EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement"), dated as of the 10th
day of May, 1996, by and between the individual named on the signature page
hereof, having the address set forth on such signature page ("Executive"), and
SAC TECHNOLOGIES, INC., a Minnesota corporation (the "Company"), with offices at
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W I T N E S E T H:
The Company wishes to employ Executive, and Executive desires
to be employed by the Company, all on the terms, and subject to the conditions,
hereinafter set forth.
Contemporaneously herewith, Executive has executed and
delivered to the Company a Non-Competition Letter (the "Non-Competition
Agreement"), a copy of which is attached hereto as Exhibit A.
NOW, THEREFORE, in consideration of the premises, of the
mutual covenants and agreements hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Employment; Term. (a) The Company hereby employs Executive,
and Executive hereby accepts such employment, and agrees to serve the Company,
upon the terms and conditions hereinafter set forth, for a term commencing on
the date hereof and (unless sooner terminated as hereinafter provided) expiring
on December 31, 2001 (such term of employment being hereinafter referred to as
the "term of full time employment"). During the term of full time employment,
Executive shall devote his full time and attention and best efforts to the
business and affairs of the Company and will faithfully and diligently perform,
in a competent and professional manner and to the best of his ability, all of
his duties and responsibilities hereunder.
(b) Position; Authority. During the term of full time
employment, Executive shall hold the title(s) and office(s) of, and serve in the
position(s) of, those office(s) of the Company set forth on the signature page
hereof. Subject to the provisions of the Company's Restated Articles of
Incorporation and By-Laws, and to the ultimate control of the Board of Directors
of the Company, to whom he shall report, Executive shall have the duties,
responsibilities and authority appropriate to his office(s) and title(s), as
understood and best practiced, generally, in the business community in
Minnesota, as well as those duties and responsibilities of an executive nature
as may from time to time be assigned to him by the Board of Directors of the
Company.
(c) Board of Directors. During the term of full time
employment, Executive shall be elected as a member of the Board of Directors of
the Company.
(d) Conduct. During the term of this Agreement, Executive will
not conduct himself in any manner which would tend to harm the reputation or
goodwill of the Company in the biometrics industry or the financial world.
(e) Place of Employment. Except with his prior consent,
Executive shall not be required to relocate outside of the Minneapolis/St. ▇▇▇▇
vicinity; provided that Executive shall undertake all travel required in
connection with the performance of his duties hereunder.
2. Compensation. (a) Salary. During the term of this
Agreement, the Company shall pay Executive the initial salary set forth on the
signature page hereof in semi-monthly installments, subject to all applicable
withholdings (the "Base Salary"). For periods commencing on January 1, 1997, and
on each January 1 thereafter, the Board shall review Executive's Base Salary and
may increase the same for any future period.
(b) Bonus Plan. During the term of full time employment,
Executive shall be entitled to participate in such Bonus Plans as may from time
to time be established by the Board of Directors, provided that the same shall
be based on both the gross revenue and net income before tax performance of the
Company.
(c) Expenses. In addition to the compensation provided above,
the Company shall reimburse Executive for all reasonable and necessary vouchered
business and entertainment expenses incurred by him during the term of this
Agreement, in the performance of his duties and responsibilities under this
Agreement in accordance with the Company's policies as from time to time in
effect. Executive shall submit appropriate substantiation of such expenses
monthly in arrears.
(d) Perquisites and Benefits. During the term of full time
employment, Executive shall be entitled to continue to participate in such
benefit programs and receive such perquisites as may from time to time be
established by the Company.
(e) Expiration of Agreement without Renewal. Executive's term
of full time employment hereunder shall be automatically renewed from year to
year from and after December 31, 2001 for consecutive one year terms unless
Executive has received a written notice of termination at least six months prior
to the end of the initial term of full time employment or the end of renewal
period in conformity with the provisions hereof.
