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EXHIBIT 10.20
CONSULTING AGREEMENT
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This Consulting Agreement (the "Agreement") is made as of May 1, 1997,
by and between Ferrofluidics Corporation (the "Company"), a Massachusetts
corporation with its principal place of business at 40 Simon Street, Nashua, New
Hampshire, and Paul F. Avery, Jr. ("Consultant") of 178 Drinkwater Road,
Kensington, New Hampshire.
WHEREAS, Consultant has been employed by the Company as its Chairman of
the Board of Directors and Treasurer pursuant to that certain Amended and
Restated Employment Agreement dated as of May 17, 1996 (the "Employment
Agreement");
WHEREAS, the Company and Consultant desire to terminate the Employment
Agreement and the Consultant's employment with the Company;
WHEREAS, the Company desires to retain Consultant to render consulting
and advisory services to the Company on an independent contractor basis and on
the terms and conditions set forth herein;
WHEREAS, Consultant desires to furnish such consulting and advisory
services to the Company on an independent contractor basis and on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises, terms, provisions and conditions set forth in this Agreement,
the parties hereby agree:
1. TERMINATION OF EMPLOYMENT: ENGAGEMENT OF CONSULTANT. The Company
and Consultant acknowledge and agree that Consultant's employment with the
Company pursuant to the Employment Agreement is terminated effective as of the
date hereof, and that the Employment Agreement shall be deemed to have been
terminated as of the date hereof and shall be of no further force or effect.
Subject to the terms and conditions set forth in this Agreement, the Company
hereby retains Consultant for the term set forth in Section 2 as a consultant
and advisor to the Company.
2. TERM. This Agreement shall commence on the date hereof and shall
continue for a period of three (3) years (such period being referred to as the
"Consultation Period"), unless sooner terminated in accordance with the
provisions of Section 5. The parties hereto may extend the Consultation Period
upon mutual written agreement.
3. SERVICES. Consultant agrees to perform such consulting, advisory
and related services for the Company as may be reasonably requested from time to
time by the Company (the "Services"). During the Consultation Period, Consultant
shall perform the Services under the direction and restriction of the Chief
Executive Officer of the Company.
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4. COMPENSATION.
a. CONSULTING FEES. During the term of this Agreement,
Company shall pay to Consultant consulting fees at a rate of $10,000 per month,
payable in arrears on the last day of each month. Payment for any partial month
shall be prorated.
b. MATTERS CONCERNING RESTRICTED STOCK AND STOCK OPTIONS.
(i) Notwithstanding any provision to the contrary
contained in any other agreement, all shares of restricted stock granted to
Consultant pursuant to any plan maintained by the Company and held by Consultant
on the date hereof (whether vested or unvested) shall become fully vested as of
the date hereof.
(ii) Notwithstanding any provision to the contrary
contained in any other agreement, all options to purchase stock of the Company
granted to Consultant under any plan maintained by the Company and held by
Consultant on the date hereof (whether exercisable or unexercisable) shall
become fully vested and exercisable and may hereafter be exercised by Consultant
until the expiration date thereof.
c. LIFE INSURANCE. The Company and Consultant acknowledge
that the Company has paid all premiums due or payable through November 5, 1997
(the "Paid-Up Premium Date"), relating to that certain life insurance policy
(Policy # 41019258) on the life of Consultant in the amount of one million
dollars ($1,000,000) (the "Life Insurance Policy"). The Company and Consultant
agree that the Company shall not take any action that would be inconsistent with
maintaining such policy through the Paid-Up Premium Date, but that the Company
shall have no obligation to maintain such policy at any time following the
Paid-Up Premium Date; provided, however, that Consultant shall be entitled to
assume the Company's obligations under the Life Insurance Policy and continue to
maintain such policy in accordance with its terms following the Paid-Up Premium
Date. Each of the Company and Consultant shall use its or his best efforts to
arrange for the assumption by Consultant on the Paid-Up Premium Date of the
Company's obligations under the Life Insurance Policy.
