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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 3, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 0-27892
----------------------------
SIPEX CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MASSACHUSETTS 04-6135748
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
22 LINNELL CIRCLE, BILLERICA, MASSACHUSETTS 01821
(Address of principal executive offices) (Zip Code)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (978) 667-8700
Former name, former address and former fiscal year if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
There were 18,075,758 shares of the Registration's Common Stock issued and
outstanding as of July 3, 1999.
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SIPEX CORPORATION
FORM 10-Q
SIX MONTHS ENDED JULY 3, 1999
INDEX
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<CAPTION>
ITEM
NUMBER PAGE
------ ----
<S> <C> <C> <C>
Part I: Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at July 3, 1999 and
December 31, 1998........................................... 3
Condensed Consolidated Statements of Operations for the
three months and
six months ended July 3, 1999 and June 27, 1998............. 4
Condensed Consolidated Statements of Cash Flows for the six
months ended July 3, 1999 and June 27, 1998................. 5
Notes To Condensed Consolidated Financial Statements........ 6-7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 7-10
Item 3. Quantitative and Qualitative Disclosure about Market Risk... 10
Part II: Other Information
Item 1. Legal Proceedings........................................... *
Item 2. Changes in Securities....................................... *
Item 3. Defaults Upon Senior Securities............................. *
Item 4. Submission of Matters to a Vote of Security Holders......... 11
Item 5. Other Information........................................... *
Item 6. Exhibits and Reports on Form 8-K............................ 11
Exhibit 10 Material Contracts 1999 Stock Plan...............
Exhibit 10.1 Employment Agreement, dated August 9, 1999,
between the Company and Stephen E. Parks....................
Exhibit 10.2 Employment Agreement, dated May 14, 1999,
between the Company and James E. Donegan....................
Exhibit 10.3 Employment Agreement, dated May 14, 1999,
between the Company and Frank R. DiPietro...................
Exhibit 10.4 Employment Agreement, dated May 14, 1999,
between the Company and Raymond Chow........................
Exhibit 10.5 Employment Agreement, dated May 14, 1999,
between the Company and Yener Gurler........................
Exhibit 11.1 Computation of Earnings Per Common Share.......
Exhibit 27 Financial Data Schedule..........................
Signatures....................................................................... 12
</TABLE>
- ---------------
* No information provided due to inapplicability of item.
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PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
SIPEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JULY 3, DECEMBER 31,
1999 1998
(UNAUDITED) (AUDITED)
----------- ------------
<S> <C> <C>
ASSETS:
Current Assets
Cash and cash equivalents.............................. $ 11,444 $ 17,810
Short-term investment securities....................... 1,875 7,981
Accounts receivable, less allowances of $573 and $449
at July 3, 1999 and December 31, 1998, respectively... 13,623 12,862
Inventories............................................ 18,425 16,682
Deferred income taxes-current.......................... 3,523 3,523
Prepaid expenses and other current assets.............. 2,876 1,224
-------- --------
Total current assets.............................. 51,766 60,082
Property, plant, and equipment, net......................... 13,856 10,306
Restricted cash equivalents and securities.................. 36,750 24,261
Deferred income taxes....................................... 4,741 4,741
Other assets................................................ 150 106
-------- --------
Total assets...................................... $107,263 $ 99,496
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities
Current portion of long term debt...................... $ -- $ 8
Accounts payable....................................... 3,431 3,560
Accrued expenses....................................... 5,351 3,218
-------- --------
Total current liabilities......................... 8,782 6,786
-------- --------
Shareholders' Equity:
Preferred stock, $.01 par value, 1,000,000 shares
authorized and no shares issued or outstanding at July
3, 1999 and December 31, 1998, respectively........... -- --
Common stock, $.01 par value, 40,000,000 shares
authorized and 18,075,758 and 17,979,812 shares issued
and outstanding at July 3, 1999 and December 31, 1998,
respectively.......................................... 181 180
Additional paid-in capital............................. 103,066 102,704
Accumulated deficit.................................... (4,789) (10,229)
Accumulated other comprehensive income................. 23 55
-------- --------
Total shareholders' equity........................ 98,481 92,710
-------- --------
Total liabilities and shareholders' equity........ $107,263 $ 99,496
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements
3
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SIPEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------- -------------------
JULY 3, JUNE 27, JULY 3, JUNE 27,
1999 1998 1999 1998
------- -------- ------- --------
<S> <C> <C> <C> <C>
Net sales........................................... $17,054 $16,190 $33,233 $32,374
Cost of sales....................................... 8,482 7,982 16,500 15,988
------- ------- ------- -------
Gross profit................................... 8,572 8,208 16,733 16,386
------- ------- ------- -------
Operating expenses Research and development......... 2,095 1,690 3,883 3,168
Marketing and selling.......................... 1,756 1,695 3,550 3,288
General and administrative..................... 926 791 1,905 1,554
------- ------- ------- -------
Total operating expenses.................. 4,777 4,176 9,338 8,010
------- ------- ------- -------
Income from operations.............................. 3,795 4,032 7,395 8,376
Other income (expense).............................. 471 475 968 931
------- ------- ------- -------
Income before income taxes.......................... 4,266 4,507 8,363 9,307
Income tax expense.................................. 1,493 -- 2,927 --
======= ======= ======= =======
Net income.......................................... $ 2,773 $ 4,507 $ 5,436 $ 9,307
======= ======= ======= =======
Net income per common share-basic................... $ 0.15 $ 0.25 $ 0.30 $ 0.52
======= ======= ======= =======
Net income per common share-assuming dilution....... $ 0.15 $ 0.24 $ 0.29 $ 0.50
======= ======= ======= =======
Weighted average common shares outstanding-basic.... 18,067 17,792 18,046 17,771
======= ======= ======= =======
Weighted average common and common equivalent shares
outstanding-assuming dilution..................... 18,576 18,651 18,628 18,710
======= ======= ======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements
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SIPEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------
JULY 3, JUNE 27,
1999 1998
-------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income............................................. $ 5,436 $ 9,307
Adjustments to reconcile net income to net cash (used
in) provided by operating activities:
Additions (reductions) to accounts receivable
allowances............................................ 115 (214)
Depreciation and amortization.......................... 1,110 1,006
Loss on disposal of assets............................. 51 --
Changes in current assets and liabilities:
Increase in accounts receivable................... (876) (2,816)
Increase in inventories........................... (1,743) (3,393)
Increase in prepaid expenses...................... (1,695) (702)
Increase in accrued taxes......................... 2,917 --
Decrease in accounts payable...................... (129) (742)
Decrease in accrued expenses...................... (784) (489)
-------- ---------
Net cash provided by operating activities................... 4,402 1,957
-------- ---------
INVESTING ACTIVITIES:
Proceeds from maturity of investment securities........ 88,149 218,126
Purchase of investment securities...................... (82,043) (214,265)
Increase in restricted cash equivalents and
securities............................................ (12,489) --
Purchase of property, plant, and equipment............. (4,711) (2,623)
-------- ---------
Net cash used in (provided by) investing
activities...................................... (11,094) 1,238
-------- ---------
FINANCING ACTIVITIES:
Proceeds from issuance of common stock................. 363 435
Payment of capital lease obligations................... (8) (30)
-------- ---------
Net cash provided by financing activities......... 355 405
Effect of foreign currency translation adjustments..... (28) (55)
-------- ---------
Increase (decrease) in cash and cash equivalents....... (6,365) 3,545
Cash and cash equivalents, beginning of period......... 17,810 23,887
-------- ---------
Cash and cash equivalents, end of period.................... $ 11,445 $ 27,432
======== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements
5
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SIPEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared by SIPEX
Corporation (the "Company") pursuant to the rules and regulations of the
Securities and Exchange Commission regarding interim financial reporting.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements
and should be read in conjunction with the financial statements and notes
thereto for the year ended December 31, 1998 included in the Company's 10-K
filing. The accompanying financial statements reflect all adjustments
(consisting solely of normal, recurring adjustments) which are, in the opinion
of management, necessary for a fair presentation of results for the interim
periods presented. The results of operations for the three-month period ended
July 3, 1999 are not necessarily indicative of the results to be expected for
the full fiscal year.
2. FACILITY EXIT COSTS
In the fourth quarter of 1998, Management of the Company and the Board of
Directors approved a plan to close its current manufacturing facility in
Milpitas, California and its sales office in France. As part of the plan, the
Company will be vacating the current leased facility in Milpitas and moving
operations to a new facility in Milpitas. Total estimated costs of $938,000
associated with the closure of the facility include $220,000 for rent, real
estate taxes, electricity, heat and water expenses for an estimated six month
period after the building is vacated and until it can be sub-leased or sold. The
balance of $718,000 represented charges to operations in 1998 for the write-down
to net realizable value of less efficient and duplicate machinery and equipment
not needed in the combined restructured manufacturing operations. Additionally,
the Company's plan includes the closure of its French sales operation and
relocation of these activities to the Company's new site in Belgium. As a result
of this action, the Company recorded $200,000 of facility exit costs, in the
fourth quarter of 1998, related to severance and other related employee benefit
costs. As of July 3, 1999, approximately $117,000 of the $1.138 million of costs
remain to be paid.
3. RESTRICTED CASH AND CASH EQUIVALENTS AND INVESTMENT SECURITIES
Restricted cash and cash equivalents and investment securities represents
amounts pledged for an operating lease which the Company entered into for the
construction and lease of a new wafer fabrication facility in Milpitas,
California. The lease agreement is for a five-year period, including a one-year
construction period.
4. NEW ACCOUNTING STANDARDS
The AICPA Accounting Standards Executive Committee recently issued
Statement of Position ("SOP") 98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use. This statement requires that
certain costs related to the development or purchase of internal-use software be
capitalized and amortized over the estimated useful life of the software, and is
effective for fiscal years beginning after December 15, 1998. The statement also
requires that costs related to the preliminary project stage and post
implementation/operations stage in an internal-use computer software development
project be expensed as incurred. The Company will comply with the provisions of
SOP 98-1 in fiscal 1999. The adoption of this SOP did not have a material impact
on the Company's financial position or results of operations.
The AICPA Accounting Standards Executive Committee recently issued SOP
98-5, Reporting on the Costs of Start-Up Activities. This Statement requires
that costs incurred during start-up activities, including organization costs, be
expensed as incurred, and is effective for fiscal years beginning after December
15, 1998. The Company will comply with the provisions of SOP 98-5 in fiscal
1999. The adoption of this SOP had no impact on the Company's financial position
or results of operations.
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5. NET INCOME PER SHARE
Net income per share-basic is based upon the weighted average number of
common shares outstanding. Net income per share-assuming dilution is based upon
the weighted average number of common equivalent shares outstanding assuming
dilution. Common equivalent shares, consisting of outstanding stock options, are
included in the per share calculations where the effect of their inclusion would
be dilutive.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This 10-Q contains certain statements of a forward-looking nature relating
to future events or the future financial performance of the Company and the
Company's actual future results may differ significantly from such statements.
In evaluating such statements, the various factors identified over the caption
"Factors Affecting Future Operating Results" should be considered.
OVERVIEW
SIPEX Corporation (the "Company") was organized and commenced operations in
1965. The Company is a leading manufacturer of high performance, high
value-added analog integrated circuits. The Company serves the broad analog
signal processing market with single, dual and multiprotocol interface circuits,
low power and high voltage application specific circuits, electroluminescent
circuits, data converters and power management products. Applications for the
Company's products include telecommunications, personal computers and
peripherals, battery powered hand-held devices, cellular telephones, test
equipment, factory automation, networking, process controls and satellites. The
Company operates in the analog segment of the semiconductor industry.
RESULTS OF OPERATIONS
The table below presents the statement of operations for the three months
and six months ended July 3, 1999 and June 27, 1998 as a percentage of net sales
and provides the percentage change of such items comparing the interim periods
ended July 3, 1999 to the corresponding period from the prior fiscal year.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------- -------------------------------
PERCENTAGE PERCENTAGE
JULY 3, JUNE 27, INCREASE JULY 3, JUNE 27, INCREASE
1999 1998 (DECREASE) 1999 1998 (DECREASE)
------- -------- ---------- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net sales................................... 100% 100% 5.3% 100% 100% 2.7%
Cost of sales............................... 49.7 49.3 6.3 49.6 49.4 3.2
----- ----- ------ ----- ----- ------
Gross profit................................ 50.3 50.7 4.4 50.4 50.6 2.1
----- ----- ------ ----- ----- ------
Operating expenses
Research and development............... 12.3 10.4 24.0 11.7 9.8 22.6
Marketing and selling.................. 10.3 10.5 3.6 10.7 10.2 8.0
General and administrative............. 5.4 4.9 17.1 5.7 4.8 22.6
----- ----- ------ ----- ----- ------
Total operating expenses.......... 28.0 25.8 14.4 28.1 24.8 16.6
----- ----- ------ ----- ----- ------
Operating income............................ 22.3 24.9 (5.9) 22.3 25.8 (11.7)
Other income (expense)...................... 2.8 2.9 (0.8) 2.9 2.9 3.9
----- ----- ------ ----- ----- ------
Income before income taxes.................. 25.1 27.8 (5.3) 25.2 28.7 (10.2)
Income tax expense.......................... 8.8 -- (100.0) 8.8 -- (100.0)
----- ----- ------ ----- ----- ------
Net income.................................. 16.3% 27.8% (38.5%) 16.4% 28.7% (41.6%)
===== ===== ====== ===== ===== ======
</TABLE>
Net sales for the second quarter and first six months of 1999 increased
5.3% and 2.7% to $17.1 million and $33.2 million, respectively, as compared to
the same periods in the previous year. International sales increased by 26.6%
and 22.8%, respectively, for the second quarter and first six months of 1999 as
compared to the same periods in the 1998. Second quarter gains in Japan and
Pacific Rim in 1999 vs. 1998 were offset by a
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decrease in United States and European sales from the prior year's quarter.
Sequentially, net sales decreased in Europe and Japan offset by an increase in
U.S. and Pacific Rim markets for the second quarter of 1999 vs. the first
quarter in 1999. Gains in Europe, Japan and Pacific Rim were offset by a
decrease in U.S. sales for the first six months of 1999 vs. the same period in
1998. International sales represented approximately 42.9% and 43.3% for the
second quarter and first six months of 1999, respectively.
Gross profit increased for both the second quarter and first six months of
1999 by $0.4 million and $0.3 million, as compared to the same periods in the
previous year. As a percentage of net sales, gross profit decreased slightly to
50.3% and 50.4% for both the second quarter and first six months of 1999
respectively, over comparable periods in the prior year primarily due to certain
costs associated with the start-up of our new wafer fab facility in Milpitas,
California.
Research and development expenses for the second quarter and first six
months of 1999 increased $405,000 and $715,000 respectively, or 24.0% and 22.6%
as compared to the same periods one year ago. The increase in spending was due
to process development and new product development expenses. As a percentage of
net sales, research and development increased to 12.3% and 11.7% for the second
quarter and first six months of 1999, as compared to 10.4% and 9.8% for the same
periods in the previous year.
Marketing and selling expenses increased 3.6% and 8.0% to $1.8 million and
$3.6 million, respectively, for the second quarter and first six months of 1999
as compared with $1.7 million and $3.3 million, respectively, for the same
periods of the previous year. The increase was due primarily to higher costs
associated with travel, marketing, advertising programs and increased staffing.
As a percentage of net sales, marketing and selling expenses for the second
quarter and first six months of 1999 declined to 10.3% and increased to 10.7%,
respectively, as compared to 10.5% and 10.2%, respectively, in the previous year
due to staffing and compensation increasing at a slower rate than sales growth.
General and administrative expenses increased by $135,000 and $351,000 for
the second quarter and first six months of 1999, respectively, as compared to
the same period of the previous year. The increase in spending for the second
quarter and first six months of 1999 as compared to the same periods a year ago
was due to increased professional fees and additional staffing related expenses
which were initiated starting in the second quarter of 1999. As a percentage of
net sales, general and administrative expenses increased to 5.4% and 5.7%,
respectively for the second quarter and first six months of 1999, an increase
from the 4.9% and 4.8%, respectively for the comparable periods of the previous
year.
Other income/expense for the second quarter and first six months of 1999
consists primarily of interest income on short-term and restricted investment
securities and cash equivalents net of royalty expenses. For the second quarter
and first six months of 1999, other income/expense represented income of
$471,000 and $968,000 as compared to an income of $475,000 and $931,000 for the
same periods in the previous year. The increase in the first six months of 1999
was due primarily to the interest income earned on short-term investment
securities and was offset by a decrease in the second quarter of 1999 in royalty
income.
The Company recorded income tax expense of $1.5 million and $2.9 million
for the second quarter and first six months of 1999, respectively, an effective
rate of 35%, for these periods.
LIQUIDITY AND CAPITAL RESOURCES
At July 3, 1999, the Company had working capital of $43 million and
available funds of $13.3 million consisting of cash, cash equivalents and
short-term U.S. Government-backed investments. In addition, there is $36.8
million of restricted cash and cash equivalents and investment securities
representing amounts pledged for an operating lease which the Company entered
into for the construction and lease of a new wafer fabrication facility in
Milpitas, California. The lease agreement is for a five-year period, including a
one-year construction period. The Company anticipates that the available funds
and cash provided from operations will be sufficient to meet cash and working
capital requirements for the foreseeable future.
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FACTORS AFFECTING FUTURE OPERATING RESULTS
Except for historical information contained herein, the matters set forth
in this Form 10-Q, including the statements in the management's discussion are
forward-looking statements that are dependent on certain risks and uncertainties
including such factors, among others, as the timing, volume and pricing of new
orders received and shipped during the quarter, whether customer cancellations
and delays of outstanding orders increase, timely ramp-up of new facilities, and
the timely introduction of new processes and products.
Past performance of the Company may not be a good indicator of future
performance due to factors affecting the Company, its competitors, the
semiconductor industry and the overall domestic and international economy. The
semiconductor industry is characterized by rapid technological change, price
erosion, cyclical market patterns, occasional shortages of materials, capacity
constraints, variation in manufacturing efficiencies and significant
expenditures for capital equipment and product development. Furthermore, new
product introductions and patent protection of existing products are critical
factors for future sales growth and sustained profitability.
Although the Company believes that it has sufficient product lines,
manufacturing facilities and technical and financial resources for its current
operations, sales and profitability can be significantly affected by the above
and other risks discussed from time to time in the Company's other filings with
the Securities and Exchange Commission, including its Annual Report on Form 10-K
for the year ended December 31, 1998. Additionally, the Company's common stock
could be subject to significant price volatility should sales and/or earnings
fail to meet expectations of the investment community.
YEAR 2000 READINESS DISCLOSURE STATEMENT
The Year 2000 issue results from computer programs written using two digits
rather than four to define the applicable year. Any of the Company's internal
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the Year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
The Company has assessed its information technology systems and non-IT
systems (such as building security, voice mail, telephone and other systems
containing embedded microprocessors) and has determined the nature and extent of
the work required, if any, to make these internal systems Year 2000 compliant.
In the third quarter of fiscal 1998, the Company selected new enterprise and
manufacturing software systems, which are Year 2000 compliant and began
implementation of these systems in the fourth quarter of 1998. Implementation is
scheduled to be fully complete by September 1999. This work is on schedule
through the second quarter of 1999. The Company's business is dependent upon its
information systems, which are an integral part of all major business processes.
As the Company progresses through the implementation of these critical
operational and logistical modules, there is a risk that these implementations
could be delayed, could experience difficulties or in fact may not be successful
and could adversely affect future results of operations and cash flows. The
Company's current enterprise and manufacturing system has been upgraded to
become Year 2000 compliant in the second quarter of 1999, will be tested in the
third quarter of 1999, and will remain in place until the new system is fully
operational. In addition, the Company's semiconductor manufacturing and payroll
systems are being updated and are expected to be Year 2000 compliant by
September 1999. Total expenditures on the general upgrade of internal computer
systems are estimated to be $2 million, a portion of which would be related to
Year 2000 compliance. The majority of these expenditures will be capitalized in
1999 to the extent in which they relate to the costs of implementation of new
systems. Year 2000 remediation costs will be expensed as incurred.
The Company has conducted a written survey of its foundries and other
suppliers of products and services with which it has a material relationship in
order to identify and assess their Year 2000 readiness and compliance, and any
negative impacts that any non-compliance could have on the Company. In addition,
the Company reviews Year 2000 issues at key suppliers as part of regularly
scheduled visits. Based upon the survey responses, the Company found all of
these principal suppliers to be Year 2000 compliant. Although management
believes the Company's systems will be Year 2000 compliant, the failure of the
Company's
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suppliers to address the Year 2000 issue could result in disruption to the
Company's operations and have a significant adverse impact on its results of
operations, the extent of which the Company has not yet estimated. In addition,
the Company continues to work with its customers to identify potential Year 2000
issues with its customers' products. Many of the Company's key customers are
Fortune 500 companies, are sensitive to Year 2000 issues and are expected to be
Year 2000 compliant. However, the Company continues to survey its customers and
monitor their progress in ensuring Year 2000 compliance. The Company is not
actively engaged in preparing contingency plans in the event that key customers
or suppliers fail to become Year 2000 compliant. However, the Company, in the
ordinary course of business, seeks to expand its customer base to lessen
dependence on any one customer for a significant portion of its revenues, and
seeks second sources of supply for its key products and services where
appropriate.
