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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported) January 1, 1998
ADVANCED MACHINE VISION CORPORATION
(Exact name of registrant as specified in its charter)
California
(State or other jurisdiction of incorporation)
0-20097 33-0256103
(Commission File Number) (I.R.S. Employer Identification No.)
2067 Commerce Drive
Medford, Oregon 97504
(Address of principal executive offices) (Zip Code)
541-776-7700
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
Total Number of Pages: 7
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Item 5. Other Events
A. On January 1, 1998, Advanced Machine Vision Corporation ("AMV" or
the "Corporation") entered into new employment agreements with William
J. Young, James Ewan and Alan R. Steel, President and Chief Executive
Officer of AMV, President and Chief Executive Officer of AMV's SRC
VISION, Inc. subsidiary, and Vice President, Finance and Chief
Financial Officer of AMV, respectively.
B. On February 17, 1998, the Board of Directors of Advanced
Machine Vision Corporation declared a dividend distribution of one
preferred share purchase right (a "Right") for each outstanding share
of Class A Common Stock and Class B Common Stock, without par value
(the "Common Shares"), of the Corporation. The dividend is payable to
the shareholders of record on February 27, 1998 (the "Record Date"),
and with respect to Common Shares issued thereafter until the
Distribution Date (as defined below) and, in certain circumstances,
with respect to Common Stock issued after the Distribution Date.
Except as set forth below, each Right, when it becomes exercisable,
entitles the registered holder to purchase from the Corporation one
one-hundredth of a share of Series A Junior Participating Preferred
Stock, without par value (the "Preferred Shares"), of the Corporation
at a price of $15 per one one-hundredth of a Preferred Share (the
"Purchase Price"), subject to adjustment. The description and terms of
the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Corporation and American Stock Transfer &
Trust Company, as Rights Agent (the "Rights Agent") dated as of
February 27, 1998.
Initially, the Rights will be attached to all certificates
representing Common Shares then outstanding, and no separate Right
Certificates will be distributed. The Rights will separate from the
Common Shares upon the earliest to occur of (i) ten days after a
person or group of affiliated or associated persons has acquired
beneficial ownership of 20% or more of the outstanding Common Shares
(except pursuant to a Permitted Offer, as hereinafter defined); or
(ii) 10 Business Days (as defined in the Rights Agreement) (or such
later date as the Board may determine) following the commencement of,
or announcement of an intention to make, a tender offer or exchange
offer the consummation of which would result in a person or group
becoming an Acquiring Person (as hereinafter defined) (the earliest of
such dates being called the "Distribution Date"). A person or group
whose acquisition of Common Shares causes a Distribution Date pursuant
to clause (i) above is an "Acquiring Person." The date that a person
or group becomes an Acquiring Person is the "Shares Acquisition Date."
The Rights Agreement provides that, until the Distribution Date,
the Rights will be transferred solely with the Common Shares. Until
the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Share certificates issued after the Record Date
upon transfer or new issuances of Common Shares will contain a
notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights),
the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even if such notation or a copy of
this Summary of Rights is not attached thereto, will also constitute
the transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common
Shares as of the close of business on the Distribution Date (and to
each initial record holder of certain Common Shares issued after the
Distribution Date), and such separate Right Certificates alone will
evidence the Rights.
The Rights are not exercisable until the Distribution Date and
will expire at the close of business on February 26, 2008, unless
earlier redeemed by the Corporation as described below.
In the event that any person becomes an Acquiring Person (except
pursuant to a tender or exchange offer which is for all outstanding
Common Shares at a price and on terms which a majority of members of
the Board of Directors (who are not also officers of the Corporation
or an Acquiring Person or affiliate or associate thereof) determines
to be adequate and in the best interests of the Corporation and its
shareholders, other than such Acquiring Person, its affiliates and
associates (a "Permitted Offer"), each holder of a Right will
thereafter have the right (the "Flip-In Right") to receive upon
exercise the number of Common Shares (or, in certain circumstances,
one one-hundredths of a share of Preferred Shares or other securities
of the Corporation) having a market value (immediately before such
triggering event) equal to two times the exercise price of the Right.
At such time, all Rights that are beneficially owned by the Acquiring
Person or any affiliate, associate or transferee thereof will be null
and void.
In the event that, at any time following the Shares Acquisition
Date, (i) the Corporation is acquired in a merger or other business
combination transaction in which the holders of all of the outstanding
Common Shares immediately before the consummation of the transaction
are not the holders of all of the surviving corporation's voting
power, or (ii) more than 50% of the Corporation's assets or earning
power are sold or transferred, in either case with or to an Acquiring
Person or any affiliate or associate or any other person in which such
Acquiring Person, affiliate or associate has an interest or any person
acting on behalf of or in concert with such Acquiring Person,
affiliate or associate, or, if in such transaction all holders of
Common Shares are not treated alike, then each holder of a Right
(except Rights which previously have been voided as set forth above)
shall thereafter have the right (the "Flip-Over Right") to receive,
upon exercise, common shares of the acquiring company having a value
equal to two times the exercise price of the Right. The holder of a
Right will continue to have the Flip-Over Right only to the extent
that the Flip-In Right has not previously been exercised.
The Purchase Price payable and the number of Preferred Shares,
Common Shares or other securities issuable upon exercise of the Rights
are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of the Preferred Shares, (ii) upon the grant to
holders of the Preferred Shares of certain rights or warrants to
subscribe for or purchase Preferred Shares at a price (or conversion
price as the case may be), less than the then current market price of
the Preferred Shares or (iii) upon the distribution to holders of the
Preferred Shares of evidences of indebtedness or assets (excluding
regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a Preferred Share issuable upon exercise of each
Right are also subject to adjustment in the event of a stock split of
the Common Shares or a stock dividend on the Common Shares payable in
Common Shares or subdivisions, consolidations or combinations of the
Common Shares occurring, in any such case, before the Distribution
Date.
Preferred Shares purchasable upon exercise of the Rights will not
be redeemable. Each Preferred Share will be entitled to a minimum
preferential quarterly dividend payment of $1.00 per share but, if
greater, will be entitled to an aggregate dividend per share of 100
times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled to a
minimum preferential liquidation payment of $100 per share;
thereafter, and after the holders of the Common Shares receive a
liquidation payment of $1.00 per share, the holders of the Preferred
Shares and the holders of the Common Shares will share the remaining
assets in the ratio of 1 to 1 (as adjusted) for each Preferred Share
and Common Share so held, respectively. Finally, in the event of any
merger, consolidation or other transaction in which Common Shares are
exchanged, each Preferred Share will be entitled to receive 100 times
the amount received per Common Share. These rights are protected by
customary antidilution provisions. In the event that the amount of
accrued and unpaid dividends on the Preferred Shares is equivalent to
six full quarterly dividends or more (whether or not consecutive), the
holders of the Preferred Shares shall have the right, voting as a
class, to elect two directors until all cumulative dividends on the
Preferred Shares have been paid through the last quarterly dividend
payment date or until non-cumulative dividends have been paid
regularly for at least one year.
With certain exceptions, no adjustment to the Purchase Price will
be required until cumulative adjustments require an adjustment of at
least 1% in such Purchase Price. No fractional Preferred Shares will
be issued (other than fractions which are one one-hundredth or
integral multiples of one one-hundredth of a Preferred Share, which
may, at the election of the Corporation, be evidenced by depository
receipts) and in lieu thereof, a payment in cash will be made based on
the market price of the Preferred Shares on the last Trading Day (as
defined in the Rights Agreement) before the date of exercise.
