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EXHIBIT 10.31
CENTENNIAL TECHNOLOGIES, INC.
7 Lopez Road
Wilmington, MA 01887
Mr. Michael Hone
4 Fawn Run
Pittsford, New York 14534
Re: Employment Agreement
Dear Michael:
On behalf of Centennial Technologies, Inc. (the "Company"), I am
writing to confirm the terms and conditions of your employment with the Company:
1. You are being hired to serve on a full-time basis as President
and Chief Executive Officer of the Company, effective August 19, 1997. While
employed by the Company, you will exercise such authority and perform such
duties as are commensurate with the titles held. You and the Company may
mutually agree upon a position description following the commencement of your
employment. You will report to the Company's Board of Directors ("Board").
2. Your compensation will consist of the following:
(a) Your initial base salary will be $50,000 per year,
payable in twelve (12) monthly installments. Such
salary shall be subject to review and adjustment from
time to time by the Board.
(b) You are entitled to a bonus calculated as follows.
For the first twelve (12) months after the date you
commence employment, you will be guaranteed a total
bonus of $100,000, payable monthly in twelve (12)
equal installments. By the end of the fiscal year
1998 (ending March 31, 1998), you will develop and
propose a bonus plan for key executives, including
yourself, to be considered by the Board which, if
accepted by the Board, will be implemented in fiscal
year 1999 (ending March 31, 1999).
(c) You will receive a signing bonus of $175,000, which
will be paid as follows: on January 1, 1998 - $75,000
and on April 25, 1998 - $100,000.
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(d) If your home located in Rochester, New York is sold
at a loss, which is defined as an amount below your
original purchase price plus the documented costs of
improvements, as a result of your relocation to
Massachusetts for employment with the Company, the
Company will provide you with a loan of an equivalent
amount, but in no event to exceed $25,000, to be
repaid in accordance with the terms to be negotiated
between you and the Company.
(e) While employed as President and Chief Executive
Officer, you will receive a monthly stipend of $1,000
for expenses associated with your position including,
but not limited to, a car lease and social membership
dues.
(f) You will receive a non-qualified stock option to
purchase 925,000 shares of Common Stock of the
Company, such options shall vest as follows: 33% of
such shares shall vest on your first anniversary of
employment with the Company and, provided you remain
employed by the Company, 33% of the remaining shares
will vest upon each of your next two anniversary
dates with the Company. If your employment is
terminated without cause at any time prior to your
third anniversary of employment, such options shall
vest for the full employment year in which the
termination without cause occurs and you will have a
period of three years from the date of any
termination without cause at any time, to exercise
such options. You may be eligible to receive such
future stock option grants as the Board shall, from
time to time, deem appropriate. Irrespective of this
Agreement and except for the above provisions
regarding vesting and exercise of options, all
options will be governed by the terms and conditions
set forth in the Company's 1994 Stock Option Plan
(whether or not granted under such plan).
(g) The Company shall pay or reimburse you for all
reasonable expenses you incur moving your household
goods to the Boston Metropolitan area from the
Rochester, New York area, including your reasonable
travel expenses associated with the move.
(h) Because of the necessity to conserve the Company's
cash resources in the initial periods of your
employment, you and the Company agree that if you
remain employed by the Company after April 30, 1998,
the Company shall pay you a retention bonus of
$450,000 on May 15, 2000. In the event your
employment terminates after April 30, 1998 but before
April 30, 2000, you will receive a retention payment
on May 15, 2000 which is equal to the $450,000
reduced by $18,750 per month for
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each full month between your termination date and
April 30, 2000. Such payment shall be in addition to
the base salary of $50,000 per year. You understand
that the retention bonus shall be an unsecured
obligation of the Company and you are willing to risk
that the Company's financial position is such that it
will be able to make the payment due on May 15, 2000.
3. You will be elected to serve as a member of the Board at the
first Board meeting following the commencement date of your employment with the
Company.
4. You will be entitled to participate in any and all bonus and
benefit programs that the Company establishes and makes available to its
employees for which you may be eligible under the particular plan documents or
other eligibility requirements.
