EMPLOYMENT AGREEMENT
AGREEMENT made the 20th day of December, 1996 by and between EA
Industries, Inc., a New Jersey corporation (the "Company") and Xxxx X. Xxxxx
(the "Executive").
W I T N E S S E T H:
WHEREAS, the Company wishes to assure itself of the services of the
Executive, and the Executive wishes to serve in the employ of the Company, upon
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Employment, Term.
1.1 The Company agrees to employ the Executive, and the Executive
agrees to serve in the employ of the Company, for the term set forth in Section
1.2, in the position and with the responsibilities, duties and authority set
forth in Section 2 and on the other terms and conditions set forth in this
Agreement.
1.2 The term of the Executive's employment under this Agreement
shall be the period commencing on the date hereof and continuing through
December 31, 1997, unless sooner terminated in accordance with this Agreement.
1.3 Unless either party elects to terminate this Agreement at the
end of the original or any renewal term by giving the other party notice of such
election in writing at least 180 days before the expiration of the then current
term, this Agreement shall be deemed to have been renewed for an additional term
of one year commencing on the day after the expiration of the then current term.
2. Position, Duties. The Executive shall serve the Company as President
and Chief Executive Officer of Tanon Manufacturing, Inc. and at the request of
the Board of Directors shall serve as an officer and director of the Company,
its parents, subsidiaries and/or affiliates without payment of any additional
compensation. The Executive shall have such duties and responsibilities,
appropriate to said positions as the Board of Directors of the Company (the
"Board") shall assign to the Executive. The Executive shall perform his duties
and responsibilities hereunder, faithfully and diligently and shall report to
the Chairman of the Board of Directors of the Company. The Executive shall
devote his full business time and attention to the performance of his duties and
responsibilities hereunder. The Executive hereby represents that he is not bound
by any confidentiality agreements or restrictive covenants which restrict or may
restrict his ability to perform his duties hereunder, and agrees that he will
not enter into any such agreements or covenants during the term of his
employment hereunder, except such restrictive covenants or confidentiality
agreements which are required by the Company.
3. Cash Compensation. During the term of this Agreement, in consideration
of the performance by the Executive of the services set forth in Section 2 and
his observance of the other covenants set forth herein, the Company shall pay
the Executive, and the Executive shall accept, a salary at the rate of $240,000
per annum, payable in accordance with the standard payroll practices of the
Company. In addition to the salary payable hereunder, the Executive may be
entitled to receive merit increases in salary during the term hereof in amounts
and at such times as shall be determined by the Board in its sole discretion. In
no event shall the failure to grant any such increase (or the amount of any such
increase) give rise to a claim by the Executive under this Agreement.
(b) The Company agrees that the Executive shall be eligible to
participate in any executive bonus plan established by the Company.
4. Expense Reimbursement. During the term of this Agreement, consistent
with the Company's policies and procedures as may be in effect from time to
time, the Company shall reimburse the Executive for all reasonable and necessary
out-of-pocket expenses (including the cost for purchase and installation of a
telephone in the Executive's automobile, minimum monthly usage charges, and all
calls on Company business) incurred by him in connection with the performance of
his duties hereunder, upon the presentation of proper accounts therefor in
accordance with the Company's policies.
5. Other Benefits. (a) During the term of this Agreement, the Executive
shall be entitled to receive vacation time in an amount equal to other
executives of the Company at levels comparable to the Executive, but in no event
less than four (4) weeks paid vacation time per annum and such other benefits,
including, subject to meeting standard eligibility requirements, participation
in any 401(k) plan in which the Company's Executives are eligible to
participate, customary medical insurance and continuing education benefits, as
are from time to time made available to other similarly situated employees of
the Company on the same terms as are available to such similarly situated
Executives, it being understood that the Executive shall be required to make the
same contributions and payments in order to receive any of such benefits as may
be required of such similarly situated Executives. In addition, the Executive
shall receive an automobile allowance of seven hundred fifty dollars ($750) per
month during the term of this Agreement. If the Executive transfers his
principal place of residence during the term of this Agreement closer to his
principal office location he shall be reimbursed for the reasonable costs
associated with that move, such as costs of shipping furniture and other
personal property, sales commissions, customary closing costs, and other costs
typically reimbursed to senior executives. In addition, the Company shall
"gross-up" the reimbursement to compensate the Executive for the actual tax
effect of such reimbursement.
