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Exhibit (10)(m)
NON-COMPETE AGREEMENT
This AGREEMENT (the "Agreement") dated August 29, 2000 (the "Effective Date") by
and between Richard Schaub, Jr. (the "Executive") and The First Years Inc., a
Massachusetts corporation and its subsidiaries (together called the "Company").
In consideration of the employment of the Executive by the Company and the
payments and benefits to be provided by the Company to the Executive under this
agreement, as well as the Executive's entering into a Change of Control
Agreement with the Company on this date and the mutual promises and the
respective covenants and agreements of the parties herein contained, the parties
hereto agree as follows:
1. DEFINITIONS.
The terms "Accrued Obligation", "Cause", "Change of Control", "Date of
Termination", Disability", and "Notice of Termination" are defined in
Exhibit A attached hereto and incorporated herein by reference.
2. EMPLOYMENT STATUS.
The parties acknowledge that this Agreement does not constitute an
employment contract or impose on the Company any obligation to retain
the Executive as an employee; that such relationship is on an at-will
basis; and that this Agreement also does not prevent the Executive from
terminating his employment at any time.
3. TERMINATION BY THE EXECUTIVE.
If the Executive terminates his employment for any reason, he agrees to
give Notice of Termination to the Chief Executive Officer of the
Company at least sixty (60) days prior to the Date of Termination.
4. NON-COMPETITION AND NON-SOLICITATION.
(a) The Executive agrees that if his employment is terminated
prior to the occurrence of a Change of Control by the Company
for any reason other than
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for Cause or Disability, or by the Executive for any reason,
then for a period of one (1) year following the Date of
Termination he shall not (i) directly or indirectly, whether
as owner, partner, shareholder, agent, consultant,
co-venturer, employee or otherwise, or through any person as
hereafter defined, engage in the business of developing or
selling products which are competitive with the products that
on the Date of Termination of his employment are being sold or
under development by the Company in any of the countries in
which the Company is doing business on the Date of
Termination; or (ii) employ, recruit, or otherwise solicit or
induce any employee, agent, distributor, supplier, customer,
or consultant of the Company to terminate their employment or
otherwise cease their relationship with the Company.
(b) Section 4(a) shall not bind the Executive following the
termination of the Executive's employment if a Change of
Control occurs after the Date of Termination of his employment
during the one (1) - year period referenced in Section 4(a).
(c) For purposes of Section 4(a), the term "Person" shall mean an
individual, a corporation, an association, a partnership, an
estate, a trust, and any other entity or organization.
(d) In the event that any provision of this Section 4 is
determined by any court of competent jurisdiction to be
unenforceable by reason of its extending for too great a
period of time, or over too great a range of activities, it
shall be interpreted to extend only over the maximum period of
time, or range of activities, as to which it may be
enforceable.
(e) If the Executive's employment is terminated by the Executive
for any reason prior to the occurrence of a Change of Control,
the Company may, in its sole discretion, choose to enforce or
not enforce the non-compete provision in Section 4(a); and in
the event the Company chooses to enforce such non-compete
provision, the Company will provide the Termination Benefits
set forth in Section 5(a).
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5. TERMINATION OF EXECUTIVE'S EMPLOYMENT AND SEVERANCE PAYMENTS PRIOR TO
A CHANGE OF CONTROL.
(a) TERMINATION BENEFITS.
In consideration of the Executive's agreement not to compete,
not to solicit or hire, to maintain the Confidential
Information in confidence, to cooperate, and such other
agreements set forth in Sections 4 and 6, the Company agrees
that in the event the Executive's employment is terminated
prior to the occurrence of a Change of Control by the Company
for any reason other than for Cause or Disability, then the
Company will provide the Executive, in addition to the Accrued
Obligation as defined in Exhibit A, the following payments and
benefits ("Termination Benefits"):
(i) The Executive's base salary then in effect for a one
(1)-year period following the Date of Termination (to
be paid in twelve (12) equal monthly installments),
reduced by the amount, if any, that the Executive
earns from any other new employment or
self-employment during such one (1) year period (the
"Severance Payments"); and
(ii) For a one (1)-year period following the Date of
Termination (the "Termination Benefits Period") the
benefits then in effect for executive officers of the
Company other than any cash-based or equity-based
incentive compensation or bonus plans (the "Employee
Benefits"); provided, however, that such Employee
Benefits shall cease within five (5) business days of
the commencement of any new employment or
self-employment during the Termination Benefits
Period; and provided further that the Executive
continues to comply with his obligations under
Sections 4 and 6 set forth herein.
