EXHIBIT10.1

 

EMPLOYMENTAGREEMENT

 

This Employment Agreement (this “Agreement”) is made and entered intoas of the 7th day of June 2004, by and between Apogee Technology, Inc., aDelaware corporation with its principal office at 129 Morgan Drive, Norwood,Massachusetts 02062 (the “Company”), and Herbert M. Stein (the “Executive”).

 

WITNESSETH:

 

WHEREAS, the Company desires to engage the full-time services of theExecutive;

 

WHEREAS, the Executive desires to be so employed by the Company; and

 

WHEREAS, the Company desires to be assured that the unique and expertservices of the Executive will be available solely to the Company on suchfull-time basis, and that the Executive is willing and able to render suchservices on the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and of the respectivecovenants and agreements set forth below, the parties hereto agree as follows:

 

# 1.               Employment and Term. The Company hereby agrees to employ the Executive, and the Executivehereby agrees to accept such employment, on the terms and conditions set forthherein, for the three-year period commencing on June 2, 2004 (the “EffectiveDate”), unless such employment is earlier terminated in accordance with theterms and provisions of this Agreement. This Agreement shall automatically renew for successive periods of twoyears (each a “Renewal Term”) unless either party notifies the other of itsintention not to renew this Agreement within one hundred twenty (120) daysprior to expiration of the Initial Term or Renewal Term, as appropriate(collectively, the Initial Term and Renewal Term(s) are the “Term”).

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# 2.               Duties and Restrictions.

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## **(a)**                                  Duties as Executive ofthe Company. The Executive shall, subject to the direction andsupervision of the Company’s Board of Directors, serve as the Chief ExecutiveOfficer and President of the Company. The Executive shall also serve as Chairman of the Company’s Board ofDirectors, subject to the rights of the Company’s shareholders to elect theCompany’s directors.  In his capacity asPresident and Chief Executive Officer, the Executive’s rights, duties andresponsibilities shall be as prescribed from time to time by the Board ofDirectors of the Company, provided such duties are customary for a presidentand chief executive officer.  TheExecutive shall devote his entire working time, attention and energy to theaffairs of the Company during the Term of his employment pursuant to thisAgreement.  The Executive shall performhis duties to the best of his ability, pursuant to the policies and regulationsof the Company, and shall use his best efforts to promote the success of thepresent and future businesses of the Company. The Executive, as Chief Executive Officer and President of the Company,shall have primary responsibility for managing the business and financialaffairs of the Company.  Notwithstandinganything to the contrary, the Executive shall require Board approval to hire orfire Senior Management Employees.  Forpurposes hereof, the term “Senior Management Employees” shall mean employeeswho are, or shall be, compensated with an annual base salary equal to or

 

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## **greater than $150,000 or such other amount as approved bythe Compensation Committee of the Board of Directors.**

 

## **(b)**                                 Confidentiality.  The Executive shall not, directly orindirectly, during the Term and at any time during or following the terminationof his employment with the Company, reveal, divulge, or make known to anyperson or entity, or use for the Executive’s personal benefit (including,without limitation, for the purpose of soliciting business competitive with anybusiness of the Company or any of its subsidiaries or affiliates), anyinformation acquired during the course of employment hereunder with regard tothe financial, technical, business or other affairs of the Company or any ofits subsidiaries or affiliates (including, without limitation, any list orrecord of persons or entities with which the Company or any of its subsidiariesor affiliates has any dealings), other than (1) material already in the publicdomain, (2) information of a type not considered confidential by personsengaged in the same business or a similar business to that conducted by theCompany, (3) material known by the recipients through disclosure by a thirdparty who has a bona fide right to make such disclosure, or (4) material thatthe Executive is required to disclose under the following circumstances: (A) inthe performance by the Executive of his duties and responsibilities hereunder,which disclosure is reasonably necessary or appropriate, to another executiveof the Company or to representatives or agents of the Company (such asindependent public accountants and legal counsel); (B) at the express directionof any authorized governmental entity; (C) pursuant to a subpoena or othercourt process; or (D) as otherwise required by laws or the rules, regulations,or orders of any applicable regulatory body. The Executive shall, at any time requested by the Company (either duringor after his employment with the Company), promptly deliver to the Company allmemoranda, notes, reports, lists, and other documents (and all copies thereof)relating to the business of the Company or any of its subsidiaries oraffiliates which he may then possess or have under his control.

