Employment Agreement - Rapiscan Security Products (USA) Inc. and Andreas F. Kotowski
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this
1st day of April, 1997, by and between RAPISCAN SECURITY PRODUCTS (U.S.A.), INC.
("Company"), a California corporation, and ANDREAS F. KOTOWSKI ("Employee"),
with reference to the following facts:
A. Employee has been serving Company in a satisfactory and capable
manner pursuant to a written or oral agreement between Employee and Company.
B. Company has requested that Employee enter into a written
employment agreement with Company with respect to matters relating to continued
employment with Company, and Employee has agreed to do so, upon the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the terms and conditions and the
mutual agreements and covenants set forth herein, the parties hereto agree as
follows:
1. SCOPE OF EMPLOYMENT.
-------------------
1.1 Capacity. Company hereby continues to employ Employee and
--------
Employee hereby accepts continued employment as President of U.S. Operations and
General Manager of Company. Employee shall report to the Chief Executive
Officer of Company and perform the services and duties customarily incident to
such office and as otherwise decided upon by the Chief Executive Officer or the
Board of Directors.
1.2 Devotion of Services. Employee shall devote his entire
--------------------
productive time, ability and attention exclusively to the business of Company
during the term of this Agreement, except for passive investments, charitable
and non-profit enterprises and any other business investments which do not
interfere with his duties hereunder and which are not competitive with
Employer's activities (except as the owner of less than 2% of the issued and
outstanding capital stock of a publicly traded corporation). Employee shall
perform and discharge well and faithfully those duties assigned him by Company.
2. TERM. Subject to Section 6 herein, the term of this Agreement
----
shall commence as of the date of this Agreement and shall continue and remain in
full force and effect for a period of two (2) years. However, in the event that
Company thereafter continues to employ Employee, this Agreement shall be deemed
automatically renewed upon the same terms and conditions set forth herein except
(a) that the parties may mutually agree to revise any of the terms set forth
herein, and (b) the employment relationship will be on an "at will" basis, which
means that, subject to Section 6.4 herein, either Company or Employee may elect
to terminate the employment relationship at any time for any reason whatsoever,
with or without cause. Employee acknowledges that no representation has been
made
1
<PAGE>
by Company as to any minimum or specified term or length of employment following
the term set forth above.
3. COMPENSATION.
------------
3.1 Salary and Bonus. In consideration of the services to be
----------------
rendered by Employee hereunder, including without limitation any services
rendered as an officer or director of Company or any subsidiary or affiliate
thereof, during the term of this Agreement Company shall pay to Employee the
following:
(a) A salary in the amount of $140,000.00 per annum, which salary
shall be reviewed no less frequent than annually by the Company's Board of
Directors. The Board of Directors may increase Employee's salary but, in no
event, may Employee's salary be reduced during the term of this Agreement.
(b) The Company presently intends to continue its policy of
establishing a fiscal year end bonus pool for members of management of Company
and/or its subsidiaries, which may be up to ten percent (10%) of the Company's
net income before taxes. At the sole discretion of the Board of Directors,
Employee may be entitled to participate therein.
(c) All payments to Employee shall be subject to the regular
withholding requirements of all appropriate governmental taxing authorities.
(d) If the Company's Board of Directors and/or any committee
thereof grants options to senior members of management of the Company and/or its
subsidiaries, the Board of Directors and/or such committee may, in its sole
discretion, consider granting options to Employee.
3.2 Other Benefits. Employee shall be entitled to participate in
--------------
any medical and insurance plan which Company is presently providing or may
provide to its senior executives. Employee acknowledges that the terms of such
plans may change from time to time. Furthermore, Employee shall be entitled to
receive the same automobile, life insurance policy and all other benefits which
he presently is receiving.
3.3 Expenses. Company will advance to or reimburse Employee for
--------
all reasonable travel and entertainment required by Company and other reasonable
expenses incurred by Employee in connection with the performance of his services
under this Agreement in accordance with Company policy as established from time
to time.