At this time, the Company believes that its most reasonably likely worst
case Year 2000 scenario is that it will be unable to successfully complete the
implementation of its enterprise and manufacturing systems discussed above.
However, the Company has developed contingency plans for this risk and continues
to develop further contingency plans for both mission critical and non-mission
critical systems as it identifies the Year 2000 risks.
Various statements in this discussion of Year 2000 issues are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements include statements of the
Company's expectations, statements with regard to schedules and expected
completion dates and statements regarding expected Year 2000 compliance. These
forward-looking statements are subject to various risk factors, which may
materially affect the Company's efforts to achieve Year 2000 compliance. These
risk factors include the inability of the Company to complete the plans and
modifications that it has identified, the wide variety of information systems
and components, both hardware and software, that must be evaluated, the variety,
number and complexity of equipment used in the Company's operations and the
large number of vendors and customers with which the Company interacts. The
Company's assessments of the effects of Year 2000 on the Company are based, in
part, upon information received from third parties and the Company's reasonable
reliance on that information. Therefore, the risk that inaccurate information is
supplied by third parties upon which the Company reasonably relied must be
considered as a risk factor that might affect the Company's Year 2000 efforts.
The Company is attempting to reduce the risks by utilizing an organized
approach, extensive testing, and allowance of ample contingency time to address
issues identified by tests.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company owns financial instruments that are sensitive to market risks
as part of its investment portfolio. The investment portfolio is used to
preserve the Company's capital until it is required to fund operations,
including the Company's research and development activities. None of these
market-risk sensitive instruments are held for trading purposes. The Company
does not own derivative financial instruments in its investment portfolio. The
investment portfolio contains instruments that are subject to the risk of a
decline in interest rates.
Investment Rate Risk -- The Company's investment portfolio includes debt
instruments that are primarily United States government bonds of less than one
year in duration. These bonds are subject to interest rate risk, and could
decline in value if interest rates fluctuate. The Company's investment portfolio
also consists of certain commercial paper, which is also subject to interest
rate risk. Due to the short duration and conservative nature of these
instruments, the Company does not believe that it has a material exposure to
interest rate risk.
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PART II: OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders was held on May 28, 1999. Holders of an
aggregate of 18,055,868 shares at the close of business on April 9, 1999 were
entitled to vote at the meeting. At such meeting, the Company's shareholders
voted as follows:
a) To elect Messr. James E. Donegan to the Board of Directors for a
three-year term.
<TABLE>
<CAPTION>
TOTAL VOTE FOR EACH TOTAL VOTE WITHHELD FROM
DIRECTOR EACH DIRECTOR
------------------- ------------------------
<S> <C> <C>
James E. Donegan............................ 15,091,096 28,559
</TABLE>
Messrs. Steward S. Flaschen and Manfred Loeb will continue to hold office
until the 2000 Annual Meeting of Shareholders or until their successors have
been duly elected or until their earlier resignation or removal. Messrs. Lionel
H. Olmer, John L. Sprague and Willy M. C. Sansen will continue to hold office
until the 2001 Annual Meeting of Shareholders or until their successors have
been duly elected or until their earlier resignation or removal.
b) To approve the adoption of the Company's 1999 Stock Option Plan.
<TABLE>
<S> <C>
Total Vote For the Proposal................................. 10,260,339
Total Vote Against the Proposal............................. 2,218,096
Abstentions................................................. 4,949
Broker Non-Votes............................................ 2,636,271
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 10 Material Contracts -- 1999 Stock Plan (filed as Appendix
A to the Company's definite Proxy Statement for the
Annual Meeting Of Shareholders held May 28, 1999).
Exhibit 10.1 Employment Agreement, dated August 9, 1999 between the
Company and Stephen E. Parks.
Exhibit 10.2 Employment Agreement, dated May, 1999 between the Company
and James E. Donegan.
Exhibit 10.3 Employment Agreement, dated May, 1999 between the Company
and Frank R. DiPietro
Exhibit 10.4 Employment Agreement, dated May, 1999 between the Company
and Raymond Chow.
Exhibit 10.5 Employment Agreement, dated May, 1999 between the Company
and Yener Gurler.
Exhibit 11.1 Computation of Earnings Per Common Share
Exhibit 27.1 Financial Data Schedule
b) Reports on Form 8-K
None
11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SIPEX CORPORATION
BY /s/ FRANK R. DIPIETRO
---------------------------------
FRANK R. DIPIETRO
EXECUTIVE VICE PRESIDENT, FINANCE
&
CHIEF FINANCIAL OFFICER,
TREASURER, & CLERK
(DULY AUTHORIZED OFFICER &
PRINCIPAL FINANCIAL OFFICER)
DATE: August 10, 1999
12
<PAGE> 1
EXHIBIT 10.1
June 18, 1999
Mr. Stephen E. Parks
95 Partridge Run
East Greenwich, RI 02818
Dear Steve:
Sipex Corporation is very pleased to extend an offer of employment to you
on the terms and conditions set forth in this letter.
As a condition of your employment, you will be required to execute an
Employee Noncompetition, Nondisclosure and Developments Agreement in the form
attached to this letter, as well as an Employment Agreement in the form attached
to this letter. A signed copy of this letter will also be attached to and made
part of your Employment Agreement.
The following is a summary of the terms and conditions upon which you will
be employed by the Company:
1. TITLE AND RESPONSIBILITIES: Your starting position and title will be
President and Chief Operating Officer. You will report directly to me, along
with Jack Worthen, Vice President of Sales, Cosmo Maza, Vice President of
Quality Assurance, and Frank DiPietro, Executive Vice President and CFO.
Initially, Operations (Yener Gurler), Product Development (Raymond Chow) and
Marketing (Mike Robinson) will report directly to you. I will retain the title
of Chairman and CEO.
2. STARTING SALARY AND BONUS: Your starting salary will be $250,000 per
year. If you are still employed by the Company as of March 1, 2000, you will
receive a guaranteed bonus of $175,000 reflecting your service in 1999.
3. PROMOTION: Both you and Sipex would contemplate that you would, if
successful, transition to the position of CEO in addition to your position as
President within a reasonable period of the commencement of your employment with
the Company. If this occurs, Sales and Quality Assurance would then report to
you, I would remain Chairman, and you and Frank DiPietro would report directly
to me. You recognize that this promotion is not guaranteed, but will be based on
the Board of Directors' assessment of your fitness and readiness to assume the
title of CEO. The Company will agree to inform you no later than March 1, 2000
whether the Board intends to appoint you CEO. In the event that Board informs
you on or before March 1, 2000 that you will not be appointed CEO, you will be
free within thirty days of such notice to terminate your employment, and such
termination will be considered to be with Good Reason (as defined in Section 3
(B) (2) of the Employment Agreement). You would then be entitled to receive the
benefits set forth in Section 3 (B) (3) of the
<PAGE> 2
Employment Agreement, provided you signed the necessary comprehensive release.
In the event you are promoted to CEO, the Board may, at its discretion, increase
your base salary.
4. STOCK OPTIONS: At the commencement of your employment, you shall be
granted options to purchase 150,000 shares of Sipex stock at the fair market
value of the stock on the date of grant, vesting over a 5-year period, all in
accordance with the terms of the Company's Stock Option Plan. In the event the
Board promotes you to CEO, you shall on the first anniversary of your date of
employment be granted an option (vesting over 5 years, all in accordance with
the terms of the Company's Stock Option Plan) to purchase an additional 175,000
shares of Sipex stock at the fair market value of the stock on the date of
grant, and you shall, if you are still employed on the second anniversary of
your date of employment, be granted an option (vesting over 5 years, all in
accordance with the terms of the Company's Stock Option Plan) to purchase an
additional 175,000 shares of Sipex stock at the fair market value of the stock
on the date of grant. If the Company fails to obtain agreement by any Successor
To The Business as defined in Section 10 of the Employment Agreement to perform
your Employment Agreement (all as set forth in Section 10 of the Employment
Agreement), all stock options you then hold will vest to 100% on the effective
date of any such transaction described in said section 10.
5. HOUSING AND RELOCATION: The Company will grant you a loan in the
amount of $250,000 to offset the cost of obtaining new housing in Massachusetts.
The loan will be contingent on the purchase of your new home in Massachusetts
and it shall be secured by a mortgage on the home you purchase. The loan will be
forgivable over a period of 3 years, at 33 1/3% on the three anniversary dates
following issuance of the loan, provided that if you leave the Company without
Good Reason, or because you are terminated by the Company for Cause, all as
defined in section 3 of the Employment Agreement, the portion of the loan not
yet forgiven must be repaid to the Company within thirty days of the termination
of your employment. If you terminate your employment with Good Reason, or if the
Company terminates your employment without Cause, all as defined in section 3 of
the Employment Agreement, the remaining unforgiven portion of the loan shall be
forgiven.
In addition, the Company shall pay reasonable and customary relocation
expenses, including moving costs, closing costs, and real estate commissions
that you incur in selling your home in East Greenwich, Rhode Island and moving
to Massachusetts. If you are not able to sell your current home in Rhode Island
prior to moving into a new home in Massachusetts, the Company shall assume the
interest portion of your present mortgage payment until the earlier of one year
or the date you sell your home in Rhode Island. The Company will pay for
reasonable temporary housing expenses for you if you personally relocate to
Massachusetts prior to the sale of your home in Rhode Island, and it will pay
for reasonable temporary housing expenses for your family if your family
relocates to Massachusetts prior to the sale of your home in Rhode Island.
<PAGE> 3
6. BENEFITS: You shall be eligible for life insurance and medical
insurance under the plan applicable to Sipex executives. You will be entitled to
a corporate lease allowance of up to $1,000 per month for a vehicle, and the
Company will cover the cost of maintenance and business-related gasoline
expenses. You will be entitled to the customary vacation, retirement and other
benefits applicable to Sipex executives. You will be covered by the Company's
Directors & Officers Liability insurance policy.
7. SEVERANCE BENEFIT: In the event you are terminated by the Company
without Cause, or if you terminate your employment with Good Reason, all as
defined in Section 3 of the Employment Agreement, as further modified by
paragraph 3 of this letter, and if you sign a comprehensive release, you shall
be entitled to the severance benefits set forth in section 3 (B) (3) of the
Employment Agreement.
Finally, I want to re-emphasize that our industry is a volatile one, and
you should realize that it is possible that Sipex may be acquired or merged or
otherwise experience a change in control, which may affect your employment
status. Your sole and exclusive rights in the event of a change of control are
set forth in paragraph 4 of this letter and in Section 10 of the Employment
Agreement you will be required to sign.
If the foregoing is acceptable in all respects to you, kindly countersign a
copy of this letter and return it to me. We look forward to our association with
you.
Sincerely yours,
/s/ James E. Donegan
----------------------------------
James E. Donegan, Chairman and CEO
Agreed to:
/s/ Stephen E. Parks
- ----------------------------
Stephen E. Parks
Date: June 18, 1999
<PAGE> 4
EMPLOYMENT AGREEMENT
AGREEMENT made as of this day of August 9, 1999, by and between Stephen
E. Parks, a person residing at 95 Partridge Run, East Greenwich, R.I. 02818 (the
"Employee") and Sipex Corporation, a Massachusetts corporation with a principal
place of business in Billerica, Massachusetts (the "Company").
WHEREAS, the Employee's senior managerial position requires that he be
trusted with extensive confidential information and trade secrets of the Company
and that he develop a thorough and comprehensive knowledge of all details of the
Company's business, including, but not limited to, information relating to
research, development, inventions, manufacturing, purchasing, accounting,
engineering, marketing, distribution and licensing of the Company's products and
services;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the mutual
covenants and obligations herein contained, the parties hereto agree as follows:
1. POSITION AND RESPONSIBILITIES. The Employee agrees to serve as
President and Chief Operating Officer of the Company or in such other positions
as may be assigned. He shall have direct responsibility for the Operations,
Product Development and Marketing divisions of the Company. The Employee shall
at all times report to, and his activities shall at all times be subject to the
direction and control of the Chairman and Chief Executive Officer and the Board
of Directors of the Company or to its designee, and the Employee shall exercise
such powers and comply with and perform, faithfully and to the best of his
ability, such directions and duties in relation to the business and affairs of
the Company as may from time to time be vested in or requested of him. If
Employee shall be elected to other offices of the Company or any of its
affiliates, he shall serve in such positions without further compensation than
provided for in this Agreement. The Employee agrees to follow all rules,
policies and directives of the Company as may be promulgated or modified from
time to time. The Employee shall perform his services under this Agreement at
such locations as may be required by the Company.
2. COMPENSATION; SALARY, BONUSES AND OTHER BENEFITS. During the
term of this Agreement, the Company shall pay the Employee the following
compensation:
(A) SALARY. In consideration of the services to be
rendered by the Employee to the Company, the Company will pay to the
Employee a monthly salary of $20,800 (the Employee's "Base Rate")
during the term of this Agreement. Employee's Base Rate may be adjusted
by the Company's Board of Directors in its sole discretion from time to
time; provided, however, that under no circumstance shall such Base
Rate be reduced. Such salary shall be payable in conformity with the
Company's customary practices for executive compensation, as such
practices shall be established or modified from time to time.
<PAGE> 5
(B) FRINGE BENEFITS.
(1) The Employee will be entitled to participate
on the same general basis and subject to the same rules and
regulations as other Company executive employees in the
Company's standard benefit plans as such benefits or plans may
be modified or amended from time to time.
(2) The Company will maintain supplemental life
insurance on the life of the Employee so that the aggregate
total death benefit payable to the Employee from all Company
life insurance policies will total _____________.
(3) At the request of the Employee, the Company
will maintain supplemental disability insurance for the
Employee so that the aggregate total disability benefits
payable to the Employee from all Company disability insurance
policies will total sixty-six and two-thirds percent (66 2/3%)
of Employee's salary.
(4) The Company shall pay or reimburse the
Employee for all reasonable business expenses incurred or paid
by the Employee in the performance of his duties and
responsibilities hereunder, provided the Employee provides
reasonable substantiation and documentation of these expenses.
The Company agrees to provide reimbursement within a
reasonable time after receipt of such documentation.
(C) PERFORMANCE BASED BONUS. At the sole discretion of
the Board of Directors, the Employee may also be eligible to receive a
discretionary annual bonus after the end of the Company's calendar
year, provided that the Employee continues to be employed by the
Company at such year end. The amount of this bonus, if any, shall be
determined by the Board of Directors based on objective or subjective
goals set by the Board of Directors in its sole discretion. In the
event that the Employee's employment with the Company is terminated by
the Company without Cause or is terminated by the Employee for Good
Reason other than at calendar year end, the Employee's bonus shall be
prorated for such partial year. No bonus shall be payable to Employee
with respect to any calendar year of the Company during which
Employee's employment is terminated for Cause or Employee terminates
his employment without Good Reason. In the event employee is employed
on March 1, 2000 and has not been terminated for Cause or he has not
terminated his employment without Good Reason, he shall be entitled
Letter, to a bonus of $175,000 reflecting his services in 1999.
(D) TAXES. All payments in this Section 2 shall be
subject to all applicable federal, state and local withholding, payroll
and other taxes.
3. TERMINATION. The Employee's employment under this Agreement
may be terminated as follows:
(A) BY THE EMPLOYEE WITHOUT GOOD REASON. The Employee may
terminate, his
<PAGE> 6
-3-
employment without Good Reason (as defined in Section 3(B)(2) below)
provided that the Employee gives the Company a written notice of intent
to terminate at least thirty (30) days' prior to the effective date of
such termination. In the event of a termination by the Employee without
Good Reason, the Company may accelerate the Employee's departure date
and will have no obligation to pay Employee after his actual departure
date. In the event of termination by the Employee without Good Reason,
the Employee shall be entitled to no severance or other termination
benefits.
(B) BY THE EMPLOYEE WITH GOOD REASON OR BY THE COMPANY
WITHOUT CAUSE.
(1) The Company may terminate the Employee's
employment without Cause (as defined in Section 3(C))
at any time. The Employee may terminate his
employment for Good Reason (as defined in Subsection
(2) of this Section 3(B) and as further defined in
paragraph 3 of the offer letter dated June , 1999,
attached hereto) after giving the Company a written
notice of intent to terminate at least thirty (30)
days prior to the effective date of such termination.
(2) For purposes of this Agreement, termination
by the Employee for "GOOD REASON" shall mean the
termination of employment by the Employee: (i) as a
result of a material breach of this Agreement by the
Company; (ii) as a result of a material reduction in
the Employee's title or reporting responsibilities as
they exist on the date hereof without the Employee's
written consent; (iii) as a result of the failure of
the Company to pay the Employee's salary or bonus, if
any, in the time and manner contemplated by this
Agreement; (iv) as a result of the Company requiring
the Employee to relocate more than 50 miles from
Billerica, Massachusetts (unless such relocation is
to another facility of the Company); or (v) for a
reason set forth in paragraph 3 of the offer letter
to Employee dated June , 1999; PROVIDED, HOWEVER,
that an event described in this Section shall not
constitute Good Reason unless it is communicated by
the Employee to the Company in writing and is not
corrected by the Company to the Employee's
reasonable satisfaction within 30 days of the date
of the Employee's delivery of such written notice to
the Company. Notwithstanding Section 3(B)(2)(iv), in
the event a Successor To The Business (as defined in
Section 10 hereof) assumes this Agreement, Section
3(B)(2)(iv) shall be modified to read as follows:
"(iv) as a result of the Company requiring the
Employee to relocate more than 50 miles from
Billerica, Massachusetts to any other location
(including without limitation any facility of the
Company or the Successor To The Business)."
(3) In the event that the Company exercises its
right to terminate the Employee without Cause or the
Employee terminates his employment for Good Reason
and the Employee signs a comprehensive release in the
form, and of a scope, acceptable to the Company, the
Company agrees to:
(i) pay the Employee a lump sum payment
equal to eighteen (18)
<PAGE> 7
-4-
months' base salary at the Employee's then
current Base Rate;
(ii) pay the Employee an amount equal to
the highest annual bonus paid or payable by
the Company to the Employee with respect to
any calendar year during the three (3)
calendar years prior to Employee's
termination of employment;
(iii) allow the Employee to participate
to the same extent as active executive
employees (including dependent coverage) in
the life, accident, disability, health and
dental insurance plans of the Company
(including the supplemental insurance set
forth in Section 2(B)(2) and 2(B)(3) of this
Agreement) or to provide benefits equivalent
to those of active executive employees, at
no cost to the Employee for a period of
eighteen (18) months commencing on the date
of termination of employment;
(iv) allow the Employee the option to
buy the Company automobile leased for the
Employee for a price equal to the buyout
amount of the automobile at the end of the
lease. The Employee hereby authorizes the
Company to deduct any tax withholdings
applicable to such transfer from any
payments to be made by the Company
hereinafter. All risk of damage or loss with
respect to such automobile shall rest with
the Employee. The automobile will be
transferred to the Employee "as is," with no
representations or warranties, express or
implied, being made to the Employee
(including warranties of merchantability and
fitness for a particular purpose) and,
without limiting the generality of the
foregoing in any way, in no event shall the
Company be liable for any consequential,
special, punitive or other damages in
connection with the automobile transfer. If
this option is not exercised, the automobile
will be returned to the Company;
(v) In the event that any of the
payments to be made to the Employee, or the
compensation received or deemed to be
received by the Employee, pursuant to or nay
reason of the provisions of Section 3(B)(3)
of this Agreement result in the imposition
of an excise tax on the Employee pursuant to
Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), or any
similar provision of state, local or foreign
tax law (the "Parachute Tax"), the Company
shall pay an additional amount to the
Employee (the "Gross-Up Payment"). The
Gross-Up Payment shall be calculated by the
Company and shall equal an amount necessary
to yield the Employee, on an after-tax
basis, an amount equal to the Parachute Tax
imposed on the Employee (including any
Parachute Tax imposed with respect to the
Gross-Up Payment). The Gross-Up Payment with
respect to any Parachute Tax shall be
payable by the Company to the Employee no
later than the last day of the fiscal year
<PAGE> 8
-5-
in which such Parachute Tax is imposed.
(iv) The payments in this Section
3(B)(3) shall be subject to all applicable
federal, state and local withholding,
payroll and other taxes.
If Employee breaches his obligations under
the Noncompetition, Nondisclosure and
Developments Agreement executed herewith
between Employee and the Company, the
Company may immediately cease payment of all
severance and/or benefits described in this
Agreement. This cessation of severance
and/or benefits shall be in addition to, and
not, as an alternative to, any other
remedies in law or in equity available to
the Company, including the right to seek
specific performance or an injunction.
Except as expressly set forth in this
Section 3(B), Employee acknowledges that the
Company shall not have any other obligations
to the Employee in the event of Employee's
termination under this Section 3(B), except
such other obligations as may be imposed by
law.