(b) The Company has granted or agreed to grant the Executive options
to purchase 400,000 shares of the Company's Common Stock under the Company's
1994 Equity Incentive Plan and the Company or its subsidiaries may grant the
Executive additional warrants or options under this plan or otherwise (such
options or warrants are collectively referred to as the "Options"). If the
Company terminates the employment of the Executive for any reason
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other than Due Cause as defined in paragraph 6.3 of this Agreement, or the
Executive terminates his employment pursuant to a Change of Control or for Good
Reason, any remaining unvested Options then held by Executive shall become
immediately vested and exercisable and shall be amended to remain exercisable
for the remainder of their original term or shall be replaced by warrants or
options with such revised terms and the shares issuable under the Options shall
be registered under the Securities Act of 1933 and listed on the New York Stock
Exchange or such other exchange as the Company's Common Stock is then traded.
6. Termination of Employment.
6.1 Death. In the event of the death of the Executive during the
term of this Agreement, the Company shall pay to the estate or other legal
representative of the Executive the salary provided for in Section 3(a) (at the
annual rate then in effect) (the "Base Salary") accrued to the Executive's date
of death and not theretofore paid, and the estate or other legal representative
of the Executive shall have no further rights under this Agreement. Rights and
benefits of the Executive, his estate or other legal representative under the
Executive benefit plans and programs of the Company, if any, will be determined
in accordance with the terms and provisions of such plans and programs.
6.2 Disability. If the Executive shall become incapacitated by
reason of sickness, accident or other physical or mental disability and shall
for a period of one hundred eighty (180) consecutive days be unable to perform
his normal duties hereunder, the employment of the Executive hereunder may be
terminated by the Company upon thirty (30) days' prior written notice to the
Executive. Within thirty (30) days after such termination, the Company shall pay
to the Executive the Base Salary accrued to the date of such termination and not
theretofore paid. Rights and benefits of the Executive, his estate or other
legal representative under the Executive benefit plans and programs of the
Company, if any, will be determined in accordance with the terms and provisions
of such plans and programs. Neither the Executive nor the Company shall have
further rights or obligations under this Agreement, except as provided in
Sections 7 and 8.
6.3 Due Cause. The employment of the Executive hereunder may be
terminated by the Company at any time during the term of this Agreement for Due
Cause (as hereinafter defined). In the event of such termination, the Company
shall pay to the Executive the Base Salary accrued to the date of such
termination and not theretofore paid to the Executive, and, after the
satisfaction of any claim of the Company against the Executive arising as a
direct and proximate result of such Due Cause, neither the Executive nor the
Company shall have any further rights or obligations under this Agreement,
except as provided in Sections 7 and 8. Rights and benefits of the Executive,
his estate or other legal representative under the Executive benefit plans and
programs of the Company, if any, will be determined in accordance with the terms
and provisions of such plans and programs. For purposes hereof, "Due Cause"
shall mean (i) the Executive's willful and continued failure substantially to
perform his duties with the Company, (ii) fraud, misappropriation or intentional
material damage to the property or business of the Company by the Executive of
(iii) the Executive's conviction of, or plea of nolo
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contendere to, any felony that, in the judgment of the Board adversely affects
the Company's reputation or the Executive's ability to carry out his obligations
under this Agreement. In the event of an occurrence under this Section 6.3, the
Executive shall be given written notice by the Company that it intends to
terminate the Executive's employment for Due Cause under this Section, which
written notice shall specify the act or acts upon the basis of which the Company
intends so to terminate the Executive's employment. If the basis for such
written notice is an act or acts described in clause (i) above the Executive
shall be given ten (10) days to cease or correct the performance (or
nonperformance) giving rise to such written notice and, upon failure of the
Executive within such ten (10) days to cease or correct such performance (or
nonperformance), the Executive's employment by the Company shall automatically
be terminated hereunder for Due Cause.