4. INVENTIONS.
----------
4.1 Right to Inventions. Employee agrees that any discoveries,
-------------------
inventions or improvements of whatever nature (collectively "Inventions") made
or conceived by Employee, solely or jointly with others, during the term of his
employment with
2
<PAGE>
Company, that are made with Company's equipment, supplies, facilities, trade
secrets or time; or that relate, at the time of conception of or reduction to
practice, to the business of Company or Company's actual or demonstrably
anticipated research or development; or that result from any work performed by
Employee for Company, shall belong to Company. Employee also agrees that
Company shall have the right to keep any such Inventions as trade secrets, if
Company so chooses. In order to permit Company to claim rights to which it may
be entitled, Employee agrees to disclose to Company in confidence all Inventions
that Employee makes during the course of his employment and all patent
applications filed by Employee within three (3) years after termination of his
employment. Employee shall (a) assist Company in obtaining patents on all
Inventions deemed patentable by Company in the United States and in all foreign
countries and (b) execute all documents and do all things necessary to obtain
letters patent to vest Company with full and extensive titles thereto and to
protect the same against infringement by others. For the purposes of this
Agreement, an Invention is deemed to have been made during the period of
Employee's employment if the Invention was conceived or first actually reduced
to practice during that period, and Employee agrees that any patent application
filed within three (3) years after termination of his employment with the
Company shall be presumed to relate to an Invention made during the term of
Employee's employment unless Employee can provide evidence to the contrary.
4.2 Assignment of Inventions and Patents. In furtherance of, and
------------------------------------
not in contravention, limitation and/or in place of, the provisions of Section
4.1 above, Company hereby notifies Employee of California Labor Code Section
2870, which provides:
"Any provision in an employment agreement which provides that an
employee shall assign or offer to assign any of his or her rights in an
invention to his or her employer shall not apply to an invention for which
no equipment, supplies, facility, or trade secret information of the
employer was used and which was developed entirely on the employee's own
time, and (a) which does not relate (1) directly or indirectly to the
business of the employer or (2) to the employer's actual or demonstrably
anticipated research or development, or (b) which does not result from any
work performed by the employee for the employer. Any provision which
purports to apply to such an invention is to that extent against the public
policy of this state and is to that extent void and unenforceable."
Employee acknowledges that he has been notified by the Company of this
law, and understands that this Agreement does not apply to Inventions which are
otherwise fully protected under the provisions of said Labor Code Section 2870.
Therefore, Employee agrees to promptly disclose in writing to the Company all
Inventions, whether Employee personally considers them patentable
3
<PAGE>
or not, which Employee alone, or with others, conceives or makes during his
employment with Company or as is otherwise required and set forth under Section
4.1 above. Company shall hold said information in strict confidence to
determine the applicability of California Labor Code Section 2870 to said
Invention and, to the extent said Section 2870 does not apply, Employee hereby
assigns and agrees to assign all his right, title and interest in and to those
Inventions which relate to business of the Company and Employee agrees not to
disclose any of these Inventions to others without the prior written express
consent of Company. Employee agrees to notify Company in writing prior to
making any disclosure or performing any work during the term of his employment
with Company which may conflict with any proprietary rights or technical know-
how claimed by Employee as his property. In the event Employee fails to give
Company notice of such conflict, Employee agrees that Employee shall have no
further right or claim with respect to any such conflicting proprietary rights
or technical know-how.
5. CONFIDENTIALITY.
---------------
5.1 Restrictions on Use of Trade Secrets and Records. During
------------------------------------------------
the term of his employment, Employee will have access to and become acquainted
with various trade secrets of Company, consisting of formulas, patterns,
devices, secret Inventions, processes, compilations of information, records and
specifications (collectively "Trade Secrets"), all of which are owned by Company
and used in the operation of Company's business. Additionally, Employee will
have access to and may become acquainted with various files, records, customer
lists, documents, drawings, specifications, equipment and similar items relating
to the business of Company (collectively "Confidential Information"). All such
Trade Secrets and Confidential Information, whether they are designed, conceived
or prepared by Employee or come into Employee's possession or knowledge in any
other way, are and shall remain the exclusive property of Company and shall not
be removed from the premises of Company under any circumstances whatsoever
without the prior written consent of Company. Employee promises and agrees that
he will not use for himself or for others, or divulge or disclose to any other
person or entity, directly or indirectly, either during the term of his
employment by Company or at any time thereafter, for his own benefit or for the
benefit of any other person or entity or for any reason whatsoever, any of the
Trade Secrets or Confidential Information described herein, which he may
conceive, develop, obtain or learn about during or as a result of his employment
by Company unless specifically authorized to do so in writing by Company.