(C) AT THE ELECTION OF THE COMPANY FOR CAUSE. The Company
may, immediately and unilaterally, terminate the Employee's employment
hereunder for "Cause" at any time during the term of this Agreement by
giving to the Employee written notice of such termination ten (10) days
prior to the effective date of termination. The Company may pay
Employee for this ten (10) day period in lieu of such notice.
Termination of the Employee's employment by the Company shall
constitute a termination for "Cause" if such termination is for one or
more of the following causes:
(1) the substantial and continuing failure of
the Employee to render services to the Company
substantially in accordance with his assigned duties
or obligations under this Agreement, which materially
and adversely affects or could materially and
adversely affect the business, prospects, financial
condition, operations, property or affairs of the
Company, which is not cured by the Employee to the
satisfaction of the Company within thirty (30) days
notice to the Employee by the Company of the failure;
(2) dishonesty, deliberate disregard of the
rules or policies of the Company, material breach of
the terms of this Agreement, which is not cured by
the Employee to the satisfaction of the Company
within thirty (30) days notice to the Employee by the
Company;
(3) the commission by the Employee of an act of
fraud, embezzlement or breach of fiduciary duty;
(4) acts of moral turpitude by the Employee
which materially adversely affect the Employee's
ability to perform his duties hereunder and represent
the
<PAGE> 9
-6-
Company;
(5) the conviction by the Employee of a felony;
or
(6) the commission of an act which constitutes
unfair competition with the Company or which induces
any customer of the Company to breach a contract with
the Company.
In the event of a termination for "Cause" pursuant to
the provisions of clauses (1) through (6) above,
inclusive, the Employee shall be entitled to no
severance or other termination benefits.
(D) BENEFITS IF AGREEMENT TERMINATED DUE TO DEATH OR
DISABILITY. The Company shall have the right to terminate Employee's
employment if Employee dies or suffers physical incapacity or mental
incompetence. In the event Employee's employment shall terminate due to
the physical incapacity or mental incompetence of the Employee, the
Company shall pay the Employee an amount equal to: (i) eighteen (18)
months salary at the then current Base Rate, less (ii) any amounts
recovered by the Employee under any health and disability insurance
programs available through the Company. For the purposes of this
Agreement, the Employee shall be deemed to have suffered physical
incapacity or mental incompetence if the Employee is unable to perform
the essential functions of his job with reasonable accommodation. Any
accommodation will not be deemed reasonable if it imposes an undue
hardship on the Company. If this Agreement terminates due to the death
of Employee, Employee will not be entitled to any payments after the
date of his death.
4. SURVIVAL OF CERTAIN PROVISIONS. Provisions of this Agreement
shall survive any termination of employment or of this Agreement if so provided
herein or if necessary or desirable to fully accomplish the purposes of such
provision. Without limiting the foregoing, the obligations of the Employee under
Sections 3, 4, 5, 8 and 10 hereof and the Employee Noncompetition, Nondisclosure
and Developments Agreement of even date herewith by and between Employee and the
Company expressly survive any termination of employment or termination of this
Agreement. The obligation of the Company to make payments to or on behalf of the
Employee under Section 3(B) hereof is expressly conditioned upon Employee's
continued full performance of the obligations under the terms of Section 5 and
the Noncompetition, Nondisclosure and Developments Agreement executed herewith
between Employee and the Company.
5. NONCOMPETITION, NONDISCLOSURE AND DEVELOPMENTS AGREEMENT. In
connection with his employment by the Company pursuant to the terms of this
Agreement, the Employee shall execute, prior to the execution hereof by the
Company, the Noncompetition, Nondisclosure and Developments Agreement attached
hereto as EXHIBIT A.
6. CONSENT AND WAIVER BY THIRD PARTIES. The Employee hereby
represents and
<PAGE> 10
-7-
warrants that he has obtained all waivers and/or consents from third parties
which are necessary to enable him to enjoy employment with the Company on the
terms and conditions set forth herein and to execute and perform this Agreement
without being in conflict with any other agreement, obligation or understanding
with any such third party. The Employee represents that he is not bound by any
agreement or any other existing or previous business relationship which
conflicts with, or may conflict with, the performance of his obligations
hereunder or prevent the full performance of his duties and obligations
hereunder.
7. GOVERNING LAW. This Agreement, the employment relationship
contemplated herein and any claim arising from such relationship, whether or not
arising under this Agreement, shall be governed by and construed in accordance
with the internal laws of the Commonwealth of Massachusetts, without giving
effect to the principles of choice of law or conflicts of laws of such
Commonwealth and this Agreement shall be deemed to be performable in
Massachusetts. Any claims or legal actions by one party against the other
arising out of the relationship between the parties contemplated herein (whether
or not arising under this Agreement) shall be commenced or maintained in any
state or federal court located in Massachusetts, and Employee hereby submits to
the jurisdiction and venue of any such court.
8. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement or the other agreements executed in connection with
the transactions contemplated hereby for any reason shall be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement or such
other agreements, but this Agreement or such other agreements, as the case may
be, shall be construed and reformed to the maximum extent permitted by law.
9. WAIVERS AND MODIFICATIONS. This Agreement may be modified, and
the rights, remedies and obligations contained in any provision hereof may be
waived, only in accordance with this Section 9. No waiver by either party of any
breach by the other of any provision hereof shall be deemed to be a waiver of
any later or other breach thereof or as a waiver of any other provision of this
Agreement. This Agreement sets forth all of the terms of the understandings
between the parties with reference to the subject matter set forth herein and
may not be waived, changed, discharged or terminated orally or by any course of
dealing between the parties, but only by an instrument in writing signed by the
party against whom any waiver, change, discharge or termination is sought. No
modification or waiver by the Company shall be effective without the consent of
at least a majority of the members of the Board of Directors excluding the
Employee then in office at the time of such modification or waiver.
10. ASSIGNMENT. The Employee acknowledges that the services to be
rendered by him hereunder are unique and personal in nature. Accordingly, the
Employee may not assign any of his rights or delegate any of his duties or
obligations under this Agreement. The rights and obligations of the Company
under this Agreement shall inure to the benefit of, and shall be binding upon,
the successors and assigns of the Company. To that end, the, Company will
<PAGE> 11
-8-
require any successor (a "Successor To The Business") to all or substantially
all of the business and/or assets of the Company (whether direct or indirect,
by purchase, merger, consolidation or otherwise), expressly to assume and
agree, by agreement in form and substance satisfactory to the Employee, to
perform this Agreement in the same manner and to the same extent that Company
would be required to perform it if no such transaction had taken place. Failure
of the Company to obtain such agreement prior to the effective date of such
transaction shall be a breach of this Agreement and shall entitle the Employee
to compensation and benefits from the Company in the same amount and on the
same terms as the Employee would be entitled hereunder if he were to terminate
his employment pursuant to Section 3(B) of this Agreement. In the event the
Company fails to obtain a successor's agreement to assume this Agreement under
this Section 10, the date upon which any such transaction becomes effective
shall be deemed the termination date and Employee's employment with the Company
will end on that date.
11. ACKNOWLEDGEMENTS. The Employee hereby acknowledges and
recognizes that the enforcement of any of the provisions in this Agreement and
the Noncompetition, Nondisclosure, and Developments Agreement executed
herewith may potentially interfere with the Employee's ability to pursue a
proper livelihood. The Employee represents that he is knowledgeable about the
business of the Company and further represents that he is capable of pursuing a
career in other industries to earn a proper livelihood. The Employee recognizes
and agrees that the enforcement of the Noncompetition, Nondisclosure and
Developments Agreement is necessary to ensure the preservation, protection and
continuity of the business, trade secrets and goodwill of the Company. The
Employee agrees that, due to the proprietary nature of the Company's business,
the restrictions set forth in the Noncompetition, Nondisclosure and
Developments Agreement are reasonable as to time and scope.
12. ENTIRE AGREEMENT. This Agreement, the offer letter dated
June __, 1999, and the Noncompetition, Nondisclosure and Developments Agreement
executed herewith constitutes the entire, understanding of the parties relating
to the subject matter hereof and supersedes and cancels all agreements, written
or oral, made prior to the date hereof between the Employee and the Company
relating to employment, salary, bonus, or other compensation of any
description, equity participation, pension, post-retirement benefits, severance
or other remuneration, except for the Company stock option plan(s) and the
stock option agreement(s) between the Company and the Employee which shall
remain in full force and effect in accordance with their respective terms
(except as modified by this Agreement).
13. NOTICES. All notices hereunder shall be in writing and shall
be delivered in person or mailed by certified or registered mail, return receipt
requested, addressed as follows:
If to the Company, to: Sipex Corporation
22 Linnell Circle
Billerica, Massachusetts 01821
Attention: Chief Financial Officer
<PAGE> 12
-9-
If to the Employee, at the Employee's address set forth on the
signature page hereto.
14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
15. SECTION HEADINGS. The descriptive section headings herein have
been inserted for convenience only and shall not be deemed to define, limit, or
otherwise affect the construction of any provision hereof.
<PAGE> 13
-10-
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written as an instrument under seal.
SIPEX CORPORATION: EMPLOYEE:
By: /s/ James E. Donegan /s/ Stephen E. Parks
---------------------------- -----------------------------------
James E. Donegan Stephen E. Parks
Title: Chairman and CEO
95 Partridge Run
-----------------------------------
Street Address
East Greenwich, RI 02818
-----------------------------------
City State Zip Code
<PAGE> 14
EMPLOYEE NONCOMPETITION,
NONDISCLOSURE AND DEVELOPMENTS AGREEMENT
In consideration of and as a condition of my employment or continued
employment by Sipex Corporation (the "Company"), I hereby agree with the Company
as follows:
1. During the period of my employment by the Company, I shall
devote my full time and best efforts to the business of the Company and I shall
neither pursue any business opportunity outside the Company nor take any
position with any organization other than the Company without the approval of a
majority of the disinterested members of the Company's Board of Directors.
Further, during the period of my employment by the Company and for one year
thereafter, I shall not, directly or indirectly, alone or as a partner, officer,
director, employee or stockholder of any entity, (a) engage in any business
activity which is in competition with the products or services being developed,
manufactured or sold by the Company, (b) solicit or do business with any
customer of the Company, or any potential customer of the Company with whom I
have had contact, in competition with the products or services being developed,
manufactured or sold by the Company, or (c) solicit, interfere with or endeavor
to entice away any employee of the Company. For purposes of clause (a) of the
preceding sentence as it relates to the one year period following the
termination of my employment by the Company, an entity which neither sells,
directly or indirectly, its products or services to at least one of the existing
customers of the Company or the customers being actively developed or solicited
by the Company nor proposes to develop products or services for sale, directly
or indirectly, to any such customer, shall not be deemed to be in competition
with the Company.
2. I shall not at any time, whether during or after the
termination of my employment, reveal to any person or entity any Confidential
Information (as defined in EXHIBIT A hereto), except to employees of the Company
who need to know such Confidential Information for the purposes of their
employment, or as otherwise authorized by the Company in writing, and I shall
keep secret all matters entrusted to me and shall not use or attempt to use any
Confidential Information except as may be required in the ordinary course of
performing my duties as an employee of the Company, nor shall I use any
Confidential Information in any manner which may injure or cause loss or may be
calculated to injure or cause loss to the Company, whether directly or
indirectly.
Furthermore, I agree that during my employment I shall not make, use or
permit to be used any Company Documentation (as defined in EXHIBIT A hereto)
otherwise than for the benefit of the Company. I further agree that I shall not,
after the termination of my employment, use or permit others to use any such
Company Documentation, it being agreed that all Company Documentation shall be
and remain the sole and exclusive property of the Company. Immediately upon the
termination of my employment I shall deliver all Company Documentation in my
possession, and all copies thereof, to the Company, at its main office.
<PAGE> 15
3. If at any time or times during my employment, I shall (either
alone or with others) make, conceive, create, discover, invent or reduce to
practice any Development (as defined in EXHIBIT A hereto) that (a) relates to
the business of the Company or any customer of or supplier to the Company or any
of the products or services being developed, manufactured or sold by the Company
or which may be used in relation therewith; or (b) results from tasks assigned
to me by the Company; or (c) results from the use of premises or personal
property (whether tangible or intangible) owned, leased or contracted for by the
Company, then all such Developments and the benefits thereof are and shall
immediately become the sole and absolute property of the Company and its
assigns, as works made for hire or otherwise. I shall promptly disclose to the
Company (or any persons designated by it) each such Development. I hereby assign
all rights (including, but not limited to, rights to inventions, patentable
subject matter, copyrights and trademarks) I may have or may acquire in the
Developments and all benefits and/or rights resulting therefrom to the Company
and its assigns without further compensation and shall communicate, without cost
or delay, and without disclosing to others the same, all available information
relating thereto (with all necessary plans and models) to the Company.
4. Excluded from this Agreement are my developments that I cannot
assign to the Company because of a prior agreement with ________________________
which is effective until ________________. (Give name and date or write "none").
5. I hereby consent to the use of my name, picture, signature,
voice, image, and/or likeness by the Company during my employment by the Company
and at any time thereafter. Further, I waive all claims I may now have or may
ever have against the Company and its officers, employees, and agents arising
out of the Company's use, adaptation, reproduction, modification, distribution,
exhibition or other commercial exploitation of my name, picture, signature,
voice, image and/or likeness, including but not limited to right of privacy,
right of publicity and celebrity, use of voice, name or likeness, defamation and
copyright infringement. I represent and warrant that I have not made any
contract or commitment in conflict with this consent and waiver.
6. I shall, during my employment and at any time thereafter, at
the request and cost of the Company, promptly sign, execute, make and do all
such deeds, documents, acts and things as the Company and its duly authorized
officers may reasonably require:
(a) to apply for, obtain, register and vest in the name
of the Company alone (unless the Company otherwise directs) patents,
copyrights, trademarks or other analogous protection in any country
throughout the world relating to a Development and when so obtained or
vested to renew and restore the same; and
(b) to defend any judicial, opposition or other
proceedings in respect of such applications and any judicial,
opposition or other proceeding, petition or application for revocation
of any such patent, copyright, trademark or other analogous protection.
7. If the Company is unable, after reasonable effort, to secure
my signature on any application for patent, copyright, trademark or other
analogous registration or other documents regarding any legal protection
relating to a Development, whether because of my
<PAGE> 16
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physical or mental incapacity or for any other reason whatsoever, I hereby
irrevocably designate and appoint the Company and its duly authorized officers
and agents as my agent and attorney-in-fact, to act for and in my behalf and
stead to execute and file any such application or applications or other
documents and to do all other lawfully permitted acts to further the prosecution
and issuance of patent, copyright or trademark registrations or any other legal
protection thereon with the same legal force and effect as if executed by me.
8. I agree that any breach of this Agreement by me will cause
irreparable damage to the Company and that in the event of such breach the
Company shall have, in addition to any and all remedies of law, the right to an
injunction, specific performance or other equitable relief to prevent the
violation of my obligations hereunder.
9. I understand that this Agreement does not create an obligation
on the Company or any other person or entity to continue my employment.
10. I further represent that my performance of all of the terms of
this Agreement and as an employee of the Company does not and will not breach
any agreement to keep in confidence proprietary information acquired by me in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I shall not enter into, any agreement either written or oral in
conflict herewith.
11. Any waiver by the Company of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
of such provision or any other provision hereof.
12. I hereby agree that each provision herein shall be treated as
a separate and independent clause, and the unenforceability of any one clause
shall in no way impair the enforceability of any of the other clauses of the
Agreement. Moreover, if one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively broad as to scope,
activity, subject or otherwise so as to be unenforceable at law, such provision
or provisions shall be construed by the appropriate judicial body by limiting or
reducing it or them, so as to be enforceable to the maximum extent compatible
with the applicable law as it shall then appear. I hereby further agree that the
language of all parts of this Agreement shall in all cases be construed as a
whole according to its fair meaning and not strictly for or against either of
the parties.
13. Any amendment to or modification of this Agreement, or any
waiver of any provision hereof, shall be in writing and signed by the Company.
14. This Agreement shall be effective as of the date entered
below. My obligations under this Agreement shall survive the termination of my
employment regardless of the manner of such termination and shall be binding
upon my heirs, executors, administrators and legal representatives.
<PAGE> 17
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15. The Company shall have the right to assign this Agreement to
its successors and assigns, and all covenants and agreements hereunder shall
inure to the benefit of and be enforceable by said successors or assigns.
16. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts and shall in all
respects be interpreted, enforced and governed under the internal and domestic
laws of Massachusetts, without giving effect to the principles of conflicts of
laws of such state. Any claims or legal actions by one party against the other
arising out of the relationship between the parties contemplated herein (whether
or not arising under this Agreement) shall be governed by the laws of the
Commonwealth of Massachusetts and shall be commenced and maintained in any state
or federal court located in such state, and I hereby submit to the jurisdiction
and venue of any such court.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as a
sealed instrument this day of , 1999.
Steven Parks
Name - Please Print
Address: _______________________________
_______________________________
<PAGE> 18
EXHIBIT A
DEFINITIONS
The term "Company" shall include Sipex Corporation and any of its
subsidiaries, divisions, or affiliates. The Company shall have the right to
assign this Agreement to its successors and assigns, and all covenants and
agreements hereunder shall inure to the benefit of and be enforceable by said
successors or assigns.
The term "Company Documentation" shall mean notes, memoranda, reports,
lists, records, drawings, sketches, specifications, software programs, data,
documentation or other materials of any nature and in any form, whether written,
printed, or in digital format or otherwise, relating to any matter within the
scope of the business of the Company or concerning any of its dealings or
affairs.
The term "Confidential Information" shall mean any information
concerning the organization, business or finances of the Company or of any third
party which the Company is under an obligation to keep confidential that is
maintained by the Company as confidential. Such Confidential Information shall
include, but is not limited to, trade secrets or confidential information
respecting inventions, products, designs, methods, know-how, techniques,
systems, processes, software programs, works of authorship, customer lists,
projects, plans and proposals.
The term "Development" shall mean any invention, modification,
discovery, design, development, improvement, process, software program, work of
authorship, documentation, formula, data, technique, know-how, trade secret or
intellectual property right whatsoever or any interest therein (whether or not
patentable or registrable under copyright, trademark or similar statutes
(including but not limited to the Semiconductor Chip Protection Act) or subject
to analogous protection).
<PAGE> 1
Exhibit 10.2
EMPLOYMENT AGREEMENT
AGREEMENT made as of this 14th day of May, 1999, by and between James
E. Donegan, a person residing at 468 Old Bedford Road, Concord, Massachusetts
01742 (the "Employee") and Sipex Corporation, a Massachusetts corporation with a
principal place of business in Billerica, Massachusetts (the "Company").
WHEREAS, the Employee's senior managerial position requires that he be
trusted with extensive confidential information and trade secrets of the Company
and that he develop a thorough and comprehensive knowledge of all details of the
Company's business, including, but not limited to, information relating to
research, development, inventions, manufacturing, purchasing, accounting,
engineering, marketing, distribution and licensing of the Company's products and
services;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the mutual
covenants and obligations herein contained, the parties hereto agree as follows:
1. Position and Responsibilities. During the term of this Agreement,
the Employee agrees to serve as President and Chief Executive Officer of the
Company or in such other positions as may be assigned. The Employee shall at all
times report to, and his activities shall at all times be subject to the
direction and control of the Board of Directors of the Company or to its
designee, and the Employee shall exercise such powers and comply with and
perform, faithfully and to the best of his ability, such directions and duties
in relation to the business and affairs of the Company as may from time to time
be vested in or requested of him. If Employee shall be elected to other offices
of the Company or any of its affiliates, he shall serve in such positions
without further compensation than provided for in this Agreement. The Employee
agrees to follow all rules, policies and directives of the Company as may be
promulgated or modified from time to time. The Employee shall perform his
services under this Agreement at such locations as may be required by the
Company.
2. Compensation: Salary, Bonuses and Other Benefits. During the term of
this Agreement, the Company shall pay the Employee the following compensation:
(A) Salary. In consideration of the services to be rendered by the
Employee to the Company, the Company will pay to the Employee a monthly
salary of $21,000.00 (the Employee's "Base Rate") during the term of this
Agreement. Employee's Base Rate may be adjusted by the Company's Board of
Directors in its sole discretion from time to time; provided, however,
that under no circumstance shall such Base Rate be reduced. Such salary
shall be payable in conformity with the Company's customary practices for
executive compensation, as such practices shall be established or modified
from time to time.
<PAGE> 2
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(B) Fringe Benefits.
(1) The Employee will be entitled to participate on the same
general basis and subject to the same rules and regulations as
other Company executive employees in the Company's standard
benefit plans as such benefits or plans may be modified or
amended from time to time.
(2) The Company will maintain supplemental life insurance on
the life of the Employee so that the aggregate total death
benefit payable to the Employee from all Company life
insurance policies will total One Million Dollars
($1,000,000.00).
(3) At the request of the Employee, the Company will maintain
supplemental disability insurance for the Employee so that the
aggregate total disability benefits payable to the Employee
from all Company disability insurance policies will total
sixty-six and two-thirds percent (66 2/3%) of Employee's
salary.
(4) The Company shall pay or reimburse the Employee for all
reasonable business expenses incurred or paid by the Employee
in the performance of his duties and responsibilities
hereunder, provided the Employee provides reasonable
substantiation and documentation of these expenses. The
Company agrees to provide reimbursement within a reasonable
time after receipt of such documentation.