d. RETIREMENT PLANS. In connection with the termination of
Consultant's employment with the Company on the date hereof, Consultant shall be
entitled to participate in and enjoy the benefit of the Company's retirement,
supplementary retirement, deferred compensation or similar plans, programs or
arrangements as available to the Company's management as of the date hereof.
e. HEALTH, MEDICAL AND WELFARE PLANS. Consultant may, at
his sole expense, elect to continue his group health insurance pursuant to
COBRA.
f. 401(k) PLAN. The Company shall use its best efforts to
assist Consultant in the roll over or withdrawal of his interest in the
Company's Tax Savings and Deposit and
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Investment Plan (the "401(k) Plan"), all in accordance with and subject to
applicable law and the terms of the 401(k) Plan.
g. REIMBURSEMENT OF EXPENSES. The Company shall reimburse
Consultant for all reasonable and necessary expenses incurred or paid by
Consultant in connection with, or related to, the performance of the Services
under this Agreement; provided, however, that the Company shall provide all
airline tickets to Consultant on a prepaid basis in connection with all travel
by Consultant for purposes of performance of the Services hereunder. Consultant
shall submit to the Company itemized monthly statements, in a form reasonably
satisfactory to the Company, of such expenses incurred in the previous month.
The Company shall pay to Consultant amounts shown on each such statement within
thirty (30) days after receipt thereof.
5. TERMINATION OF CONSULTANCY AND TERMINATION COMPENSATION.
a. GENERAL TERMINATION COMPENSATION. If Consultant's
consultancy is terminated pursuant to Sections 5b or 5d, the Company shall
continue to make payments to Consultant (or, if applicable, to Consultant's
beneficiary) as provided in Section 4a for the balance of the Consultation
Period.
b. DEATH OR DISABILITY.. In the event Consultant dies or
becomes disabled during the Consultation Period, his consultancy hereunder shall
automatically terminate. For the purpose of this Agreement, "disability" shall
refer to a situation in which Consultant is totally disabled from performing
Services for the Company during a period of thirteen (13) consecutive weeks.
If any question shall arise as to whether during any period Consultant
has suffered a disability, Consultant may, and at the request of the Company
will, submit to the Company a certification in reasonable detail by a physician
selected by Consultant or his guardian to whom the Company has no reasonable
objection as to whether Consultant was so disabled and such certification shall
for the purposes of this Agreement be conclusive of the issue. If such question
shall arise and Consultant shall fail to submit such certification, the
Company's determination of such issue shall be binding on Consultant.
c. BY THE COMPANY FOR CAUSE. The Company may terminate
Consultant's consultancy hereunder for cause at any time upon notice to
Consultant setting forth in reasonable detail the nature of such cause. The
following, as determined by the Board of Directors of the Company in its good
faith and reasonable judgment, shall constitute "cause" for termination:
(1) Consultant's embezzlement of funds of or theft
from the Company or other material dishonesty with respect to the Company or any
of its affiliates; or
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(2) Conviction of, or plea of nolo contendere to, a
felony or other crime involving moral turpitude (it being understood that
violation of a motor vehicle code does not constitute such a crime); or
(3) Conduct engaged in or action taken or omitted to
be taken by Consultant which is in material breach of this Agreement, in which
case where such breach is incapable of being cured and remains uncured after
written notice by the Company to Consultant; or
(4) Gross or willful misconduct of Consultant with
respect to the Company or any subsidiary or affiliate thereof.
Upon the giving of notice of termination of Consultant's consultancy
hereunder for cause, the Company shall have no further obligation or liability
to Consultant, other than the payment of consulting fees earned and unpaid at
the date of termination and the contribution by the Company to the cost of
Consultant's participation (subject to any required contribution by Consultant
under the terms of the applicable plans) in the Company's group health and
medical plans as the same are in effect from time to time for so long as
Consultant is entitled to continue such participation under applicable law and
plan terms.
d. BY THE COMPANY OTHER THAN FOR CAUSE. The Company may
terminate Consultant's consultancy hereunder other than for cause at any time
upon sixty (60) days' written notice to Consultant.
e. BY CONSULTANT. Consultant may terminate his consultancy
hereunder at any time upon sixty (60) days' written notice to the Company.
