EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made as of May 22,
2000, between Centennial Technologies, Inc., a Delaware corporation (the
"Company"), and L. Michael Hone ("Executive").
WHEREAS, the Company desires to continue to employ Executive and
Executive desires to continue to be employed by the Company on the terms
contained herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. TERM OF EMPLOYMENT. The term of this Agreement shall extend from the date
hereof (the "Commencement Date") until the third anniversary of the Commencement
Date; provided, however, that the term of this Agreement shall automatically be
extended for one additional year on each anniversary hereafter unless, not less
than 90 days prior to any such anniversary, either party shall have given notice
to the other that it does not wish to extend this Agreement. The term of this
Agreement shall be subject to termination as provided in Section 6 and may
sometimes be referred to herein as the "Period of Employment."
2. POSITION AND DUTIES. During the Period of Employment, Executive shall serve
as the President and Chief Executive Officer and a member of the Board of
Directors of the Company (the "Board"), and shall have supervision and control
over and responsibility for the business and affairs of the Company and shall
have such other powers and duties as may from time to time be prescribed by the
Board, provided that such duties are consistent with Executive's position or
other positions that he may hold from time to time. Executive shall devote his
full working time and efforts to the business and affairs of the Company.
Notwithstanding the foregoing, Executive may serve on other boards of directors,
with the approval of the Board, or engage in religious, charitable or other
community activities as long as such services and activities do not materially
interfere with Executive's performance of his duties to the Company as provided
in this Agreement.
3. COMPENSATION AND BENEFITS.
(a) BASE SALARY. Executive's initial annual base salary shall be
$330,000, which shall be effective beginning May 1, 2000. Executive's base
salary shall be subject to increase at the discretion of the Compensation
Committee of the Board (the "Compensation Committee") based on its annual
review. The base salary in effect at any given time is referred to herein as
"Base Salary." The Base Salary shall be payable in substantially equal bi-weekly
installments.
(b) BONUS. Executive shall be eligible to receive cash incentive
compensation equal to up to 150% of his Base Salary ("Bonus") as determined on
an annual basis by the Compensation Committee in its sole discretion.
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(c) LIFE INSURANCE. The Company shall at its expense provide Executive
with $1,000,000 of term life insurance, the death benefits from which shall be
payable to one or more beneficiaries designated by Executive.
(d) AUTO ALLOWANCE. The Company shall pay to Executive a monthly
automobile allowance equal to $1,000.
(e) CLUB MEMBERSHIP. The Company shall pay all regular and special
membership fees and dues (including any initiation fees) for Executive's
membership in Vesper Country Club. This benefit shall be in addition to any
corporate or personal membership rights the Company may pay for at Andover
Country Club.
(f) MOVING EXPENSES. The Company has requested Executive to relocate to
the Company's headquarters in Wilmington, Massachusetts. Accordingly, the
Company shall pay for Executive's moving costs, including closing costs
associated with Executive's sale of his residence in Rochester, New York and the
closing and brokerage costs associated with Executive's purchase of a new
residence in the area surrounding the Company's headquarters.
(g) TRAVEL. In light of Executive's relocation at the request of the
Company, the Company shall reimburse Executive for reasonable travel expenses
incurred in visiting his family.
(h) EXPENSES. Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by him in performing services
hereunder during the Period of Employment, in accordance with the policies and
procedures then in effect and established by the Company for its senior
executive officers.