(C) Performance Based Bonus. At the sole discretion of the Board of
Directors, the Employee may also be eligible to receive a discretionary
annual bonus after the end of the Company's calendar year, provided that
the Employee continues to be employed by the Company at such year end. The
amount of this bonus, if any, shall be determined by the Board of
Directors based on objective or subjective goals set by the Board of
Directors in its sole discretion. In the event that the Employee's
employment with the Company is terminated by the Company without Cause or
is terminated by the Employee for Good Reason other than at calendar year
end, the Employee's bonus shall be prorated for such partial year. No
bonus shall be payable to Employee with respect to any calendar year of
the Company during which Employee's employment is terminated for Cause or
Employee terminates his employment without Good Reason.
(D) Taxes. All payments in this Section 2 shall be subject to all
applicable federal, state and local withholding, payroll and other taxes.
3. Termination. The Employee's employment under this Agreement may be
terminated as follows:
(A) By the Employee Without Good Reason. The Employee may terminate his
employment without Good Reason (as defined in Section 3(B)(2) below)
provided that the Employee gives the Company a written notice of intent to
terminate at least thirty (30) days'
<PAGE> 3
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prior to the effective date of such termination. In the event of a
termination by the Employee without Good Reason, the Company may
accelerate the Employee's departure date and will have no obligation to
pay Employee after his actual departure date. In the event of
termination by the Employee without Good Reason, the Employee shall be
entitled to no severance or other termination benefits.
(B) By the Employee with Good Reason or by the Company without Cause.
(1) The Company may terminate the Employee's employment
without Cause (as defined in Section 3(C)) at any time. The
Employee may terminate his employment for Good Reason (as
defined in Subsection (2) of this Section 3(B)) after giving
the Company a written notice of intent to terminate at least
thirty (30) days prior to the effective date of such
termination.
(2) For purposes of this Agreement, termination by the
Employee for "Good Reason" shall mean the termination of
employment by the Employee: (i) as a result of a material
breach of this Agreement by the Company; (ii) as a result of a
material reduction in the Employee's title or reporting
responsibilities as they exist on the date hereof without the
Employee's written consent; (iii) as a result of the failure
of the Company to pay the Employee's salary or bonus, if any,
in the time and manner contemplated by this Agreement; or (iv)
as a result of the Company requiring the Employee to relocate
more than 50 miles from Billerica, Massachusetts (unless such
relocation is to another facility of the Company); provided,
however, that an event described in this Section shall not
constitute Good Reason unless it is communicated by the
Employee to the Company in writing and is not corrected by the
Company to the Employee's reasonable satisfaction within 30
days of the date of the Employee's delivery of such written
notice to the Company. Notwithstanding Section 3(B)(2)(iv), in
the event a Successor To The Business (as defined in Section
10 hereof) assumes this Agreement, Section 3(B)(2)(iv) shall
be modified to read as follows: "(iv) as a result of the
Company requiring the Employee to relocate more than 50 miles
from Billerica, Massachusetts to any other location (including
without limitation any facility of the Company or the
Successor To The Business)."
(3) In the event that the Company exercises its right to
terminate the Employee without Cause or the Employee
terminates his employment for Good Reason and the Employee
signs a comprehensive release in the form, and of a scope,
acceptable to the Company, the Company agrees to:
(i) pay the Employee a lump sum payment equal to
twenty-four (24) months' base salary at the
Employee's then current Base Rate;
(ii) pay the Employee an amount equal to the highest
annual bonus paid or payable by the Company to the
Employee with respect to any
<PAGE> 4
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calendar year during the three (3) calendar years
prior to Employee's termination of employment;
(iii) allow the Employee to participate to the same
extent as active executive employees (including
dependent coverage) in the life, accident,
disability, health and dental insurance plans of the
Company (including the supplemental insurance set
forth in Section 2(B)(2) and 2(B)(3) of this
Agreement) or to provide benefits equivalent to those
of active executive employees, at no cost to the
Employee for a period of twenty four (24) months
commencing on the date of termination of employment;
(iv) allow the Employee the option to buy the Company
automobile leased for the Employee for a price equal
to the buyout amount of the automobile at the end of
the lease. The Employee hereby authorizes the Company
to deduct any tax withholdings applicable to such
transfer from any payments to be made by the Company
hereinafter. All risk of damage or loss with respect
to such automobile shall rest with the Employee. The
automobile will be transferred to the Employee "as
is," with no representations or warranties, express
or implied, being made to the Employee (including
warranties of merchantability and fitness for a
particular purpose) and, without limiting the
generality of the foregoing in any way, in no event
shall the Company be liable for any consequential,
special, punitive or other damages in connection with
the automobile transfer. If this option is not
exercised, the automobile will be returned to the
Company;
(v) In the event of a termination hereunder, each
outstanding option held by the Employee pursuant to
any stock option plan of the Company shall, without
further action by the Company, accelerate and become
immediately exercisable in full; provided that other
than such acceleration(s), such outstanding option(s)
shall continue to be governed by the terms of any
such Stock Option Plan and related Stock Option
Agreement(s);
(vi) In the event that any of the payments to be made
to the Employee, or the compensation received or
deemed to be received by the Employee, pursuant to or
by reason of the provisions of Section 3(B)(3) of
this Agreement result in the imposition of an excise
tax on the Employee pursuant to Section 4999 of the
Internal Revenue Code of 1986, as amended (the
"Code"), or any similar provision of state, local or
foreign tax law (the "Parachute Tax"), the Company
shall pay an additional amount to the Employee (the
"Gross-Up Payment"). The Gross-Up Payment shall be
calculated by the Company and shall equal an amount
necessary to yield the Employee, on an after-tax
basis, an amount equal to the Parachute Tax imposed
on the Employee (including any Parachute Tax
<PAGE> 5
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imposed with respect to the Gross-Up Payment). The
Gross-Up Payment with respect to any Parachute Tax
shall be payable by the Company to the Employee no
later than the last day of the fiscal year in which
such Parachute Tax is imposed.
(vii) The payments in this Section 3(B)(3) shall be
subject to all applicable federal, state and local
withholding, payroll and other taxes.
If Employee breaches his obligations under the
Noncompetition, Nondisclosure and Developments
Agreement executed herewith between Employee and the
Company, the Company may immediately cease payment of
all severance and/or benefits described in this
Agreement. This cessation of severance and/or
benefits shall be in addition to, and not as an
alternative to, any other remedies in law or in
equity available to the Company, including the right
to seek specific performance or an injunction. Except
as expressly set forth in this Section 3(B), Employee
acknowledges that the Company shall not have any
further obligations to the Employee in the event of
Employee's termination under this Section 3(B),
except such further obligations as may be imposed by
law.
(C) At the election of the Company for Cause. The Company may,
immediately and unilaterally, terminate the Employee's employment
hereunder for "Cause" at any time during the term of this Agreement by
giving to the Employee written notice of such termination ten (10) days
prior to the effective date of termination. The Company may pay Employee
for this ten (10) day period in lieu of such notice. Termination of the
Employee's employment by the Company shall constitute a termination for
"Cause" if such termination is for one or more of the following causes:
(1) the substantial and continuing failure of the Employee to
render services to the Company substantially in accordance
with his assigned duties or obligations under this Agreement,
which materially and adversely affects or could materially and
adversely affect the business, prospects, financial condition,
operations, property or affairs of the Company, which is not
cured by the Employee to the satisfaction of the Company
within thirty (30) days notice to the Employee by the Company
of the failure;
(2) dishonesty, deliberate disregard of the rules or policies
of the Company, material breach of the terms of this
Agreement, which is not cured by the Employee to the
satisfaction of the Company within thirty (30) days notice to
the Employee by the Company,
(3) the commission by the Employee of an act of fraud,
embezzlement or breach of fiduciary duty;
<PAGE> 6
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(4) acts of moral turpitude by the Employee which materially
adversely affect the Employee's ability to perform his duties
hereunder and represent the Company;
(5) the conviction by the Employee of a felony; or
(6) the commission of an act which constitutes unfair
competition with the Company or which induces any customer of
the Company to breach a contract with the Company.
In the event of a termination for "Cause" pursuant to the
provisions of clauses (1) through (6) above, inclusive, the
Employee shall be entitled to no severance or other
termination benefits.
(D) Benefits if Agreement Terminated Due to Death or Disability. The
Company shall have the right to terminate Employee's employment if
Employee dies or suffers physical incapacity or mental incompetence. In
the event Employee's employment shall terminate due to the physical
incapacity or mental incompetence of the Employee, the Company shall pay
the Employee an amount equal to: (i) twenty-four (24) months salary at the
then current Base Rate, less (ii) any amounts recovered by the Employee
under any health and disability insurance programs available through the
Company. For the purposes of this Agreement, the Employee shall be deemed
to have suffered physical incapacity or mental incompetence if the
Employee is unable to perform the essential functions of his job with
reasonable accommodation. Any accommodation will not be deemed reasonable
if it imposes an undue hardship on the Company. If this Agreement
terminates due to the death of Employee, Employee will not be entitled to
any payments after the date of his death.
4. Survival of Certain Provisions. Provisions of this Agreement shall
survive any termination of employment or of this Agreement if so provided herein
or if necessary or desirable to fully accomplish the purposes of such provision.
Without limiting the foregoing, the obligations of the Employee under Sections
3, 4, 5, 8 and 10 hereof and the Employee Noncompetition, Nondisclosure and
Developments Agreement of even date herewith by and between Employee and the
Company expressly survive any termination of employment or termination of this
Agreement. The obligation of the Company to make payments to or on behalf of the
Employee under Section 3(B) hereof is expressly conditioned upon Employee's
continued full performance of the obligations under the terms of Section 5 and
the Noncompetition, Nondisclosure and Developments Agreement executed herewith
between Employee and the Company.
5. Noncompetition, Nondisclosure and Developments Agreement. In
connection with his employment by the Company pursuant to the terms of this
Agreement, the Employee shall execute, prior to the execution hereof by the
Company, the Noncompetition, Nondisclosure and Developments Agreement attached
hereto as Exhibit A.
<PAGE> 7
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6. Consent and Waiver by Third Parties. The Employee hereby represents
and warrants that he has obtained all waivers and/or consents from third parties
which are necessary to enable him to enjoy employment with the Company on the
terms and conditions set forth herein and to execute and perform this Agreement
without being in conflict with any other agreement, obligation or understanding
with any such third party. The Employee represents that he is not bound by any
agreement or any other existing or previous business relationship which
conflicts with, or may conflict with, the performance of his obligations
hereunder or prevent the full performance of his duties and obligations
hereunder.
7. Governing Law. This Agreement, the employment relationship
contemplated herein and any claim arising from such relationship, whether or not
arising under this Agreement, shall be governed by and construed in accordance
with the internal laws of the Commonwealth of Massachusetts, without giving
effect to the principles of choice of law or conflicts of laws of such
Commonwealth and this Agreement shall be deemed to be performable in
Massachusetts. Any claims or legal actions by one party against the other
arising out of the relationship between the parties contemplated herein (whether
or not arising under this Agreement) shall be commenced or maintained in any
state or federal court located in Massachusetts, and Employee hereby submits to
the jurisdiction and venue of any such court.
8. Severability. In case any one or more of the provisions contained in
this Agreement or the other agreements executed in connection with the
transactions contemplated hereby for any reason shall be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement or such
other agreements, but this Agreement or such other agreements, as the case may
be, shall be construed and reformed to the maximum extent permitted by law.
9. Waivers and Modifications. This Agreement may be modified, and the
rights, remedies and obligations contained in any provision hereof may be
waived, only in accordance with this Section 9. No waiver by either party of any
breach by the other or any provision hereof shall be deemed to be a waiver of
any later or other breach thereof or as a waiver of any other provision of this
Agreement. This Agreement sets forth all of the terms of the understandings
between the parties with reference to the subject matter set forth herein and
may not be waived, changed, discharged or terminated orally or by any course of
dealing between the parties, but only by an instrument in writing signed by the
party against whom any waiver, change, discharge or termination is sought. No
modification or waiver by the Company shall be effective without the consent of
at least a majority of the members of the Board of Directors excluding the
Employee then in office at the time of such modification or waiver.
10. Assignment. The Employee acknowledges that the services to be
rendered by him hereunder are unique and personal in nature. Accordingly, the
Employee may not assign any of his rights or delegate any of his duties or
obligations under this Agreement. The rights and obligations of the Company
under this Agreement shall inure to the benefit of, and shall be binding upon,
the successors and assigns of the Company. To that end, the Company will require
any successor (a "Successor To The Business") to all or substantially all of the
business and/or assets of the Company (whether direct or indirect, by purchase,
merger, consolidation or
<PAGE> 8
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otherwise), expressly to assume and agree, by agreement in form and substance
satisfactory to the Employee, to perform this Agreement in the same manner and
to the same extent that Company would be required to perform it if no such
transaction had taken place. Failure of the Company to obtain such agreement
prior to the effective date of such transaction shall be a breach of this
Agreement and shall entitle the Employee to compensation and benefits from the
Company in the same amount and on the same terms as the Employee would be
entitled hereunder if he were to terminate his employment pursuant to Section
3(B) of this Agreement. In the event the Company fails to obtain a successor's
agreement to assume this Agreement under this Section 10, the date upon which
any such transaction becomes effective shall be deemed the termination date and
Employee's employment with the Company will end on that date.
11. Acknowledgments. The Employee hereby acknowledges and recognizes
that the enforcement of any of the provisions in this Agreement and the
Noncompetition, Nondisclosure and Developments Agreement executed herewith may
potentially interfere with the Employee's ability to pursue a proper livelihood.
The Employee represents that he is knowledgeable about the business of the
Company and further represents that he is capable of pursuing a career in other
industries to earn a proper livelihood. The Employee recognizes and agrees that
the enforcement of the Noncompetition, Nondisclosure and Developments Agreement
is necessary to ensure the preservation, protection and continuity of the
business, trade secrets and goodwill of the Company. The Employee agrees that,
due to the proprietary nature of the Company's business, the restrictions set
forth in the Noncompetition, Nondisclosure and Developments Agreement are
reasonable as to time and scope.
12. Entire Agreement. This Agreement and the Noncompetition,
Nondisclosure and Developments Agreement executed herewith constitutes the
entire understanding of the parties relating to the subject matter hereof and
supersedes and cancels all agreements, written or oral, made prior to the date
hereof between the Employee and the Company relating to employment, salary,
bonus, or other compensation of any description, equity participation, pension,
post-retirement benefits, severance or other remuneration, except for the
Company stock option plan(s) and the stock option agreement(s) between the
Company and the Employee which shall remain in full force and effect in
accordance with their respective terms (except as modified by this Agreement).
13. Notices. All notices hereunder shall be in writing and shall be
delivered in person or mailed by certified or registered mail, return receipt
requested, addressed as follows:
If to the Company, to: Sipex Corporation
22 Linnell Circle
Billerica, Massachusetts 01821
Attention: Chief Financial Officer
If to the Employee, at the Employee's address set forth on the
signature page hereto.
<PAGE> 9
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14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
15. Section Headings. The descriptive section headings herein have been
inserted for convenience only and shall not be deemed to define, limit, or
otherwise affect the construction of any provision hereof.
<PAGE> 10
-10-
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written as an instrument under seal.
SIPEX CORPORATION: EMPLOYEE:
- ----------------------------- ------------------------------
James E. Donegan
By: /s/ James E. Donegan
- ----------------------------- ------------------------------
Signature
Title:
- ----------------------------- 468 Old Bedford Road 01742
------------------------------
Street Address
Concord, MA 01742
------------------------------
City State Zip Code
<PAGE> 11
EMPLOYEE NONCOMPETITION,
NONDISCLOSURE AND DEVELOPMENTS AGREEMENT
May 14, 1999
In consideration of and as a condition of my employment or continued
employment by Sipex Corporation (the "Company"), I hereby agree with the Company
as follows:
1. During the period of my employment by the Company, I shall devote my
full time and best efforts to the business of the Company and I shall neither
pursue any business opportunity outside the Company nor take any position with
any organization other than the Company without the approval of a majority of
the disinterested members of the Company's Board of Directors. Further, during
the period of my employment by the Company and for one year thereafter, I shall
not, directly or indirectly, alone or as a partner, officer, director, employee
or stockholder of any entity, (a) engage in any business activity which is in
competition with the products or services being developed, manufactured or sold
by the Company, (b) solicit or do business with any customer of the Company, or
any potential customer of the Company with whom I have had contact, in
competition with the products or services being developed, manufactured or sold
by the Company, or (c) solicit, interfere with or endeavor to entice away any
employee of the Company. For purposes of clause (a) of the preceding sentence as
it relates to the one year period following the termination of my employment by
the Company, an entity which neither sells, directly or indirectly, its products
or services to at least one of the existing customers of the Company or the
customers being actively developed or solicited by the Company nor proposes to
develop products or services for sale, directly or indirectly, to any such
customer, shall not be deemed to be in competition with the Company.
2. I shall not at any time, whether during or after the termination of
my employment, reveal to any person or entity any Confidential Information (as
defined in Exhibit A hereto), except to employees of the Company who need to
know such Confidential Information for the purposes of their employment, or as
otherwise authorized by the Company in writing, and I shall keep secret all
matters entrusted to me and shall not use or attempt to use any Confidential
Information except as may be required in the ordinary course of performing my
duties as an employee of the Company, nor shall I use any Confidential
Information in any manner which may injure or cause loss or may be calculated to
injure or cause loss to the Company, whether directly or indirectly.
Furthermore, I agree that during my employment I shall not
make, use or permit to be used any Company Documentation (as defined in Exhibit
A hereto) otherwise than for the benefit of the Company. I further agree that I
shall not, after the termination of my employment, use or permit others to use
any such Company Documentation, it being agreed that all Company Documentation
shall be and remain the sole and exclusive property of the Company. Immediately
upon the termination of my employment I shall deliver all Company Documentation
in my possession, and all copies thereof, to the Company, at its main office.
<PAGE> 12
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3. If at any time or times during my employment, I shall (either alone
or with others) make, conceive, create, discover, invent or reduce to practice
any Development (as defined in Exhibit A hereto) that (a) relates to the
business of the Company or any customer of or supplier to the Company or any of
the products or services being developed, manufactured or sold by the Company or
which may be used in relation therewith; or (b) results from tasks assigned to
me by the Company; or (c) results from the use of premises or personal property
(whether tangible or intangible) owned, leased or contracted for by the Company,
then all such Developments and the benefits thereof are and shall immediately
become the sole and absolute property of the Company and its assigns, as works
made for hire or otherwise. I shall promptly disclose to the Company (or any
persons designated by it) each such Development. I hereby assign all rights
(including, but not limited to, rights to inventions, patentable subject matter,
copyrights and trademarks) I may have or may acquire in the Developments and all
benefits and/or rights resulting therefrom to the Company and its assigns
without further compensation and shall communicate, without cost or delay, and
without disclosing to others the same, all available information relating
thereto (with all necessary plans and models) to the Company.
4. Excluded from this Agreement are my developments that I cannot
assign to the Company because of a prior agreement with
____________________________________ which is effective until
______________________. (Give name and date or write "none").
5. I hereby consent to the use of my name, picture, signature, voice,
image, and/or likeness by the Company during my employment by the Company and at
any time thereafter. Further, I waive all claims I may now have or may ever have
against the Company and its officers, employees, and agents arising out of the
Company's use, adaptation, reproduction, modification, distribution, exhibition
or other commercial exploitation of my' name, picture, signature, voice, image
and/or likeness, including but not limited to right of privacy, right of
publicity and celebrity, use of voice, name or likeness, defamation and
copyright infringement. I represent and warrant that I have not made any
contract or commitment in conflict with this consent and waiver.
6. I shall, during my employment and at any time thereafter, at the
request and cost of the Company, promptly sign, execute, make and do all such
deeds, documents, acts and things as the Company and its duly authorized
officers may reasonably require:
(a) to apply for, obtain, register and vest in the name of the Company
alone (unless the Company otherwise directs) patents, copyrights,
trademarks or other analogous protection in any country throughout the
world relating to a Development and when so obtained or vested to renew
and restore the same; and
(b) to defend any judicial, opposition or other proceedings in respect
of such applications and any judicial, opposition or other proceeding,
petition or application for revocation of any such patent, copyright,
trademark or other analogous protection.
7. If the Company is unable, after reasonable effort, to secure my
signature on any application for patent, copyright, trademark or other analogous
registration or other documents regarding any legal protection relating to a
Development, whether because of my physical or
<PAGE> 13
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mental incapacity or for any other reason whatsoever, I hereby irrevocably
designate and appoint the Company and its duly authorized officers and agents as
my agent and attorney-in-fact, to act for and in my behalf and stead to execute
and file any such application or applications or other documents and to do all
other lawfully permitted acts to further the prosecution and issuance of patent,
copyright or trademark registrations or any other legal protection thereon with
the same legal force and effect as if executed by me.
8. I agree that any breach of this Agreement by me will cause
irreparable damage to the Company and that in the event of such breach the
Company shall have, in addition to any and all remedies of law, the right to an
injunction, specific performance or other equitable relief to prevent the
violation of my obligations hereunder.