At any time before the earlier to occur of (i) a person becoming
an Acquiring Person, (ii) the expiration of the Rights, or (iii) in
certain circumstances, after the Shares Acquisition Date, the
Corporation may redeem all but not less than all of the Rights at a
price of $.0001 per Right (the "Redemption Price") which redemption
shall be effective upon the action of the Board of Directors.
All of the provisions of the Rights Agreement may be amended by
the Board of Directors of the Corporation before the Distribution
Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended by the Board in order to cure any ambiguity,
defect or inconsistency, to make changes which do not adversely affect
the interests of holders of Rights (excluding the interests of any
Acquiring Person), or, subject to certain limitations, to shorten or
lengthen any time period under the Rights Agreement.
Item 7. Financial Statements and Exhibits
(c) Exhibits
* Rights Agreement dated February 27, 1998 between AMV and American
Stock Transfer and Trust Company (incorporated by reference to
the Company's Form 8-A filed with the Securities and Exchange
Commission on February 27, 1998).
* Employment Agreement between Alan R. Steel and the Company dated
January 1, 1998.
* Employment Agreement between William J. Young and the Company
dated January 1, 1998.
* Employment Agreement between William J. Young and SRC VISION,
Inc. dated January 1, 1998.
* Employment Agreement between James Ewan and SRC VISION, Inc.
dated January 1, 1998.
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 hereunto duly authorized.
ADVANCED MACHINE VISION CORPORATION
Date: February 27, 1998 By: /s/ Alan R. Steel
-----------------------------------
Vice President, Finance and
Chief Financial Officer
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Exhibit Index
4 Rights Agreement dated February 27, 1998 between AMV and American Stock
Transfer and Trust Company (incorporated by reference to the Company's
Form 8-A filed with the Securities and Exchange Commission on February
27, 1998).
10.1 Employment Agreement between Alan R. Steel and the Company dated
January 1, 1998.
10.2 Employment Agreement between William J. Young and the Company dated
January 1, 1998.
10.3 Employment Agreement between William J. Young and SRC VISION, Inc. dated
January 1, 1998.
10.4 Employment Agreement between James Ewan and SRC VISION, Inc. dated
January 1, 1998.
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into by and between
Advanced Machine Vision Corporation, a California corporation (the "Company"),
and Alan R. Steel (the "Executive"), as of January 1, 1998.
I. RECITAL.
WHEREAS, the Company desires to employ the Executive as Vice
President-Finance and Chief Financial Officer.
NOW, THEREFORE, the Company and the Executive desire to set forth in this
Agreement the terms and conditions of the Executive's employment with the
Company.
II. EMPLOYMENT.
The Company hereby employs the Executive and the Executive hereby accepts
such employment, upon the terms and conditions hereinafter set forth, from
January 1, 1998 to and including December 31, 1999. This Agreement shall be
automatically renewed for one additional year for each year subsequent to 1999
unless the Executive or the Company gives notice to the other, in writing, at
least 30 days prior to the expiration of 1998 or, thereafter, 13 months prior to
the expiration of the Agreement, of its or his desire to terminate this
Agreement or modify its terms. The Company agrees that the Executive will be
located, and will render such services, in the Medford, Oregon area.
III. DUTIES.
A. The Executive shall serve during the course of his employment as Vice
President-Finance and Chief Financial Officer of the Company and shall have such
other similar duties and responsibilities as the Board of Directors of the
Company shall determine from time to time.
B. The Executive agrees to devote substantially all of his time, energy and
ability to the business of the Company and shall not be involved in the
operations or management of any other competitive business. Nothing herein shall
prevent the Executive, upon written approval of the Board of Directors of the
Company, from serving as a director or trustee of other corporations or
businesses which are not in competition with the business of the Company or in
competition with any present or future affiliate of the Company.
C. For the term of this Agreement, the Executive shall report to the Chief
Executive Officer of the Company.
IV. COMPENSATION.
A. Base Salary. The Company shall pay the Executive a Base Salary at a rate
to be determined by the Compensation Committee of the Board of Directors but
which rate shall not be less than the greater of
(i) $150,150 per year, or
(ii) if such rate is increased from time to time by the Compensation
Committee, such increased rate of Base Salary.
Such Base Salary shall be earned monthly and shall be payable in periodic
installments no less frequently than monthly in accordance with the Company's
customary practices. Amounts payable shall be reduced by standard withholding
and other authorized deductions.
B. Annual Bonus, Incentive, Savings and Retirement Plans. The Executive
shall be entitled to participate in all annual bonus, incentive, savings and
retirement plans, practices, policies and programs applicable generally to other
peer executives of the Company as well as discretionary plans approved by the
Compensation Committee.
C. Welfare Benefit Plans. The Executive shall be eligible for participation
in and shall receive all benefits under welfare benefit plans, practices,
policies and programs provided by the Company to the extent applicable generally
to other peer executives of the Company as well as discretionary plans approved
by the Compensation Committee.
D. Employment Expenses. The Executive shall be entitled to receive prompt
reimbursement for all reasonable Employment Expenses incurred by him in
accordance with the policies, practices and procedures as in effect generally
with respect to other peer executives of the Company.
E. Fringe Benefits. The Executive shall be entitled to fringe benefits in
accordance with the plans, practices, programs and policies as in effect
generally with respect to other peer executives of the Company.
F. Accrued Vacation. The Executive shall be entitled to paid vacation of
five weeks per year.
G. Automobile. At the Executive's option, the Company shall provide the
Executive with the use of a Company owned or leased automobile or the Executive
shall be entitled to a $600.00 per month automobile allowance.
V. TERMINATION.
A. Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death. If the Company determines in good
faith that disability of the Executive has occurred (pursuant to the definition
of Disability set forth below), it may give to the Executive written notice of
its intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the day of
receipt of such notice by the Executive. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from his duties with the
Company on the basis provided in this agreement for a period of 3 months as a
result of Incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or his legal representative. "Incapacity" as used
herein shall be limited only to such Disability which substantially prevents
Company from availing itself of the services of the Executive.
B. Cause. The Company may terminate the Executive's employment for Cause.
For purposes of this Agreement, "Cause" shall mean that the Company, acting in
good faith based upon the information then known to the Company, determines that
the Executive has:
(i) committed an act of fraud upon, or an act evidencing material
dishonesty toward the Company; or
(ii) been convicted of a felony, which conviction through lapse of
time or otherwise is not subject to appeal; or
(iii) willfully refused to perform material required duties and
responsibilities or performed them with gross negligence or willful
misconduct and failed to cure such misconduct given the opportunity within
thirty days written notice by the Company to remedy such acts.
C. Obligations of the Company upon Termination Based upon Death or
Disability or Cause.
(i) Death or Disability. If the Executive's employment is terminated
by reason of the Executive's Death or Disability, this Agreement shall
terminate without further obligations to the Executive or his legal
representatives under this Agreement, other than for payments made by the
Company to the Executive equal to the sum of:
(a) the Executive's annual Base Salary through the date of
termination to the extent not theretofore paid,
(b) reasonable Employment Expenses, as provided herein, through
the date of termination to the extent not theretofore paid, and
(c) any Accrued Vacation pay to the extent not theretofore paid.
The sum of the amounts described in clauses (a), (b) and (c) shall be
hereinafter referred to as the "Accrued Obligations" which shall be paid to the
Executive or his estate or beneficiary, as applicable, in a lump sum in cash
within 30 days of the date of termination and in addition, the Company shall pay
to the Executive or his estate or beneficiary, as applicable, any amounts due
pursuant to the terms of any applicable welfare or pension benefit plans.