(i) OTHER BENEFITS. During the Period of Employment, Executive shall be
entitled to continue to participate in or receive benefits under all of the
Company's Employee Benefit Plans in effect on the date hereof, or under plans or
arrangements that provide Executive with benefits at least substantially
equivalent to those provided under such Employee Benefit Plans. As used herein,
the term "Employee Benefit Plans" includes, without limitation, each savings and
profit-sharing plan; stock option plan; medical insurance plan; dental insurance
plan; disability plan; and health and accident plan or arrangement established
and maintained by the Company on the date hereof for senior executives of the
Company. To the extent that the scope or nature of benefits described in this
section is determined under the policies of the Company based in whole or in
part on the seniority or tenure of an employee's service, Executive shall be
deemed to have a tenure with the Company equal to the actual time of Executive's
service with the Company. During the Period of Employment, Executive shall be
entitled to participate in or receive benefits under any employee benefit plan
or arrangement which may, in the future, be made available by the Company to its
executives and key management employees, subject to and on a basis consistent
with the terms, conditions and overall administration of such plan or
arrangement. All benefits to be received by Executive pursuant to Sections 3(c)
- (i), inclusive, under this Agreement shall be made on an after-tax basis, such
that the Company shall compensate Executive for any federal or state tax payable
with respect to such benefit as well as any such tax payable with respect to the
compensation called for by this sentence.
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(j) VACATIONS. Executive shall be entitled to six (6) paid weeks of
vacation in each calendar year. Executive shall also be entitled to all paid
holidays given by the Company to its executives.
4. UNAUTHORIZED DISCLOSURE.
(a) CONFIDENTIAL INFORMATION. Executive acknowledges that in the course
of his employment with the Company, he has been allowed to become, and will
continue to be allowed to become, acquainted with the Company's business
affairs, information, trade secrets, and other matters which are of a
proprietary or confidential nature, including but not limited to the Company's
and its affiliates' operations, business opportunities, price and cost
information, finance, customer information, business plans, various sales
techniques, manuals, letters, notebooks, procedures, reports, products,
processes, services, and other confidential information and knowledge
(collectively the "Confidential Information") concerning the Company's and its
affiliates' business. Executive understands and acknowledges that the
Confidential Information is confidential, and he agrees not to disclose such
Confidential Information to anyone outside the Company except to the extent that
(i) Executive deems such disclosure or use reasonably necessary or appropriate
in connection with performing his duties on behalf of the Company; (ii)
Executive is required by order of a court of competent jurisdiction (by subpoena
or similar process) to disclose or discuss any Confidential Information,
provided that in such case, Executive shall promptly inform the Company of such
event, shall cooperate with the Company in attempting to obtain a protective
order or to otherwise restrict such disclosure, and shall only disclose
Confidential Information to the minimum extent necessary to comply with any such
court order; (iii) such Confidential Information becomes generally known to and
available for use in the Company's industry, other than as a result of any
action or inaction by Executive; or (iv) such information has been published in
a form generally available to the public prior to the date Executive proposes to
disclose or use such information. Executive further agrees that he will not
during employment and/or at any time thereafter use such Confidential
Information in competing, directly or indirectly, with the Company. At such time
as Executive shall cease to be employed by the Company, he will immediately turn
over to the Company all Confidential Information, including papers, documents,
writings, electronically stored information, other property, and all copies of
them provided to or created by him during the course of his employment with the
Company.
(b) HEIRS, SUCCESSORS, AND LEGAL REPRESENTATIVES. The foregoing
provisions of this Section 4 shall be binding upon Executive's heirs,
successors, and legal representatives. The provisions of this Section 4 shall
survive the termination of this Agreement for any reason.
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5. COVENANT NOT TO COMPETE. In consideration for Executive's employment by the
Company under the terms provided in this Agreement and as a means to aid in the
performance and enforcement of the terms of the provisions of Section 4,
Executive agrees as follows:
(a) NONCOMPETITION. During the Period of Employment and for the
Post-Termination Period (as defined below), Executive will not, directly or
indirectly, as an owner, director, principal, agent, officer, employee, partner,
consultant, or otherwise, carry on, operate, manage, control, or become involved
in any manner with any business, operation, corporation, partnership,
association, agency, or other person or entity which is engaged in a business
that is competitive in any geographic area with any of the Company's products
which are produced by the Company or any affiliate of the Company as of the date
of Executive's termination of employment with the Company; provided, however,
that the foregoing shall not prohibit Executive from owning up to one percent
(1%) of the outstanding stock of any publicly held company. As used herein,
"Post-Termination Period" means the period following termination of Executive's
employment with the Company for any reason whatsoever equal to the longer of 12
months or the period for which the Executive is receiving any benefits from the
Company pursuant to Section 7 hereof.