5. You will be entitled to 4 weeks of vacation per year to be
taken at such times as are consistent with the interests of the Company. The
number of vacation days to which you are entitled in each year shall accrue at
the rate of 1.6 days per month that you are employed during such year.
6. You will be required to execute the enclosed Proprietary and
Confidential Information Agreement and the Non-Competition and Non-Solicitation
Agreement as a condition of employment. Also, you will be required to
successfully pass a pre-employment drug test.
7. You represent that you are not bound by any employment
contracts, restrictive covenants or other restrictions preventing you from
entering into employment with or carrying out your responsibilities for the
Company.
8. If you are discharged by the Company with or without cause
during the first twelve months of employment with the Company, you will be
entitled to the amount discussed in paragraphs 2(a), 2(c), 2(e), the retention
payment calculated and paid in accordance with 2(h), the bonus described in
paragraph 2(b) and medical/insurance benefits then in effect, for a period of
twelve (12) months, subject only to no event arising during the 12-month period
which would entitle the Company to terminate your employment pursuant to clause
(ii) of paragraph 9 if you were still employed by the Company. If you are
discharged without cause after August 19, 1998, you will be entitled to the
stipend referred to in paragraph 2(e), the retention payment calculated and paid
in accordance with 2(h), the amount of $50,000 (equal to the annual base
salary), the bonus under the bonus plan described in paragraph 2(b), payable in
accordance with the terms of such plan, and, medical/insurance benefits, all of
which (other than the retention payment under paragraph 2(h) and the bonus under
the plan described in paragraph 2(b)) will be paid in twelve equal monthly
installments, subject only to no event arising during the 12-month period which
would entitle the Company to terminate
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your employment pursuant to clause (ii) of paragraph 9 if you were still
employed by the Company. These severance payments would be in lieu of all other
severance by the Company you might otherwise be entitled to and is conditioned
upon the execution of a general release.
9. As used herein, the discharge "for cause" shall mean (i) the
material failure by you to perform any of your duties following receipt of
written notice of such failure from the Board and following the expiration of a
60 day cure period following receipt of such notice, (ii) any breach by you of
any of the terms of the Confidential Information Agreement and Non-Competition
Agreement between you and the Company, (iii) any attempt by you to secure any
improper personal profit in connection with the business of the Company or any
of its subsidiaries, (iv) any failure by you to devote substantially your full
working time to the affairs of the Company and its subsidiaries following
receipt of written notice of such failure from the Board and following the
expiration of a 60 day cure period following receipt of such notice, (v) the
engaging by you in business other than the business of the Company and its
subsidiaries, however, you are not prohibited from serving on the board of
directors of up to two other businesses neither of which would be competitive
with or related to the business of the Company, (vi) your conviction, or the
entry of a pleading of guilty or nolo contendre by you to, any crime involving
moral turpitude or any felony, and (vii) any willful and knowing act by you
which constitutes willful or gross misconduct which is demonstrably and
significantly injurious to the Company.
10. The Company agrees to indemnify you and hold you harmless
against all costs (including reasonable attorney's fees) which you may incur
with respect to any claims, of any nature or description, relating to any acts
or omissions by the Company, its employees, officers, directors, consultants,
agents or contractors which relate to the Company and occurred prior to the
commencement of your employment by the Company.
11. This letter is not to be construed as an agreement, either
expressed or implied, to employ you for any stated term, and shall in no way
alter the Company's policy of employment at will, allowing either you or the
Company to remain free to terminate the employment relationship with or without
cause at any time, subject, in the case of the Company, to the provisions of
paragraph 8.
12. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
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If the foregoing correctly sets forth our Agreement, would you please
indicate by signing the enclosed copy of this letter in the space provided below
and returning it to the Company
Very truly yours,
CENTENNIAL TECHNOLOGIES, INC.
By:_________________________________
Name:
Title:
The foregoing correctly sets forth the terms and conditions of my
employment by Centennial Technologies, Inc., all of which are acceptable to me.
_________________________________
L. Michael Hone