6. INDEPENDENT CONTRACTOR STATUS. Consultant shall perform all
services under this Agreement as an "independent contractor" and not as an
employee or agent of the Company. Consultant is not authorized to assume or
create any obligation or responsibility, express or implied, on behalf of, or in
the name of, the Company or to bind the Company in any manner.
7. ASSIGNMENT. Neither the Company nor Consultant may make any
assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other party; provided,
however, that (i) the Company may assign its rights and obligations under this
Agreement without the consent of Consultant in the event that the Company shall
hereafter effect a reorganization, consolidate with, or merge into, any other
person or entity or transfer all of its properties or assets to any other person
or entity, and (ii) Consultant may assign its rights and obligations under this
agreement without the consent of the Company to P.F. Avery Corporation. This
Agreement shall inure to the benefit of and be binding upon the Company and
Consultant, their respective successors, executors, administrators, heirs and
permitted assigns.
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8. SEVERABILITY. If any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
9. WAIVER. No waiver of any provision hereof shall be effective
unless made in writing and signed by the waiving party. The failure of either
party to require the performance of any term or obligation of this Agreement, or
the waiver by either party of any breach of this Agreement, shall not prevent
any subsequent enforcement of such term or obligation or be deemed a waiver of
any subsequent breach.
10. NOTICES. Any and all notices, requests, demands and other
communications provided for by this Agreement shall be in writing and shall be
deemed given when delivered by hand, telex or facsimile, or if mailed, five days
after mailing (two business days in the case of courier service), to the parties
as follows:
If to Consultant: Paul F. Avery, Jr.
178 Drinkwater Road
Kensington, NH 03833
If to the Company: Ferrofluidics Corporation
40 Simon Street
Nashua, NH 03061
Attn: Salvatore J. Vinciguerra
11. ENTIRE AGREEMENT. This Agreement and the
Non-Disclosure/Non-Compete Agreement dated September 22, 1993 between the
Company and Consultant constitute the entire agreement between the parties and
supersede all prior communications, agreements and understandings, written or
oral, with respect to the terms and conditions of Consultant's consultancy and
prior employment with the Company.
12. AMENDMENT. This Agreement may be amended or modified only by a
written instrument signed by Consultant and by an expressly authorized
representative of the Company.
13. HEADINGS. The headings and captions in this Agreement are for
convenience only and in no way define or describe the scope of or content of any
provision of this Agreement.
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14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which together shall
constitute one and the same instrument.
15. GOVERNING LAW. This is a New Hampshire contract and shall be
construed and enforced under and be governed in all respects by the laws of The
State of New Hampshire, without regard to the conflict of laws principles
thereof.
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IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company, by its duly authorized representative, and by
Consultant, as of the date first above written.
"CONSULTANT" FERROFLUIDICS CORPORATION
/s/ Paul F. Avery, Jr. By: /s/ Salvatore J. Vinciguerra
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Paul F. Avery, Jr. Salvatore J. Vinciguerra
President and Chief Executive Officer
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ASSIGNMENT AND ASSUMPTION
Paul F. Avery, Jr. ("Avery") hereby assigns his rights and obligations under the
second sentence of Section 1, Sections 2, 3, 4a, and 4g, Sections 6 through 10
and Sections 12 through 15 (collectively, the "Assigned Provisions"), of the
Consulting Agreement dated May 1, 1997 between Ferrofluidics Corporation and
Avery, and P.F. Avery Corporation ("P.F. Avery") hereby agrees to be bound by
and perform all of Avery's obligations under the Assigned Provisions of the
Consulting Agreement as if a party thereto. P.F. Avery further agrees to make
Avery available to provide the Services set forth in Section 3 of the Consulting
Agreement. Avery and P.F. Avery acknowledge that the provisions of Section 5b
shall relate to the death or disability of Avery and that the provisions of
Section 5c shall relate to the conduct of Avery or P.F. Avery.
Date: May 2, 1997
/s/ Paul F. Avery, Jr.
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Paul F. Avery, Jr.
P.F. AVERY CORPORATION
/s/ Paul F. Avery, Jr.
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Name Paul F. Avery, Jr.
Title: President
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