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## **(c)**                                  Non-Solicitation. During the Term andNon-Solicitation Period (as defined below), the Executive will not (i) solicit,or attempt to solicit, any officer, director, consultant, executive or employeeof the Company or any of its subsidiaries or affiliates (each an “Employee”) toleave their employment, affiliation, or engagement with the Company or suchsubsidiary or affiliate, (ii) call upon, solicit, divert or attempt to solicitor divert from the Company or any of its affiliates or subsidiaries any oftheir customers or suppliers, or potential customers or suppliers, of whosenames he was aware during the term of his employment with the Company; or (iii)interfere with the business relationship or advantage between the Company andany customer, supplier, or account of the Company, of whose name he was awareduring the term of his employment with the Company.

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## **(d)**                                 For purposes of thisAgreement, the “Non-Solicitation Period” shall mean a period of one yearfollowing the termination of the Executive’s employment for any reason; provided,however, that under no circumstances may the Executive make anysolicitations hereunder with respect to any former Employee until six monthshas expired since such Employee’s employment, affiliation or engagement withthe Company has terminated.

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# 3.               Compensation and Benefits.

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## **(a)**                                  Base Salary.  During each Company Fiscal Year, theExecutive shall receive a base salary (as adjusted, the “Base Salary”), payablein accordance with the Company’s payroll policies as in effect from time totime.  In addition, the Company’s Boardof Directors shall annually consider granting increases in the Base Salarybased on such factors as the Executive’s performance and the financialperformance of the Company, but the Company shall have no obligation to grantsuch increases in compensation.  Thefirst such review shall take place on or around the first scheduled Boardmeeting in 2005.  The Executive’sinitial Base Salary shall be Two Hundred Ninety-Five Thousand Dollars($295,000.00).  The term “Company FiscalYear” shall mean each one-year period ending on December 31.

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## **(b)**                                 Bonus.  Beginning with the Company Fiscal Yearending December 31, 2004, and for each successive Company Fiscal Year duringthe Term, the Executive shall be eligible to receive a bonus (“Bonus”) at suchtime and in such amount as shall be determined by the Company’s Board ofDirectors in its

 

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## **absolute and sole discretion.   This bonus may be paid in cash, stock, or stock options or anymixture of the three as determined by the Board of Directors.**

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## **(c)**                                  Expenses.  During the Term, the Executive shall beentitled to receive prompt reimbursement for all reasonable business expensesincurred by him (in accordance with the policies and procedures establishedfrom time to time by the Company) in performing services hereunder, providedthat the Executive properly accounts therefor in accordance with Company policy.

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## **(d)**                                 Benefits.  During the Term and subject to anycontribution generally required of employees of the Company, the Executiveshall be entitled to participate in any and all employee benefit plans fromtime to time in effect for employees of the Company generally.  Such participation shall be subject to (i)the terms of the applicable plan documents and (ii) generally applicableCompany policies. The Company may alter, modify or terminate its employeebenefit plans at any time as it, in its sole discretion, determines to beappropriate.

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## **(e)**                                  Vacations.  The Executive shall be entitled to twenty(20) paid vacation days per Company Fiscal Year.  Vacation days shall accrue at the rate of 1.67 days per month ineach fiscal year.  If the Executive doesnot fully utilize his vacation in any given year, he may roll any unusedportion forward into future years except that at no time can the total accruedand unused vacation time exceed forty (40) days.

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(f)                                    Proration.  Any payments or benefits payable to theExecutive hereunder in respect of any calendar year or any fiscal year duringwhich the Executive is employed by the Company for less than the entire year,unless otherwise provided in the applicable plan or arrangement, shall beprorated in accordance with the number of days in such calendar year or fiscalyear during which he is so employed.

 

## **(g)**                                 Equity Compensation.

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(i)                                     Grant.  The Company shall grant the Executiveoptions to purchase 200,000 shares fully vested for the first year of theemployment term at $8.92 per share, it being acknowledged that such exerciseprice represents the fair market value of the Company’s common stock as of June7, 2004.