3. Termination. (a) The Executive's term of full time
employment hereunder may be terminated only for "cause" (as hereinafter
provided) by implementation of the following process. Any member of the Board of
Directors shall first bring the issue before the Board for full discussion, it
being understood and agreed that, for this purpose, provided that forty-eight
hours' actual notice shall have been given by the Board member calling the
meeting to all other Board members and a bona fide effort to have all directors
present shall have been made, the absence of any shareholder-employee then
acting as a Director from attendance at such meeting shall not defeat the
existence of a quorum for the purposes of dealing with the issue of termination,
and notwithstanding any provision in the Company's Restated Articles of
Incorporation or By-Laws to the contrary, a quorum for such purpose shall be
deemed present at such meeting despite any such absences. In the event that at
such meeting the Board shall determine to terminate Executive's term of full
time employment for "cause," then the Executive's term of full time employment
shall terminate immediately upon written notice to Executive specifying the
subparagraph below ((i) - (v)) which best describes the "cause" relied upon and
specifying with particularity the nature of the "cause" (whereupon the term of
this Agreement shall be terminated without further obligation of the Company to
Executive, subject to Executive's rights to seek a judicial determination that
his dismissal was wrongful. As used herein, "cause" shall mean and include only:
(i) Executive's repeated failure or refusal to
perform or observe, in any material respect,
his duties, responsibilities or obligations
as provided herein, if such breach is not
cured, if curable, within ten days after
written notice thereof to Executive by the
Company;
(ii) Any dishonesty affecting the Company, or any
customer or employee of any of the
foregoing;
(iii) Excessive use of alcohol (unless the same is
the result of diagnosed alcoholism), or use
of illegal drugs, interfering with
performance of Executive's obligations under
this Agreement, continuing after warning;
(iv) Conviction of a felony or of any crime
involving misrepresentation, moral turpitude
or fraud; or
(v) Commission by Executive of any willful or
intentional act which could reasonably be
expected to materially injure the
reputation, business or business
relationships of the Company and/or
Executive, if such breach is not cured, if
curable, within ten days after written
notice thereof to Executive by the Company.
(b) The following acts of the Company shall constitute
constructive termination giving rise to the following rights of Executive: (i)
an adverse change in Executive's status or position in the Company such as a
diminution of Executive's duties, responsibilities or authority without
Executive's consent; (ii) a reduction by the Company in Executive's Base Salary
for other than austerity reasons; (iii) the taking of any action by the Company
which would materially adversely affect the physical conditions existing prior
to the date of this Agreement in or under which Executive performs his duties
hereunder; or (iv) the failure of the Company to comply with any material
provision of this Agreement other than for austerity reasons which has not been
cured within ten (10) calendar days after notice of such noncompliance has been
given by Executive to the Company. In the event of constructive termination as
aforesaid, Executive shall be entitled to have his Base Salary continued for a
period of years or portions thereof, equal to the greater of (i) the number of
years or portions thereof which are remaining between the date hereof and
December 31, 2001; or (ii) two years; and Executive shall furthermore be
released from any obligations under the Non-Competition Agreement.
(c) This Agreement shall terminate forthwith upon the death or
disability of Executive. As used herein the term "disability" shall mean the
inability of Executive to perform, in all material respects, his duties and
responsibilities contemplated under this Agreement for a period of more than 365
calendar days, whether or not continuous, during the term hereof, due to
physical or mental incapacity or impairment (including diagnosed alcoholism). A
determination of disability shall be made by a physician satisfactory to both
the Executive and the Board of Directors of the Company; provided that if
Executive and the Board of Directors of the Company cannot agree as to a
physician, then each shall select a physician and these two together shall
select a third physician, whose sole determination as to disability shall be
binding on all parties.
(d) Executive may voluntarily terminate Executive's employment
hereunder at any time upon six (6) months prior written notice. During such
notice period, Executive shall continue his full time duties hereunder only at
the request of the Company.
(e) The termination by the Company of this Agreement shall be
without prejudice to any claim which the Company or Executive may have, at law
or in equity, arising out of or in connection with the events giving rise to
such termination.
4. Confidential Information.
(a) Definition. As used herein the term "Confidential
Information" shall mean and include any and all confidential, proprietary,
secret or non-public information related in any way to the business or
operations, present or future, of the Company, or any customer (as such term is
defined in the Non-Competition Agreement) of the Company, which is now, or in
the future shall become, known to Executive as a result of his relationship with
the Company; provided, that Executive's commitment hereunder with respect to
Confidential Information shall not extend to any part of such Confidential
Information which:
(i) was known by Executive prior to its
disclosure to him, through no wrongful act
of any person;
(ii) was known or available to the public prior
to its disclosure to Executive;
(iii) becomes known or available to the public
subsequent to disclosure to Executive
through no wrongful act of any person; or
(iv) was disclosed to Executive at any time by a
third party having a bona fide right to
disclose such information to Executive.
(b) Confidential Information to be kept in Confidence.