9. I understand that this Agreement does not create an obligation on
the Company or any other person or entity to continue my employment.
10. I further represent that my performance of all of the terms of this
Agreement and as an employee of the Company does not and will not breach any
agreement to keep in confidence proprietary information acquired by me in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I shall not enter into, any agreement either written or oral in
conflict herewith.
11. Any waiver by the Company of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
of such provision or any other provision hereof.
12. I hereby agree that each provision herein shall be treated as a
separate and independent clause, and the unenforceability of any one clause
shall in no way impair the enforceability of any of the other clauses of the
Agreement. Moreover, if one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively broad as to scope,
activity, subject or otherwise so as to be unenforceable at law, such provision
or provisions shall be construed by the appropriate judicial body by limiting or
reducing it or them, so as to be enforceable to the maximum extent compatible
with the applicable law as it shall then appear. I hereby further agree that the
language of all parts of this Agreement shall in all cases be construed as a
whole according to its fair meaning and not strictly for or against either of
the parties.
13. Any amendment to or modification of this Agreement, or any waiver
of any provision hereof, shall be in writing and signed by the Company.
14. This Agreement shall be effective as of the date entered below. My
obligations under this Agreement shall survive the termination of my employment
regardless of the manner of such termination and shall be binding upon my heirs,
executors, administrators and legal representatives.
<PAGE> 14
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15. The Company shall have the right to assign this Agreement to its
successors and assigns, and all covenants and agreements hereunder shall inure
to the benefit of and be enforceable by said successors or assigns.
16. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts and shall in all respects be
interpreted, enforced and governed under the internal and domestic laws of
Massachusetts, without giving effect to the principles of conflicts of laws of
such state. Any claims or legal actions by one party against the other arising
out of the relationship between the parties contemplated herein (whether or not
arising under this Agreement) shall be governed by the laws of the Commonwealth
of Massachusetts and shall be commenced and maintained in any state or federal
court located in such state, and I hereby submit to the jurisdiction and venue
of any such court.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as a
sealed instrument as of the date first above written.
/s/ James E. Donegan
--------------------------------------
James E. Donegan
--------------------------------------
Name - Please Print
Address:
------------------------------
------------------------------
<PAGE> 15
EXHIBIT A
DEFINITIONS
The term "Company" shall include Sipex Corporation and any of its
subsidiaries, divisions, or affiliates. The Company shall have the right to
assign this Agreement to its successors and assigns, and all covenants and
agreements hereunder shall inure to the benefit of and be enforceable by said
successors or assigns.
The term "Company Documentation" shall mean notes, memoranda, reports,
lists, records, drawings, sketches, specifications, software programs, data,
documentation or other materials of any nature and in any form, whether written,
printed, or in digital format or otherwise, relating to any matter within the
scope of the business of the Company or concerning any of its dealings or
affairs.
The term "Confidential Information" shall mean any information
concerning the organization, business or finances of the Company or of any third
party which the Company is under an obligation to keep confidential that is
maintained by the Company as confidential. Such Confidential Information shall
include, but is not limited to, trade secrets or confidential information
respecting inventions, products, designs, methods, know-how, techniques,
systems, processes, software programs, works of authorship, customer lists,
projects, plans and proposals.
The term "Development" shall mean any invention, modification,
discovery, design, development, improvement, process, software program, work of
authorship, documentation, formula, data, technique, know-how, trade secret or
intellectual property right whatsoever or any interest therein (whether or not
patentable or registrable under copyright, trademark or similar statutes
(including but not limited to the Semiconductor Chip Protection Act) or subject
to analogous protection).
<PAGE> 1
Exhibit 10.3
EMPLOYMENT AGREEMENT
AGREEMENT made as of this 14th day of May, 1999, by and between Frank
R. DiPietro, a person residing at Two Cummings Road, Merrimack, New Hampshire
03054 (the "Employee") and Sipex Corporation, a Massachusetts corporation with a
principal place of business in Billerica, Massachusetts (the "Company").
WHEREAS, the Employee's senior managerial position requires that he be
trusted with extensive confidential information and trade secrets of the Company
and that he develop a thorough and comprehensive knowledge of all details of the
Company's business, including, but not limited to, information relating to
research, development, inventions, manufacturing, purchasing, accounting,
engineering, marketing, distribution and licensing of the Company's products and
services;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the mutual
covenants and obligations herein contained, the parties hereto agree as follows:
1. Position and Responsibilities. During the term of this Agreement,
the Employee agrees to serve as Executive Vice President of Finance and Chief
Financial Officer of the Company or in such other positions as may be assigned.
The Employee shall at all times report to, and his activities shall at all times
be subject to the direction and control of the Chief Executive Officer of the
Company or to his designee, and the Employee shall exercise such powers and
comply with and perform, faithfully and to the best of his ability, such
directions and duties in relation to the business and affairs of the Company as
may from time to time be vested in or requested of him. If Employee shall be
elected to other offices of the Company or any of its affiliates, he shall serve
in such positions without further compensation than provided for in this
Agreement. The Employee agrees to follow all rules, policies and directives of
the Company as may be promulgated or modified from time to time. The Employee
shall perform his services under this Agreement at such locations as may be
required by the Company.
2. Compensation: Salary, Bonuses and Other Benefits. During the term of
this Agreement, the Company shall pay the Employee the following compensation:
(A) Salary. In consideration of the services to be rendered by the
Employee to the Company, the Company will pay to the Employee a monthly
salary of $15,312.50 (the Employee's "Base Rate") during the term of this
Agreement. Employee's Base Rate may be adjusted by the Company's Board of
Directors in its sole discretion from time to time; provided, however,
that under no circumstance shall such Base Rate be reduced. Such salary
shall be payable in conformity with the Company's customary practices for
executive compensation, as such practices shall be established or modified
from time to time.
<PAGE> 2
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(B) Fringe Benefits.
(1) The Employee will be entitled to participate on the same
general basis and subject to the same rules and regulations as
other Company executive employees in the Company's standard
benefit plans as such benefits or plans may be modified or
amended from time to time.
(2) The Company will maintain supplemental life insurance on
the life of the Employee so that the aggregate total death
benefit payable to the Employee from all Company life
insurance policies will total Five Hundred Thousand Dollars
($500,000.00).
(3) At the request of the Employee, the Company will maintain
supplemental disability insurance for the Employee so that the
aggregate total disability benefits payable to the Employee
from all Company disability insurance policies will total
sixty-six and two-thirds percent (66 2/3%) of Employee's
salary.
(4) The Company shall pay or reimburse the Employee for all
reasonable business expenses incurred or paid by the Employee
in the performance of his duties and responsibilities
hereunder, provided the Employee provides reasonable
substantiation and documentation of these expenses. The
Company agrees to provide reimbursement within a reasonable
time after receipt of such documentation.
(C) Performance Based Bonus. At the sole discretion of the Board of
Directors, the Employee may also be eligible to receive a discretionary
annual bonus after the end of the Company's calendar year, provided that
the Employee continues to be employed by the Company at such year end. The
amount of this bonus, if any, shall be determined by the Board of
Directors based on objective or subjective goals set by the Board of
Directors in its sole discretion. In the event that the Employee's
employment with the Company is terminated by the Company without Cause or
is terminated by the Employee for Good Reason other than at calendar year
end, the Employee's bonus shall be prorated for such partial year. No
bonus shall be payable to Employee with respect to any calendar year of
the Company during which Employee's employment is terminated for Cause or
Employee terminates his employment without Good Reason.
(D) Taxes. All payments in this Section 2 shall be subject to all
applicable federal, state and local withholding, payroll and other taxes.
3. Termination. The Employee's employment under this Agreement may be
terminated as follows:
(A) By the Employee Without Good Reason. The Employee may terminate his
employment without Good Reason (as defined in Section 3(B)(2) below)
provided that the Employee gives the Company a written notice of intent to
terminate at least thirty (30) days'
<PAGE> 3
-3-
prior to the effective date of such termination. In the event of a
termination by the Employee without Good Reason, the Company may accelerate
the Employee's departure date and will have no obligation to pay Employee
after his actual departure date. In the event of termination by the
Employee without Good Reason, the Employee shall be entitled to no
severance or other termination benefits.
(B) By the Employee with Good Reason or by the Company without Cause.
(1) The Company may terminate the Employee's employment
without Cause (as defined in Section 3(C)) at any time. The
Employee may terminate his employment for Good Reason (as
defined in Subsection (2) of this Section 3(B)) after giving
the Company a written notice of intent to terminate at least
thirty (30) days prior to the effective date of such
termination.
(2) For purposes of this Agreement, termination by the
Employee for "Good Reason" shall mean the termination of
employment by the Employee: (i) as a result of a material
breach of this Agreement by the Company; (ii) as a result of a
material reduction in the Employee's title or reporting
responsibilities as they exist on the date hereof without the
Employee's written consent; (iii) as a result of the failure
of the Company to pay the Employee's salary or bonus, if any,
in the time and manner contemplated by this Agreement; or (iv)
as a result of the Company requiring the Employee to relocate
more than 50 miles from Billerica, Massachusetts (unless such
relocation is to another facility of the Company); provided,
however, that an event described in this Section shall not
constitute Good Reason unless it is communicated by the
Employee to the Company in writing and is not corrected by the
Company to the Employee's reasonable satisfaction within 30
days of the date of the Employee's delivery of such written
notice to the Company. Notwithstanding Section 3(B)(2)(iv), in
the event a Successor To The Business (as defined in Section
10 hereof) assumes this Agreement, Section 3(B)(2)(iv) shall
be modified to read as follows: "(iv) as a result of the
Company requiring the Employee to relocate more than 50 miles
from Billerica, Massachusetts to any other location (including
without limitation any facility of the Company or the
Successor To The Business)."
(3) In the event that the Company exercises its right to
terminate the Employee without Cause or the Employee
terminates his employment for Good Reason and the Employee
signs a comprehensive release in the form, and of a scope,
acceptable to the Company, the Company agrees to:
(i) pay the Employee a lump sum payment equal to
eighteen (18) months' base salary at the Employee's
then current Base Rate;
(ii) pay the Employee an amount equal to the highest
annual bonus paid or payable by the Company to the
Employee with respect to any
<PAGE> 4
-4-
calendar year during the three (3) calendar years
prior to Employee's termination of employment;
(iii) allow the Employee to participate to the same
extent as active executive employees (including
dependent coverage) in the life, accident,
disability, health and dental insurance plans of the
Company (including the supplemental insurance set
forth in Section 2(B)(2) and 2(B)(3) of this
Agreement) or to provide benefits equivalent to those
of active executive employees, at no cost to the
Employee for a period of twenty four (24) months
commencing on the date of termination of employment;
(iv) allow the Employee the option to buy the Company
automobile leased for the Employee for a price equal
to the buyout amount of the automobile at the end of
the lease. The Employee hereby authorizes the Company
to deduct any tax withholdings applicable to such
transfer from any payments to be made by the Company
hereinafter. All risk of damage or loss with respect
to such automobile shall rest with the Employee. The
automobile will be transferred to the Employee "as
is," with no representations or warranties, express
or implied, being made to the Employee (including
warranties of merchantability and fitness for a
particular purpose) and, without limiting the
generality of the foregoing in any way, in no event
shall the Company be liable for any consequential,
special, punitive or other damages in connection with
the automobile transfer. If this option is not
exercised, the automobile will be returned to the
Company;
(v) In the event of a termination hereunder, each
outstanding option held by the Employee pursuant to
any stock option plan of the Company shall, without
further action by the Company, accelerate and become
immediately exercisable in full; provided that other
than such acceleration(s), such outstanding option(s)
shall continue to be governed by the terms of any
such Stock Option Plan and related Stock Option
Agreement(s);
(vi) In the event that any of the payments to be made
to the Employee, or the compensation received or
deemed to be received by the Employee, pursuant to or
by reason of the provisions of Section 3(B)(3) of
this Agreement result in the imposition of an excise
tax on the Employee pursuant to Section 4999 of the
Internal Revenue Code of 1986, as amended (the
"Code"), or any similar provision of state, local or
foreign tax law (the "Parachute Tax"), the Company
shall pay an additional amount to the Employee (the
"Gross-Up Payment"). The Gross-Up Payment shall be
calculated by the Company and shall equal an amount
necessary to yield the Employee, on an after-tax
basis, an amount equal to the Parachute Tax
<PAGE> 5
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imposed on the Employee (including any Parachute Tax
imposed with respect to the Gross-Up Payment). The
Gross-Up Payment with respect to any Parachute Tax
shall be payable by the Company to the Employee no
later than the last day of the fiscal year in which
such Parachute Tax is imposed.
(vii) The payments in this Section 3(B)(3) shall be
subject to all applicable federal, state and local
withholding, payroll and other taxes.
If Employee breaches his obligations under the
Noncompetition, Nondisclosure and Developments
Agreement executed herewith between Employee and the
Company, the Company may immediately cease payment of
all severance and/or benefits described in this
Agreement. This cessation of severance and/or
benefits shall be in addition to, and not as an
alternative to, any other remedies in law or in
equity available to the Company, including the right
to seek specific performance or an injunction. Except
as expressly set forth in this Section 3(B), Employee
acknowledges that the Company shall not have any
further obligations to the Employee in the event of
Employee's termination under this Section 3(B),
except such further obligations as may be imposed by
law.
(C) At the election of the Company for Cause. The Company may,
immediately and unilaterally, terminate the Employee's employment
hereunder for "Cause" at any time during the term of this Agreement by
giving to the Employee written notice of such termination ten (10) days
prior to the effective date of termination. The Company may pay Employee
for this ten (10) day period in lieu of such notice. Termination of the
Employee's employment by the Company shall constitute a termination for
"Cause" if such termination is for one or more of the following causes:
(1) the substantial and continuing failure of the Employee to
render services to the Company substantially in accordance
with his assigned duties or obligations under this Agreement,
which materially and adversely affects or could materially and
adversely affect the business, prospects, financial condition,
operations, property or affairs of the Company, which is not
cured by the Employee to the satisfaction of the Company
within thirty (30) days notice to the Employee by the Company
of the failure;
(2) dishonesty, deliberate disregard of the rules or policies
of the Company, material breach of the terms of this
Agreement, which is not cured by the Employee to the
satisfaction of the Company within thirty (30) days notice to
the Employee by the Company;
(3) the commission by the Employee of an act of fraud,
embezzlement or breach of fiduciary duty;
<PAGE> 6
-6-
(4) acts of moral turpitude by the Employee which materially
adversely affect the Employee's ability to perform his duties
hereunder and represent the Company;
(5) the conviction by the Employee of a felony; or
(6) the commission of an act which constitutes unfair
competition with the Company or which induces any customer of
the Company to breach a contract with the Company.
In the event of a termination for "Cause" pursuant to the
provisions of clauses (1) through (6) above, inclusive, the
Employee shall be entitled to no severance or other
termination benefits.
(D) Benefits if Agreement Terminated Due to Death or Disability. The
Company shall have the right to terminate Employee's employment if
Employee dies or suffers physical incapacity or mental incompetence. In
the event Employee's employment shall terminate due to the physical
incapacity or mental incompetence of the Employee, the Company shall pay
the Employee an amount equal to: (i) twenty-four (24) months salary at the
then current Base Rate, less (ii) any amounts recovered by the Employee
under any health and disability insurance programs available through the
Company. For the purposes of this Agreement, the Employee shall be deemed
to have suffered physical incapacity or mental incompetence if the
Employee is unable to perform the essential functions of his job with
reasonable accommodation. Any accommodation will not be deemed reasonable
if it imposes an undue hardship on the Company. If this Agreement
terminates due to the death of Employee, Employee will not be entitled to
any payments after the date of his death.
4. Survival of Certain Provisions. Provisions of this Agreement shall
survive any termination of employment or of this Agreement if so provided herein
or if necessary or desirable to fully accomplish the purposes of such provision.
Without limiting the foregoing, the obligations of the Employee under Sections
3, 4, 5, 8 and 10 hereof and the Employee Noncompetition, Nondisclosure and
Developments Agreement of even date herewith by and between Employee and the
Company expressly survive any termination of employment or termination of this
Agreement. The obligation of the Company to make payments to or on behalf of the
Employee under Section 3(B) hereof is expressly conditioned upon Employee's
continued full performance of the obligations under the terms of Section 5 and
the Noncompetition, Nondisclosure and Developments Agreement executed herewith
between Employee and the Company.
5. Noncompetition, Nondisclosure and Developments Agreement. In
connection with his employment by the Company pursuant to the terms of this
Agreement, the Employee shall execute, prior to the execution hereof by the
Company, the Noncompetition, Nondisclosure and Developments Agreement attached
hereto as Exhibit A.
<PAGE> 7
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6. Consent and Waiver by Third Parties. The Employee hereby represents
and warrants that he has obtained all waivers and/or consents from third parties
which are necessary to enable him to enjoy employment with the Company on the
terms and conditions set forth herein and to execute and perform this Agreement
without being in conflict with any other agreement, obligation or understanding
with any such third party. The Employee represents that he is not bound by any
agreement or any other existing or previous business relationship which
conflicts with, or may conflict with, the performance of his obligations
hereunder or prevent the full performance of his duties and obligations
hereunder.
7. Governing Law. This Agreement, the employment relationship
contemplated herein and any claim arising from such relationship, whether or not
arising under this Agreement, shall be governed by and construed in accordance
with the internal laws of the Commonwealth of Massachusetts, without giving
effect to the principles of choice of law or conflicts of laws of such
Commonwealth and this Agreement shall be deemed to be performable in
Massachusetts. Any claims or legal actions by one party against the other
arising out of the relationship between the parties contemplated herein (whether
or not arising under this Agreement) shall be commenced or maintained in any
state or federal court located in Massachusetts, and Employee hereby submits to
the jurisdiction and venue of any such court.
8. Severability. In case any one or more of the provisions contained in
this Agreement or the other agreements executed in connection with the
transactions contemplated hereby for any reason shall be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement or such
other agreements, but this Agreement or such other agreements, as the case may
be, shall be construed and reformed to the maximum extent permitted by law.
9. Waivers and Modifications. This Agreement may be modified, and the
rights, remedies and obligations contained in any provision hereof may be
waived, only in accordance with this Section 9. No waiver by either party of any
breach by the other or any provision hereof shall be deemed to be a waiver of
any later or other breach thereof or as a waiver of any other provision of this
Agreement. This Agreement sets forth all of the terms of the understandings
between the parties with reference to the subject matter set forth herein and
may not be waived, changed, discharged or terminated orally or by any course of
dealing between the parties, but only by an instrument in writing signed by the
party against whom any waiver, change, discharge or termination is sought. No
modification or waiver by the Company shall be effective without the consent of
at least a majority of the members of the Chief Executive Officer excluding the
Employee then in office at the time of such modification or waiver.
10. Assignment. The Employee acknowledges that the services to be
rendered by him hereunder are unique and personal in nature. Accordingly, the
Employee may not assign any of his rights or delegate any of his duties or
obligations under this Agreement. The rights and obligations of the Company
under this Agreement shall inure to the benefit of, and shall be binding upon,
the successors and assigns of the Company. To that end, the Company will require
any successor (a "Successor To The Business") to all or substantially all of the
business and/or assets of the Company (whether direct or indirect, by purchase,
merger, consolidation or
<PAGE> 8
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otherwise), expressly to assume and agree, by agreement in form and substance
satisfactory to the Employee, to perform this Agreement in the same manner and
to the same extent that Company would be required to perform it if no such
transaction had taken place. Failure of the Company to obtain such agreement
prior to the effective date of such transaction shall be a breach of this
Agreement and shall entitle the Employee to compensation and benefits from the
Company in the same amount and on the same terms as the Employee would be
entitled hereunder if he were to terminate his employment pursuant to Section
3(B) of this Agreement. In the event the Company fails to obtain a successor's
agreement to assume this Agreement under this Section 10, the date upon which
any such transaction becomes effective shall be deemed the termination date and
Employee's employment with the Company will end on that date.
11. Acknowledgments. The Employee hereby acknowledges and recognizes
that the enforcement of any of the provisions in this Agreement and the
Noncompetition, Nondisclosure and Developments Agreement executed herewith may
potentially interfere with the Employee's ability to pursue a proper livelihood.
The Employee represents that he is knowledgeable about the business of the
Company and further represents that he is capable of pursuing a career in other
industries to earn a proper livelihood. The Employee recognizes and agrees that
the enforcement of the Noncompetition, Nondisclosure and Developments Agreement
is necessary to ensure the preservation, protection and continuity of the
business, trade secrets and goodwill of the Company. The Employee agrees that,
due to the proprietary nature of the Company's business, the restrictions set
forth in the Noncompetition, Nondisclosure and Developments Agreement are
reasonable as to time and scope.
12. Entire Agreement. This Agreement and the Noncompetition,
Nondisclosure and Developments Agreement executed herewith constitutes the
entire understanding of the parties relating to the subject matter hereof and
supersedes and cancels all agreements, written or oral, made prior to the date
hereof between the Employee and the Company relating to employment, salary,
bonus, or other compensation of any description, equity participation, pension,
post-retirement benefits, severance or other remuneration, except for the
Company stock option plan(s) and the stock option agreement(s) between the
Company and the Employee which shall remain in full force and effect in
accordance with their respective terms (except as modified by this Agreement).