6.4 Other Termination. (a) The Company may terminate the Executive's
employment prior to the expiration of the term of this Agreement for whatever
reason it deems appropriate; provided, however, that in the event that such
termination is not pursuant to Sections 6.1, 6.2 or 6.3, in lieu of notice or
any other termination payment pursuant to shortening the then current term of
this Agreement, the Company shall pay to the Executive:
(i) on the date of termination, the Base Salary accrued to the
date of termination and not theretofore paid to the Executive:
(ii) within three weeks after the date of termination
severance pay, in the form of a lump sum payment in an amount equal to the
greater of (a) the amount of cash compensation earned by Executive in the
calendar year (whether or not paid in such calendar year) immediately preceding
the calendar year in which termination occurs, or (b) the then current annual
Base Salary, Executive's annual automobile allowance as described in paragraph
5(a) and the guideline or annual target amount for the Executive for the then
current year pursuant to the bonus plan described in paragraph 3(b). Cash
compensation shall consist of (i) Executive's Base Salary (ii) Executive's
automobile allowance as described in paragraph 5(a) and (iii) the amount of any
cash incentive compensation or bonus earned by the Executive in such immediately
preceding calendar year.
(iii) sufficient funds, payable monthly in advance, to enable
the Executive to continue coverage under COBRA for a period of eighteen months
after termination for any benefits he elects to continue after termination or to
obtain comparable benefits if coverage under COBRA is unavailable.
(b) The Executive shall have the right to terminate this Agreement
during the one year period following a Change of Control or for Good Reason and
in that event the Company shall pay to the Executive:
(i) on the date of termination, the Base Salary accrued to the
date of termination and not theretofore paid to the Executive.
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(ii) within three weeks after the date of termination
severance pay, in the form of a lump sum payment in an amount equal to the
greater of (a) the amount of cash compensation earned by Executive in the
calendar year (whether or not paid in such calendar year) immediately preceding
the calendar year in which termination occurs, or (b) the then current annual
Base Salary, Executive's annual automobile allowance as described in paragraph
5(a) and the guideline or annual target amount for the Executive for the then
current year pursuant to the bonus plan described in paragraph 3(b). Cash
compensation shall consist of (i) Executive's Base Salary (ii) Executive's
automobile allowance as described in paragraph 5(a) and (iii) the amount of any
cash incentive compensation or bonus earned by the Executive in such immediately
preceding calendar year.
(iii) sufficient funds, payable monthly in advance, to enable
the Executive to continue coverage under COBRA for a period of eighteen months
after termination for any benefits he elects to continue after termination or to
obtain comparable benefits if coverage under COBRA is unavailable.
(c) In the event of a termination pursuant to this paragraph 6(4),
rights and benefits of the Executive, his estate or other legal representative
under the Executive benefit plans and programs of the Company, if any, will be
determined in accordance with the terms and provisions of such plans and
programs and neither the Executive nor the Company shall have any further rights
or obligations under this Agreement, except as provided in Sections 7 and 8.
(d) For purposes of this Agreement, a Change in Control of the
Company shall be deemed to have occurred if:
(i) a "person" (meaning an individual, a partnership, or other
group or association as defined in Sections 13(d) and 14(d) the Securities
Exchange Act of 1934), acquires thirty percent (30%) or more of the combined
voting power of the outstanding securities of the Company having a right to vote
in elections of directors, or
(ii) Continuing Directors shall for any reason cease to
constitute a majority of the Board of Directors of the Company; or
(iii) all or substantially all of the business and/or assets
of the Company is disposed of by the Company to a party or parties other than a
parent, subsidiary or other affiliate of the Company, pursuant to a partial or
complete liquidation of the Company, sale of assets (including stock of a
subsidiary of the Company) or otherwise.