(b) COMPANY' DISCRETION TO ENFORCE NON-COMPETE.
If the Executive's employment is terminated by the Executive
for any reason prior to the occurrence of
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a Change of Control, the Company may, in its sole discretion,
choose to enforce or not to enforce the non-compete provision
set forth in Section 4(a) for a period of twelve (12) months
after the Executive's employment is terminated. If the Company
chooses to enforce Section 4(a) after the Executive
terminates his employment with the Company prior to a Change
of Control, the Company shall continue to pay and provide to
the Executive the Severance Payments for a one (1) year period
following the Date of Termination, reduced by the amount, if
any, that the Executive earns from any other new employment or
self-employment during such one (1) year period, and the
Employee Benefits; provided, however, that the Employee
Benefits shall cease within five (5) business days of the
commencement of any new employment or self-employment during
such one (1) year period and provided further that the
Executive continues to comply with his obligations under
Section 4(a) set forth above. Nothing in this Section 5(b)
shall limit the provisions of Section 7.
(c) EXECUTIVE'S OBLIGATION TO GIVE NOTICE OF NEW EMPLOYMENT.
The Executive shall be obligated to give prompt notice, within
five (5) business days of the date of commencement of any
employment or self-employment during the Termination Benefits
Period, and shall respond promptly to any reasonable inquiries
concerning any employment or self-employment in which the
Executive engages during the Termination Benefits Period,
including the compensation and benefits payable to the
Executive from any new employment or self-employment.
(d) TERMINATION FOR CAUSE, DISABILITY, OR BY THE EXECUTIVE PRIOR
TO A CHANGE OF CONTROL.
In the event the Company terminates the Executive's employment
for Cause or Disability or the Executive terminates his
employment for any reason prior to the occurrence of a Change
of Control, and the Company chooses not to enforce the
non-competition provision in Section 4(a), the Company shall
not have any further obligations under this Agreement
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other than the obligation to pay the Accrued Obligation as
defined in Exhibit A within ten (10) days of the Date of
Termination, and any post-employment benefits to which the
Executive is entitled under the terms of the Company's
employee benefits plan.
6. CONFIDENTIAL INFORMATION.
(a) CONFIDENTIAL INFORMATION. As used in this Agreement,
"Confidential Information" means information belonging to the
Company which is of value to the Company in the course of
conducting its business and the disclosure of which could
result in a competitive or other disadvantage to the Company.
Confidential Information includes, without limitation,
financial information, reports and forecasts, inventions,
improvements, and other intellectual property; trade secrets,
know-how, designs, processes or formulae; software, market or
sales information or plans; customer lists and business plans,
prospects and opportunities (such as possible acquisitions or
dispositions of businesses or facilities) which have been
discussed or considered by the management of the Company.
Confidential Information includes information developed by the
Executive in the course of the Executive's employment by the
Company; as well as other information to which the Executive
may have access in connection with the Executive's employment.
Confidential Information also includes the Confidential
Information of others with whom the Company has a business
relationship. Notwithstanding the foregoing, Confidential
Information does not include information in the public domain,
unless due to breach of the Executive's duties under this
Section 6(a).
(b) CONFIDENTIALITY. The Executive understands and agrees that the
Executive's employment creates a relationship of confidence
and trust between the Executive and the Company with respect
to all Confidential Information. At all times, both during the
Executive's employment with the Company and for a period of
one (1) year after termination of the Executive's employment,
the Executive will keep in confidence and trust all such
Confidential
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Information and will not use or disclose any such Confidential
Information without the written consent of the Company, except
as may be necessary in the ordinary course of performing the
Executive's duties to the Company.