(ii) Cause. If the Executive's employment is terminated by the Company
for Cause, this Agreement shall terminate without further obligations to
the Executive other than for the timely payment of Accrued Obligations and
any amounts due pursuant to the terms of any applicable welfare or pension
benefit plans.
D. Obligations of the Company upon Termination without Cause. If the
Executive's employment is terminated by the Company other than for Cause as
described in Section V. B. above, the Company shall pay Executive the Accrued
Obligations and, in addition, shall pay the Executive an amount equal to 2.99
times the then current annual Base Salary in 24 equal monthly installments
unless such termination follows a "change of control" (as described in this
Section V. D. below), in which case the Company will immediately pay the
Executive such amount in a single cash lump sum payment. Termination without
cause shall also be deemed to occur upon "Constructive Termination" as described
below. Termination pursuant to Section V. A. (Death or Disability) shall not
constitute termination without cause under this Section V. D. In addition, the
Company shall continue to pay the Executive's health and medical benefits for a
period of two years following the termination, at which time the Executive will
be entitled to pursue, at the Executive's cost, applicable COBRA benefits. In
addition, the Company shall pay to the Executive or his estate or beneficiary,
as applicable, Accrued Obligations and any amounts due pursuant to any
applicable welfare or pension benefit plans. Moreover, all of the Executive's
employee stock options shall become fully vested.
Change in Control. For purposes of this Agreement, a change of control
shall mean:
(i) any transfer or series of transfers of capital stock of the
Company, other than as a result of a sale of capital stock of the Company
pursuant to a public offering registered under the Securities Act of 1933,
as amended, as a result of which the holders of capital stock of the
Company prior to such transfer or transfers become, collectively, the legal
or beneficial holders of less than fifty percent (50%) of the capital stock
of the Company;
(ii) the consummation of any merger or consolidation of the Company
with another corporation; provided, however, that no Change in Control
shall be deemed to have occurred if, immediately following such merger or
consolidation, legal or beneficial holders of capital stock of the Company
prior to such merger or consolidation shall own or control, directly or
indirectly, through one or more intermediaries, equity securities
representing the power to vote or direct the voting of more than fifty
percent (50%) of the voting power of all classes of equity securities
entitled to vote in the election of directors of the corporation resulting
from such merger or consolidation; or
(iii)any transfer of all or substantially all of the business and
assets of the Company to another corporation; provided, however, that no
Change in Control shall be deemed to have occurred if the legal or
beneficial holders of capital stock of the Company prior to such transfer
of control, retain directly or indirectly through one or more
intermediaries, the power to vote or direct the voting of more than fifty
percent (50%) of the voting power of all classes of equity securities
entitled to vote in the election of directors of such corporation to which
all or substantially all of the business and assets of the Company are
transferred.
Constructive Termination. For purposes of this Agreement, constructive
termination shall occur if
(i) the Executive's place of employment or the Company's business
office is moved more than 50 miles from its present location,
(ii) there is a material downward change in the Executive's duties and
responsibilities, (iii) there is a downward change in the Executive's Base
Salary, or (iv) there is a change in the Executive's title and/or
responsibilities that is clearly a demotion.
E. Special Severance. Following the expiration or termination of this
Agreement by breach or passage or time, if the Executive's employment at any
time is terminated without cause, then the Company shall pay the Executive as
Special Severance compensation an amount equal to 2.99 times the then current
annual Base Salary, payable in 24 equal monthly installments, subject to Section
V. F. below. This Special Severance payment shall be reduced by standard
withholding and other authorized deductions.
F. Notwithstanding any other provision of this Agreement, the Executive
shall be entitled to, and the Company will be obligated to pay the Executive,
severance in an amount equal to the lesser of
(i) the amount prescribed by this Agreement, or
(ii) the maximum permitted under then current U. S. Federal Income Tax
Regulations as currently described in Section 280(g) of the Internal
Revenue Code without triggering a "parachute" excise tax for the Executive,
if applicable. The Executive and the Company shall determine in good faith
the maximum payment permitted under Federal Income Tax Regulations.
VI. ARBITRATION.
Any controversy or claim arising out of or relating to this Agreement, its
enforcement or interpretation, or because of an alleged breach, default, or
misrepresentation in connection with any of its provisions, shall be submitted
to arbitration, to be held in Medford, Oregon in accordance with the rules and
procedures of the American Arbitration Association. In the event either party
institutes arbitration under this Agreement, the costs and expenses of such
arbitration (including counsel fees) shall be borne by each of the parties, or
as the arbitrator(s) may determine at the request of either party.
VII. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their respective businesses,
which shall have been obtained by the Executive during his employment by the
Company or any of its affiliated companies and which shall not be or become
public knowledge (other than by acts by the Executive or his representatives in
violation of this Agreement). After termination of the Executive's employment
with the Company, he shall not, without the prior written consent of the
Company, or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it.
VIII. SUCCESSORS.
A. This Agreement is personal to the Executive and shall not, without the
prior written consent of the Company, be assignable by the Executive.
B. This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns and any such successor or assignee shall
be deemed substituted for the Company under the terms of this Agreement for all
purposes. As used herein, "successor" and "assignee" shall include any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires the stock of the
Company or to which the Company assigns this Agreement by operation of law or
otherwise. Prior to assignment or succession of obligations to the Executive
under this Agreement, all remaining monetary obligations (including, but not
limited to, severance, benefits and applicable employer taxes) of the Company
will be placed in escrow by the Company for the sole purpose of paying such
obligations.
IX. WAIVER.
No waiver of any breach of any term or provision of this Agreement shall be
construed to be, nor shall be, a waiver of any other breach of this Agreement.
No waiver shall be binding unless in writing and signed by the party waiving the
breach.
X. MODIFICATION.
This Agreement may not be amended or modified other than by a written
agreement executed by the Executive and the Company.
XI. SAVINGS CLAUSE.
If any provision of this Agreement or the application thereof is held
invalid, the invalidity shall not affect other provisions or applications of the
Agreement which can be given effect without the invalid provisions or
applications and to this end the provisions of this Agreement are declared to be
severable.
XII. COMPLETE AGREEMENT.
This instrument constitutes and contains the entire agreement and
understanding concerning the Executive's employment and the other subject
matters addressed herein between the parties, and supersedes and replaces all
prior negotiations and all agreements proposed or otherwise, whether written or
oral, concerning the subject matters hereof. This is an integrated document.
XIII. GOVERNING LAW.
This Agreement shall be deemed to have been executed and delivered within
the State of Oregon, and the rights and obligations of the parties hereunder
shall be construed and enforced in accordance with, and governed by, the laws of
the State of Oregon without regard to principles of conflict of laws.
XIV. CONSTRUCTION.
Each party has cooperated in the drafting and preparation of this
Agreement. Hence, in any construction to be made of this Agreement, the same
shall not be construed against any party on the basis that the party was the
drafter. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect.
XV. COMMUNICATIONS.
All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered or if mailed
by registered or certified mail, postage prepaid, addressed to the Executive at
the Executive's residence address on file with the Company, or addressed to the
Company at 2067 Commerce Drive, Medford, OR 97504. Any party may change the
address at which notice shall be given by written notice given in the above
manner.
XVI. EXECUTION.
This Agreement is being executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. Photographic copies of such signed counterparts may be used
in lieu of the originals for any purpose.
