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EXHIBIT 10.12
INCENTIVE AGREEMENT
This INCENTIVE AGREEMENT (this "AGREEMENT"), dated as of
March 21, 1996, is made by and between Nashua Corporation, a Delaware
corporation, with its principal place of business located in Nashua,
New Hampshire ("NASHUA") and David A. Peterson, an individual
residing at 45 Glenn Drive, Rt #1, White Heath, IL 61884 (the
"EXECUTIVE").
WHEREAS, the Executive is employed on the date hereof as Chief
Executive Officer and President of Cerion Technologies Inc., a
Delaware corporation with its principal place of business located in
Champaign, Illinois ("CERION");
WHEREAS, Cerion was established on December 31, 1995 as a
wholly-owned subsidiary of Nashua, to assume the operations of
Nashua's Precision Technologies division;
WHEREAS, Nashua and Cerion intend to sell shares of Common Stock
of Cerion in an underwritten public offering (the "OFFERING");
WHEREAS, in the event that Nashua and Cerion are unable or
unwilling to complete the Offering for any reason, Nashua may pursue
the private sale of Cerion as a going concern to a third party;
WHEREAS, Nashua believes that the Executive's participation in
the management of Cerion is important to the success of any such
proposed private sale, and is accordingly prepared to offer the
Executive certain incentives to encourage the Executive to retain his
current position with Cerion until the time of any such private sale;
and
WHEREAS, in consideration of the promises and covenants set forth
below Nashua and the Executive desire to enter into an Incentive
Agreement, on the terms and subject to the conditions set forth below;
NOW, THEREFORE, it is hereby agreed as follows:
Section 1. DEFINITIONS. For the purposes of this Agreement:
(a) the term "AFFILIATE" shall mean, with respect to a
specified Person, any Person that directly or indirectly controls, is
controlled by or is under common control with, the specified Person;
(b) the term "DISK BUSINESS" shall mean the manufacture,
processing or sale of substrates for disks used in the hard disk
drives of computers, network servers or storage devices and substrates
for organic photoconductor drums;
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(c) the term "PERSON" shall mean any individual,
corporation, association, partnership (general or limited), joint
venture, trust, estate, limited liability company, or other legal
entity or organization, and any government or subdivision thereof
or any governmental or regulatory agency;
(d) the term "RESTRICTED PERIOD" shall mean the period from
the date hereof until the first to occur of (i) the date two years
after the termination or expiration of the Executive's employment with
Cerion, and (ii) the date of completion of an Offering; and
(e) the term "SALE" shall mean, with respect to Cerion, the
sale, disposal or other transfer of all or substantially all of the
assets or capital stock of Cerion to, or the merger of Cerion with,
any Person which at the time of such sale, disposal, other transfer or
merger is not an Affiliate of Nashua. In no event shall the term
"Sale" include the sale of Cerion Common Stock in any Offering.
Section 2. INCENTIVE PAYMENT. If the Executive shall
continue to be employed by Cerion in the capacity he has as of the
date of this Agreement, or in any capacity with similar duties,
responsibilities and compensation in the management of Cerion, and
such employment continues through and including the date of
completion of any Sale of Cerion, then Nashua agrees to pay to the
Executive an incentive payment in an aggregate amount calculated by
multiplying the Executive's base salary for 1996 ($160,000) by 3
(the "Incentive Payment"). The Incentive Payment shall be payable 50%
immediately following the date of completion of any Sale of Cerion,
with the balance due and payable twelve months after the date of
completion of such a Sale. In any case of a conditional Sale or a
Sale for which any portion of the consideration or purchase price is
deferred or is to be delivered at a later date than the "closing" of
such Sale, then the actual date of completion of such a Sale of
Cerion shall, for the purposes of this Agreement, be as reasonably
determined by Nashua under the circumstances, taking into
consideration the time at which substantially all of the
bargained-for consideration in such Sale shall have been received
by Nashua, and Nashua may, in such circumstances, elect to make the
foregoing Incentive Payment in such installments as Nashua may deem
appropriate.