(c) INVENTIONS. The Executive agrees that he will communicate to
the Company promptly and fully all discoveries, improvements,
and inventions (hereinafter called "inventions") and all
writings, drawings, and other works of authorship (hereinafter
called "works of authorship") made or conceived or created or
authored by him (either solely or jointly with others) during
his employment and, as to inventions, for six months
thereafter, which are along the lines of the actual or
anticipated business, work, or investigations of the Company
or which result from or are suggested by any work he may do
for the Company; and such inventions, whether patented or not,
and works of authorship and any copyrights therein, arising
from his employment shall be and remain the sole and exclusive
property of the Company or its nominees. The Executive agrees
to keep and maintain adequate and current written records of
all such inventions and works of authorship, in the form of
notes, drafts, layouts, sketches, drawings, reports and the
like relating thereto, which records shall be and remain the
property of and available to the Company at all times. The
Executive agrees that he will, during and after his employment
with the Company, without charge to the Company, but at its
request and expense, assist the Company and its nominees in
every proper way to obtain and vest in it or them title to,
and to maintain and support the validity of, patents and
copyrights on the inventions and works of authorship referred
to above, in all countries, by executing all necessary or
desirable documents, including applications for patents and
copyrights, assignments thereof, assignments of priority
rights thereof and such other lawful documents as may be
requested.
(d) REASONABLE IN SCOPE. The Executive understands that the
restrictions set forth in this Section 6 are intended to
protect the Company's interest in the Confidential Information
and established employee,
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customer, and supplier relationships and goodwill, and agrees
that such restrictions are reasonable and appropriate for this
purpose.
(e) DOCUMENTS, RECORDS, ETC. All documents, records, data,
apparatus, equipment and other physical property whether or
not pertaining to Confidential Information, which are
furnished to the Executive by the Company, or are produced by
the Executive in connection with the Executive's employment,
will be and remain the sole property of the Company. The
Executive will return to the Company all such materials and
property as and when requested by the Company; in any event,
the Executive will return all such materials and property
immediately upon termination of the Executive's employment for
any reason. The Executive will not retain with the Executive
any such material or property or any copies thereof after such
termination.
(f) LITIGATION AND REGULATORY COOPERATION.
During and after the Executive's employment, the Executive
shall cooperate fully 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 the Executive was employed by the Company. The
Executive's full 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 the Executive's employment,
the 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 the Executive was employed by the Company. The Company
shall reimburse the Executive for any reasonable out-of-pocket
expenses incurred after the Executive's Employment; the
Company shall reimburse the Executive for any reasonable
out-of-pocket expenses and at a rate of $700 per half day of
the time spent in
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the performance of the Executive's obligations under this
Section 6(f).
7. INJUNCTIONS.
The Executive agrees that it would be difficult to measure any damages
caused to the Company which might result from any breach by the
Executive of the promises set forth in Sections 4 and 6, and that in
any event, money damages would be an inadequate remedy for any such
breach. Accordingly, subject to Sections 4 and 6 of this Agreement, the
Executive agrees that if the Executive breaches, or proposes to breach,
any portion of this Agreement, the Company shall be entitled, in
addition to all other remedies that it may have, to an injunction or
other appropriate equitable relief to restrain any such breach without
showing or proving any actual damages to the Company.
8. ASSIGNMENT BY EXECUTIVE.
This Agreement is personal to the Executive and, without the prior
written consent of the Company, shall not be assignable by the
Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
9. SUCCESSORS AND ASSIGNS OF THE COMPANY.
The rights and obligations of the Company under this Agreement shall
inure to the benefit of and shall be binding upon the successors and
assigns of the Company, including without limitation, any corporation,
individual or other person or entity which may acquire all or
substantially all of the assets and business of the Company, or with or
into which the Company may be consolidated or merged, or any surviving
corporation in any merger involving the Company. All references in this
Agreement to the Company shall be deemed to include all such successors
and assigns.
10. ARBITRATION OF DISPUTES.
(a) All controversies, claims, or disputes arising out of or
relating to this Agreement, or the breach thereof ("disputes")
shall be resolved by mutual
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agreement of the Executive and the Board, acting by majority
vote. In the event the Executive and the Board fail to resolve
a dispute by mutual consent within thirty (30) days after a
notice of dispute has been received by one party from the
other, then such dispute shall be settled by arbitration
administered by the American Arbitration Association ("AAA")
in accordance with its Commercial Arbitration Rules.