(b) NONSOLICITATION. During the Period of Employment and for the
Post-Termination Period, Executive will not directly or indirectly solicit or
induce any present or future employee of the Company or any affiliate of the
Company to accept employment with Executive or with any business, operation,
corporation, partnership, association, agency, or other person or entity with
which Executive may be associated, and Executive will not employ or cause any
business, operation, corporation, partnership, association, agency, or other
person or entity with which Executive may be associated to employ any present or
future employee of the Company without providing the Company with ten (10) days'
prior written notice of such proposed employment.
6. TERMINATION. Executive's employment hereunder may be terminated without any
breach of this Agreement under the following circumstances:
(a) DEATH. Executive's employment hereunder shall terminate upon his
death.
(b) DISABILITY. If, as a result of Executive's incapacity due to
physical or mental illness, Executive shall have been absent from his duties
hereunder on a full-time basis for one hundred eighty (180) calendar days in the
aggregate in any twelve (12) month period, the Company may terminate Executive's
employment hereunder.
(c) TERMINATION BY COMPANY FOR CAUSE. At any time during the Period of
Employment, the Company may terminate Executive's employment hereunder for Cause
if such termination is approved by a majority of the Board at a meeting of the
Board called and held for such purpose. Executive shall be given notice of any
such meeting of the Board and shall be afforded the opportunity to make an oral
presentation and provide written materials to the Board. For purposes of this
Agreement, "Cause" shall mean: (A) conduct by Executive constituting a material
act of willful misconduct in connection with the performance of his duties,
including, without limitation, misappropriation of funds or property of the
Company or any of its affiliates other than the occasional, customary and de
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minimis use of Company property for personal purposes; (B) criminal or civil
conviction of Executive, a plea of nolo contendere by Executive or conduct by
Executive that would reasonably be expected to result in material injury to the
reputation of the Company if he were retained in his position with the Company,
including, without limitation, conviction of a felony involving moral turpitude;
(C) continued, willful and deliberate non-performance by Executive of his duties
hereunder (other than by reason of Executive's physical or mental illness,
incapacity or disability) which has continued for more than thirty (30) days
following written notice of such non-performance from the Board; (D) a breach by
Executive of any of the provisions contained in Sections 4 or 5 of this
Agreement; or (E) a violation by Executive of the Company's employment policies
which has continued following written notice of such violation from the Board.
(d) TERMINATION WITHOUT CAUSE. At any time during the Period of
Employment, the Company may terminate Executive's employment hereunder without
Cause if such termination is approved by a majority of the Board at a meeting of
the Board called and held for such purpose. Any termination by the Company of
Executive's employment under this Agreement which does not constitute a
termination for Cause under Section 6(c) or result from the death or disability
of the Executive under Section 6(a) or (b) shall be deemed a termination without
Cause. If the Company provides notice to Executive under Section 1 that it does
not wish to extend the Period of Employment, such action shall not be deemed a
termination without Cause.