XVII. LEGAL COUNSEL.
The Executive and the Company recognize that this is a legally binding
contract and acknowledge and agree that they have had the opportunity to consult
with legal counsel of their choice.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
ADVANCED MACHINE VISION CORPORATION ALAN R. STEEL
By: /s/ William J. Young /s/ Alan R. Steel
- ---------------------------------- -------------------------------
Its President
- ----------------------------------
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into by and between
Advanced Machine Vision Corporation, a California corporation (the "Company"),
and William J. Young (the "Executive"), as of January 1, 1998.
I. RECITAL.
WHEREAS, the Company desires to employ the Executive as President and Chief
Executive Officer.
NOW, THEREFORE, the Company and the Executive desire to set forth in this
Agreement the terms and conditions of the Executive's employment with the
Company.
II. EMPLOYMENT.
The Company hereby employs the Executive and the Executive hereby accepts
such employment, upon the terms and conditions hereinafter set forth, from
January 1, 1998 to and including December 31, 1999. This Agreement shall be
automatically renewed for one additional year for each year subsequent to 1999
unless the Executive or the Company gives notice to the other, in writing, at
least 30 days prior to the expiration of 1998 or, thereafter, 13 months prior to
the expiration of the Agreement, of its or his desire to terminate this
Agreement or modify its terms. The Company agrees that the Executive will be
located, and will render such services, in the Medford, Oregon area.
III. DUTIES.
A. The Executive shall serve during the course of his employment as
President and Chief Executive Officer of the Company and shall have such other
similar duties and responsibilities as the Board of Directors of the Company
shall determine from time to time.
B. The Executive agrees to devote substantially all of his time, energy and
ability to the business of the Company and shall not be involved in the
operations or management of any other competitive business. Nothing herein shall
prevent the Executive, upon written approval of the Board of Directors of the
Company, from serving as a director or trustee of other corporations or
businesses which are not in competition with the business of the Company or in
competition with any present or future affiliate of the Company.
C. For the term of this Agreement, the Executive shall report to the Board
of Directors of the Company.
IV. COMPENSATION.
A. Base Salary. The Company shall pay the Executive a Base Salary at a rate
to be determined by the Compensation Committee of the Board of Directors but
which rate shall not be less than the greater of
(i) $227,500 per year, or
(ii) if such rate is increased from time to time by the Compensation
Committee, such increased rate of Base Salary.
Such Base Salary shall be earned monthly and shall be payable in periodic
installments no less frequently than monthly in accordance with the Company's
customary practices. Amounts payable shall be reduced by standard withholding
and other authorized deductions.
B. Annual Bonus, Incentive, Savings and Retirement Plans. The Executive
shall be entitled to participate in all annual bonus, incentive, savings and
retirement plans, practices, policies and programs applicable generally to other
peer executives of the Company as well as discretionary plans approved by the
Compensation Committee.
C. Welfare Benefit Plans. The Executive shall be eligible for participation
in and shall receive all benefits under welfare benefit plans, practices,
policies and programs provided by the Company to the extent applicable generally
to other peer executives of the Company as well as discretionary plans approved
by the Compensation Committee.
D. Employment Expenses. The Executive shall be entitled to receive prompt
reimbursement for all reasonable Employment Expenses incurred by him in
accordance with the policies, practices and procedures as in effect generally
with respect to other peer executives of the Company.
E. Fringe Benefits. The Executive shall be entitled to fringe benefits in
accordance with the plans, practices, programs and policies as in effect
generally with respect to other peer executives of the Company.
F. Accrued Vacation. The Executive shall be entitled to paid vacation of
five weeks per year.
G. Automobile. At the Executive's option, the Company shall provide the
Executive with the use of a Company owned or leased automobile or the Executive
shall be entitled to a $600.00 per month automobile allowance.
V. TERMINATION.
A. Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death. If the Company determines in good
faith that disability of the Executive has occurred (pursuant to the definition
of Disability set forth below), it may give to the Executive written notice of
its intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the day of
receipt of such notice by the Executive. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from his duties with the
Company on the basis provided in this agreement for a period of 3 months as a
result of Incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or his legal representative. "Incapacity" as used
herein shall be limited only to such Disability which substantially prevents
Company from availing itself of the services of the Executive.
B. Cause. The Company may terminate the Executive's employment for Cause.
For purposes of this Agreement, "Cause" shall mean that the Company, acting in
good faith based upon the information then known to the Company, determines that
the Executive has:
(i) committed an act of fraud upon, or an act evidencing material
dishonesty toward the Company; or
(ii) been convicted of a felony, which conviction through lapse
of time or otherwise is not subject to appeal; or
(iii) willfully refused to perform material required duties and
responsibilities or performed them with gross negligence or willful
misconduct and failed to cure such misconduct given the opportunity
within thirty days written notice by the Company to remedy such acts.
C. Obligations of the Company upon Termination Based upon Death or
Disability or Cause.
(i) Death or Disability. If the Executive's employment is terminated
by reason of the Executive's Death or Disability, this Agreement shall
terminate without further obligations to the Executive or his legal
representatives under this Agreement, other than for payments made by the
Company to the Executive equal to the sum of:
(a) the Executive's annual Base Salary through the date of
termination to the extent not theretofore paid,
(b) reasonable Employment Expenses, as provided herein, through
the date of termination to the extent not theretofore paid, and
(c) any Accrued Vacation pay to the extent not theretofore paid.
The sum of the amounts described in clauses (a), (b) and (c) shall be
hereinafter referred to as the "Accrued Obligations" which shall be paid to the
Executive or his estate or beneficiary, as applicable, in a lump sum in cash
within 30 days of the date of termination and in addition, the Company shall pay
to the Executive or his estate or beneficiary, as applicable, any amounts due
pursuant to the terms of any applicable welfare or pension benefit plans.
(ii) Cause. If the Executive's employment is terminated by the Company
for Cause, this Agreement shall terminate without further obligations to
the Executive other than for the timely payment of Accrued Obligations and
any amounts due pursuant to the terms of any applicable welfare or pension
benefit plans.
D. Obligations of the Company upon Termination without Cause. If the
Executive's employment is terminated by the Company other than for Cause as
described in Section V. B. above, the Company shall pay Executive the Accrued
Obligations and, in addition, shall pay the Executive an amount equal to 2.99
times the then current annual Base Salary in 24 equal monthly installments
unless such termination follows a "change of control" (as described in this
Section V. D. below), in which case the Company will immediately pay the
Executive such amount in a single cash lump sum payment. Termination without
cause shall also be deemed to occur upon "Constructive Termination" as described
below. Termination pursuant to Section V. A. (Death or Disability) shall not
constitute termination without cause under this Section V. D. In addition, the
Company shall continue to pay the Executive's health and medical benefits for a
period of two years following the termination, at which time the Executive will
be entitled to pursue, at the Executive's cost, applicable COBRA benefits. In
addition, the Company shall pay to the Executive or his estate or beneficiary,
as applicable, Accrued Obligations and any amounts due pursuant to any
applicable welfare or pension benefit plans. Moreover, all of the Executive's
employee stock options shall become fully vested.