13. Notices. All notices hereunder shall be in writing and shall be
delivered in person or mailed by certified or registered mail, return receipt
requested, addressed as follows:
If to the Company, to: Sipex Corporation
22 Linnell Circle
Billerica, Massachusetts 01821
Attention: President
If to the Employee, at the Employee's address set forth on the
signature page hereto.
<PAGE> 9
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14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
15. Section Headings. The descriptive section headings herein have been
inserted for convenience only and shall not be deemed to define, limit, or
otherwise affect the construction of any provision hereof.
<PAGE> 10
-10-
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written as an instrument under seal.
SIPEX CORPORATION: EMPLOYEE:
- ----------------------------- ------------------------------
Frank R. DiPietro
By: /s/ Frank R, DiPietro
- ----------------------------- ------------------------------
Signature
Title:
----------------------- 2 Cummings Road
-------------------------------
Street Address
Merrimack, NH 03054
-------------------------------
City State Zip Code
<PAGE> 11
Exhibit A of Employment Agreement by and between Frank R. DiPietro
and Sipex Corporation
EMPLOYEE NONCOMPETITION,
NONDISCLOSURE AND DEVELOPMENTS AGREEMENT
May 14, 1999
In consideration of and as a condition of my employment or continued
employment by Sipex Corporation (the "Company"), I hereby agree with the Company
as follows:
1. During the period of my employment by the Company, I shall devote my
full time and best efforts to the business of the Company and I shall neither
pursue any business opportunity outside the Company nor take any position with
any organization other than the Company without the approval of a majority of
the disinterested members of the Company's Board of Directors. Further, during
the period of my employment by the Company and for one year thereafter, I shall
not, directly or indirectly, alone or as a partner, officer, director, employee
or stockholder of any entity, (a) engage in any business activity which is in
competition with the products or services being developed, manufactured or sold
by the Company, (b) solicit or do business with any customer of the Company, or
any potential customer of the Company with whom I have had contact, in
competition with the products or services being developed, manufactured or sold
by the Company, or (c) solicit, interfere with or endeavor to entice away any
employee of the Company. For purposes of clause (a) of the preceding sentence as
it relates to the one year period following the termination of my employment by
the Company, an entity which neither sells, directly or indirectly, its products
or services to at least one of the existing customers of the Company or the
customers being actively developed or solicited by the Company nor proposes to
develop products or services for sale, directly or indirectly, to any such
customer, shall not be deemed to be in competition with the Company.
2. I shall not at any time, whether during or after the termination of
my employment, reveal to any person or entity any Confidential Information (as
defined in Exhibit A hereto), except to employees of the Company who need to
know such Confidential Information for the purposes of their employment, or as
otherwise authorized by the Company in writing, and I shall keep secret all
matters entrusted to me and shall not use or attempt to use any Confidential
Information except as may be required in the ordinary course of performing my
duties as an employee of the Company, nor shall I use any Confidential
Information in any manner which may injure or cause loss or may be calculated to
injure or cause loss to the Company, whether directly or indirectly.
Furthermore, I agree that during my employment I shall not
make, use or permit to be used any Company Documentation (as defined in Exhibit
A hereto) otherwise than for the benefit of the Company. I further agree that I
shall not, after the termination of my employment, use or permit others to use
any such Company Documentation, it being agreed that all Company Documentation
shall be and remain the sole and exclusive property of the Company. Immediately
upon the termination of my employment I shall deliver all Company Documentation
in my possession, and all copies thereof, to the Company, at its main office.
<PAGE> 12
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3. If at any time or times during my employment, I shall (either alone
or with others) make, conceive, create, discover, invent or reduce to practice
any Development (as defined in Exhibit A hereto) that (a) relates to the
business of the Company or any customer of or supplier to the Company or any of
the products or services being developed, manufactured or sold by the Company or
which may be used in relation therewith; or (b) results from tasks assigned to
me by the Company; or (c) results from the use of premises or personal property
(whether tangible or intangible) owned, leased or contracted for by the Company,
then all such Developments and the benefits thereof are and shall immediately
become the sole and absolute property of the Company and its assigns, as works
made for hire or otherwise. I shall promptly disclose to the Company (or any
persons designated by it) each such Development. I hereby assign all rights
(including, but not limited to, rights to inventions, patentable subject matter,
copyrights and trademarks) I may have or may acquire in the Developments and all
benefits and/or rights resulting therefrom to the Company and its assigns
without further compensation and shall communicate, without cost or delay, and
without disclosing to others the same, all available information relating
thereto (with all necessary plans and models) to the Company.
4. Excluded from this Agreement are my developments that I cannot
assign to the Company because of a prior agreement with
____________________________________ which is effective until
______________________. (Give name and date or write "none").
5. I hereby consent to the use of my name, picture, signature, voice,
image, and/or likeness by the Company during my employment by the Company and at
any time thereafter. Further, I waive all claims I may now have or may ever have
against the Company and its officers, employees, and agents arising out of the
Company's use, adaptation, reproduction, modification, distribution, exhibition
or other commercial exploitation of my' name, picture, signature, voice, image
and/or likeness, including but not limited to right of privacy, right of
publicity and celebrity, use of voice, name or likeness, defamation and
copyright infringement. I represent and warrant that I have not made any
contract or commitment in conflict with this consent and waiver.
6. I shall, during my employment and at any time thereafter, at the
request and cost of the Company, promptly sign, execute, make and do all such
deeds, documents, acts and things as the Company and its duly authorized
officers may reasonably require:
(a) to apply for, obtain, register and vest in the name of the Company
alone (unless the Company otherwise directs) patents, copyrights,
trademarks or other analogous protection in any country throughout the
world relating to a Development and when so obtained or vested to renew
and restore the same; and
(b) to defend any judicial, opposition or other proceedings in respect
of such applications and any judicial, opposition or other proceeding,
petition or application for revocation of any such patent, copyright,
trademark or other analogous protection.
7. If the Company is unable, after reasonable effort, to secure my
signature on any application for patent, copyright, trademark or other analogous
registration or other documents regarding any legal protection relating to a
Development, whether because of my physical or
<PAGE> 13
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mental incapacity or for any other reason whatsoever, I hereby irrevocably
designate and appoint the Company and its duly authorized officers and agents as
my agent and attorney-in-fact, to act for and in my behalf and stead to execute
and file any such application or applications or other documents and to do all
other lawfully permitted acts to further the prosecution and issuance of patent,
copyright or trademark registrations or any other legal protection thereon with
the same legal force and effect as if executed by me.
8. I agree that any breach of this Agreement by me will cause
irreparable damage to the Company and that in the event of such breach the
Company shall have, in addition to any and all remedies of law, the right to an
injunction, specific performance or other equitable relief to prevent the
violation of my obligations hereunder.
9. I understand that this Agreement does not create an obligation on
the Company or any other person or entity to continue my employment.
10. I further represent that my performance of all of the terms of this
Agreement and as an employee of the Company does not and will not breach any
agreement to keep in confidence proprietary information acquired by me in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I shall not enter into, any agreement either written or oral in
conflict herewith.
11. Any waiver by the Company of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
of such provision or any other provision hereof.
12. I hereby agree that each provision herein shall be treated as a
separate and independent clause, and the unenforceability of any one clause
shall in no way impair the enforceability of any of the other clauses of the
Agreement. Moreover, if one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively broad as to scope,
activity, subject or otherwise so as to be unenforceable at law, such provision
or provisions shall be construed by the appropriate judicial body by limiting or
reducing it or them, so as to be enforceable to the maximum extent compatible
with the applicable law as it shall then appear. I hereby further agree that the
language of all parts of this Agreement shall in all cases be construed as a
whole according to its fair meaning and not strictly for or against either of
the parties.
13. Any amendment to or modification of this Agreement, or any waiver
of any provision hereof, shall be in writing and signed by the Company.
14. This Agreement shall be effective as of the date entered below. My
obligations under this Agreement shall survive the termination of my employment
regardless of the manner of such termination and shall be binding upon my heirs,
executors, administrators and legal representatives.
<PAGE> 14
-4-
15. The Company shall have the right to assign this Agreement to its
successors and assigns, and all covenants and agreements hereunder shall inure
to the benefit of and be enforceable by said successors or assigns.
16. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts and shall in all respects be
interpreted, enforced and governed under the internal and domestic laws of
Massachusetts, without giving effect to the principles of conflicts of laws of
such state. Any claims or legal actions by one party against the other arising
out of the relationship between the parties contemplated herein (whether or not
arising under this Agreement) shall be governed by the laws of the Commonwealth
of Massachusetts and shall be commenced and maintained in any state or federal
court located in such state, and I hereby submit to the jurisdiction and venue
of any such court.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as a
sealed instrument as of the date first above written.
------------------------------------
Frank R. DiPietro
-------------------------------------
Name - Please Print
Address:
------------------------------
------------------------------
<PAGE> 15
EXHIBIT A
DEFINITIONS
The term "Company" shall include Sipex Corporation and any of its
subsidiaries, divisions, or affiliates. The Company shall have the right to
assign this Agreement to its successors and assigns, and all covenants and
agreements hereunder shall inure to the benefit of and be enforceable by said
successors or assigns.
The term "Company Documentation" shall mean notes, memoranda, reports,
lists, records, drawings, sketches, specifications, software programs, data,
documentation or other materials of any nature and in any form, whether written,
printed, or in digital format or otherwise, relating to any matter within the
scope of the business of the Company or concerning any of its dealings or
affairs.
The term "Confidential Information" shall mean any information
concerning the organization, business or finances of the Company or of any third
party which the Company is under an obligation to keep confidential that is
maintained by the Company as confidential. Such Confidential Information shall
include, but is not limited to, trade secrets or confidential information
respecting inventions, products, designs, methods, know-how, techniques,
systems, processes, software programs, works of authorship, customer lists,
projects, plans and proposals.
The term "Development" shall mean any invention, modification,
discovery, design, development, improvement, process, software program, work of
authorship, documentation, formula, data, technique, know-how, trade secret or
intellectual property right whatsoever or any interest therein (whether or not
patentable or registrable under copyright, trademark or similar statutes
(including but not limited to the Semiconductor Chip Protection Act) or subject
to analogous protection).
<PAGE> 1
Exhibit 10.4
EMPLOYMENT AGREEMENT
AGREEMENT made as of this 14th day of May, 1999, by and between Raymond
Wai Bing Chow, a person residing at 15129 El Quito Way, Saratoga, California
95070 (the "Employee") and Sipex Corporation, a Massachusetts corporation with a
principal place of business in Billerica, Massachusetts (the "Company").
WHEREAS, the Employee's senior managerial position requires that he be
trusted with extensive confidential information and trade secrets of the Company
and that he develop a thorough and comprehensive knowledge of all details of the
Company's business, including, but not limited to, information relating to
research, development, inventions, manufacturing, purchasing, accounting,
engineering, marketing, distribution and licensing of the Company's products and
services;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the mutual
covenants and obligations herein contained, the parties hereto agree as follows:
1. Position and Responsibilities. During the term of this Agreement,
the Employee agrees to serve as Senior Vice President and Chief Technology
Officer of the Company or in such other positions as may be assigned. The
Employee shall at all times report to, and his activities shall at all times be
subject to the direction and control of the Chief Executive Officer of the
Company or to his designee, and the Employee shall exercise such powers and
comply with and perform, faithfully and to the best of his ability, such
directions and duties in relation to the business and affairs of the Company as
may from time to time be vested in or requested of him. If Employee shall be
elected to other offices of the Company or any of its affiliates, he shall serve
in such positions without further compensation than provided for in this
Agreement. The Employee agrees to follow all rules, policies and directives of
the Company as may be promulgated or modified from time to time. The Employee
shall perform his services under this Agreement at such locations as may be
required by the Company.
2. Compensation: Salary, Bonuses and Other Benefits. During the term of
this Agreement, the Company shall pay the Employee the following compensation:
(A) Salary. In consideration of the services to be rendered by the
Employee to the Company, the Company will pay to the Employee a monthly
salary of $15,312.50 (the Employee's "Base Rate") during the term of this
Agreement. Employee's Base Rate may be adjusted by the Company's Board of
Directors in its sole discretion from time to time; provided, however,
that under no circumstance shall such Base Rate be reduced. Such salary
shall be payable in conformity with the Company's customary practices for
executive compensation, as such practices shall be established or modified
from time to time.
(B) Fringe Benefits. The Employee will be entitled to participate on
the same general basis and subject to the same rules and regulations as
other Company executive employees
<PAGE> 2
-2-
in the Company's standard benefit plans as such benefits or plans may be
modified or amended from time to time. The Company shall pay or reimburse
the Employee for all reasonable business expenses incurred or paid by the
Employee in the performance of his duties and responsibilities hereunder,
provided the Employee provides reasonable substantiation and documentation
of these expenses. The Company agrees to provide reimbursement within a
reasonable time after receipt of such documentation.
(C) Performance Based Bonus. At the sole discretion of the Board of
Directors, the Employee may also be eligible to receive a discretionary
annual bonus after the end of the Company's calendar year, provided that
the Employee continues to be employed by the Company at such year end. The
amount of this bonus, if any, shall be determined by the Board of
Directors based on objective or subjective goals set by the Board of
Directors in its sole discretion. In the event that the Employee's
employment with the Company is terminated by the Company without Cause or
is terminated by the Employee for Good Reason other than at calendar year
end, the Employee's bonus shall be prorated for such partial year. No
bonus shall be payable to Employee with respect to any calendar year of
the Company during which Employee's employment is terminated for Cause or
Employee terminates his employment without Good Reason.
(D) Taxes. All payments in this Section 2 shall be subject to all
applicable federal, state and local withholding, payroll and other taxes.
3. Termination. The Employee's employment under this Agreement may be
terminated as follows:
(A) By the Employee Without Good Reason. The Employee may terminate his
employment without Good Reason (as defined in Section 3(B)(2) below)
provided that the Employee gives the Company a written notice of intent to
terminate at least thirty (30) days' prior to the effective date of such
termination. In the event of a termination by the Employee without Good
Reason, the Company may accelerate the Employee's departure date and will
have no obligation to pay Employee after his actual departure date. In the
event of termination by the Employee without Good Reason, the Employee
shall be entitled to no severance or other termination benefits.
(B) By the Employee with Good Reason or by the Company without Cause.
(1) The Company may terminate the Employee's employment
without Cause (as defined in Section 3(C)) at any time. The Employee may
terminate his employment for Good Reason (as defined in Subsection (2) of
this Section 3(B)) after giving the Company a written notice of intent to
terminate at least thirty (30) days prior to the effective date of such
termination.
(2) For purposes of this Agreement, termination by the
Employee for "Good Reason" shall mean the termination of employment by the
Employee: (i) as a result of a material breach of this Agreement by the
Company; (ii) as a result of a material reduction in
<PAGE> 3
-3-
the Employee's title or reporting responsibilities as they exist on the
date hereof without the Employee's written consent; (iii) as a result of
the failure of the Company to pay the Employee's salary or bonus, if any,
in the time and manner contemplated by this Agreement; or (iv) as a result
of the Company requiring the Employee to relocate more than 50 miles from
Billerica, Massachusetts (unless such relocation is to another facility of
the Company); provided, however, that an event described in this Section
shall not constitute Good Reason unless it is communicated by the Employee
to the Company in writing and is not corrected by the Company to the
Employee's reasonable satisfaction within 30 days of the date of the
Employee's delivery of such written notice to the Company. Notwithstanding
Section 3(B)(2)(iv), in the event a Successor To The Business (as defined
in Section 10 hereof) assumes this Agreement, Section 3(B)(2)(iv) shall be
modified to read as follows: "(iv) as a result of the Company requiring
the Employee to relocate more than 50 miles from Billerica, Massachusetts
to any other location (including without limitation any facility of the
Company or the Successor To The Business)."
(3) In the event that the Company exercises its right to
terminate the Employee without Cause or the Employee terminates his
employment for Good Reason and the Employee signs a comprehensive release
in the form, and of a scope, acceptable to the Company, the Company agrees
to:
(i) pay the Employee a lump sum amount equal to
twelve (12) months' base salary at the Employee's then current Base Rate;
(ii) pay the Employee an amount equal to the highest
annual bonus paid or payable by the Company to the Employee with respect
to any calendar year during the three (3) calendar years prior to
Employee's termination of employment;
(iii) allow the Employee to participate to the same
extent as active executive employees (including dependent coverage) in the
life, accident, disability, health and dental insurance plans of the
Company or to provide benefits equivalent to those of active executive
employees, at no cost to the Employee for a period of twelve (12) months
commencing on the date of termination of employment.
(iv) In the event of a termination hereunder, each
outstanding option held by the Employee pursuant to any stock option plan
of the Company shall, without further action by the Company, accelerate
and become immediately exercisable in full; provided that other than such
acceleration(s), such outstanding option(s) shall continue to be governed
by the terms of any such Stock Option Plan and related Stock Option
Agreement(s);
(v) In the event that any of the payments to be made
to the Employee, or the compensation received or deemed to be received by
the Employee, pursuant to or by reason of the provisions of Section
3(B)(3) of this Agreement result in the imposition of an excise tax on the
Employee pursuant to Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any similar provision of state, local or foreign
tax law (the
<PAGE> 4
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"Parachute Tax"), the Company shall pay an additional amount to the
Employee (the "Gross-Up Payment"). The Gross-Up Payment shall be
calculated by the Company and shall equal an amount necessary to yield the
Employee, on an after-tax basis, an amount equal to the Parachute Tax
imposed on the Employee (including any Parachute Tax imposed with respect
to the Gross-Up Payment). The Gross-Up Payment with respect to any
Parachute Tax shall be payable by the Company to the Employee no later
than the last day of the fiscal year in which such Parachute Tax is
imposed.
(vi) The payments in this Section 3(B)(3) shall be
subject to all applicable federal, state and local withholding, payroll
and other taxes.
If Employee breaches his obligations under the Nondisclosure
and Developments Agreement executed herewith between Employee and the
Company, the Company may immediately cease payment of all severance and/or
benefits described in this Agreement. This cessation of severance and/or
benefits shall be in addition to, and not as an alternative to, any other
remedies in law or in equity available to the Company, including the right
to seek specific performance or an injunction. Except as expressly set
forth in this Section 3(B), Employee acknowledges that the Company shall
not have any further obligations to the Employee in the event of
Employee's termination under this Section 3(B), except such further
obligations as may be imposed by law.
(C) At the election of the Company for Cause. The Company may,
immediately and unilaterally, terminate the Employee's employment
hereunder for "Cause" at any time during the term of this Agreement by
giving to the Employee written notice of such termination ten (10) days
prior to the effective date of termination. The Company may pay Employee
for this ten (10) day period in lieu of such notice. Termination of the
Employee's employment by the Company shall constitute a termination for
"Cause" if such termination is for one or more of the following causes:
(1) the substantial and continuing failure of the Employee to
render services to the Company substantially in accordance with his
assigned duties or obligations under this Agreement, which
materially and adversely affects or could materially and adversely
affect the business, prospects, financial condition, operations,
property or affairs of the Company, which is not cured by the
Employee to the satisfaction of the Company within thirty (30) days
notice to the Employee by the Company of the failure;
(2) dishonesty, deliberate disregard of the rules or policies
of the Company or material breach of the terms of this Agreement,
which is not cured by the Employee to the satisfaction of the
Company within thirty (30) days notice to the Employee by the
Company;
(3) the commission by the Employee of an act of fraud,
embezzlement or breach of fiduciary duty;
<PAGE> 5
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(4) acts of moral turpitude by the Employee which materially
adversely affect the Employee's ability to perform his duties
hereunder and represent the Company;
(5) the conviction by the Employee of a felony; or
(6) the commission of an act which constitutes unfair
competition with the Company or which induces any customer of the
Company to breach a contract with the Company.
In the event of a termination for "Cause" pursuant to the provisions of
clauses (1) through (6) above, inclusive, the Employee shall be entitled
to no severance or other termination benefits.
(D) Benefits if Agreement Terminated Due to Death or Disability. The
Company shall have the right to terminate Employee's employment if
Employee dies or suffers physical incapacity or mental incompetence. In
the event Employee's employment shall terminate due to the physical
incapacity or mental incompetence of the Employee, the Company shall pay
the Employee an amount equal to: (i) twelve (12) months salary at the then
current Base Rate, less (ii) any amounts recovered by the Employee under
any health and disability insurance programs available through the
Company. For the purposes of this Agreement, the Employee shall be deemed
to have suffered physical incapacity or mental incompetence if the
Employee is unable to perform the essential functions of his job with
reasonable accommodation. Any accommodation will not be deemed reasonable
if it imposes an undue hardship on the Company. If this Agreement
terminates due to the death of Employee, Employee will not be entitled to
any payments after the date of his death.
4. Survival of Certain Provisions. Provisions of this Agreement shall
survive any termination of employment or of this Agreement if so provided herein
or if necessary or desirable to fully accomplish the purposes of such provision.