 

(ii)                                  General Terms;Forfeiture & Vesting.   Theoptions shall be subject to a stock option agreement (the “Option Agreement”)and evidenced by each party’s execution of a stock option agreement. The OptionAgreement shall incorporate each of the following terms and concepts:  (i) the options shall be “non-qualified”stock options (i.e. the options will not be incentive stock options underSection 422 of the Internal Revenue Code of 1996, as amended); (ii) the optionsshall be of not less than ten (10) years duration; (iii) upon the Executive’stermination of service with the Company in all capacities (including as anemployee, director or consultant) for other than Cause, death or disability,the Executive may exercise vested options for a period not to exceed onehundred eighty (180) days following such termination of service.

 

# 4.               Termination. The Executive’s employment hereundermay be terminated by the Company or the Executive, as applicable, without anybreach of this Agreement by the terminating party, under the followingcircumstances:

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## **(a)**                                  Death.  The Executive’s employment hereunder shallterminate upon his death.  During theterm of the Executive’s employment, the company will pay for a term lifeinsurance policy in the amount of $600,000 that will be payable to theExecutive’s estate.   This payment shallbe made within a year of the Executive’s death.

 

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## **(b)**                                 Disability.  If, as a result of the Executive’sincapacity due to physical or mental illness (as determined in good faith bythe Company’s Board of Directors), the Executive shall have been unable, withreasonable accommodation, to perform the essential functions of his duties andresponsibilities hereunder on a full-time basis for one hundred and eighty(180) calendar days within any three hundred and sixty (360) consecutive days.

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## **(c)**                                  Cause.  The Company may terminate the Executive’semployment hereunder for Cause. For purposes of this Agreement, the Companyshall have “Cause” to terminate the Executive’s employment hereunder upon:

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### (i)                                     The Executive having been convicted of,or having pleaded guilty or nolocontendere to, any felony or anycrime involving moral turpitude;

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### (ii)                                  The Executive’s willful or intentionalfailure to perform the Executive’s duties and responsibilities hereunder orfailure to follow a lawful written directive of the Board of Directors (otherthan any such failure resulting from the Executive’s incapacity due to physicalor mental illness), upon thirty (30) days notice and opportunity to cure;

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### (iii)                               The commission by the Executive of anyfraud, embezzlement or misappropriation of funds; or

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### (iv)                              The breach by the Executive of any of theExecutive’s material obligations under Sections 2(b), 2(c) or 7 of thisAgreement.

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## **(d)**                                 Termination by theCompany Without Cause. The Company may terminate the Executive’semployment at any time without Cause effective upon at least sixty (60) daysprior written notice.

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# 5.                                       Compensation Upon Termination or Failureto Renew.   Upon any termination of this Agreement, allpayments, salary and other benefits shall cease, except as specificallyprovided for in this Section 5:

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## **(a)**                                  Death.  If the Executive’s employment shall beterminated by reason of his death, the Company shall pay to such person asshall have been designated in a notice filed with the Company prior to theExecutive’s death, or, if no such person shall be designated, to his estate, asa death benefit, any payments which the Executive’s spouse, beneficiaries, orestate may be entitled to receive pursuant to any insurance or executivebenefit plan or other arrangement or life insurance policy maintained by theCompany, the Executive’s Base Salary accrued through the Date of Termination atthe rate in effect at the time of death and any Bonus which the Board ofDirectors determines is appropriate under Section 3(b).

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## **(b)**                                 Disability.  During any period that the Executive failsto perform his duties and responsibilities hereunder as a result of incapacitydue to physical or mental illness, the Executive shall continue to receive hisBase Salary until the Executive’s employment is terminated pursuant to Section4(b) hereof and thereafter the Executive shall receive the Executive’s BaseSalary accrued through the Date of Termination at the rate in effect at thetime Notice of Termination is given and any Bonus which the Board of Directorsdetermines is appropriate under Section 3(b) and any disability insurancebenefits the Executive is entitled to receive.