Change in Control. For purposes of this Agreement, a change of control
shall mean:
(i) any transfer or series of transfers of capital stock of the
Company, other than as a result of a sale of capital stock of the Company
pursuant to a public offering registered under the Securities Act of 1933,
as amended, as a result of which the holders of capital stock of the
Company prior to such transfer or transfers become, collectively, the legal
or beneficial holders of less than fifty percent (50%) of the capital stock
of the Company;
(ii) the consummation of any merger or consolidation of the Company
with another corporation; provided, however, that no Change in Control
shall be deemed to have occurred if, immediately following such merger or
consolidation, legal or beneficial holders of capital stock of the Company
prior to such merger or consolidation shall own or control, directly or
indirectly, through one or more intermediaries, equity securities
representing the power to vote or direct the voting of more than fifty
percent (50%) of the voting power of all classes of equity securities
entitled to vote in the election of directors of the corporation resulting
from such merger or consolidation; or
(iii) any transfer of all or substantially all of the business and
assets of the Company to another corporation; provided, however, that no
Change in Control shall be deemed to have occurred if the legal or
beneficial holders of capital stock of the Company prior to such transfer
of control, retain directly or indirectly through one or more
intermediaries, the power to vote or direct the voting of more than fifty
percent (50%) of the voting power of all classes of equity securities
entitled to vote in the election of directors of such corporation to which
all or substantially all of the business and assets of the Company are
transferred.
Constructive Termination. For purposes of this Agreement, constructive
termination shall occur if
(i) the Executive's place of employment or the Company's business
office is moved more than 50 miles from its present location,
(ii) there is a material downward change in the Executive's duties and
responsibilities, (iii) there is a downward change in the Executive's Base
Salary, or (iv) there is a change in the Executive's title and/or
responsibilities that is clearly a demotion.
E. Special Severance. Following the expiration or termination of this
Agreement by breach or passage or time, if the Executive's employment at any
time is terminated without cause, then the Company shall pay the Executive as
Special Severance compensation an amount equal to 2.99 times the then current
annual Base Salary, payable in 24 equal monthly installments, subject to Section
V. F. below. This Special Severance payment shall be reduced by standard
withholding and other authorized deductions.
F. Notwithstanding any other provision of this Agreement, the Executive
shall be entitled to, and the Company will be obligated to pay the Executive,
severance in an amount equal to the lesser of
(i) the amount prescribed by this Agreement, or
(ii) the maximum permitted under then current U. S. Federal Income Tax
Regulations as currently described in Section 280(g) of the Internal
Revenue Code without triggering a "parachute" excise tax for the Executive,
if applicable. The Executive and the Company shall determine in good faith
the maximum payment permitted under Federal Income Tax Regulations.
VI. ARBITRATION.
Any controversy or claim arising out of or relating to this Agreement, its
enforcement or interpretation, or because of an alleged breach, default, or
misrepresentation in connection with any of its provisions, shall be submitted
to arbitration, to be held in Medford, Oregon in accordance with the rules and
procedures of the American Arbitration Association. In the event either party
institutes arbitration under this Agreement, the costs and expenses of such
arbitration (including counsel fees) shall be borne by each of the parties, or
as the arbitrator(s) may determine at the request of either party.
VII. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their respective businesses,
which shall have been obtained by the Executive during his employment by the
Company or any of its affiliated companies and which shall not be or become
public knowledge (other than by acts by the Executive or his representatives in
violation of this Agreement). After termination of the Executive's employment
with the Company, he shall not, without the prior written consent of the
Company, or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it.
VIII. SUCCESSORS.
A. This Agreement is personal to the Executive and shall not, without the
prior written consent of the Company, be assignable by the Executive.
B. This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns and any such successor or assignee shall
be deemed substituted for the Company under the terms of this Agreement for all
purposes. As used herein, "successor" and "assignee" shall include any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires the stock of the
Company or to which the Company assigns this Agreement by operation of law or
otherwise. Prior to assignment or succession of obligations to the Executive
under this Agreement, all remaining monetary obligations (including, but not
limited to, severance, benefits and applicable employer taxes) of the Company
will be placed in escrow by the Company for the sole purpose of paying such
obligations.
IX. WAIVER.
No waiver of any breach of any term or provision of this Agreement shall be
construed to be, nor shall be, a waiver of any other breach of this Agreement.
No waiver shall be binding unless in writing and signed by the party waiving the
breach.
X. MODIFICATION.
This Agreement may not be amended or modified other than by a written
agreement executed by the Executive and the Company.
XI. SAVINGS CLAUSE.
If any provision of this Agreement or the application thereof is held
invalid, the invalidity shall not affect other provisions or applications of the
Agreement which can be given effect without the invalid provisions or
applications and to this end the provisions of this Agreement are declared to be
severable.
XII. COMPLETE AGREEMENT.
This instrument constitutes and contains the entire agreement and
understanding concerning the Executive's employment and the other subject
matters addressed herein between the parties, and supersedes and replaces all
prior negotiations and all agreements proposed or otherwise, whether written or
oral, concerning the subject matters hereof. This is an integrated document.
XIII. GOVERNING LAW.
This Agreement shall be deemed to have been executed and delivered within
the State of Oregon, and the rights and obligations of the parties hereunder
shall be construed and enforced in accordance with, and governed by, the laws of
the State of Oregon without regard to principles of conflict of laws.
XIV. CONSTRUCTION.
Each party has cooperated in the drafting and preparation of this
Agreement. Hence, in any construction to be made of this Agreement, the same
shall not be construed against any party on the basis that the party was the
drafter. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect.
XV. COMMUNICATIONS.
All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered or if mailed
by registered or certified mail, postage prepaid, addressed to the Executive at
the Executive's residence address on file with the Company, or addressed to the
Company at 2067 Commerce Drive, Medford, OR 97504. Any party may change the
address at which notice shall be given by written notice given in the above
manner.
XVI. EXECUTION.
This Agreement is being executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. Photographic copies of such signed counterparts may be used
in lieu of the originals for any purpose.
XVII. LEGAL COUNSEL.
The Executive and the Company recognize that this is a legally binding
contract and acknowledge and agree that they have had the opportunity to consult
with legal counsel of their choice.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
ADVANCED MACHINE VISION CORPORATION WILLIAM J. YOUNG
By: /s/ Alan R. Steel /s/ William J. Young
- ----------------------------------- -------------------------------
Its Chief Financial Officer
- -----------------------------------
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into by and between
SRC VISION, Inc., an Oregon corporation (the "Company"), and William J. Young
(the "Executive"), as of January 1, 1998.
I. RECITAL.
WHEREAS, the Company desires to employ the Executive as Chairman of the
Board.
NOW, THEREFORE, the Company and the Executive desire to set forth in this
Agreement the terms and conditions of the Executive's employment with the
Company.
II. EMPLOYMENT.
The Company hereby employs the Executive and the Executive hereby accepts
such employment, upon the terms and conditions hereinafter set forth, from
January 1, 1998 to and including December 31, 1999. This Agreement shall be
automatically renewed for one additional year for each year subsequent to 1999
unless the Executive or the Company gives notice to the other, in writing, at
least 30 days prior to the expiration of 1998 or, thereafter, 13 months prior to
the expiration of the Agreement, of its or his desire to terminate this
Agreement or modify its terms. The Company agrees that the Executive will be
located, and will render such services, in the Medford, Oregon area.
III. DUTIES.
A. The Executive shall serve during the course of his employment as
Chairman of the Board of the Company and shall have such other similar duties
and responsibilities as the Board of Directors of the Company shall determine
from time to time.
B. The Executive agrees to devote a portion of his time, energy and ability
to the business of the Company that he deems necessary.
C. For the term of this Agreement, the Executive shall report to the Board
of Directors of the Company.
IV. COMPENSATION.
A. Base Salary. The Company shall pay the Executive a Base Salary at a rate
to be determined by the Compensation Committee of the Board of Directors but
which rate shall not be less than the greater of
(i) $35,000 per year, or
(ii) if such rate is increased from time to time by the Compensation
Committee, such increased rate of Base Salary.