Executive acknowledges that the Confidential Information was acquired and/or
developed by the owner thereof at great expense, is a special, valuable and
unique asset of the owner thereof, and represents the sole and exclusive
property of the owner thereof. Executive has obtained and in the course of his
employment with the Company will continue to obtain, Confidential Information
and personal knowledge of and influence over customers of the Company. Executive
further acknowledges that, under appropriate circumstances, his rendering of
services to the Company's customers will necessarily require his knowledge,
development and use of certain Confidential Information of the Company, and his
disclosure to customers and others requiring knowledge thereof in the proper
performance of their duties for the Company or customers, of certain
Confidential Information of the Company (such as, without limitation, marketing
plans, budgets, designs, customer preferences and policies, and identity of
appropriate personnel of customers with sufficient authority to influence a
shift in suppliers). Executive acknowledges that any wrongful use or disclosure
of any Confidential Information would greatly damage the owner thereof, causing
it irreparable injury. Executive covenants and agrees that, at all times during
the term of this Agreement and for a period of three (3) years thereafter, he
shall not, directly or indirectly, publish, divulge or disclose, in whole or in
part, or suffer the use by any third party, for his own benefit or the benefit
of any person, any Confidential Information, other than:
(i) in the due course of performing his duties
on behalf of the Company, but then only to
officers, employees or others acting on
behalf of the Company, or any customer,
where the duties of such person require such
disclosure;
(ii) upon the prior express written instructions
of the Board of Directors of the Company; or
(iii) as may be required by law;
provided, that in the event that any Confidential Information shall be subject
to a restriction extending beyond the expiration of such three (3) year period,
Executive shall abide by such restriction during said extended period. Executive
shall at all times abide by the Company's policies and regulations with respect
to the protection of its Confidential Information, as in effect from time to
time.
(c) Materials; Return at Termination. Executive acknowledges
and agrees that all copies of all memoranda, documents, data, records, notes and
other written information in his possession or under his control, which contain
or pertain to any Confidential Information, shall at all times be the sole and
exclusive property of the Company. In the event Executive's employment
terminates for any reason, Executive shall promptly deliver to the Company all
copies of all such materials in his possession or under his control.
(d) Confidential Information of Others. Executive will not
inappropriately use, disclose to the Company or induce the Company to use any
confidential, proprietary, secret or non-public information or documents in his
possession belonging to any third party (other than customers). Executive
represents and warrants that his employment with the Company will not require
him to violate any obligation to or confidence with another.
(e) Specific Performance; Injunctive Relief. The parties
recognize, acknowledge and agree that, if Executive breaches any of the
foregoing provisions of this Section 4, the Company will suffer irreparable
injury, and money damages will not provide an adequate remedy to the Company.
Accordingly, Executive agrees that, in any such event, the Company shall be
entitled to have the provisions of this Agreement specifically enforced by any
court having equity jurisdiction, without being required to post a bond or other
security and without having to prove the inadequacy of the available remedies at
law. In addition, the Company shall be entitled to avail itself of all such
other actions and remedies available to it under law or in equity and shall be
entitled to such damages as it sustains by reason of such breach.
5. Intellectual Property. (a) During the term of this
Agreement, Executive will disclose to the Company all ideas, inventions and
business plans developed by him which relate directly or indirectly to the
Company's business, including without limitation any process, operation, product
or improvement which may be patentable or copyrightable. Executive agrees that
all of the foregoing will be the sole and exclusive property of the Company and
that he will at the Company's request and cost do whatever is necessary to
secure the rights thereto, by patent, copyright or otherwise, for the benefit of
the Company. Executive, to the extent that Executive has the legal right to do
so, hereby assigns and agrees to assign to the Company any and all of
Executive's right, title and interest in and to any and all of the foregoing.
(b) It is further agreed and the Executive is hereby notified
that the agreement in subparagraph (a) above does not apply to any such ideas,
inventions and business plans for which no equipment, supplies, facility or
confidential information of the Company was used and which was developed
entirely on the Executive's own time, and
(i) which do not relate (aa) directly to the
business of the Company, or (bb) to the
Company's actual or demonstrably anticipated
research and development, or
(ii) which do not result from any work performed
by the Executive for the Company.
6. Life Insurance. Executive agrees that the Company shall
have the right to obtain life insurance on Executive's life, at the Company's
sole expense and with the Company as the sole beneficiary thereof. Executive
shall (a) cooperate fully with the Company in obtaining such life insurance, (b)
sign any necessary consents, applications and other related forms or documents
and (c) take any required medical examinations.
7. Notices.
All notices hereunder shall be given in writing by personal
delivery by registered or certified mail, return receipt requested, postage
prepaid or by hand delivery addressed to the parties at the following respective
addresses or at such other address as may be designated in writing by either
party to the other in the manner set forth herein:
If to the Company:
SAC Technologies, Inc.