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## **(c)**                                  Cause or VoluntaryTermination.  If theExecutive’s employment shall be terminated by the Company for Cause, theCompany’s sole obligation shall be to pay the Executive his Base Salary throughthe Date of Termination at the rate in effect at the time Notice of Terminationis given.  If the Executive’s employmentshall be terminated voluntarily by the Executive, the Company shall pay theExecutive (i) his Base Salary through the Date of Termination at the rate ineffect at the time Notice of Termination is given; and (ii) an amount equal tothe highest Bonus previously received by the Executive, to be paid at the timesuch bonuses are customarily paid, and pro-rated in accordance with Section3(f).

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## **(d)**                                 Without Cause. If the Company shallterminate the Executive’s employment without Cause, then the Company shall paythe Executive:

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### (i)                                     his Base Salary accrued through the Dateof Termination at the rate in effect at the time Notice of Termination isgiven;

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### (ii)                                  in lieu of any further salary payments tothe Executive for periods subsequent to the Date of Termination and asseverance pay to the Executive, following the Date of Termination, Base Salaryfor a period equal to the greater of twenty-four (24) months or the remainingperiod in the Term, at the rate in effect at the time the Notice of Terminationis given and payable in accordance with the Company’s then-current payrollpolicies;

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### (iii)                               amounts necessary to continue theExecutive’s coverage under any medical plans in effect as of the Date ofTermination for a period of twenty-four (24) months commencing on the Date ofTermination; and

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### (iv)                              an amount equal to the highest twelvemonth Bonus previously received by the Executive, to be paid at the time suchbonuses are customarily paid.

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## **(e)**                                  Failure to Renew. Notwithstandinganything contained in this Agreement, the Executive shall not be entitled toany compensation in the event that the Term of this Agreement is allowed toexpire at its scheduled expiration date.

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## **(f)**                                    Any payments paid tothe Executive by the Company under this Section 5 shall (i) be conditioned onthe Executive’s compliance with his post-employment covenants, includingwithout limitation, sections 2(b), 2(c) and 7; (ii) upon request, beconditioned on the delivery of a release satisfactory to the Company and (iii)be deemed liquidated damages.

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# 6.                                       Other Provisions Relating to Termination.

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## **(a)**                                  Notice of Termination.  Any termination of the Executive’semployment by the Company or by the Executive (other than termination becauseof the death of the Executive) during the Term shall be communicated by writtenNotice of Termination to the other party hereto. For purposes of thisAgreement, a “Notice of Termination” shall mean a notice which shall indicatethe specific termination provision in this Agreement relied upon and shall setforth in reasonable detail the facts and circumstances claimed to provide abasis for termination of the Executive’s employment under the provision soindicated.

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## **(b)**                                 Date of Termination.  For purposes of this Agreement, “Date ofTermination” shall mean: (1) if the Executive’s employment is terminated by hisdeath, the date of his death; (2) if the Executive’s employment is terminatedbecause of a disability pursuant to Section 4(b), then immediately after Noticeof Termination is given; (3) if the Executive’s employment is terminated by theCompany for Cause then, immediately after a Notice of Termination is given; and(4) if the Executive’s employment is terminated by the Company without Cause,then upon such date as is specified in the Notice of Termination.

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# 7.                                       Non-Competition.

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## **(a)**                                  Executive hereby acknowledgesthat the Company has developed and will develop substantial and valuablegoodwill with its past, present and future customers as a result of substantialinvestments of time, effort and capital. Executive further acknowledges that he has acquired, and will continueto acquire, a high level of skill and expertise in the Company’s field(s) ofbusiness (the “Business”) as a direct result of Executive’s employment by theCompany, and that the Company will likely suffer serious competitive damage ifExecutive were to utilize that skill and expertise for the benefit of acompetitor of the Company.  Accordingly,Executive hereby covenants and agrees that, during the Term or any extensionthereof and for a

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## **period of eighteen (18) months after termination of hisemployment with the Company, for any reason or from the date of any finaljudgment upholding the provisions of this Section 7, whichever is later,Executive shall not, anywhere in the world, directly or indirectly engage orinvest in, own, manage, operate, control or participate in the ownership,management, operation or control of, lend Executive’s name or any similar nameto, or render services similar to those provided by Executive to the Businessand/or the Company, or render advice to, any person, entity or business thenengaged in a business that is competitive with any of the lines of businessconducted by the Company either at the date hereof or at the date oftermination of Executive’s employment; provided, however, that Executive maypurchase or otherwise acquire five percent (5%) or less of the capital stock ofa competitive, publicly traded company.**

