from the Employee any payment in respect
of holidays taken in excess of his entitlement accrued at the date of his
leaving. Upon termination of the employment, the Employee shall be entitled to
salary in lieu of any outstanding holiday entitlement. All annual holidays are
to be taken at dates mutually agreed with the Company and not more than 10
consecutive days may be taken at
any one time without the Company's consent. All annual holidays must be taken
before the 31st March of the following year. Holidays not taken will be
forfeited.
In addition to annual holidays the Company observes the statutory
public holidays appropriate to the location of the Employee's appointment to
which the Employee is also entitled.
SICKNESS AND STATUTORY SICK PAY
Statutory sick pay will be paid in accordance with current legislation
in the United Kingdom. Any additional sick pay will be at the Company's absolute
discretion.
PENSION
The Company does not operate a pension scheme for employee based in the United
Kingdom.
DISCIPLINARY RULES & GRIEVANCE PROCEDURES
There are no disciplinary rules in force in relation to the Employee
who is at all times expected to conduct himself in a manner consistent with his
senior status.
There is no formal or contractual Grievance and Appeals procedure
applicable to the Employee's employment but if the Employee has any grievance in
relation to the employment he may apply in writing to the President of the
Company.
COLLECTIVE AGREEMENTS
There are no collective agreements in force which affect the terms of
this Employment.