In Rochester, New York, on 25 July 2000.
OF THE ONE PART, DETECTION SYSTEMS, INC., a United States company with
registered office at 130 Perinton Parkway, Fairport, New York 14450 USA
(hereinafter the "Company").
AND OF THE OTHER, MR. GEORGE BEHLKE, of full age, of United States
nationality, with domicile at 6756 Cherry Street, Victor, NY 14564-9305.
CLAUSES
1. The Company appoints Mr. GEORGE BEHLKE, who accepts, as VICE PRESIDENT
- OPERATIONS and GENERAL MANAGER - ASIA of the Company, with
responsibility for the Company's world wide operations and its current
and future operations and offices in Asia, exercising his functions and
duties under the criteria and instructions of the Chief Executive
Officer of the Company.
2. The present Contract shall have an duration of TWO YEARS counting from
30 June 2000.
3. Mr. BEHLKE's place of work shall be at the Company's Fairport
headquarters. It is anticipated that Mr. BEHLKE shall travel on
business approximately 50% of his time. The majority of this travel
shall be in the Asia region. Travel outside of the Asia region shall
not exceed 30% of his travel, without Mr. BEHLKE's consent.
4. The basic initial renumeration which Mr. BEHLKE shall receive shall be
ONE HUNDRED AND FIFTY SIX THOUSAND U.S. DOLLARS gross each year,
payable in 12 equal payments, this amount includes vacation pay.
5. In addition, an annual bonus payable in June of each year equal to the
higher of (a) 1.2% of pretax profit (after bonuses) above 4% of the
Company's net sales (as reported in the Company's audited financial
statements), or (b) 2.4% of the increase in pretax profit or reduction
in pretax loss (after bonuses) of the Company's Asian operations
(excluding profit on intercompany transactions) as reported to the
Company's Board of Directors. If the Company's Asian operations change
from a pre-tax loss to a pre-tax profit, the bonus shall be calculated
as 2.4% of the net change.
The bonus amounts calculated in accordance with (a) and (b) shall be
subject to a sales growth modifier. The full bonus in accordance (a)
shall be payable only if net sales for the Company increase by at least
10% from the immediately prior fiscal year. The full bonus in
accordance (b) shall be payable only if net sales for the Company's
Asian operations (excluding intercompany sales) increase by at least
10% from the immediately prior fiscal year. Bonus amounts under (a)
and (b) shall be reduced pro rata to the extent net sales growth of the
Company or its Asian operations, respectively, is less than 10%. The
bonus formula is to be reviewed on an annual basis.
6. During the period Mr. BEHLKE is travelling to Hong Kong on business, he
shall be entitled to use the Company's apartment in Hong Kong. During
the time Mr. BEHLKE is in Asia, he will be provided a living allowance
of $50 per day.
7. Mr. BEHLKE is entitled to continue to participate in all plans he
currently participates as a Corporate officer of the Company, including
but not limited to the Company's Stock Option Plan.
8. In addition to the health care coverage Mr. Behlke and his family
receives in the United States, the Company shall provide Mr. BEHLKE, at
the Company's expense, supplemental health care insurance in foreign
locations where he will be travelling frequently.
9. The Company shall make Mr. BEHLKE neutral with respect to any income
tax liabilities that arise in connection with Mr. BEHLKE's status as an
American citizen travelling abroad on business, provided that such
liabilities do not arise from the failure of Mr. BEHLKE to follow a
reasonable income tax position, as would be determined by the
nationally recognised independent accounting firm engaged by the
Company's to provide you with individual tax consulting, registration
and preparation of required filings, consistent with your international
duties. The accountants engaged by the Company (at the Company's
expense) will be entitled to review all documentation underlying any
payments that are requested in accordance with this provision. In this
clause, neutral means if Mr. BEHLKE has to pay more tax on his income,
excluding effect of social taxes, than he would have incurred if he
were not travelling to Hong Kong on business, then the Company agrees
to pay that amount which, after tax, would put Mr. BEHLKE in the same
position after tax he would have been if he were not travelling to Hong
Kong on business.
10. The parties agree that if Mr. BEHLKE's employment with the Company is
terminated for any reason during the term of this contract, or if Mr.
BEHLKE resigns because the Company has taken such actions that so
materially diminish the responsibilities of his position as described
in clause (1) above that it effectively constitutes a termination, or
if the Company requires Mr. BEHLKE to relocate from his residence
without his prior consent, or if the Company requires that more than
25% of Mr. BEHLKE's time is outside of the Asia region without his
consent, then all payments and entitlements described in all clauses
above shall immediately cease, except the following amounts shall still
be paid:
(i) all earned but unpaid amounts of salary, benefits or bonus shall
be paid within 15 days. The bonus payable shall be calculated on a pro
rata basis.
(ii) any tax gross up pursuant to clause 10 above, shall be paid.
However, any amounts determined to be payable shall be reduced pro rata
so the effect of any payment only covers the months during which Mr.
BEHLKE was employed by the Company.
(iii) Mr. BEHLKE's monthly salary at the rate in effect at the time of
termination plus the US$50 daily allowance. The salary payments shall
continue on a monthly basis for a period of one year from the date of
termination. The US$50 daily allowance shall be paid for any days Mr.
BEHLKE is travelling on business immediately following a termination up
to a maximum of 30 days.1
11. During any period in which Mr. BEHLKE is being paid in accordance with
any of the clauses herein, Mr. BEHLKE shall not, without the prior
written consent of the Chief Executive Officer of the Company, engage,
as an employee, partner, consultant, venturer, entrepreneur or
otherwise, in the development or sale of any product or service which
is competitive with any product or service sold or under active
development by the Company. The parties expressly agree and accept
that the non-compete terms described herein supersede any prior
non-compete agreements and constitute the only non-compete terms
between Mr. BEHLKE and the Company.
12. The parties expressly agree and accept that all disputes between the
parties relating hereto or arising out of the employment of Mr. BEHLKE
by the Company shall be subject to the jurisdiction of the labour
courts of New York state, to which the parties expressly submit.
DETECTION SYSTEMS INC. Mr. GEORGE BEHLKE
/s/ Karl H. Kostusiak /s/ George E. Behlke
Mr. Karl Kostusiak
Chairman & CEO
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1 Subsequent to the execution of this agreement, the Company entered into
letter agreements with Mr. Behlke and certain other senior officers
confirming the Company's longstanding severance policy. Pursuant to his
letter agreement, Mr. Behlke will receive salary, bonus and benefits during a
non-compete period of 21 months if his employment is terminated other than
for cause, or if he terminates his employment following certain relocations,
reductions in compensation or diminutions in responsibility.
