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Exhibit
10.2
EMPLOYMENT AND SEVERANCE
AGREEMENT
Michael Thoben
Interlink Electronics, Inc.,
This Employment and Severance
Agreement (the “Agreement”) is entered into as of this
28th day of September, 2007, by and between E. Michael Thoben III
(“Officer”) and Interlink Electronics, Inc., a Delaware
corporation (the “Company”).
RECITALS
A. Officer is currently a
member of senior management of the Company, serving in the capacity
of Chief Executive Officer and President.
B. The Company would like to
continue to retain the service of Officer through the Transition
Period as such term is defined in that certain Transition Letter
Agreement dated September 28, 2007, a copy of which is
attached hereto and incorporated herein by reference as if set
forth in full.
B. The Company desires to
provide certain protection to Officer in the event of termination
of Officer’s employment, other than for “cause”,
as defined herein, in order to induce Executive to remain in the
employ of the Company.
C. The Company considers the
establishment and maintenance of a sound and vital management to be
essential to protecting and enhancing the best interest of the
Company and its stockholders. In this connection, the Company
recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control may exist and
that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or
distraction of management personnel to the detriment of the Company
and its stockholders. Accordingly, the Board of Directors of the
Company (the “ Board ”) has determined that
appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of members of the
Company’s management to their assigned duties without
distraction in circumstances arising from the possibility of a
change in control of the Company. This Agreement is designed to
serve this function, as well as to provide added protections to
Officer in the event of termination under the circumstances
described below.
D. This Agreement, the form
of which has been approved by the Board, sets forth the severance
benefits which the Company agrees will be provided to Officer in
the event Officer’s employment with the Company is terminated
under the circumstances described below.
NOW THEREFORE, in
consideration of the mutual covenants contained herein, the parties
hereby agree as follows:
AGREEMENT
1. Definitions . The
following terms shall have the following meanings for purposes of
this Agreement:
(i) “ Capped
Benefits ” has the meaning ascribed to it in
Section 6.
(ii) “ Cause
” shall mean
(A) the willful and continued
failure by Officer substantially to perform Officer’s
reasonably assigned duties with the Company consistent with those
duties assigned to Officer, other than a failure resulting from
Officer’s incapacity due to physical or mental illness, after
a written demand for performance has been delivered to Officer by
the Board which specifically identifies the manner in which the
Board believes that Officer has not substantially performed
Officer’s duties and which is not or cannot be cured within
ninety (90) days after written demand;
(B) the conviction of guilty
or entering of a nolo contendere plea to a felony, which is
materially and demonstrably injurious to the Company; or
(C) the commission of an act
by Officer, or the failure by Officer to act, which constitutes
gross negligence or gross misconduct and which is not or cannot be
cured within sixty (60) days after written notice from the
Board.
For purposes of this
Section 1(ii), no act, or failure to act, on Officer’s
part shall be considered “willful” unless done, or
omitted, by Officer in bad faith. Any act, or failure to act,
expressly authorized by a resolution duly adopted by the Board or
based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or be an omission, by Officer in
good faith. Notwithstanding the foregoing, Officer shall not be
deemed to have been terminated for Cause unless the Board shall
have delivered to Officer a copy of a resolution duly adopted by
the Board finding, after reasonable notice to Officer and an
opportunity for Officer to be heard with respect to such matter,
that in the good faith opinion of the Board, Officer has engaged in
the conduct set forth above in (A), (B), or (C) of this
Section 1(ii). Any such determination by the Board shall be
subject to de novo review in mediation or in arbitration conducted
pursuant to Section 16. The Company shall take all reasonable
steps to enable Officer to effect a cure as contemplated by this
Section 1(ii), provided, however, that nothing in this
Agreement shall be construed to prevent the Company from taking
reasonable steps to preserve evidence and the chain of custody
thereof and otherwise to take such actions as the Company
reasonably deems to be appropriate to comply with legal obligations
applicable to it or with the fiduciary obligations of its Board of
Directors.
(iii) “ Change in
Control ” shall mean the occurrence of any of the
following events:
(A) any consolidation,
merger, plan of share exchange, or other reorganization involving
the Company (a “ Merger ”) as a result of which
the holders of outstanding securities of the Company ordinarily
having the right to vote for the election of directors (“
Voting Securities ”) immediately prior to the Merger
do not continue to hold at least 50% of the combined voting power
of the outstanding Voting Securities of the surviving or continuing
corporation immediately after the Merger, disregarding any Voting
Securities issued or retained by such holders in respect of
securities of any other party to the Merger;
(B) any sale, lease, exchange
or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, the assets of the
Company;
(C) the adoption of any plan
or proposal for the liquidation or dissolution of the
Company;
(D) any Person (as defined
below) shall have become the beneficial owner (within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934 (the
“ Exchange Act ”)), directly or indirectly, of
securities of the Company ordinarily having the right to vote for
the election of directors representing 50% or more of the
outstanding shares of common stock or combined voting power of the
then outstanding Voting Securities; or
(E) The appointment of a
State court receiver or a Bankruptcy Trustee, or the functional
equivalent thereof
Notwithstanding anything in
the foregoing to the contrary, unless otherwise determined by the
Board, no Change in Control shall be deemed to have occurred for
purposes of this Agreement if (1) Officer acquires (other than
on the same basis as all other holders of the Company shares) an
equity interest in an entity that acquires the Company in a Change
in Control otherwise described under Section 1(ii)(A) or
(B) above, or (2) Officer is part of group that
constitutes a Person which becomes a beneficial owner of Voting
Securities in a transaction that otherwise would have resulted in a
Change in Control under Section 1(ii)
(D) above.