Section 3. EXECUTIVE'S EMPLOYMENT PROTECTION. In the event
that, within twelve (12) months after any Sale of Cerion, the
employment of the Executive with Cerion (or its successor) is
involuntarily terminated by the employer (other than for cause),
and Nashua shall not, within a reasonable period of time thereafter,
have offered employment to the Executive in a position with Nashua or
any Affiliate of Nashua with similar duties, responsibilities and
compensation to that held by the Executive immediately prior to such
termination, then Nashua agrees promptly to pay to the Executive an
additional payment in an amount equal to the Executive's base salary
for 1996; PROVIDED, however, that Nashua shall make no payment,
which, when aggregated with other payments hereunder, would constitute
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an "excess parachute payment" within the meaning of Section 280G of
the Internal Revenue Code of 1986 or any successor provision.
Section 4. TERMINATION OF OBLIGATIONS. Upon the first to
occur of (i) the completion of an Offering and (ii) December 31, 1996,
all obligations of Nashua to pay any amount to the Executive under
this Agreement shall immediately terminate and be of no further
effect. All obligations of the Executive pursuant to section 5 below
shall terminate upon the completion of an Offering, and this Agreement
shall thereupon be canceled in its entirety without any requirement
of notice to or consent of any party.
Section 5. NON-COMPETITION, NON-SOLICITATION, INVENTIONS AND
CONFIDENTIALITY.
Section 5.1. NON-COMPETITION. The parties hereto recognize
and agree that the services of the Executive are special and unique
and that he has special fiduciary duties to Cerion as its Chief
Executive Officer and President, and that for these reasons a
covenant on the part of the Executive not to compete during his
employment by Cerion, and for a reasonable period after the
termination or expiration of such employment, is essential to protect
the value of Cerion to Nashua. Accordingly, and in consideration for
$1.00 and Nashua's covenants and agreements set forth herein and other
good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Executive agrees that for the Restricted
Period, neither the Executive nor any person or entity controlled,
directly or indirectly, by the Executive, whether individually or as
an officer, director, employee, consultant, partner or owner of more
than one percent of the equity interest in any corporation or other
entity, shall, directly or indirectly (i) in the United States,
Canada, United Kingdom, Western Europe, Eastern Europe, or the Far
East, engage in, or render any services in connection with, any
business that is competitive, directly or indirectly, with the
businesses (including without limitation the Disk Business) carried on
by Cerion at or prior to the termination or expiration of the
Executive's employment by Cerion, or (ii) interfere with the business
relationships (whether formed heretofore or hereafter) between Cerion
and any of its customers and suppliers.
Section 5.2 NON-SOLICITATION. During the Restricted Period,
neither the Executive nor any person or entity controlled, directly or
indirectly, by the Executive shall, directly or indirectly, hire,
retain (including as a consultant), solicit or encourage to leave the
employment of Cerion, any employee of Cerion, or hire or retain any
former employee of Cerion (including, for the purposes of this section
5.2, any former employee of the Precision Technologies division of
Nashua) who has left such employment within one year prior to such
hiring or retention.
Section 5.3 INVENTIONS; ASSIGNMENT. All rights to
discoveries, inventions, improvements and innovations (including all
data and records pertaining thereto) which relate to the business of
Cerion whether or not patentable, copyrightable or reduced to writing
which
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the Executive may discover, invent or originate during the Restricted
Period either alone or with others and whether or not during working
hours or by the use of the facilities of Cerion ("INVENTIONS"), shall
be the exclusive property of Cerion. The Executive shall promptly
disclose all Inventions to Cerion. Whether during the term of this
Agreement or thereafter, the Executive shall execute at the request of
Cerion any assignments or other documents Cerion may deem necessary to
protect or perfect its rights in any Inventions, and shall assist
Cerion, at Cerion's expense, in obtaining, defending and enforcing
Cerion's rights therein. The Executive hereby appoints Cerion as his
attorney-in-fact to execute on his behalf any assignments or other
documents deemed necessary by Cerion to protect or perfect its rights
to any Inventions.