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## **(b)**                                 Executive acknowledgesthat the Business is multinational in scope and that the duration andgeographic scope of the non-competition provisions set forth in this Section 7are therefore reasonable.  In the eventthat any court determines that the duration or the geographic scope, or both,are unreasonable and that either such provision is to that extentunenforceable, the parties hereto agree that the provision shall remain in fullforce and effect for the greatest time period and in the greatest area thatwould not render it unenforceable. Executive expressly grants to the Company for a period of up to eighteen(18) months, as the case may be, following the termination of this Agreementthe right to notify any person at any time of the terms of this restrictivecovenant.

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(c)                                  EXECUTIVEREPRESENTS AND WARRANTS THAT THE KNOWLEDGE, SKILLS AND ABILITIES HE POSSESSESARE SUFFICIENT TO PERMIT HIM, IN THE EVENT OF TERMINATION OF HIS EMPLOYMENTHEREUNDER FOR ANY REASON, TO EARN, FOR A PERIOD OF UP TO EIGHTEEN (18) MONTHSFROM SUCH TERMINATION, A LIVELIHOOD SATISFACTORY TO EXECUTIVE WITHOUT VIOLATINGANY PROVISIONS OF THIS SECTION.

 

# 8.               Assignment.  Neither theCompany nor the Executive may make any assignment of this Agreement, or anyinterest in it, by operation of law or otherwise, without the prior writtenconsent of the other; provided, however, that the Company may assign its rightsand obligations under this Agreement without the consent of the Executive inthe event that the Company shall effect a reorganization, consolidate with, ormerge into, any other person or transfer all or substantially all of itsproperties or assets to any other person. This Agreement shall inure to thebenefit of and be binding upon the Company and the Executive, their respectivesuccessors, executors, administrators, heirs and permitted assigns.

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# 9.               Enforcement of Covenants. The Executive acknowledges that the Executive has carefully read andconsidered all the terms and conditions of this Agreement, including therestraints imposed upon the Executive pursuant to Sections 2(b), 2(c) and 7.The Executive agrees that said restraints are necessary for the reasonable andproper protection of the Company and its affiliates and that each and every oneof the restraints is reasonable in respect to subject matter, length of timeand geographic area. The Executive further acknowledges that, were theExecutive to breach any of the covenants contained in Section 2(b), 2(c) or 7,the damage to the Company would be irreparable. The Executive therefore agreesthat the Company, in addition to any other remedies available to it, shall beentitled to preliminary and permanent injunctive relief against any breach orthreatened breach by the Executive of any of said covenants, without having topost bond.

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# 10.         Conflicting Agreements. The Executive hereby represents and warrants that the execution of thisAgreement and the performance of the Executive’s obligations hereunder will notbreach or be in conflict with any other agreement to which the Executive is aparty or is bound and that the Executive is not now subject to any covenantsagainst competition or similar covenants that would affect the performance ofthe Executive’s obligations under this Agreement. The Executive will notdisclose to or use on behalf of the Company any proprietary information of athird party without such party’s consent.

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# 11.         Notice.  For purposesof this Agreement, all notices and all other communications provided for inthis Agreement shall be in writing and shall be deemed to have been duly givenwhen (a) delivered personally, (b) sent by facsimile or similar electronicdevice and confirmed, (c) delivered by overnight express, or (d) if

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# sent by any other means, upon receipt. Notices and all other communications provided for in this Agreementshall be

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If to the Executive:

 

Herbert M. Stein

 

 

If to the Company:

 

Apogee Technology, Inc.

129 Morgan Drive

Norwood, MA  02062

Attn:   Chairman of the Compensation Committee, Alan Tuck                                                              

 

With a copy to:   Apogee’s designated legal counsel

 

 

or to such other address as either party mayhave furnished to the other in writing in accordance herewith.