(e) TERMINATION BY EXECUTIVE. At any time during the Period of
Employment, Executive may terminate his employment hereunder for any reason,
including but not limited to Good Reason. If Executive provides notice to the
Company under Section 1 that he does not wish to extend the Period of
Employment, such action shall not be deemed a voluntary termination by
Executive. For purposes of this Agreement, "Good Reason" shall mean that
Executive has complied with the "Good Reason Process" (hereinafter defined)
following the occurrence of any of the following events: (A) a substantial
diminution or other substantive adverse change, not consented to by Executive,
in the nature or scope of Executive's responsibilities, authorities, powers,
functions or duties; (B) removal of Executive from his position as Chief
Executive Officer of the Company; (C) an involuntary reduction in Executive's
Base Salary except for across-the-board reductions similarly affecting all or
substantially all senior executives of the Company; (D) a breach by the Company
of any of its other material obligations under this Agreement and the failure of
the Company to cure such breach within thirty (30) days after written notice
thereof by Executive; (E) the involuntary relocation of the Company's offices at
which Executive is principally employed to a location more than fifty (50) miles
from such offices, or the requirement by the Company that Executive be based
anywhere other than such offices on an extended basis, except for required
travel on the Company's business to an extent substantially consistent with
Executive's business travel obligations; or (F) the failure of the Company to
obtain the agreement from any successor to the Company to assume and agree to
perform this Agreement as required by Section 9. "Good Reason Process" shall
mean that (i) Executive reasonably determines in good faith that a "Good Reason"
event has occurred; (ii) Executive notifies the Company in writing of the
occurrence of the Good Reason event; (iii) Executive cooperates in good faith
with the Company's efforts, for a period not less than ninety (90) days
following such notice, to modify Executive's employment situation in a manner
acceptable to Executive and Company; and (iv) notwithstanding such efforts, one
or more of the Good Reason events continues to exist and has not been modified
in a manner acceptable to Executive. If the Company cures the Good Reason event
in a manner acceptable to Executive during the ninety (90) day period, Good
Reason shall be deemed not to have occurred.
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(f) NOTICE OF TERMINATION. Except for termination as specified in
Section 6(a), any termination of Executive's employment by the Company or any
such termination by Executive shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon.
(g) DATE OF TERMINATION. "Date of Termination" shall mean: (A) if
Executive's employment is terminated by his death, the date of his death; (B) if
Executive's employment is terminated on account of disability under Section 6(b)
or by the Company for Cause under Section 6(c), the date on which Notice of
Termination is given; and (C) if Executive's employment is terminated by the
Company under Section 6(d), or terminated by the Executive under Section 6(e),
thirty (30) days after the date on which a Notice of Termination is given.
7. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(a) DEATH OF EXECUTIVE. If Executive's employment terminates by reason
of his death, the Company shall, within ninety (90) days of death, pay in a lump
sum amount to such person as Executive shall have most recently designated in a
notice filed with the Company or, if no such person is designated, to
Executive's estate, Executive's unpaid Base Salary and Pro Rata Bonus (as
defined in Section 7(f) below) to the date of his death. Upon the death of
Executive, all unvested stock options shall immediately vest in Executive's
estate or other legal representatives and become exercisable, and Executive's
estate or other legal representatives shall have the remaining option term to
exercise all stock options granted to Executive. For a period of one (1) year
following the Date of Termination, the Company shall pay such health insurance
premiums as may be necessary to allow Executive's spouse and dependents to
receive health insurance coverage substantially similar to coverage they
received prior to the Date of Termination. Such payments, in the aggregate,
shall fully discharge the Company's obligations hereunder.
(b) DISABILITY OF EXECUTIVE. During any period that Executive fails to
perform his duties hereunder as a result of incapacity due to physical or mental
illness, Executive shall continue to receive his Base Salary and Pro Rata Bonus
until Executive's employment is terminated due to disability in accordance with
Section 6(b) or until Executive terminates his employment in accordance with
Section 6(e), whichever first occurs. Following such termination, Executive may
receive benefits under the Company's long-term disability plan subject to the
terms and conditions thereof. Upon the Date of Termination, all unvested stock
options shall immediately vest and become exercisable and Executive shall have
the remaining option term to exercise all stock options granted to Executive.
For a period of one (1) year following the Date of Termination, the Company
shall pay such health insurance premiums as may be necessary to allow Executive
and Executive's spouse and dependents to receive health insurance coverage
substantially similar to coverage they received prior to the Date of
Termination.
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(c) TERMINATION BY EXECUTIVE. If Executive's employment is terminated
by Executive other than for Good Reason as provided in Section 6(e), then the
Company shall, through the Date of Termination, pay Executive his unpaid Base
Salary at the rate in effect at the time Notice of Termination is given.