(b) The arbitration shall be conducted in Boston, Massachusetts,
by a panel of three arbitrators with one arbitrator to be
selected by each party (the "appointed arbitrators"), and the
third arbitrator to be selected by mutual agreement of the two
appointed arbitrators from a list provided by the AAA, or
otherwise (the "third arbitrator"). If the parties fail to
agree on the third arbitrator within thirty (30) days of their
appointment, then the two appointed arbitrators shall request
the AAA to appoint the third arbitrator. All disputes shall be
resolved by a majority vote of such three arbitrators.
(c) Each party shall pay and be responsible for (i) its own
attorney's fees and costs; (ii) the expenses of the arbitrator
selected by such party; and (iii) the expenses of its own
witnesses. The expenses of the third arbitrator and all other
expenses of arbitration shall be borne equally by the parties
unless a majority of the three arbitrators agree that the
position of either party with respect to a particular dispute
was without a substantial basis, in which event such expenses
shall be assessed entirely against such party, and each party
shall bear the expenses of its own respective arbitrator. The
parties agree that the arbitrators shall not be permitted to
award punitive damages.
(d) Any judgment upon the award rendered by the arbitrators shall
be final and binding on the parties and may be entered in any
court having jurisdiction thereof.
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11. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Massachusetts, without reference to its principles of
conflicts of law. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect.
This Agreement may not be amended, modified, repealed, waived,
extended or discharged except by an agreement in writing
signed by the party against whom enforcement of such
amendment, modification, repeal, waiver, extension or
discharge is sought. No person, other than pursuant to a
resolution of the Board of Directors, shall have authority on
behalf of the Company to agree to amend, modify, repeal,
waive, extend or discharge any provision of this Agreement or
take any other action in respect thereto.
(b) NOTICES. All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt
requested, postage prepaid, addressed to the Company's
headquarters and, in the case of the Executive, to the address
on the signature page of this Agreement or, in either case, to
such other address as any party shall have subsequently
furnished to the other parties in writing. Notice and
communications shall be effective when actually received by
the addressee.
(c) SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) TAXES. The Company may withhold from any amounts due and
payable under this Agreement such federal, state or local
taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
(e) NO WAIVER. Any party's failure to insist upon strict
compliance with any provision hereof or the
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failure to assert any right such party may have hereunder
shall not be deemed to be a waiver of such provision or right
or any other provision or right of this Agreement.
(f) ENTIRE AGREEMENT; SURVIVAL. This Agreement entered into as of
the date hereof between the Company and the Executive contains
the entire agreement of the Executive and the Company with
respect to the subject matter of the Agreement, and all
promises, representations, understandings, arrangements and
prior agreements, whether in writing or otherwise, are merged
into, and superseded by, this Agreement. Any provision hereof
which by its terms applies in whole or part after a
termination of the Executive's employment hereunder shall
survive such termination.
IN WITNESS WHEREOF, the Executive has executed this Agreement and, pursuant to
due authorization from its Board of Directors, the Company has caused this
Agreement to be executed as of the day and year first above written.
THE FIRST YEARS INC.
/s/ Richard F. Schaub, Jr. By: /s/ Ronald J. Sidman
- --------------------------------- --------------------------------
Richard Schaub, Jr. Name: Ronald J. Sidman
Title: President and CEO
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EXHIBIT A.
DEFINITIONS
1. ACCRUED OBLIGATION.
The Company shall pay to the Executive (or in the event of his death,
his legal representative) a lump sum amount in cash equal to the sum of
(a) the Executive's base salary through the Date of Termination to the
extent not theretofore paid; and (b), any accrued vacation pay and any
other amounts due the Executive as of the date of Termination, in each
case to the extent not theretofore paid.