V. TERMINATION.
A. Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death. If the Company determines in good
faith that disability of the Executive has occurred (pursuant to the definition
of Disability set forth below), it may give to the Executive written notice of
its intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the day of
receipt of such notice by the Executive. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from his duties with the
Company on the basis provided in this agreement for a period of 3 months as a
result of Incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or his legal representative. "Incapacity" as used
herein shall be limited only to such Disability which substantially prevents
Company from availing itself of the services of the Executive.
B. Cause. The Company may terminate the Executive's employment for Cause.
For purposes of this Agreement, "Cause" shall mean that the Company, acting in
good faith based upon the information then known to the Company, determines that
the Executive has:
(i) committed an act of fraud upon, or an act evidencing material
dishonesty toward the Company; or
(ii) been convicted of a felony, which conviction through lapse of
time or otherwise is not subject to appeal; or
(iii) willfully refused to perform material required duties and
responsibilities or performed them with gross negligence or willful
misconduct and failed to cure such misconduct given the opportunity within
thirty days written notice by the Company to remedy such acts.
C. Obligations of the Company upon Termination Based upon Death or
Disability or Cause.
(i) Death or Disability. If the Executive's employment is terminated
by reason of the Executive's Death or Disability, this Agreement shall
terminate without further obligations to the Executive or his legal
representatives under this Agreement, other than for payments made by the
Company to the Executive equal to the sum of:
(a) the Executive's annual Base Salary through the date of
termination to the extent not theretofore paid, and
(b) reasonable Employment Expenses, as provided herein, through
the date of termination to the extent not theretofore paid.
The sum of the amounts described in clauses (a)and (b) shall be hereinafter
referred to as the "Accrued Obligations" which shall be paid to the Executive or
his estate or beneficiary, as applicable, in a lump sum in cash within 30 days
of the date of termination.
(ii) Cause. If the Executive's employment is terminated by the Company
for Cause, this Agreement shall terminate without further obligations to
the Executive other than for the timely payment of Accrued Obligations.
D. Obligations of the Company upon Termination without Cause. If the
Executive's employment is terminated by the Company other than for Cause as
described in Section V. B. above, the Company shall pay Executive the Accrued
Obligations and, in addition, shall pay the Executive an amount equal to 2.99
times the then current annual Base Salary in 24 equal monthly installments
unless such termination follows a "change of control" (as described in this
Section V. D. below), in which case the Company will immediately pay the
Executive such amount in a single cash lump sum payment. Termination without
cause shall also be deemed to occur upon "Constructive Termination" as described
below. Termination pursuant to Section V. A. (Death or Disability) shall not
constitute termination without cause under this Section V. D. In addition, the
Company shall pay to the Executive or his estate or beneficiary, as applicable,
Accrued Obligations.
Change in Control. For purposes of this Agreement, a change of control
shall mean:
(i) any transfer or series of transfers of capital stock of the
Company, other than as a result of a sale of capital stock of the Company
pursuant to a public offering registered under the Securities Act of 1933,
as amended, as a result of which the holders of capital stock of the
Company prior to such transfer or transfers become, collectively, the legal
or beneficial holders of less than fifty percent (50%) of the capital stock
of the Company;
(ii) the consummation of any merger or consolidation of the Company
with another corporation; provided, however, that no Change in Control
shall be deemed to have occurred if, immediately following such merger or
consolidation, legal or beneficial holders of capital stock of the Company
prior to such merger or consolidation shall own or control, directly or
indirectly, through one or more intermediaries, equity securities
representing the power to vote or direct the voting of more than fifty
percent (50%) of the voting power of all classes of equity securities
entitled to vote in the election of directors of the corporation resulting
from such merger or consolidation; or
(iii) any transfer of all or substantially all of the business and
assets of the Company to another corporation; provided, however, that no
Change in Control shall be deemed to have occurred if the legal or
beneficial holders of capital stock of the Company prior to such transfer
of control, retain directly or indirectly through one or more
intermediaries, the power to vote or direct the voting of more than fifty
percent (50%) of the voting power of all classes of equity securities
entitled to vote in the election of directors of such corporation to which
all or substantially all of the business and assets of the Company are
transferred.
For purposes of this Change in Control section only, the term "Company"
shall mean the Company or its parent, Advanced Machine Vision Corporation.
Constructive Termination. For purposes of this Agreement, constructive
termination shall occur if
(i) the Executive's place of employment or the Company's business
office is moved more than 50 miles from its present location,
(ii) there is a material downward change in the Executive's duties and
responsibilities, (iii) there is a downward change in the Executive's Base
Salary, or (iv) there is a change in the Executive's title and/or
responsibilities that is clearly a demotion.
E. Special Severance. Following the expiration or termination of this
Agreement by breach or passage or time, if the Executive's employment at any
time is terminated without cause, then the Company shall pay the Executive as
Special Severance compensation an amount equal to 2.99 times the then current
annual Base Salary, payable in 24 equal monthly installments, subject to Section
V. F. below. This Special Severance payment shall be reduced by standard
withholding and other authorized deductions.
F. Notwithstanding any other provision of this Agreement, the Executive
shall be entitled to, and the Company will be obligated to pay the Executive,
severance in an amount equal to the lesser of
(i) the amount prescribed by this Agreement, or
(ii) the maximum permitted under then current U. S. Federal Income Tax
Regulations as currently described in Section 280(g) of the Internal
Revenue Code without triggering a "parachute" excise tax for the Executive,
if applicable. The Executive and the Company shall determine in good faith
the maximum payment permitted under Federal Income Tax Regulations.
VI. ARBITRATION.
Any controversy or claim arising out of or relating to this Agreement, its
enforcement or interpretation, or because of an alleged breach, default, or
misrepresentation in connection with any of its provisions, shall be submitted
to arbitration, to be held in Medford, Oregon in accordance with the rules and
procedures of the American Arbitration Association. In the event either party
institutes arbitration under this Agreement, the costs and expenses of such
arbitration (including counsel fees) shall be borne by each of the parties, or
as the arbitrator(s) may determine at the request of either party.
VII. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their respective businesses,
which shall have been obtained by the Executive during his employment by the
Company or any of its affiliated companies and which shall not be or become
public knowledge (other than by acts by the Executive or his representatives in
violation of this Agreement). After termination of the Executive's employment
with the Company, he shall not, without the prior written consent of the
Company, or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it.
VIII. SUCCESSORS.
A. This Agreement is personal to the Executive and shall not, without the
prior written consent of the Company, be assignable by the Executive.
B. This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns and any such successor or assignee shall
be deemed substituted for the Company under the terms of this Agreement for all
purposes. As used herein, "successor" and "assignee" shall include any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires the stock of the
Company or to which the Company assigns this Agreement by operation of law or
otherwise. Prior to assignment or succession of obligations to the Executive
under this Agreement, all remaining monetary obligations (including, but not
limited to, severance, benefits and applicable employer taxes) of the Company
will be placed in escrow by the Company for the sole purpose of paying such
obligations.
IX. WAIVER.
No waiver of any breach of any term or provision of this Agreement shall be
construed to be, nor shall be, a waiver of any other breach of this Agreement.
No waiver shall be binding unless in writing and signed by the party waiving the
breach.
X. MODIFICATION.
This Agreement may not be amended or modified other than by a written
agreement executed by the Executive and the Company.