Section 5.4 CONFIDENTIAL INFORMATION. (a) During and after
the period of his employment by Cerion, the Executive and any person
or entity controlled directly or indirectly by the Executive shall
maintain in confidence and shall not directly or indirectly,
disclose, sell, use, publish, make copies of, or communicate to any
person, firm, or corporation any confidential information, trade
secrets or proprietary data of Cerion of which he leams or learned
or to which he has or had access during the course of the Executive's
employment by Cerion (which, for the purpose of this section 5.4,
shall be deemed to include the Precision Technology division of
Nashua prior to the establishment of Cerion).
(b) For purposes of this section 5.4, "confidential
information, trade secrets or proprietary data" means any information
concerning any matters affecting or relating to the business of
Cerion, including but without limiting the generality of the
foregoing, any inventions, improvements, and enhancements (whether
patentable or not); patents or patent applications; any protectable
technology, know-how and copyrightable material; trade secrets,
including any formulas, patterns, devices, machines, processes,
compilations of information, or expenditures of time or money; product
designs and development; research reports, market studies and plans;
customer lists; the prices Cerion obtains or has obtained from the
sale of, or at which it sells or has sold, its products or services;
estimates, bids, and projections; or any other information concerning
the business of Cerion, its manner of operation, its plans, policies,
processes, strategies, or other data, and including any information as
to the existence or terms and provisions of this Agreement, without
regard to whether any or all of the foregoing are or would be deemed
confidential, material, or important, the parties hereto stipulating
that, as between them, the same are confidential, material and
important, and gravely affect the effective and successful conduct of
Cerion's business and Cerion's goodwill, and that any breach of the
terms of this section 5.4 shall be a material breach of this Agreement
and will result in immediate and irreparable harm to Cerion; provided
that nothing shall be considered "confidential information, trade
secrets or proprietary data" which is or becomes known to the public
by acts of others (other than other signatories to this type of
agreement with Cerion) or through the normal or other authorized
course of operation of Cerion.
(c) All memoranda, notes, lists, records and other
documents (and all copies thereof) made or compiled by the Executive
or any person or entity controlled, directly or indirectly, by the
Executive or made available to the Executive or any person or entity
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controlled, directly or indirectly, by the Executive concerning the
business of Cerion or any of its Affiliates shall be Cerion's property
and shall be delivered to Cerion promptly upon the termination of the
Executive's employment by Cerion.
Section 5.5. ASSIGNMENT. The benefits of the Executive's
agreements and covenants in this section 5 may be assigned without
notice to or consent of the Executive to any acquiror of Cerion or all
or substantially all of the assets in a Sale, and the Executive hereby
unconditionally and irrevocably consents to any such assignment and
furthermore agrees to be bound by the provisions of this section 5
notwithstanding any Sale of Cerion, or any assignment of the benefits
of this section 5 in connection with any such sale.
Section 6. GENERAL.
(a) NOTICES. All notices and other communications hereunder
shall be in writing or by written telecommunication, and shall be
deemed to have been duly given if delivered personally or if mailed by
certified or registered first-class mail, postage prepaid and return
receipt requested, sent by facsimile or delivered by established
overnight courier service to the relevant address set forth below, or
to such other address as the recipient of such notice or communication
shall have specified to the other party hereto in accordance with this
section 6(a):
If to Nashua, to:
Nashua Corporation
44 Franklin Street
Nashua, New Hampshire 03061-2002
Attention: President
Fax: 603-880-2747
If to the Executive, to:
David A. Peterson
45 Glenn Drive, Rt #1
White Heath, IL61884
Any such notice will be deemed to have been duly given or made
and to have become effective (i) if delivered by hand or facsimile to
the party to which it is directed, at the time of the receipt thereof
or the sending of such facsimile, (ii) if sent by overnight courier,
on the business day next following dispatch thereof, and (iii) if sent
by certified or registered mail, on the fifth business day following
the mailing thereof.