5.2 Non-Interference. Employee recognizes that Company has
----------------
invested substantial effort in assembling its present employees and in
developing its customer base. As a result, and particularly because of Company's
many types of confidential business information, Employee understands that any
solicitation of a customer or employee of Company, in an effort to get them to
change business affiliations, would presumably involve a misuse of
4
<PAGE>
Company's confidences, Trade Secrets and Confidential Information. Employee
therefore agrees that, for a period of one (1) year from the later of the date
of termination of Employee's employment with Company for any reason whatsoever
or the receipt by Employee of any compensation paid to Employee by Company,
Employee will not influence, or attempt to influence, existing employees or
customers of Company in an attempt to divert, either directly or indirectly,
their services or business from Company.
6. TERMINATION OF AGREEMENT.
------------------------
6.1 Termination by Company. Company may terminate Employee's
----------------------
employment hereunder at any time for cause without payment of severance or
similar benefits. For purposes of this Section 6.1, "cause" shall mean the
following events: (a) any willful breach of duty by Employee in the course of
his employment, (b) the breach of any provision of this Agreement or any
misrepresentation by Employee hereunder, (c) misconduct, neglect or negligence
in the performance of Employee's duties and obligations, (d) disloyal,
dishonest, willful misconduct, illegal, immoral or unethical conduct by
Employee, (e) such carelessness or inefficiency in the performance of his duties
that Employee is unfit to continue in the service of Company, (f) failure of
Employee to comply with the policies or directives of Company and/or failure to
take direction from Company's Board of Directors, or (g) such other conduct
which is substantially detrimental to the best interests of Company. Any such
termination shall become effective upon delivery of written notice to Employee.
6.2 Termination by Employee. Employee may terminate his
-----------------------
employment hereunder at any time for cause. For purposes of this Section 6.2,
"cause" shall mean the breach of any provision of this Agreement by Company
which is not cured within thirty (30) days after Employee delivers written
notice to Company describing such breach. If the breach is not so cured within
such thirty (30) days after delivery of such notice, the termination of
employment shall become effective after the expiration of such cure period.
6.3 Death or Disability. Employee's employment with Company
-------------------
shall cease upon the date of his death. In the event Employee becomes
physically or mentally disabled so as to become unable for more than one hundred
eighty (180) days in the aggregate in any twelve (12) month period to perform
his duties on a full-time basis with reasonable accommodations, Company may, at
its sole discretion, terminate this Agreement and Employee's employment.
6.4 Termination Following Automatic Renewal. In the event that
---------------------------------------
this Agreement is automatically renewed pursuant to Paragraph 2 herein, either
Company or Employee may terminate Employee's employment hereunder at any time
and for any reason whatsoever, with or without cause, upon thirty (30) days
prior written notice delivered to the other party.
5
<PAGE>
6.5 Effect of Termination. Upon the termination of Employee's
---------------------
employment hereunder or the expiration or termination of the Agreement, (a)
Company shall pay Employee all compensation accrued and outstanding as of the
date of such termination or expiration, and (b) notwithstanding anything to the
contrary contained herein, the rights and obligations of each party under
Paragraphs 4, 5 and 8 herein shall survive such termination or expiration.
7. EMPLOYEE'S REPRESENTATIONS. As an inducement for Company to
--------------------------
execute this Agreement, Employee represents and warrants to Company that the
negotiation, execution and delivery of this Agreement by Employee together with
the performance of his obligations hereunder does not breach or give rise to a
breach under any employment, confidentiality, non-disclosure, non-competition or
any other agreement, written or oral, to which Employee is a party.