XI. SAVINGS CLAUSE.
If any provision of this Agreement or the application thereof is held
invalid, the invalidity shall not affect other provisions or applications of the
Agreement which can be given effect without the invalid provisions or
applications and to this end the provisions of this Agreement are declared to be
severable.
XII. COMPLETE AGREEMENT.
This instrument constitutes and contains the entire agreement and
understanding concerning the Executive's employment and the other subject
matters addressed herein between the parties, and supersedes and replaces all
prior negotiations and all agreements proposed or otherwise, whether written or
oral, concerning the subject matters hereof. This is an integrated document.
XIII. GOVERNING LAW.
This Agreement shall be deemed to have been executed and delivered within
the State of Oregon, and the rights and obligations of the parties hereunder
shall be construed and enforced in accordance with, and governed by, the laws of
the State of Oregon without regard to principles of conflict of laws.
XIV. CONSTRUCTION.
Each party has cooperated in the drafting and preparation of this
Agreement. Hence, in any construction to be made of this Agreement, the same
shall not be construed against any party on the basis that the party was the
drafter. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect.
XV. COMMUNICATIONS.
All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered or if mailed
by registered or certified mail, postage prepaid, addressed to the Executive at
the Executive's residence address on file with the Company, or addressed to the
Company at 2067 Commerce Drive, Medford, OR 97504. Any party may change the
address at which notice shall be given by written notice given in the above
manner.
XVI. EXECUTION.
This Agreement is being executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. Photographic copies of such signed counterparts may be used
in lieu of the originals for any purpose.
XVII. LEGAL COUNSEL.
The Executive and the Company recognize that this is a legally binding
contract and acknowledge and agree that they have had the opportunity to consult
with legal counsel of their choice.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SRC VISION, INC. WILLIAM J. YOUNG
By: /s/ Alan R. Steel /s/ William J. Young
- ----------------------------------- -------------------------------
Its Chief Financial Officer
- -----------------------------------
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into by and between
SRC VISION, Inc., an Oregon corporation (the "Company"), and James Ewan (the
"Executive"), as of January 1, 1998.
I. RECITAL.
WHEREAS, the Company desires to employ the Executive as President and Chief
Executive Officer.
NOW, THEREFORE, the Company and the Executive desire to set forth in this
Agreement the terms and conditions of the Executive's employment with the
Company.
II. EMPLOYMENT.
The Company hereby employs the Executive and the Executive hereby accepts
such employment, upon the terms and conditions hereinafter set forth, from
January 1, 1998 to and including December 31, 1999. This Agreement shall be
automatically renewed for one additional year for each year subsequent to 1999
unless the Executive or the Company gives notice to the other, in writing, at
least 30 days prior to the expiration of 1998 or, thereafter, 13 months prior to
the expiration of the Agreement, of its or his desire to terminate this
Agreement or modify its terms. The Company agrees that the Executive will be
located, and will render such services, in the Medford, Oregon area.
III. DUTIES.
A. The Executive shall serve during the course of his employment as
President and Chief Executive Officer of the Company and shall have such other
similar duties and responsibilities as the Board of Directors of the Company
shall determine from time to time.
B. The Executive agrees to devote substantially all of his time, energy and
ability to the business of the Company and shall not be involved in the
operations or management of any other competitive business. Nothing herein shall
prevent the Executive, upon written approval of the Board of Directors of the
Company, from serving as a director or trustee of other corporations or
businesses which are not in competition with the business of the Company or in
competition with any present or future affiliate of the Company.
C. For the term of this Agreement, the Executive shall report to the Board
of Directors of the Company.
IV. COMPENSATION.
A. Base Salary. The Company shall pay the Executive a Base Salary at a rate
to be determined by the Compensation Committee of the Board of Directors but
which rate shall not be less than the greater of
(i) $250,000 per year, or
(ii) if such rate is increased from time to time by the Compensation
Committee, such increased rate of Base Salary.
Such Base Salary shall be earned monthly and shall be payable in periodic
installments no less frequently than monthly in accordance with the Company's
customary practices. Amounts payable shall be reduced by standard withholding
and other authorized deductions.
B. Annual Bonus, Incentive, Savings and Retirement Plans. The Executive
shall be entitled to participate in all annual bonus, incentive, savings and
retirement plans, practices, policies and programs applicable generally to other
peer executives of the Company as well as discretionary plans approved by the
Compensation Committee.
C. Welfare Benefit Plans. The Executive shall be eligible for participation
in and shall receive all benefits under welfare benefit plans, practices,
policies and programs provided by the Company to the extent applicable generally
to other peer executives of the Company as well as discretionary plans approved
by the Compensation Committee.
D. Employment Expenses. The Executive shall be entitled to receive prompt
reimbursement for all reasonable Employment Expenses incurred by him in
accordance with the policies, practices and procedures as in effect generally
with respect to other peer executives of the Company.
E. Fringe Benefits. The Executive shall be entitled to fringe benefits in
accordance with the plans, practices, programs and policies as in effect
generally with respect to other peer executives of the Company.
F. Accrued Vacation. The Executive shall be entitled to paid vacation of
five weeks per year.
G. Automobile. At the Executive's option, the Company shall provide the
Executive with the use of a Company owned or leased automobile or the Executive
shall be entitled to a $600.00 per month automobile allowance.
V. TERMINATION.
A. Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death. If the Company determines in good
faith that disability of the Executive has occurred (pursuant to the definition
of Disability set forth below), it may give to the Executive written notice of
its intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the day of
receipt of such notice by the Executive. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from his duties with the
Company on the basis provided in this agreement for a period of 3 months as a
result of Incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or his legal representative. "Incapacity" as used
herein shall be limited only to such Disability which substantially prevents
Company from availing itself of the services of the Executive.
B. Cause. The Company may terminate the Executive's employment for Cause.
For purposes of this Agreement, "Cause" shall mean that the Company, acting in
good faith based upon the information then known to the Company, determines that
the Executive has:
(i) committed an act of fraud upon, or an act evidencing material
dishonesty toward the Company; or
(ii) been convicted of a felony, which conviction through lapse of
time or otherwise is not subject to appeal; or
(iii) willfully refused to perform material required duties and
responsibilities or performed them with gross negligence or willful
misconduct and failed to cure such misconduct given the opportunity within
thirty days written notice by the Company to remedy such acts.
C. Obligations of the Company upon Termination Based upon Death or
Disability or Cause.
(i) Death or Disability. If the Executive's employment is terminated
by reason of the Executive's Death or Disability, this Agreement shall
terminate without further obligations to the Executive or his legal
representatives under this Agreement, other than for payments made by the
Company to the Executive equal to the sum of:
(a) the Executive's annual Base Salary through the date of
termination to the extent not theretofore paid,
(b) reasonable Employment Expenses, as provided herein, through
the date of termination to the extent not theretofore paid, and
(c) any Accrued Vacation pay to the extent not theretofore paid.
The sum of the amounts described in clauses (a), (b) and (c) shall be
hereinafter referred to as the "Accrued Obligations" which shall be paid to the
Executive or his estate or beneficiary, as applicable, in a lump sum in cash
within 30 days of the date of termination and in addition, the Company shall pay
to the Executive or his estate or beneficiary, as applicable, any amounts due
pursuant to the terms of any applicable welfare or pension benefit plans.
(ii) Cause. If the Executive's employment is terminated by the Company
for Cause, this Agreement shall terminate without further obligations to
the Executive other than for the timely payment of Accrued Obligations and
any amounts due pursuant to the terms of any applicable welfare or pension
benefit plans.