(b) EQUITABLE REMEDIES. it is recognized by the parties
hereto that damages for breaches of covenants of the nature contained
in this Agreement are difficult if not
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impossible to prove precisely; therefore, it is agreed that of this
Agreement shall be enforceable by injunction. If any of the
restrictions contained in this Agreement hereof shall be deemed to be
unenforceable by reason of the extent, duration or geographical scope
or other provisions hereof, then the parties hereto contemplate that
the court or other body having jurisdiction over the matter shall
reduce such extent, duration, geographical scope or other provision
hereof and enforce the affected provisions of this Agreement in
reduced form for all purposes in the manner contemplated hereby, and
the parties hereto agree that such provisions of this Agreement, as so
modified, shall be valid and binding as though any unenforceable
provision had not been included therein.
(c) SEVERABILITY. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect under any
law, the validity, legality and enforceability of the remaining
provisions hereof shall not in any way be affected or impaired.
(d) WAIVERS. No delay or omission by either party hereto in
exercising any right, power or privilege hereunder shall impair such
right, power or privilege, nor shall any single or partial exercise of
any such right, power or privilege preclude any further exercise
thereof or the exercise of any other right, power or privilege.
(e) COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(f) ASSIGNS. The rights and obligations of the parties
hereto shall inure to the benefit of, and shall be binding upon, the
successors and assigns of each of them; provided, however, that the
Executive acknowledges that the services to be rendered in connection
with this Agreement by him are unique and personal. Accordingly, the
Executive shall not, during the continuance of this Agreement, assign
this Agreement without the prior written consent of Nashua.
(g) ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties, supersedes all prior agreements and
understandings relating to the subject matter hereof, and shall not be
amended except by a written instrument hereafter signed by each of the
parties hereto.
(h) SURVIVAL. The termination of this Agreement shall not
affect the obligations of any party hereunder which by their terms are
to be continued for any period after the termination of this Agreement.
(i) GOVERNING LAW. This Agreement and the performance hereof
shall be construed and governed in accordance with the laws of the
State of New Hampshire.
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(j) JURISDICTION. The parties hereby agree that any action
for the enforcement or interpretation of any provision of this
Agreement will be brought in the courts of the State of New Hampshire
or any Federal court sitting therein, and each party hereby consents
to the exclusive jurisdiction of such court and waives any objections
that it may now or hereafter have to the venue of any such action or
any such court or that such action is brought in an inconvenient forum.
Each of the parties hereby consents to the service of process being
made upon such party at its address specified in section 6(a) above.
(k) WAIVER OF JURY. TRIAL, ETC. The Executive hereby waives
his right to a jury trial with respect to any action or claim arising
out of any dispute in connection with this Agreement, any rights or
obligations hereunder or thereunder or the performance of such rights
and obligations. Except as prohibited by law, the Executive hereby
waives any right he may have to claim or recover in any litigation
referred to in the preceding sentence any special, exemplary, punitive
or consequential damages or any damages other than, or in addition to,
actual damages. The Executive (i) certifies that no representative,
agent or attorney of Nashua has represented, expressly or otherwise,
that Nashua would not, in the event of litigation, seek to enforce the
foregoing waivers, and (ii) acknowledges that the Nashua has been
induced to enter into this Agreement, and to provide the benefits to
the Executive provided for in this Agreement, by, among other things,
the waivers and certifications contained in this section 6(k).
IN WITNESS WHEREOF, and intending to be legally bound hereby,
the parties hereto have caused this Agreement to be duly executed as
an instrument under seal as of the date and year first above written.
NASHUA CORPORATION
By: /s/ Bruce Wright
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Bruce Wright
Vice President,
Human Resources
/s/ David A. Peterson
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David A. Peterson