(iv) “ Control
Period ” shall mean the period commencing on the
occurrence of a Potential Change in Control and ending on the
earliest of (A) a date which is 270 days from the occurrence
of such Potential Change in Control, (B) a termination of
Officer’s employment pursuant to which Officer becomes
entitled under this Agreement to receive Severance Benefits, or
(C) termination of activities leading to a Change in Control
without the occurrence of a Change in Control.
(v) “ Date of
Termination ” has the meaning ascribed to it in
Section 5.
(vi) “ Deemed
Performance Amount ” shall mean the sum of all cash
compensation paid or payable to Officer based on performance
measures with respect to the last complete calendar
year.
(vii) “
Disability ” shall mean the absence of Officer from
Officer’s duties with the Company on a full time basis for
180 consecutive days as a result of Officer’s incapacity due
to physical or mental illness, unless, within 30 days after a
Notice of Termination (as defined below) is given to Officer
following such absence, Officer shall have returned to the full
performance of Officer’s duties.
(viii) “ Effective
Date ” has the meaning ascribed to it in
Section 3.
(ix) “ Good
Reason ” shall mean:
(A) a diminution of
Officer’s status, title, position(s), or responsibilities
from Officer’s status, title, position(s), and
responsibilities as an employee, or the assignment to Officer of
any duties or responsibilities which are inconsistent with such
status, title, position(s), or responsibilities (in either case
other than isolated, insubstantial or inadvertent actions which are
remedied after notice), or any removal of Officer from such
position(s), except in connection with the termination of
Officer’s employment for Cause, Disability or as a result of
Officer’s death or voluntarily by Officer other than for Good
Reason, and provided that, following acquisition of the Company or
its business by another entity, Officer’s status, title,
position(s) or responsibilities shall not be deemed diminished as a
result of the fact that Officer reports to a more senior officer of
the acquiring company as long as Officer’s responsibility
involves the management of the Company’s business or former
business or a business of equivalent importance;
(B) a reduction by the
Company in Officer’s rate of base salary, bonus or incentive
opportunity or a substantial reduction in benefits (other than
reductions that do not impact optionee’s compensation
opportunity, taken as a whole) of more than 10%;
(C) the Company’s
requiring Officer to be based more than 50 miles from the principal
office at in which Officer is based, except for reasonably required
travel on the Company’s business; or
(D) the Company’s
failure to obtain a consent requested by Officer pursuant to
Section 8(i) of; or
(E) The failure of the
Company to obtain an agreement, satisfactory to the Officer, from
any successors and assigns to assume and agree to perform this
Agreement.
(x) “ Notice of
Termination ” has the meaning ascribed to it in
Section 5.
(xi) “ Potential
Change in Control ” shall mean the occurrence of any of
the following:
(A) the Company enters into
an agreement or letter of intent, the approval of which by the
shareholders would result in the occurrence of a Change in Control
of the Company;
(B) any Person (including the
Company) publicly announces an intention to take or to consider
taking actions which if consummated would constitute a Change in
Control of the Company; or
(C) the Board adopts a
resolution to the effect that, for purposes of this Agreement, a
Potential Change in Control of the Company has occurred;
(xii) “ Person
” shall mean and include any individual, corporation,
partnership, group, association or other “person”, as
such term is used in Section 14(d) of the Exchange Act, other
than the Company, any subsidiary of the Company or any employee
benefit plan(s) sponsored by the Company.
(xiii) “ Plan
” shall mean any compensation plan such as an incentive,
stock option or restricted stock plan or any employee benefit plan
such as a thrift, pension, profit sharing, medical, disability,
accident, life insurance, or relocation plan or policy or any other
plan, program or policy of the Company intended to benefit
employees.
(xiv) “
Retirement ” shall mean termination on or after
Officer’s 65 th birthday.
(xv) “ Severance
Benefits ” has the meaning ascribed to it in
Section 6.
(xvi) “ Specified
Benefits ” has the meaning ascribed to it in
Section 6.
(xvii) “
Successor ” has the meaning ascribed to it in
Section 8(i).
2. Agreement to Provide
Services; Right to Terminate; Compensation and Benefits
.
(i) In the event of a
Potential Change in Control, and thereafter during the Control
Period, Officer will not terminate his employment with the
Com
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