 

# 12.         Miscellaneous. No provision of this Agreement may bemodified, waived, or discharged unless such waiver, modification, or dischargeis agreed to in a written instrument signed by the Executive and the Company.No waiver by either party hereto of, or compliance with, any condition orprovision of this Agreement to be performed by such other party shall be deemeda waiver of similar or dissimilar provisions or conditions at the same or atany prior or subsequent time. No agreements or representations, oral orotherwise, express or implied, with respect to the subject matter hereof havebeen made by either party which are not set forth expressly in this Agreement.

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# 13.         Validity.  Theinvalidity or unenforceability of any provision or provisions of this Agreementshall not affect the validity or enforceability of any other provision of thisAgreement, which shall remain in full force and effect.

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# 14.         Counterparts. This Agreement may be executed inseveral counterparts, each of which shall be deemed to be an original, but allof which together will constitute one and the same agreement.

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# 15.         Entire Agreement: Effectiveness. This Agreement constitutes the entire agreement between the parties withrespect to the subject matter hereof and supersedes any and all prioremployment agreements and/or severance protection letters, agreements, orarrangements between the Executive, on the one hand, and the Company, or anyother predecessor in interest thereto or any of their respective subsidiaries,on the other hand.

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# 16.         GOVERNING LAW. THIS AGREEMENT, INCLUDING THE VALIDITY HEREOF AND THE RIGHTS ANDOBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE CONSTRUED IN ACCORDANCE WITH ANDGOVERNED BY THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS APPLICABLE TOCONTRACTS MADE AND TO BE PERFORMED ENTIRELY IN SUCH STATE (WITHOUT GIVINGEFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF). EACH OF THE PARTIES HERETOAGREES THAT ANY ACTION OR PROCEEDING BROUGHT TO ENFORCE THE RIGHTS OROBLIGATIONS OF ANY PARTY HERETO UNDER THIS AGREEMENT

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#  MAY BE COMMENCED AND MAINTAINEDIN ANY COURT OF COMPETENT JURISDICTION LOCATED IN THE COMMONWEALTH OFMASSACHUSETTS, AND THAT THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OFMASSACHUSETTS SHALL HAVE NON-EXCLUSIVE JURISDICTION OVER ANY SUCH ACTION, SUITOR PROCEEDING BROUGHT BY ANY OF THE PARTIES HERETO. EACH OF THE PARTIES HERETOFURTHER AGREES THAT PROCESS MAY BE SERVED UPON IT BY CERTIFIED MAIL, RETURNRECEIPT REQUESTED, ADDRESSED AS MORE GENERALLY PROVIDED IN SECTION 11 HEREOF,AND CONSENTS TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTIES WITHRESPECT TO ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR IN CONNECTION WITHTHIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ENFORCEMENT OFANY RIGHTS UNDER THIS AGREEMENT.

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# 17.         Arbitration. Any dispute, controversy or claimarising out of, in connection with, or in relation to this Agreement (except formatters relating to Sections 2(b), 2(c) or 7 of this Agreement) or any breachthereof shall be finally settled by arbitration in Boston, Massachusetts,pursuant to the rules then in effect of the American Arbitration Association.Any award shall be final, binding and conclusive upon the parties and ajudgment upon the award rendered thereon may be entered in any court havingjurisdiction thereof.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of thedate and year first above written.

 
|   | COMPANY:                |
|--------|-------------------------|
|   |                    |
|   | APOGEE TECHNOLOGY, INC. |
|   | a Delaware corporation  |
|   |                    |
|   |                    |
|   | By:                     | /s/ Alan Tuck |   |
|   |                    | Name: | Alan Tuck |
|   |                    | Title: | Director and Chairman of the Compensation  Committee |
|   |                    |   |   |
|   |                    |
|   | By:                     | /s/ Arthur Reynolds |   |
|   |                    | Name: | Arthur Reynolds |
|   |                    | Title: | Director |
|   |                    |   |   |
|   |                    |
|   | THE EXECUTIVE:          |
|   |                    |
|   |                    |
|   | /s/  Herbert M. Stein   |   |
|   | Herbert M. Stein        |
|        |                         |  |  |  |  |

 

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