Thereafter, the Company shall have no further obligations to Executive except as
otherwise expressly provided under this Agreement, provided any such termination
shall not adversely affect or alter Executive's rights under any employee
benefit plan of the Company in which Executive, at the Date of Termination, has
a vested interest, unless otherwise provided in such employee benefit plan or
any agreement or other instrument attendant thereto. In addition, all vested but
unexercised stock options held by Executive as of the Date of Termination must
be exercised by Executive within three (3) months following the Date of
Termination or by the end of the option term, if earlier.
(d) TERMINATION WITHOUT CAUSE. If Executive terminates his employment
for Good Reason as provided in Section 6(e) or if Executive's employment is
terminated by the Company without Cause as provided in Section 6(d), then the
Company shall, through the Date of Termination, pay Executive his unpaid Base
Salary and Pro Rata Bonus. In addition, subject to signing by Executive of a
general release of claims in a form and manner satisfactory to the Company,
(i) the Company shall continue to pay Executive all
compensation benefits set forth in Section 3 hereof for the remaining
term of this Agreement, as such term may theretofore have been extended
in accordance with Section 1 hereof. The amount of Base Salary payable
pursuant to this Section 7(d)(i) shall be based on the rate in effect
at the time the applicable Notice of Termination is given. The amount
of Bonus payable pursuant to this Section 7(d)(i) shall be based on the
amount of the Bonus paid to Executive for the year immediately
preceding the year in which Executive's employment with the Company is
terminated; and
(ii) upon the Date of Termination, all unvested stock options
shall immediately vest and become exercisable and Executive shall have
the remaining option term to exercise all stock options granted to the
Executive.
(e) TERMINATION FOR CAUSE. If Executive's employment is terminated by
the Company for Cause as provided in Section 6(c), then the Company shall,
through the Date of Termination, pay Executive his unpaid Base Salary.
Thereafter, the Company shall have no further obligations to Executive except as
otherwise expressly provided under this Agreement, provided any such termination
shall not adversely affect or alter Executive's rights under any employee
benefit plan of the Company in which Executive, at the Date of Termination, has
a vested interest, unless otherwise provided in such employee benefit plan or
any agreement or other instrument attendant thereto. In addition, all unvested
stock options held by Executive as of the Date of Termination shall immediately
terminate and be of no further force and effect. In addition, all vested but
unexercised stock options held by Executive as of the Date of Termination must
be exercised by Executive within three (3) months following the Date of
Termination or by the end of the option term, if earlier.
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(f) PRO RATA BONUS. In determining Executive's Pro Rata Bonus pursuant
to Sections 7(a) or 7(d) hereof, the amount shall be equal to the product of (i)
a fraction, the numerator of which is the number of days elapsed in the year
Executive's employment with the Company is terminated and the denominator is
365, multiplied by (ii) the Bonus paid to Executive with respect to the year
immediately preceding the year in which Executive's employment with the Company
is terminated.
(g) CONSTRUCTION. Executive's rights under this Agreement are in
addition to, and nothing herein shall be construed so as to modify, replace or
otherwise affect Executive's rights or the Company's obligations under, the
Executive Retention Agreement dated as of February 26, 1999 between the Company
and Executive.
8. NOTICE. For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States certified mail, return
receipt requested, postage prepaid, addressed as follows:
if to the Executive:
At his home address as shown
in the Company's personnel records;
if to the Company:
Centennial Technologies
7 Lopez Road
Wilmington, MA 01887
Attention: Board of Directors
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
9. SUCCESSOR TO COMPANY. The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company expressly to assume
and agree to perform this Agreement to the same extent that the Company would be
required to perform it if no succession had taken place. Failure of the Company
to obtain an assumption of this Agreement at or prior to the effectiveness of
any succession shall be a breach of this Agreement and shall constitute Good
Reason if the Executive elects to terminate employment.