Without limiting the foregoing, the obligations of the Employee under Sections
3, 4, 5, 8 and 10 hereof and the Employee Nondisclosure and Developments
Agreement of even date herewith by and between Employee and the Company
expressly survive any termination of employment or termination of this
Agreement. The obligation of the Company to make payments to or on behalf of the
Employee under Section 3(B) hereof is expressly conditioned upon Employee's
continued full performance of the obligations under the terms of Section 5 and
the Nondisclosure and Developments Agreement executed herewith between Employee
and the Company.
5. Nondisclosure and Developments Agreement. In connection with his
employment by the Company pursuant to the terms of this Agreement, the Employee
shall execute, prior to the execution hereof by the Company, the Nondisclosure
and Developments Agreement attached hereto as Exhibit A.
6. Consent and Waiver by Third Parties. The Employee hereby represents
and warrants that he has obtained all waivers and/or consents from third parties
which are necessary
<PAGE> 6
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to enable him to enjoy employment with the Company on the terms and conditions
set forth herein and to execute and perform this Agreement without being in
conflict with any other agreement, obligation or understanding with any such
third party. The Employee represents that he is not bound by any agreement or
any other existing or previous business relationship which conflicts with, or
may conflict with, the performance of his obligations hereunder or prevent the
full performance of his duties and obligations hereunder.
7. Governing Law. This Agreement, the employment relationship
contemplated herein and any claim arising from such relationship, whether or not
arising under this Agreement, shall be governed by and construed in accordance
with the internal laws of the Commonwealth of Massachusetts, without giving
effect to the principles of choice of law or conflicts of laws of such
Commonwealth and this Agreement shall be deemed to be performable in
Massachusetts. Any claims or legal actions by one party against the other
arising out of the relationship between the parties contemplated herein (whether
or not arising under this Agreement) shall be commenced or maintained in any
state or federal court located in Massachusetts, and Employee hereby submits to
the jurisdiction and venue of any such court.
8. Severability. In case any one or more of the provisions contained in
this Agreement or the other agreements executed in connection with the
transactions contemplated hereby for any reason shall be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement or such
other agreements, but this Agreement or such other agreements, as the case may
be, shall be construed and reformed to the maximum extent permitted by law.
9. Waivers and Modifications. This Agreement may be modified, and the
rights, remedies and obligations contained in any provision hereof may be
waived, only in accordance with this Section 9. No waiver by either party of any
breach by the other or any provision hereof shall be deemed to be a waiver of
any later or other breach thereof or as a waiver of any other provision of this
Agreement. This Agreement sets forth all of the terms of the understandings
between the parties with reference to the subject matter set forth herein and
may not be waived, changed, discharged or terminated orally or by any course of
dealing between the parties, but only by an instrument in writing signed by the
party against whom any waiver, change, discharge or termination is sought. No
modification or waiver by the Company shall be effective without the consent of
at least a majority of the members of the Board of Directors excluding the
Employee then in office at the time of such modification or waiver.
10. Assignment. The Employee acknowledges that the services to be
rendered by him hereunder are unique and personal in nature. Accordingly, the
Employee may not assign any of his rights or delegate any of his duties or
obligations under this Agreement. The rights and obligations of the Company
under this Agreement shall inure to the benefit of, and shall be binding upon,
the successors and assigns of the Company. To that end, the Company will require
any successor (a "Successor To The Business") to all or substantially all of the
business and/or assets of the Company (whether direct or indirect, by purchase,
merger, consolidation or otherwise), expressly to assume and agree, by agreement
in form and substance satisfactory to the Employee, to perform this Agreement in
the same manner and to the same extent that Company
<PAGE> 7
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would be required to perform it if no such transaction had taken place. Failure
of the Company to obtain such agreement prior to the effective date of such
transaction shall be a breach of this Agreement and shall entitle the Employee
to compensation and benefits from the Company in the same amount and on the same
terms as the Employee would be entitled hereunder if he were to terminate his
employment pursuant to Section 3(B) of this Agreement. In the event the Company
fails to obtain a successor's agreement to assume this Agreement under this
Section 10, the date upon which any such transaction becomes effective shall be
deemed the termination date and Employee's employment with the Company will end
on that date.
11. Acknowledgments. The Employee hereby acknowledges and recognizes
that the enforcement of any of the provisions in this Agreement and the
Nondisclosure and Developments Agreement executed herewith may potentially
interfere with the Employee's ability to pursue a proper livelihood. The
Employee represents that he is knowledgeable about the business of the Company
and further represents that he is capable of pursuing a career in other
industries to earn a proper livelihood. The Employee recognizes and agrees that
the enforcement of the Nondisclosure and Developments Agreement is necessary to
ensure the preservation, protection and continuity of the business, trade
secrets and goodwill of the Company. The Employee agrees that, due to the
proprietary nature of the Company's business, the restrictions set forth in the
Nondisclosure and Developments Agreement are reasonable as to time and scope.
12. Entire Agreement. This Agreement and the Nondisclosure and
Developments Agreement executed herewith constitutes the entire understanding of
the parties relating to the subject matter hereof and supersedes and cancels all
agreements, written or oral, made prior to the date hereof between the Employee
and the Company relating to employment, salary, bonus, or other compensation of
any description, equity participation, pension, post-retirement benefits,
severance or other remuneration, except for the Company stock option plan(s) and
the stock option agreement(s) between the Company and the Employee which shall
remain in full force and effect in accordance with their respective terms
(except as modified by this Agreement).
13. Notices. All notices hereunder shall be in writing and shall be
delivered in person or mailed by certified or registered mail, return receipt
requested, addressed as follows:
If to the Company, to: Sipex Corporation
22 Linnell Circle
Billerica, Massachusetts 01821
Attention: President
If to the Employee, at the Employee's address set forth on the
signature page hereto.
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
<PAGE> 8
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15. Section Headings. The descriptive section headings herein have been
inserted for convenience only and shall not be deemed to define, limit, or
otherwise affect the construction of any provision hereof.
<PAGE> 9
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written as an instrument under seal.
SIPEX CORPORATION: EMPLOYEE:
- ----------------------------- ------------------------------
Raymond Wai Bing Chow
By: /s/ Raymond Wai Bing Chow
- ----------------------------- --------------------------------
Signature
Title:
- ---------------------------- 15129 El Quito Way
--------------------------------
Street Address
Saratoga CA 95070
--------------------------------
City State Zip Code
<PAGE> 10
Exhibit A of Employment Agreement by and between Raymond Wai Bing Chow
and Sipex Corporation
EMPLOYEE NONDISCLOSURE AND
DEVELOPMENTS AGREEMENT
May 14, 1999
In consideration of and as a condition of my employment or continued
employment by Sipex Corporation (the "Company"), I hereby agree with the Company
as follows:
1. During the period of my employment by the Company, I shall devote my
full time and best efforts to the business of the Company and I shall neither
pursue any business opportunity outside the Company nor take any position with
any organization other than the Company without the approval of a majority of
the disinterested members of the Company's Board of Directors. Further, during
the period of my employment by the Company and for one year thereafter, I shall
not, directly or indirectly, alone or as a partner, officer, director, employee
or stockholder of any entity, (a) solicit or do business with any customer of
the Company, or any potential customer of the Company with whom I have had
contact, in competition with the products or services being developed,
manufactured or sold by the Company, or (b) solicit, interfere with or endeavor
to entice away any employee of the Company.
2. I shall not at any time, whether during or after the termination of
my employment, reveal to any person or entity any Confidential Information (as
defined in Exhibit A hereto), except to employees of the Company who need to
know such Confidential Information for the purposes of their employment, or as
otherwise authorized by the Company in writing, and I shall keep secret all
matters entrusted to me and shall not use or attempt to use any Confidential
Information except as may be required in the ordinary course of performing my
duties as an employee of the Company, nor shall I use any Confidential
Information in any manner which may injure or cause loss or may be calculated to
injure or cause loss to the Company, whether directly or indirectly.
Furthermore, I agree that during my employment I shall not
make, use or permit to be used any Company Documentation (as defined in Exhibit
A hereto) otherwise than for the benefit of the Company. I further agree that I
shall not, after the termination of my employment, use or permit others to use
any such Company Documentation, it being agreed that all Company Documentation
shall be and remain the sole and exclusive property of the Company. Immediately
upon the termination of my employment I shall deliver all Company Documentation
in my possession, and all copies thereof, to the Company, at its main office.
3. If at any time or times during my employment, I shall (either alone
or with others) make, conceive, create, discover, invent or reduce to practice
any Development (as defined in Exhibit A hereto) that (a) relates to the
business of the Company or any customer of or supplier to the Company or any of
the products or services being developed, manufactured or sold by the Company or
which may be used in relation therewith; or (b) results from tasks assigned to
me by the Company; or (c) results from the use of premises or personal property
(whether tangible or
<PAGE> 11
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intangible) owned, leased or contracted for by the Company, then all such
Developments and the benefits thereof are and shall immediately become the sole
and absolute property of the Company and its assigns, as works made for hire or
otherwise. I shall promptly disclose to the Company (or any persons designated
by it) each such Development. I hereby assign all rights (including, but not
limited to, rights to inventions, patentable subject matter, copyrights and
trademarks) I may have or may acquire in the Developments and all benefits
and/or rights resulting therefrom to the Company and its assigns without further
compensation and shall communicate, without cost or delay, and without
disclosing to others the same, all available information relating thereto (with
all necessary plans and models) to the Company.
4. Excluded from this Agreement are my developments that I cannot
assign to the Company because of a prior agreement with
____________________________________ which is effective until
______________________. (Give name and date or write "none").
5. I hereby consent to the use of my name, picture, signature, voice,
image, and/or likeness by the Company during my employment by the Company and at
any time thereafter. Further, I waive all claims I may now have or may ever have
against the Company and its officers, employees, and agents arising out of the
Company's use, adaptation, reproduction, modification, distribution, exhibition
or other commercial exploitation of my' name, picture, signature, voice, image
and/or likeness, including but not limited to right of privacy, right of
publicity and celebrity, use of voice, name or likeness, defamation and
copyright infringement. I represent and warrant that I have not made any
contract or commitment in conflict with this consent and waiver.
6. I shall, during my employment and at any time thereafter, at the
request and cost of the Company, promptly sign, execute, make and do all such
deeds, documents, acts and things as the Company and its duly authorized
officers may reasonably require:
(a) to apply for, obtain, register and vest in the name of the Company
alone (unless the Company otherwise directs) patents, copyrights,
trademarks or other analogous protection in any country throughout the
world relating to a Development and when so obtained or vested to renew
and restore the same; and
(b) to defend any judicial, opposition or other proceedings in respect
of such applications and any judicial, opposition or other proceeding,
petition or application for revocation of any such patent, copyright,
trademark or other analogous protection.
7. If the Company is unable, after reasonable effort, to secure my
signature on any application for patent, copyright, trademark or other analogous
registration or other documents regarding any legal protection relating to a
Development, whether because of my physical or mental incapacity or for any
other reason whatsoever, I hereby irrevocably designate and appoint the Company
and its duly authorized officers and agents as my agent and attorney-in-fact, to
act for and in my behalf and stead to execute and file any such application or
applications or other documents and to do all other lawfully permitted acts to
further the prosecution and issuance of patent, copyright or trademark
registrations or any other legal protection thereon with the same legal force
and effect as if executed by me.
<PAGE> 12
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8. I agree that any breach of this Agreement by me will cause
irreparable damage to the Company and that in the event of such breach the
Company shall have, in addition to any and all remedies of law, the right to an
injunction, specific performance or other equitable relief to prevent the
violation of my obligations hereunder.
9. I understand that this Agreement does not create an obligation on
the Company or any other person or entity to continue my employment.
10. I further represent that my performance of all of the terms of this
Agreement and as an employee of the Company does not and will not breach any
agreement to keep in confidence proprietary information acquired by me in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I shall not enter into, any agreement either written or oral in
conflict herewith.
11. Any waiver by the Company of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
of such provision or any other provision hereof.
12. I hereby agree that each provision herein shall be treated as a
separate and independent clause, and the unenforceability of any one clause
shall in no way impair the enforceability of any of the other clauses of the
Agreement. Moreover, if one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively broad as to scope,
activity, subject or otherwise so as to be unenforceable at law, such provision
or provisions shall be construed by the appropriate judicial body by limiting or
reducing it or them, so as to be enforceable to the maximum extent compatible
with the applicable law as it shall then appear. I hereby further agree that the
language of all parts of this Agreement shall in all cases be construed as a
whole according to its fair meaning and not strictly for or against either of
the parties.
13. Any amendment to or modification of this Agreement, or any waiver
of any provision hereof, shall be in writing and signed by the Company.
14. This Agreement shall be effective as of the date entered below. My
obligations under this Agreement shall survive the termination of my employment
regardless of the manner of such termination and shall be binding upon my heirs,
executors, administrators and legal representatives.
15. The Company shall have the right to assign this Agreement to its
successors and assigns, and all covenants and agreements hereunder shall inure
to the benefit of and be enforceable by said successors or assigns.
16. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts and shall in all respects be
interpreted, enforced and governed under the internal and domestic laws of
Massachusetts, without giving effect to the principles of conflicts of laws of
such state. Any claims or legal actions by one party against the
<PAGE> 13
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other arising out of the relationship between the parties contemplated herein
(whether or not arising under this Agreement) shall be governed by the laws of
the Commonwealth of Massachusetts and shall be commenced and maintained in any
state or federal court located in such state, and I hereby submit to the
jurisdiction and venue of any such court.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as a
sealed instrument as of the date first above written.
------------------------------------
Raymond Wai Bing Chow
------------------------------------
Name - Please Print
Address:
---------------------------
---------------------------
<PAGE> 14
EXHIBIT A
DEFINITIONS
The term "Company" shall include Sipex Corporation and any of its
subsidiaries, divisions, or affiliates. The Company shall have the right to
assign this Agreement to its successors and assigns, and all covenants and
agreements hereunder shall inure to the benefit of and be enforceable by said
successors or assigns.
The term "Company Documentation" shall mean notes, memoranda, reports,
lists, records, drawings, sketches, specifications, software programs, data,
documentation or other materials of any nature and in any form, whether written,
printed, or in digital format or otherwise, relating to any matter within the
scope of the business of the Company or concerning any of its dealings or
affairs.
The term "Confidential Information" shall mean any information
concerning the organization, business or finances of the Company or of any third
party which the Company is under an obligation to keep confidential that is
maintained by the Company as confidential. Such Confidential Information shall
include, but is not limited to, trade secrets or confidential information
respecting inventions, products, designs, methods, know-how, techniques,
systems, processes, software programs, works of authorship, customer lists,
projects, plans and proposals.
The term "Development" shall mean any invention, modification,
discovery, design, development, improvement, process, software program, work of
authorship, documentation, formula, data, technique, know-how, trade secret or
intellectual property right whatsoever or any interest therein (whether or not
patentable or registrable under copyright, trademark or similar statutes
(including but not limited to the Semiconductor Chip Protection Act) or subject
to analogous protection).
<PAGE> 1
Exhibit 10.5
EMPLOYMENT AGREEMENT
AGREEMENT made as of this 14th day of May, 1999, by and between Yener
Gurler, a person residing at 273 Saint Henry Drive, Fremont, California (the
"Employee") and Sipex Corporation, a Massachusetts corporation with a principal
place of business in Billerica, Massachusetts (the "Company").
WHEREAS, the Employee's senior managerial position requires that he be
trusted with extensive confidential information and trade secrets of the Company
and that he develop a thorough and comprehensive knowledge of all details of the
Company's business, including, but not limited to, information relating to
research, development, inventions, manufacturing, purchasing, accounting,
engineering, marketing, distribution and licensing of the Company's products and
services;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the mutual
covenants and obligations herein contained, the parties hereto agree as follows:
1. Position and Responsibilities. During the term of this Agreement,
the Employee agrees to serve as Senior Vice President of Operations of the
Company or in such other positions as may be assigned. The Employee shall at all
times report to, and his activities shall at all times be subject to the
direction and control of the Chief Executive Officer of the Company or to his
designee, and the Employee shall exercise such powers and comply with and
perform, faithfully and to the best of his ability, such directions and duties
in relation to the business and affairs of the Company as may from time to time
be vested in or requested of him. If Employee shall be elected to other offices
of the Company or any of its affiliates, he shall serve in such positions
without further compensation than provided for in this Agreement. The Employee
agrees to follow all rules, policies and directives of the Company as may be
promulgated or modified from time to time. The Employee shall perform his
services under this Agreement at such locations as may be required by the
Company.
2. Compensation: Salary, Bonuses and Other Benefits. During the term of
this Agreement, the Company shall pay the Employee the following compensation:
(A) Salary. In consideration of the services to be rendered by the
Employee to the Company, the Company will pay to the Employee a monthly
salary of $13,125.00 (the Employee's "Base Rate") during the term of this
Agreement. Employee's Base Rate may be adjusted by the Company's Board of
Directors in its sole discretion from time to time; provided, however,
that under no circumstance shall such Base Rate be reduced. Such salary
shall be payable in conformity with the Company's customary practices for
executive compensation, as such practices shall be established or modified
from time to time.
<PAGE> 2
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(B) Fringe Benefits. The Employee will be entitled to participate on
the same general basis and subject to the same rules and regulations as
other Company executive employees in the Company's standard benefit plans
as such benefits or plans may be modified or amended from time to time.
The Company shall pay or reimburse the Employee for all reasonable
business expenses incurred or paid by the Employee in the performance of
his duties and responsibilities hereunder, provided the Employee provides
reasonable substantiation and documentation of these expenses. The Company
agrees to provide reimbursement within a reasonable time after receipt of
such documentation.
(C) Performance Based Bonus. At the sole discretion of the Board of
Directors, the Employee may also be eligible to receive a discretionary
annual bonus after the end of the Company's calendar year, provided that
the Employee continues to be employed by the Company at such year end. The
amount of this bonus, if any, shall be determined by the Board of
Directors based on objective or subjective goals set by the Board of
Directors in its sole discretion. In the event that the Employee's
employment with the Company is terminated by the Company without Cause or
is terminated by the Employee for Good Reason other than at calendar year
end, the Employee's bonus shall be prorated for such partial year. No
bonus shall be payable to Employee with respect to any calendar year of
the Company during which Employee's employment is terminated for Cause or
Employee terminates his employment without Good Reason.
(D) Taxes. All payments in this Section 2 shall be subject to all
applicable federal, state and local withholding, payroll and other taxes.
3. Termination. The Employee's employment under this Agreement may be
terminated as follows:
(A) By the Employee Without Good Reason. The Employee may terminate his
employment without Good Reason (as defined in Section 3(B)(2) below)
provided that the Employee gives the Company a written notice of intent to
terminate at least thirty (30) days' prior to the effective date of such
termination. In the event of a termination by the Employee without Good
Reason, the Company may accelerate the Employee's departure date and will
have no obligation to pay Employee after his actual departure date. In the
event of termination by the Employee without Good Reason, the Employee
shall be entitled to no severance or other termination benefits.
(B) By the Employee with Good Reason or by the Company without Cause.
(1) The Company may terminate the Employee's employment
without Cause (as defined in Section 3(C)) at any time. The Employee may
terminate his employment for Good Reason (as defined in Subsection (2) of
this Section 3(B)) after giving the Company a written notice of intent to
terminate at least thirty (30) days prior to the effective date of such
termination.
<PAGE> 3
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(2) For purposes of this Agreement, termination by the
Employee for "Good Reason" shall mean the termination of employment by the
Employee: (i) as a result of a material breach of this Agreement by the
Company; (ii) as a result of a material reduction in the Employee's title
or reporting responsibilities as they exist on the date hereof without the
Employee's written consent; (iii) as a result of the failure of the
Company to pay the Employee's salary or bonus, if any, in the time and
manner contemplated by this Agreement; or (iv) as a result of the Company
requiring the Employee to relocate more than 50 miles from Billerica,
Massachusetts (unless such relocation is to another facility of the
Company); provided, however, that an event described in this Section shall
not constitute Good Reason unless it is communicated by the Employee to
the Company in writing and is not corrected by the Company to the
Employee's reasonable satisfaction within 30 days of the date of the
Employee's delivery of such written notice to the Company. Notwithstanding
Section 3(B)(2)(iv), in the event a Successor To The Business (as defined
in Section 10 hereof) assumes this Agreement, Section 3(B)(2)(iv) shall be
modified to read as follows: "(iv) as a result of the Company requiring
the Employee to relocate more than 50 miles from Billerica, Massachusetts
to any other location (including without limitation any facility of the
Company or the Successor To The Business)."
(3) In the event that the Company exercises its right to
terminate the Employee without Cause or the Employee terminates his
employment for Good Reason and the Employee signs a comprehensive release
in the form, and of a scope, acceptable to the Company, the Company agrees
to:
(i) pay the Employee a lump sum amount equal to
twelve (12) months' base salary at the Employee's then current Base Rate;
(ii) pay the Employee an amount equal to the highest
annual bonus paid or payable by the Company to the Employee with respect
to any calendar year during the three (3) calendar years prior to
Employee's termination of employment;
(iii) allow the Employee to participate to the same
extent as active executive employees (including dependent coverage) in the
life, accident, disability, health and dental insurance plans of the
Company or to provide benefits equivalent to those of active executive
employees, at no cost to the Employee for a period of twelve (12) months
commencing on the date of termination of employment.