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in each case with a copy to:
▇▇▇▇▇▇▇ Rumble & ▇▇▇▇▇▇ Professional Association
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Towers
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to Executive:
To his address as set forth on
the signature page hereof
Notices which are hand delivered shall be effective on the date of delivery.
Notices delivered by mail or otherwise as aforesaid shall be deemed effectively
given upon the third calendar day subsequent to the postmark date thereof.
8. Miscellaneous. (a) The failure of either party at any time
to require performance by the other party of any provision hereunder shall in no
way affect the right of that party thereafter to enforce the same, nor shall it
affect any other party's right to enforce the same, or to enforce any of the
other provisions in this Agreement; nor shall the waiver by either party of the
breach of any provision hereof be taken or held to be a waiver of any subsequent
breach of such provision or as a waiver of the provision itself.
(b) This Agreement is a personal contract calling for the
provision of unique services by Executive, and Executive's rights and
obligations hereunder may not be sold, transferred, assigned, pledged or
hypothecated by Executive. In the event of any attempted assignment or transfer
of rights hereunder by Executive contrary to the provisions hereof, the Company
shall have no further liability for payments hereunder. The rights and
obligations of the Company hereunder shall be binding upon and run in favor of
the successors and assigns of the Company.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement.
(d) This Agreement has been made, shall be interpreted and
enforced in accordance with, and shall be governed in all respects by, the laws
of the State of Minnesota.
(e) Any judicial proceeding brought against any of the parties
to this Agreement or any dispute arising out of this Agreement or any matter
related hereto shall be brought in the courts of the State of Minnesota
(including the United States District Court for the District of Minnesota), and,
by execution and delivery of this Agreement, each of the parties to this
Agreement accepts for himself or itself the exclusive jurisdiction of the
aforesaid courts, and agrees that service on him or it by mail shall constitute
good and valid personal service, and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement.
(f) This Agreement (which includes the Exhibits hereto) sets
forth the entire understanding between the parties as to the subject matter of
this Agreement and merges and supersedes all prior agreements (including without
limitation any prior employment agreement to which Company and Executive are
parties, which the parties hereby expressly agree shall be deemed terminated
without obligation of any party thereto upon the effectiveness of this
Agreement), commitments, representations, writings and discussions between the
parties with respect to that subject matter. This Agreement may be terminated,
altered, modified or changed only by a written instrument signed by both parties
hereto.
(g) The provisions of this Agreement which by their terms call
for performance subsequent to termination of this Agreement or termination of
Executive's employment hereunder (including without limitation the provisions of
paragraphs 4 and 5 hereof), shall survive such termination.
(h) The Executive represents and warrants that he is not party
to or subject to any agreement, covenant, understanding, or under any
obligation, contractual or otherwise, to any firm, person or corporation, which
would prevent his employment by the Company or adversely affect his ability to
serve as an employee of the Company, as herein contemplated.
IN WITNESS WHEREOF, Executive and the Company have executed
this Agreement as of the date first above written.
Attest: SAC TECHNOLOGIES, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Authorized Signature
Witness: EXECUTIVE:
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
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Office(s): Chief Executive Officer,
Director of Research
Initial Salary: $98,000
NON-COMPETITION LETTER
May 10, 1996
SAC Technologies, Inc.
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Dear Sirs:
Contemporaneously herewith, I am entering into an employment agreement with
SAC Technologies, Inc., A Minnesota corporation. As used herein, the term the
"Company" shall mean and include SAC Technologies, Inc., together with all of
its parents, subsidiaries and affiliated companies from time to time.
I execute this letter in consideration of the Company's entering into a
long term employment agreement with me, and also to induce third party investors
to invest in the Company, a corporation in which I am a major shareholder.
Accordingly, in consideration of and reliance upon the foregoing:
1. I hereby covenant and agree that, during my term of employment with the
Company and thereafter during the "Non-Competition Period," I will not, directly
or indirectly:
(a) attempt, in any manner, to solicit from any customer (such term as
used throughout this letter agreement have the meaning ascribed to it
below) of the Company (except on behalf of the Company), business of the
type performed by the Company or to persuade any customer of the Company to
cease to do business or to reduce the amount of business which any customer
has customarily done or contemplates doing with the Company, whether or not
the relationship between the Company and such customer was originally
established in whole or in part through my efforts; or
(b) employ or attempt to employ or assist anyone else to employ any
person who is then or at any time during the preceding year was in the
Company's employ; or
(c) render any services of the type rendered by the Company to its
customers to or for any customer of the Company, unless such services are
rendered as an employee or consultant of the Company; or
(d) control, manage, operate, be employed or engaged by, or otherwise
participate or engage in business as, or own any interest in, or be
connected in any manner with, directly or indirectly, any Entity (as
defined below), whether as an individual proprietor, partner, shareholder,
joint venturer, officer, director, consultant, finder, broker, employee,
trustee, or in any other manner whatsoever, except for the Company, if such
Entity is engaged in any business in the United States of the type and
character engaged in and competitive with that conducted by the Company;
provided, however, that nothing contained in this clause shall be deemed to
prohibit me from owning less than 2% of the shares of a publicly held
corporation engaged in any such business.