10. VALIDITY. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect. The
invalid portion of this Agreement, if any, shall be modified by any court having
jurisdiction to the extent necessary to render such portion enforceable.
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11. COUNTERPARTS. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
12. ARBITRATION; OTHER DISPUTES. In the event of any dispute or controversy
arising under or in connection with this Agreement, the parties shall first
promptly try in good faith to settle such dispute or controversy by mediation
under the applicable rules of the American Arbitration Association before
resorting to arbitration. In the event such dispute or controversy remains
unresolved in whole or in part for a period of thirty (30) days after it arises,
the parties will settle any remaining dispute or controversy exclusively by
arbitration in Boston, Massachusetts, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. Notwithstanding the above,
the Company shall be entitled to seek a restraining order or injunction in any
court of competent jurisdiction to prevent any continuation of any violation of
Section 4 or 5 hereof. In addition, in the event Executive violates any of the
provisions of Section 5, then in addition to all other rights and remedies
available to the Company at law or in equity, the duration of the covenant
contained in Section 5 shall automatically be extended for the period of time
from which Executive began such violation until he permanently ceases such
violation. Furthermore, should a dispute occur concerning Executive's mental or
physical capacity as described in Section 6(b) or 7(b), a doctor selected by
Executive and a doctor selected by the Company shall be entitled to examine
Executive. If the opinion of the Company's doctor and Executive's doctor
conflict, the Company's doctor and Executive's doctor shall together agree upon
a third doctor, whose opinion shall be binding.
13. THIRD-PARTY AGREEMENTS AND RIGHTS. Executive represents to the Company that
Executive's execution of this Agreement, Executive's employment with the Company
and the performance of Executive's proposed duties for the Company will not
violate any obligations Executive may have to any employer or other party, and
Executive will not bring to the premises of the Company any copies or other
tangible embodiments of non-public information belonging to or obtained from any
such previous employment or other party.
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14. LITIGATION AND REGULATORY COOPERATION. During and after Executive's
employment, Executive shall reasonably cooperate with the Company in the defense
or prosecution of any claims or actions now in existence or which may be brought
in the future against or on behalf of the Company which relate to events or
occurrences that transpired while Executive was employed by the Company;
provided, however, that such cooperation shall not materially and adversely
affect Executive or expose Executive to an increased probability of civil or
criminal litigation. Executive's cooperation in connection with such claims or
actions shall include, but not be limited to, being available to meet with
counsel to prepare for discovery or trial and to act as a witness on behalf of
the Company at mutually convenient times. During and after Executive's
employment, Executive also shall cooperate fully with the Company in connection
with any investigation or review of any federal, state or local regulatory
authority as any such investigation or review relates to events or occurrences
that transpired while Executive was employed by the Company. The Company shall
also provide Executive with compensation on an hourly basis (to be derived based
on his Base Salary in effect at the Date of Termination) for requested
litigation and regulatory cooperation that occurs after his termination of
employment, and reimburse Executive for all costs and expenses incurred in
connection with his performance under this Section 14, including, but not
limited to, reasonable attorneys' fees and costs.
15. MISCELLANEOUS. No provisions of this Agreement may be modified, waived, or
discharged unless such waiver, modification, or discharge is agreed to in
writing and signed by Executive and such officer of the Company as may be
specifically designated by the Board. No waiver by either party hereto of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, unless specifically referred to herein,
with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement. Any references herein to any year
shall mean the fiscal year of the Company. The validity, interpretation,
construction, and performance of this Agreement shall be governed by the laws of
the Commonwealth of Massachusetts (without regard to principles of conflicts of
laws).
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IN WITNESS WHEREOF, the parties have executed this Agreement effective
on the date and year first above written.
CENTENNIAL TECHNOLOGIES, INC.
By:
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Steven M. DePerrior,
Compensation Committee Chairman
EXECUTIVE
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L. Michael Hone
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