8. EQUITABLE REMEDIES.
------------------
8.1 Injunctive Relief. Employee acknowledges and agrees that
----------------
the covenants set forth in Paragraphs 4 and 5 herein are reasonable and
necessary for protection of Company's business interests, that irreparable
injury will result to Company if Employee breaches any of the terms of said
covenants and that, in the event of Employee's actual or threatened breach of
said covenants, Company will have no adequate remedy at law. Employee
accordingly agrees that in the event of actual or threatened breach of any of
such covenants, Company shall be entitled to immediate injunctive and other
equitable relief, without bond and without the necessity of showing actual
monetary damages. Nothing contained herein shall be construed as prohibiting
Company from pursuing any other remedies available to it for such breach or
threatened breach, including the recovering of any damages which it is able to
prove. Each of the covenants in Paragraphs 4 and 5 shall be construed as
independent of any other covenants or provisions of this Agreement. In the event
of any judicial determination that any of the covenants set forth in Paragraphs
4 and 5 herein or any other provisions of the Agreement are not fully
enforceable, it is the intention and desire of the parties that the court treat
said covenants as having been modified to the extent deemed necessary by the
court to render them reasonable and enforceable and that the court enforce them
to such extent.
8.2 Specific Enforcement. Employee agrees and acknowledges that
--------------------
he is obligated under this Agreement to render services of a special, unique,
unusual, extraordinary and intellectual character, thereby giving this Agreement
peculiar value, so that the loss thereof could not be reasonable or adequately
compensated in damages in an action at law. Therefore, in addition to other
remedies provided by law, Company shall have the right, during the term of this
Agreement, to obtain specific performance hereof by Employee and to obtain
injunctive relief against the performance of service elsewhere by Employee
during the term of this Agreement.
6
<PAGE>
9. GENERAL.
-------
9.1 Entire Agreement. This Agreement contains the entire
----------------
understanding between the parties hereto and supersedes all other oral and
written agreements or understandings between them, including but not limited to
that certain Employment Agreement dated March 1, 1993.
9.2 Amendment. This Agreement may not be modified, amended,
---------
altered or supplemented except by written agreement between Employee and
Company.
9.3 Counterparts. This Agreement may be executed in two (2) or
------------
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
9.4 Jurisdiction. Each party hereby consents to the exclusive
------------
jurisdiction of the state and federal courts sitting in Los Angeles County,
California, in any action on a claim arising out of, under or in connection with
this Agreement or the transactions contemplated by this Agreement. Each party
further agrees that personal jurisdiction over him may be effected by service of
process by registered or certified mail addressed as provided in Section 9.9
herein, and that when so made shall be as if served upon him personally within
the State of California.
Employee hereby waives any and all rights that Employee may have
to request and/or demand a jury trial.
9.5 Expenses. In the event an action in law or in equity is
--------
required to enforce or interpret the terms and conditions of this Agreement, the
prevailing party shall be entitled to reasonable attorney's fees and costs in
addition to any other relief to which that party may be entitled.
9.6 Interpretation. The headings herein are inserted only as a
--------------
matter of convenience and reference, and in no way define, limit or describe the
scope of this Agreement or the intent of any provisions thereof. No provision
of this document is to be interpreted for or against any party because that
party or party's legal representative drafted it.
9.7 Successors and Assigns. This Agreement shall be binding
----------------------
upon, and inure to the benefit of, the parties hereto and their heirs,
successors, assigns and personal representatives. As used herein, the
successors of Company shall include, but not be limited to, any successor by way
of merger, consolidation, sale of all or substantially all of its assets or
similar reorganization. In no event may Employee assign any rights or duties
under this Agreement.
9.8 Controlling Law; Severability. The validity and
-----------------------------
construction of this Agreement or of any of its provisions shall be determined
under the laws of the State of California.
7
<PAGE>
Should any provision of this Agreement be invalid either due to the duration
thereof or the scope of the prohibited activity, such provision shall be limited
by the court to the extent necessary to make it enforceable and, if invalid for
any other reason, such invalidity or unenforceability shall not affect or limit
the validity and enforceability of the other provisions hereof.
9.9 Notices. Any notice required or permitted to be given under
-------
this Agreement shall be sufficient if in writing and if personally received by
the party to whom it is sent or delivered, or if sent by registered or
certified mail, postage prepaid, to Employee's residence in the case of notice
to Employee, or to its principal office if to Company. A notice is deemed
received or delivered on the earlier of the day received or three (3) days
after being sent by registered or certified mail in the manner described in
this Section.
9.10 Waiver of Breach. The waiver by any party hereto of a
----------------
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EMPLOYER
By: /s/ Deepak Chopra
----------------------------------------
Its: Chief Executive Officer
----------------------------------------
EMPLOYEE
/s/ Andreas F. Kotowski
--------------------------------------------
ANDREAS F. KOTOWSKI
8