(iv) In the event of a termination hereunder, each
outstanding option held by the Employee pursuant to any stock option plan
of the Company shall, without further action by the Company, accelerate
and become immediately exercisable in full; provided that other than such
acceleration(s), such outstanding option(s) shall continue to be governed
by the terms of any such Stock Option Plan and related Stock Option
Agreement(s);
(v) In the event that any of the payments to be made
to the Employee, or the compensation received or deemed to be received by
the Employee, pursuant to or by
<PAGE> 4
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reason of the provisions of Section 3(B)(3) of this Agreement result in
the imposition of an excise tax on the Employee pursuant to Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), or any
similar provision of state, local or foreign tax law (the "Parachute
Tax"), the Company shall pay an additional amount to the Employee (the
"Gross-Up Payment"). The Gross-Up Payment shall be calculated by the
Company and shall equal an amount necessary to yield the Employee, on an
after-tax basis, an amount equal to the Parachute Tax imposed on the
Employee (including any Parachute Tax imposed with respect to the Gross-Up
Payment). The Gross-Up Payment with respect to any Parachute Tax shall be
payable by the Company to the Employee no later than the last day of the
fiscal year in which such Parachute Tax is imposed.
(vi) The payments in this Section 3(B)(3) shall be
subject to all applicable federal, state and local withholding, payroll
and other taxes.
If Employee breaches his obligations under the Nondisclosure
and Developments Agreement executed herewith between Employee and the
Company, the Company may immediately cease payment of all severance and/or
benefits described in this Agreement. This cessation of severance and/or
benefits shall be in addition to, and not as an alternative to, any other
remedies in law or in equity available to the Company, including the right
to seek specific performance or an injunction. Except as expressly set
forth in this Section 3(B), Employee acknowledges that the Company shall
not have any further obligations to the Employee in the event of
Employee's termination under this Section 3(B), except such further
obligations as may be imposed by law.
(C) At the election of the Company for Cause. The Company may,
immediately and unilaterally, terminate the Employee's employment
hereunder for "Cause" at any time during the term of this Agreement by
giving to the Employee written notice of such termination ten (10) days
prior to the effective date of termination. The Company may pay Employee
for this ten (10) day period in lieu of such notice. Termination of the
Employee's employment by the Company shall constitute a termination for
"Cause" if such termination is for one or more of the following causes:
(1) the substantial and continuing failure of the Employee to
render services to the Company substantially in accordance with his
assigned duties or obligations under this Agreement, which
materially and adversely affects or could materially and adversely
affect the business, prospects, financial condition, operations,
property or affairs of the Company, which is not cured by the
Employee to the satisfaction of the Company within thirty (30) days
notice to the Employee by the Company of the failure;
(2) dishonesty, deliberate disregard of the rules or policies
of the Company or material breach of the terms of this Agreement,
which is not cured by the Employee to the satisfaction of the
Company within thirty (30) days notice to the Employee by the
Company;
<PAGE> 5
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(3) the commission by the Employee of an act of fraud,
embezzlement or breach of fiduciary duty;
(4) acts of moral turpitude by the Employee which materially
adversely affect the Employee's ability to perform his duties
hereunder and represent the Company;
(5) the conviction by the Employee of a felony; or
(6) the commission of an act which constitutes unfair
competition with the Company or which induces any customer of the
Company to breach a contract with the Company.
In the event of a termination for "Cause" pursuant to the provisions of
clauses (1) through (6) above, inclusive, the Employee shall be entitled
to no severance or other termination benefits.
(D) Benefits if Agreement Terminated Due to Death or Disability. The
Company shall have the right to terminate Employee's employment if
Employee dies or suffers physical incapacity or mental incompetence. In
the event Employee's employment shall terminate due to the physical
incapacity or mental incompetence of the Employee, the Company shall pay
the Employee an amount equal to: (i) twelve (12) months salary at the then
current Base Rate, less (ii) any amounts recovered by the Employee under
any health and disability insurance programs available through the
Company. For the purposes of this Agreement, the Employee shall be deemed
to have suffered physical incapacity or mental incompetence if the
Employee is unable to perform the essential functions of his job with
reasonable accommodation. Any accommodation will not be deemed reasonable
if it imposes an undue hardship on the Company. If this Agreement
terminates due to the death of Employee, Employee will not be entitled to
any payments after the date of his death.
4. Survival of Certain Provisions. Provisions of this Agreement shall
survive any termination of employment or of this Agreement if so provided herein
or if necessary or desirable to fully accomplish the purposes of such provision.
Without limiting the foregoing, the obligations of the Employee under Sections
3, 4, 5, 8 and 10 hereof and the Employee Nondisclosure and Developments
Agreement of even date herewith by and between Employee and the Company
expressly survive any termination of employment or termination of this
Agreement. The obligation of the Company to make payments to or on behalf of the
Employee under Section 3(B) hereof is expressly conditioned upon Employee's
continued full performance of the obligations under the terms of Section 5 and
the Nondisclosure and Developments Agreement executed herewith between Employee
and the Company.
5. Nondisclosure and Developments Agreement. In connection with his
employment by the Company pursuant to the terms of this Agreement, the Employee
shall execute, prior to the execution hereof by the Company, the Nondisclosure
and Developments Agreement attached hereto as Exhibit A.
<PAGE> 6
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6. Consent and Waiver by Third Parties. The Employee hereby represents
and warrants that he has obtained all waivers and/or consents from third parties
which are necessary to enable him to enjoy employment with the Company on the
terms and conditions set forth herein and to execute and perform this Agreement
without being in conflict with any other agreement, obligation or understanding
with any such third party. The Employee represents that he is not bound by any
agreement or any other existing or previous business relationship which
conflicts with, or may conflict with, the performance of his obligations
hereunder or prevent the full performance of his duties and obligations
hereunder.
7. Governing Law. This Agreement, the employment relationship
contemplated herein and any claim arising from such relationship, whether or not
arising under this Agreement, shall be governed by and construed in accordance
with the internal laws of the Commonwealth of Massachusetts, without giving
effect to the principles of choice of law or conflicts of laws of such
Commonwealth and this Agreement shall be deemed to be performable in
Massachusetts. Any claims or legal actions by one party against the other
arising out of the relationship between the parties contemplated herein (whether
or not arising under this Agreement) shall be commenced or maintained in any
state or federal court located in Massachusetts, and Employee hereby submits to
the jurisdiction and venue of any such court.
8. Severability. In case any one or more of the provisions contained in
this Agreement or the other agreements executed in connection with the
transactions contemplated hereby for any reason shall be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement or such
other agreements, but this Agreement or such other agreements, as the case may
be, shall be construed and reformed to the maximum extent permitted by law.
9. Waivers and Modifications. This Agreement may be modified, and the
rights, remedies and obligations contained in any provision hereof may be
waived, only in accordance with this Section 9. No waiver by either party of any
breach by the other or any provision hereof shall be deemed to be a waiver of
any later or other breach thereof or as a waiver of any other provision of this
Agreement. This Agreement sets forth all of the terms of the understandings
between the parties with reference to the subject matter set forth herein and
may not be waived, changed, discharged or terminated orally or by any course of
dealing between the parties, but only by an instrument in writing signed by the
party against whom any waiver, change, discharge or termination is sought. No
modification or waiver by the Company shall be effective without the consent of
at least a majority of the members of the Board of Directors excluding the
Employee then in office at the time of such modification or waiver.
10. Assignment. The Employee acknowledges that the services to be
rendered by him hereunder are unique and personal in nature. Accordingly, the
Employee may not assign any of his rights or delegate any of his duties or
obligations under this Agreement. The rights and obligations of the Company
under this Agreement shall inure to the benefit of, and shall be binding upon,
the successors and assigns of the Company. To that end, the Company will require
any successor (a "Successor To The Business") to all or substantially all of the
business and/or
<PAGE> 7
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assets of the Company (whether direct or indirect, by purchase, merger,
consolidation or otherwise), expressly to assume and agree, by agreement in form
and substance satisfactory to the Employee, to perform this Agreement in the
same manner and to the same extent that Company would be required to perform it
if no such transaction had taken place. Failure of the Company to obtain such
agreement prior to the effective date of such transaction shall be a breach of
this Agreement and shall entitle the Employee to compensation and benefits from
the Company in the same amount and on the same terms as the Employee would be
entitled hereunder if he were to terminate his employment pursuant to Section
3(B) of this Agreement. In the event the Company fails to obtain a successor's
agreement to assume this Agreement under this Section 10, the date upon which
any such transaction becomes effective shall be deemed the termination date and
Employee's employment with the Company will end on that date.
11. Acknowledgments. The Employee hereby acknowledges and recognizes
that the enforcement of any of the provisions in this Agreement and the
Nondisclosure and Developments Agreement executed herewith may potentially
interfere with the Employee's ability to pursue a proper livelihood. The
Employee represents that he is knowledgeable about the business of the Company
and further represents that he is capable of pursuing a career in other
industries to earn a proper livelihood. The Employee recognizes and agrees that
the enforcement of the Nondisclosure and Developments Agreement is necessary to
ensure the preservation, protection and continuity of the business, trade
secrets and goodwill of the Company. The Employee agrees that, due to the
proprietary nature of the Company's business, the restrictions set forth in the
Nondisclosure and Developments Agreement are reasonable as to time and scope.
12. Entire Agreement. This Agreement and the Nondisclosure and
Developments Agreement executed herewith constitutes the entire understanding of
the parties relating to the subject matter hereof and supersedes and cancels all
agreements, written or oral, made prior to the date hereof between the Employee
and the Company relating to employment, salary, bonus, or other compensation of
any description, equity participation, pension, post-retirement benefits,
severance or other remuneration, except for the Company stock option plan(s) and
the stock option agreement(s) between the Company and the Employee which shall
remain in full force and effect in accordance with their respective terms
(except as modified by this Agreement)..
13. Notices. All notices hereunder shall be in writing and shall be
delivered in person or mailed by certified or registered mail, return receipt
requested, addressed as follows:
If to the Company, to: Sipex Corporation
22 Linnell Circle
Billerica, Massachusetts 01821
Attention: President
If to the Employee, at the Employee's address set forth on the
signature page hereto.
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
<PAGE> 8
-8-
15. Section Headings. The descriptive section headings herein have been
inserted for convenience only and shall not be deemed to define, limit, or
otherwise affect the construction of any provision hereof.
<PAGE> 9
-9-
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written as an instrument under seal.
SIPEX CORPORATION: EMPLOYEE:
- ----------------------------- ------------------------------
Yener Gurler
By: /s/ Yener Gurler
-------------------------- ------------------------------
Signature
Title:
273 Saint Henry Drive
-------------------------------
Street Address
Fremont CA
---------------------------------
City State Zip Code
<PAGE> 10
Exhibit A of Employment Agreement by and between Yener Gurler
and Sipex Corporation
EMPLOYEE NONDISCLOSURE AND
DEVELOPMENTS AGREEMENT
May 14, 1999
In consideration of and as a condition of my employment or continued
employment by Sipex Corporation (the "Company"), I hereby agree with the Company
as follows:
1. During the period of my employment by the Company, I shall devote my
full time and best efforts to the business of the Company and I shall neither
pursue any business opportunity outside the Company nor take any position with
any organization other than the Company without the approval of a majority of
the disinterested members of the Company's Board of Directors. Further, during
the period of my employment by the Company and for one year thereafter, I shall
not, directly or indirectly, alone or as a partner, officer, director, employee
or stockholder of any entity, (a) solicit or do business with any customer of
the Company, or any potential customer of the Company with whom I have had
contact, in competition with the products or services being developed,
manufactured or sold by the Company, or (b) solicit, interfere with or endeavor
to entice away any employee of the Company.
2. I shall not at any time, whether during or after the termination of
my employment, reveal to any person or entity any Confidential Information (as
defined in Exhibit A hereto), except to employees of the Company who need to
know such Confidential Information for the purposes of their employment, or as
otherwise authorized by the Company in writing, and I shall keep secret all
matters entrusted to me and shall not use or attempt to use any Confidential
Information except as may be required in the ordinary course of performing my
duties as an employee of the Company, nor shall I use any Confidential
Information in any manner which may injure or cause loss or may be calculated to
injure or cause loss to the Company, whether directly or indirectly.
Furthermore, I agree that during my employment I shall not
make, use or permit to be used any Company Documentation (as defined in Exhibit
A hereto) otherwise than for the benefit of the Company. I further agree that I
shall not, after the termination of my employment, use or permit others to use
any such Company Documentation, it being agreed that all Company Documentation
shall be and remain the sole and exclusive property of the Company. Immediately
upon the termination of my employment I shall deliver all Company Documentation
in my possession, and all copies thereof, to the Company, at its main office.
3. If at any time or times during my employment, I shall (either alone
or with others) make, conceive, create, discover, invent or reduce to practice
any Development (as defined in Exhibit A hereto) that (a) relates to the
business of the Company or any customer of or supplier to the Company or any of
the products or services being developed, manufactured or sold by the Company or
which may be used in relation therewith; or (b) results from tasks assigned to
me by the Company; or (c) results from the use of premises or personal property
(whether tangible or intangible) owned, leased or contracted for by the Company,
then all such Developments and the benefits thereof are and shall immediately
become the sole and absolute property of the Company
<PAGE> 11
-2-
and its assigns, as works made for hire or otherwise. I shall promptly disclose
to the Company (or any persons designated by it) each such Development. I hereby
assign all rights (including, but not limited to, rights to inventions,
patentable subject matter, copyrights and trademarks) I may have or may acquire
in the Developments and all benefits and/or rights resulting therefrom to the
Company and its assigns without further compensation and shall communicate,
without cost or delay, and without disclosing to others the same, all available
information relating thereto (with all necessary plans and models) to the
Company.
4. Excluded from this Agreement are my developments that I cannot
assign to the Company because of a prior agreement with
____________________________________ which is effective until
______________________. (Give name and date or write "none").
5. I hereby consent to the use of my name, picture, signature, voice,
image, and/or likeness by the Company during my employment by the Company and at
any time thereafter. Further, I waive all claims I may now have or may ever have
against the Company and its officers, employees, and agents arising out of the
Company's use, adaptation, reproduction, modification, distribution, exhibition
or other commercial exploitation of my' name, picture, signature, voice, image
and/or likeness, including but not limited to right of privacy, right of
publicity and celebrity, use of voice, name or likeness, defamation and
copyright infringement. I represent and warrant that I have not made any
contract or commitment in conflict with this consent and waiver.
6. I shall, during my employment and at any time thereafter, at the
request and cost of the Company, promptly sign, execute, make and do all such
deeds, documents, acts and things as the Company and its duly authorized
officers may reasonably require:
(a) to apply for, obtain, register and vest in the name of the Company
alone (unless the Company otherwise directs) patents, copyrights,
trademarks or other analogous protection in any country throughout the
world relating to a Development and when so obtained or vested to renew
and restore the same; and
(b) to defend any judicial, opposition or other proceedings in respect
of such applications and any judicial, opposition or other proceeding,
petition or application for revocation of any such patent, copyright,
trademark or other analogous protection.
7. If the Company is unable, after reasonable effort, to secure my
signature on any application for patent, copyright, trademark or other analogous
registration or other documents regarding any legal protection relating to a
Development, whether because of my physical or mental incapacity or for any
other reason whatsoever, I hereby irrevocably designate and appoint the Company
and its duly authorized officers and agents as my agent and attorney-in-fact, to
act for and in my behalf and stead to execute and file any such application or
applications or other documents and to do all other lawfully permitted acts to
further the prosecution and issuance of patent, copyright or trademark
registrations or any other legal protection thereon with the same legal force
and effect as if executed by me.
<PAGE> 12
-3-
8. I agree that any breach of this Agreement by me will cause
irreparable damage to the Company and that in the event of such breach the
Company shall have, in addition to any and all remedies of law, the right to an
injunction, specific performance or other equitable relief to prevent the
violation of my obligations hereunder.
9. I understand that this Agreement does not create an obligation on
the Company or any other person or entity to continue my employment.
10. I further represent that my performance of all of the terms of this
Agreement and as an employee of the Company does not and will not breach any
agreement to keep in confidence proprietary information acquired by me in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I shall not enter into, any agreement either written or oral in
conflict herewith.
11. Any waiver by the Company of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
of such provision or any other provision hereof.
12. I hereby agree that each provision herein shall be treated as a
separate and independent clause, and the unenforceability of any one clause
shall in no way impair the enforceability of any of the other clauses of the
Agreement. Moreover, if one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively broad as to scope,
activity, subject or otherwise so as to be unenforceable at law, such provision
or provisions shall be construed by the appropriate judicial body by limiting or
reducing it or them, so as to be enforceable to the maximum extent compatible
with the applicable law as it shall then appear. I hereby further agree that the
language of all parts of this Agreement shall in all cases be construed as a
whole according to its fair meaning and not strictly for or against either of
the parties.
13. Any amendment to or modification of this Agreement, or any waiver
of any provision hereof, shall be in writing and signed by the Company.
14. This Agreement shall be effective as of the date entered below. My
obligations under this Agreement shall survive the termination of my employment
regardless of the manner of such termination and shall be binding upon my heirs,
executors, administrators and legal representatives.
15. The Company shall have the right to assign this Agreement to its
successors and assigns, and all covenants and agreements hereunder shall inure
to the benefit of and be enforceable by said successors or assigns.
16. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts and shall in all respects be
interpreted, enforced and governed under the internal and domestic laws of
Massachusetts, without giving effect to the principles of conflicts of laws of
such state. Any claims or legal actions by one party against the other arising
out of the relationship between the parties contemplated herein (whether or not
<PAGE> 13
-4-
arising under this Agreement) shall be governed by the laws of the Commonwealth
of Massachusetts and shall be commenced and maintained in any state or federal
court located in such state, and I hereby submit to the jurisdiction and venue
of any such court.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as a
sealed instrument as of the date first above written.
-----------------------------------
Yener Gurler
-----------------------------------
Name - Please Print
Address:
---------------------------
---------------------------
<PAGE> 14
EXHIBIT A
DEFINITIONS
The term "Company" shall include Sipex Corporation and any of its
subsidiaries, divisions, or affiliates. The Company shall have the right to
assign this Agreement to its successors and assigns, and all covenants and
agreements hereunder shall inure to the benefit of and be enforceable by said
successors or assigns.
The term "Company Documentation" shall mean notes, memoranda, reports,
lists, records, drawings, sketches, specifications, software programs, data,
documentation or other materials of any nature and in any form, whether written,
printed, or in digital format or otherwise, relating to any matter within the
scope of the business of the Company or concerning any of its dealings or
affairs.
The term "Confidential Information" shall mean any information
concerning the organization, business or finances of the Company or of any third
party which the Company is under an obligation to keep confidential that is
maintained by the Company as confidential. Such Confidential Information shall
include, but is not limited to, trade secrets or confidential information
respecting inventions, products, designs, methods, know-how, techniques,
systems, processes, software programs, works of authorship, customer lists,
projects, plans and proposals.
The term "Development" shall mean any invention, modification,
discovery, design, development, improvement, process, software program, work of
authorship, documentation, formula, data, technique, know-how, trade secret or
intellectual property right whatsoever or any interest therein (whether or not
patentable or registrable under copyright, trademark or similar statutes
(including but not limited to the Semiconductor Chip Protection Act) or subject
to analogous protection).
<PAGE> 1
Exhibit 11.1
Computation of Shares Used in Computing
Net Income Per Share
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
--------------------------- --------------------------
July 3, June 27, July 3, June 27,
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Common shares, beginning of period 18,055,665 17,779,268 17,979,812 17,711,422
Common stock equivalents 2,198,669 1,826,935 2,134,417 1,761,400
Treasury stock buyback (1,689,596) (967,559) (1,551,785) (821,652)
Weighted average shares issued 11,293 80,293 65,896 59,235
---------- ---------- ---------- ----------
18,576,031 18,718,937 18,628,340 18,710,405
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-03-1999
<PERIOD-START> JUL-03-1999
<PERIOD-END> JUL-03-1999
<CASH> 11,444
<SECURITIES> 1,875
<RECEIVABLES> 14,196
<ALLOWANCES> 573
<INVENTORY> 18,425
<CURRENT-ASSETS> 51,766
<PP&E> 39,978
<DEPRECIATION> 26,122
<TOTAL-ASSETS> 107,263
<CURRENT-LIABILITIES> 8,782
<BONDS> 0
0
0
<COMMON> 181
<OTHER-SE> 98,300
<TOTAL-LIABILITY-AND-EQUITY> 107,263
<SALES> 0
<TOTAL-REVENUES> 33,233
<CGS> 0
<TOTAL-COSTS> 16,500
<OTHER-EXPENSES> 9,338
<LOSS-PROVISION> 115
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 8,362
<INCOME-TAX> 2,927
<INCOME-CONTINUING> 5,435
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,435
<EPS-BASIC> 0.30
<EPS-DILUTED> 0.29
</TABLE>