D. Obligations of the Company upon Termination without Cause. If the
Executive's employment is terminated by the Company other than for Cause as
described in Section V. B. above, the Company shall pay Executive the Accrued
Obligations and, in addition, shall pay the Executive an amount equal to 2.99
times the then current annual Base Salary in 24 equal monthly installments
unless such termination follows a "change of control" (as described in this
Section V. D. below), in which case the Company will immediately pay the
Executive such amount in a single cash lump sum payment. Termination without
cause shall also be deemed to occur upon "Constructive Termination" as described
below. Termination pursuant to Section V. A. (Death or Disability) shall not
constitute termination without cause under this Section V. D. In addition, the
Company shall continue to pay the Executive's health and medical benefits for a
period of two years following the termination, at which time the Executive will
be entitled to pursue, at the Executive's cost, applicable COBRA benefits. In
addition, the Company shall pay to the Executive or his estate or beneficiary,
as applicable, Accrued Obligations and any amounts due pursuant to any
applicable welfare or pension benefit plans. Moreover, all of the Executive's
employee stock options shall become fully vested.
Change in Control. For purposes of this Agreement, a change of control
shall mean:
(i) any transfer or series of transfers of capital stock of the
Company, other than as a result of a sale of capital stock of the Company
pursuant to a public offering registered under the Securities Act of 1933,
as amended, as a result of which the holders of capital stock of the
Company prior to such transfer or transfers become, collectively, the legal
or beneficial holders of less than fifty percent (50%) of the capital stock
of the Company;
(ii) the consummation of any merger or consolidation of the Company
with another corporation; provided, however, that no Change in Control
shall be deemed to have occurred if, immediately following such merger or
consolidation, legal or beneficial holders of capital stock of the Company
prior to such merger or consolidation shall own or control, directly or
indirectly, through one or more intermediaries, equity securities
representing the power to vote or direct the voting of more than fifty
percent (50%) of the voting power of all classes of equity securities
entitled to vote in the election of directors of the corporation resulting
from such merger or consolidation; or
(iii) any transfer of all or substantially all of the business and
assets of the Company to another corporation; provided, however, that no
Change in Control shall be deemed to have occurred if the legal or
beneficial holders of capital stock of the Company prior to such transfer
of control, retain directly or indirectly through one or more
intermediaries, the power to vote or direct the voting of more than fifty
percent (50%) of the voting power of all classes of equity securities
entitled to vote in the election of directors of such corporation to which
all or substantially all of the business and assets of the Company are
transferred.
For purposes of this Change in Control section only, the term "Company"
shall mean the Company or its parent, Advanced Machine Vision Corporation.
Constructive Termination. For purposes of this Agreement, constructive
termination shall occur if
(i) the Executive's place of employment or the Company's business
office is moved more than 50 miles from its present location,
(ii) there is a material downward change in the Executive's duties and
responsibilities,
(iii) there is a downward change in the Executive's Base Salary, or
(iv) there is a change in the Executive's title and/or responsibilities
that is clearly a demotion.
E. Special Severance. Following the expiration or termination of this
Agreement by breach or passage or time, if the Executive's employment at any
time is terminated without cause, then the Company shall pay the Executive as
Special Severance compensation an amount equal to 2.99 times the then current
annual Base Salary, payable in 24 equal monthly installments, subject to Section
V. F. below. This Special Severance payment shall be reduced by standard
withholding and other authorized deductions.
F. Notwithstanding any other provision of this Agreement, the Executive
shall be entitled to, and the Company will be obligated to pay the Executive,
severance in an amount equal to the lesser of
(i) the amount prescribed by this Agreement, or
(ii) the maximum permitted under then current U. S. Federal Income Tax
Regulations as currently described in Section 280(g) of the Internal
Revenue Code without triggering a "parachute" excise tax for the Executive,
if applicable. The Executive and the Company shall determine in good faith
the maximum payment permitted under Federal Income Tax Regulations.
VI. ARBITRATION.
Any controversy or claim arising out of or relating to this Agreement, its
enforcement or interpretation, or because of an alleged breach, default, or
misrepresentation in connection with any of its provisions, shall be submitted
to arbitration, to be held in Medford, Oregon in accordance with the rules and
procedures of the American Arbitration Association. In the event either party
institutes arbitration under this Agreement, the costs and expenses of such
arbitration (including counsel fees) shall be borne by each of the parties, or
as the arbitrator(s) may determine at the request of either party.
VII. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their respective businesses,
which shall have been obtained by the Executive during his employment by the
Company or any of its affiliated companies and which shall not be or become
public knowledge (other than by acts by the Executive or his representatives in
violation of this Agreement). After termination of the Executive's employment
with the Company, he shall not, without the prior written consent of the
Company, or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it.
VIII. SUCCESSORS.
A. This Agreement is personal to the Executive and shall not, without the
prior written consent of the Company, be assignable by the Executive.
B. This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns and any such successor or assignee shall
be deemed substituted for the Company under the terms of this Agreement for all
purposes. As used herein, "successor" and "assignee" shall include any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires the stock of the
Company or to which the Company assigns this Agreement by operation of law or
otherwise. Prior to assignment or succession of obligations to the Executive
under this Agreement, all remaining monetary obligations (including, but not
limited to, severance, benefits and applicable employer taxes) of the Company
will be placed in escrow by the Company for the sole purpose of paying such
obligations.
IX. WAIVER.
No waiver of any breach of any term or provision of this Agreement shall be
construed to be, nor shall be, a waiver of any other breach of this Agreement.
No waiver shall be binding unless in writing and signed by the party waiving the
breach.
X. MODIFICATION.
This Agreement may not be amended or modified other than by a written
agreement executed by the Executive and the Company.
XI. SAVINGS CLAUSE.
If any provision of this Agreement or the application thereof is held
invalid, the invalidity shall not affect other provisions or applications of the
Agreement which can be given effect without the invalid provisions or
applications and to this end the provisions of this Agreement are declared to be
severable.
XII. COMPLETE AGREEMENT.
This instrument constitutes and contains the entire agreement and
understanding concerning the Executive's employment and the other subject
matters addressed herein between the parties, and supersedes and replaces all
prior negotiations and all agreements proposed or otherwise, whether written or
oral, concerning the subject matters hereof. This is an integrated document.
XIII. GOVERNING LAW.
This Agreement shall be deemed to have been executed and delivered within
the State of Oregon, and the rights and obligations of the parties hereunder
shall be construed and enforced in accordance with, and governed by, the laws of
the State of Oregon without regard to principles of conflict of laws.
XIV. CONSTRUCTION.
Each party has cooperated in the drafting and preparation of this
Agreement. Hence, in any construction to be made of this Agreement, the same
shall not be construed against any party on the basis that the party was the
drafter. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect.
XV. COMMUNICATIONS.
All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered or if mailed
by registered or certified mail, postage prepaid, addressed to the Executive at
the Executive's residence address on file with the Company, or addressed to the
Company at 2067 Commerce Drive, Medford, OR 97504. Any party may change the
address at which notice shall be given by written notice given in the above
manner.
XVI. EXECUTION.
This Agreement is being executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. Photographic copies of such signed counterparts may be used
in lieu of the originals for any purpose.
XVII. LEGAL COUNSEL.
The Executive and the Company recognize that this is a legally binding
contract and acknowledge and agree that they have had the opportunity to consult
with legal counsel of their choice.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SRC VISION, INC. JAMES EWAN
By: /s/ William J. Young /s/ James Ewan
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Its Chairman
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