2. CAUSE.
"Cause" shall mean (i) the willful and continued failure by the
Executive to substantially perform the Executive's duties with the
Company (other than any such failure resulting from the Executive's
incapacity due to physical or mental illness) after a written demand
for substantial performance is delivered to the Executive by the Chief
Executive Officer of the Company ("CEO"), which demand specifically
identifies the manner in which the CEO believes that the Executive has
not substantially performed the Executive's duties; (ii) the willful
commission of any fraud, misappropriation, or any other misconduct
which is demonstrably and materially injurious to the Company,
monetarily or otherwise, including a breach of Section 4 or 6 of this
Non-compete Agreement; or (iii) conviction of a felony. For purposes of
clauses (i) and (ii) of this definition, no act, or failure to act, on
the Executive's part, shall be deemed "willful" unless done, or omitted
to be done, by the Executive not in good faith and without reasonable
belief that the Executive's act, or failure to act, was in the best
interest of the Company.
3. CHANGE OF CONTROL.
A "Change of Control" shall be deemed to have occurred if the event set
forth in any one of the following paragraphs shall have occurred:
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(a) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities
acquired directly from the Company) representing 25% or more
of the combined voting power of the Company's then outstanding
securities, excluding any Person who becomes such a Beneficial
Owner in connection with a transaction described in clause (i)
of paragraph (c) below; or
(b) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals
who, on the date hereof, constitute the Board of Directors and
any new director (other than a director whose initial
assumption of office is in connection with an actual or
threatened election contest), whose appointment or election by
the Board was approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved
or recommended; or
(c) there is consummated a merger or consolidation of the Company
with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of
the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity or any parent thereof) at least 60% of
the combined voting power of the securities of the Company or
such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation; or (ii) a
merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not including in
the securities beneficially owned by such Person any
securities acquired directly from the Company) representing
25% or more of the
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combined voting power of the Company's then outstanding
securities; or
(d) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition of the
Company of all or substantially all of the Company's assets,
other than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity, at
least 60% of the combined voting power of the voting
securities of which are owned by stockholders of the Company
in substantially the same proportions as their ownership of
the Company immediately prior to such sale.
For purposes of this definition, "Beneficial Owner" shall have the
meaning set forth in Rule 13d-3 under the Exchange Act; "Exchange Act"
shall mean the Securities Exchange Act of 1934, as amended from time to
time; and "Person" shall have the meaning given in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (i) the Company or any
of its subsidiaries; (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
"affiliates" within the meaning set forth in Rule 12b-2 promulgated
under Section 12 of the Exchange Act; (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities; or (iv)
a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company.
4. DATE OF TERMINATION.
"Date of Termination" means (i) if the Executive's employment is
terminated by the Executive for any reason, sixty (60) days after
Notice of Termination is given; (ii) if the Executive's employment is
terminated by the Company, the date on which the Company notifies the
Executive of such termination (except in the event of a termination for
Cause); (iii) if the Executive's employment is terminated for
Disability, the date of receipt of the Notice of Termination; and (iv)
if the Executive's employment is terminated by reason of death, the
date of death.
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5. DISABILITY.
"Disability" shall be deemed to occur if, as a result of the
Executive's incapacity due to physical or mental illness, (i) the
Executive shall have been absent from the full-time performance of his
duties with the Company for a period of ninety (90) consecutive
calendar days; and (ii) the Company shall have given the Executive a
Notice of Termination for Disability.
6. NOTICE OF TERMINATION.
Any termination by the Company or by the Executive shall be
communicated by Notice of Termination to the other party hereto given
in accordance with Section 11(b) of this Agreement. For purposes of
this Agreement, a "Notice of Termination" means a written notice which
(i) indicates the specific termination provision in this Agreement,
relied upon; (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated; and (iii) if the Date of Termination is other than the date
of receipt of such notice, specifies the termination date which date
shall be not more than thirty (30) days after the giving of such notice
(but at least sixty (60) days in the case of termination of employment
by the Executive for any reason.) A Notice of Termination for Cause is
required to include a good faith opinion of the Chief Executive Officer
of the Company (the "CEO") that the Executive was guilty of conduct set
forth in clauses (i) or (ii) of the definition of Cause herein, and
specifying the particulars thereof in detail.
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