As used in this letter agreement, the term (a) "Entity" shall mean an individual
proprietorship, partnership, corporation, joint venture, trust or any other form
of business entity; and (b) "customer" shall mean and include (1) anyone who is
then a customer of the Company, (2) anyone who was a customer at any time during
the one year period immediately preceding the date of termination of my
employment with the Company, and (3) any prospective customer to whom the
Company had made a presentation (or similar offering of services) within the one
year period immediately preceding the date of such termination.
2. I acknowledge and agree (i) that the services rendered and to be
rendered by me for the Company are of a special, unique, extraordinary and
intellectual character, (ii) that I have and will continue to develop a personal
acquaintanceship and relationship with the Company's customers, as well as an
intimate knowledge of those customers' affairs and requirements, which may
constitute the Company's primary or only contact with such customers, (iii) that
the Company's relationships with established customers are likely to be placed
in my hands and (iv) that my position with the Company places me in a position
of utmost confidence and trust with respect to the customers and employees of
the Company. I also acknowledge that the customers serviced by the Company are
located throughout the United States and accordingly, it is reasonable that the
restrictive covenants set forth above are not limited by specific geographic
area. Consequently, I agree that it is fair, reasonable and necessary for the
protection of the business, operations, assets and reputation of the Company
that I make the covenants contained herein.
3. I acknowledge and agree that the covenants made by me above are of the
essence of this letter agreement and in the event of breach or contemplated
breach of any of the covenants and agreements herein continued, the Company
shall in addition to all other remedies available at law or in equity have the
right to both temporary and permanent injunctions and damages with respect to
any such actual or contemplated breach.
4. Each of the covenants and agreements set forth in this letter agreement
are separate and independent covenants, each of which has been separately
bargained for. The provisions of this covenant shall be enforced to the fullest
extent permissible. Should the whole or any part or provision of any such
separate covenants be held or declared invalid, such invalidity shall not in any
way affect the validity of any other covenant or agreement herein or of any part
or provision of the same covenant not also held or declared invalid. If any
covenant shall be found to be invalid but would be valid if some part thereof
were deleted or the period or area of application reduced, then such covenant
shall apply with such minimum modification as may be necessary to make it valid
and effective.
5. I hereby acknowledge receipt of fair and adequate consideration for my
covenants made and given herein, and agree that the "Non-Competition Period" for
purposes hereof, is defined as:
(a) In the event of the constructive termination of my employment
with the Company by the Company without "cause," the period ending on the
date of such constructive termination;
(b) In the event of the termination of my employment with the Company
by the Company with "cause," the period commencing on the effective date of
my termination and ending on the third December 31 next following the date
of my termination; and
(c) In the event of the termination of my employment with the Company
by me voluntarily, the period commencing on the effective date of my
termination and ending on the second anniversary thereof.
6. Nothing contained in this letter agreement shall limit my ability to
deal with the Company's customers in connection with business activities
unrelated to, and non-competitive with, the business activities of the Company
from and after the date hereof.
7. This letter agreement may be assigned either in whole or in part and
without the consent of the undersigned by the Company to any affiliate of the
Company, or any successor to all or any substantial part of the assets, business
or property of the Company. This letter agreement is not assignable either in
whole or in part by the undersigned. The interpretation and enforcement of this
letter agreement is to be construed and the legal relations between the parties
determined in accordance with the laws of the State of Minnesota applicable to
contracts made in and to be wholly performed within such state. Any judicial
proceeding brought against me or any dispute arising out of this letter
agreement or any matter related hereto shall be brought in the courts of the
State of Minnesota (including the United States District Court for the State of
Minnesota), and, by execution and delivery of this letter agreement, I accept
the exclusive jurisdiction of the aforesaid courts, and agree that service on me
by mail shall constitute good and valid personal service, and irrevocably agree
to be bound by any judgment rendered thereby in connection with this letter
agreement.
Very truly yours,
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇.
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