For purposes of this Agreement, the term "Continuing Director" shall
mean a member of the Board of Directors of the Company who either was a member
of the Board of Directors of the Company on the date hereof or who subsequently
became a Director and whose election, or nomination for election, was approved
by a vote of at least two-thirds of the Continuing Directors then in office.
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(e) Good Reason. For purposes of this Agreement, "Good Reason"
means:
(i) (A) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 2 of this Agreement, (B) any other
action by the Company which results in a diminution in such position, authority,
duties or responsibilities, other than an insubstantial and inadvertent action
which is remedied by the Company promptly after receipt of notice thereof given
by the Executive, (C) Xxxxx X. Xxxxx shall resign or be removed as Chairman of
the Board of Directors of the Company, or (D) the principal office location of
the Executive is moved more than 30 miles from its current location at 000
Xxxxxxxx Xxxxxxx, Xxxx Xxxx Xxxxxx, N.J.;
(ii) any failure by the Company to comply with any of the provisions
of Section 3 of this Agreement, other than an insubstantial and inadvertent
failure which is remedied by the Company promptly after receipt of notice
thereof given by the Executive.
7. Confidential Information.
7.1 (a) The Executive shall, during the Executive's employment with
the Company and at all times thereafter, treat all confidential material (as
hereinafter defined) of the Company or any member of the Company Group (as
hereinafter defined) confidentially. The Executive shall not, without the prior
written consent of the Board of Directors of the Company, disclose such
confidential material, directly or indirectly, to any party, who at the time of
such disclosure is not an Executive or agent of any member of the Company Group,
or remove from the Company's premises any notes or records relating thereto,
copies or facsimiles thereof (whether made by electronic, electrical, magnetic,
optical, laser, acoustic or other means), or any other property of any member of
the Company Group. The Executive agrees that all confidential material, together
with all notes and records of the Executive relating thereto, and all computer
disks, copies or facsimiles thereof in the possession of the Executive (whether
made by the foregoing or other means) are the exclusive property of the Company.
The Executive shall not in any manner use any confidential material of the
Company Group, or any other property of any member of the Company Group, in any
manner not specifically directed by the Company or in any way which is
detrimental to any member of the Company Group, as determined by the Board of
Directors of the Company in its sole discretion.
(b) For the purposes hereof, the term Company Group, shall
mean collectively, the Company and the Company's subsidiaries, affiliates and
parent entities, and the term "confidential material" shall mean all information
in any way concerning the activities, business or affairs of any member of the
Company Group or any of the customers and clients of any member of the Company
Group, including, without limitation, information concerning trade secrets,
together with all sales and financial information concerning any member of the
Company Group and any and all information concerning projects in research and
development or marketing plans for any products or projects of the Company
Group, and all information concerning the practices, customers and clients of
any member of the Company Group, and all information in
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any way concerning the activities, business or affairs of any of such customers
or clients, as such, which is furnished to the Executive by any member of the
Company Group or any of its agents, customers or clients, as such, or otherwise
acquired by the Executive in the course of the Executive's employment with the
Company; provided, however, that the term "confidential material" shall not
include information which (i) becomes generally available to the public other
than as a result of a disclosure by the Executive, (ii) was available to the
Executive on a non-confidential basis prior to his employment with any member of
the Company Group or (iii) becomes available to the Executive on a
non-confidential basis from a source other than any member of the Company Group
or any of its agents, customers or clients, as such, provided that such source
is not bound by a confidentiality agreement with any member of the Company Group
or any of such agents, customers or clients.
7.2 Promptly upon the request of the Company, the Executive shall
deliver to the Company all confidential material relating to any member of the
Company Group in the possession of the Executive without retaining a copy
thereof, unless, in the opinion of counsel for the Company, either returning
such confidential material or failing to retain a copy thereof would violate any
applicable Federal, state, local or foreign law, in which event such
confidential material shall be returned without retaining any copies thereof as
soon as practicable after such counsel advises that the same may be lawfully
done.
7.3 In the event that the Executive is required, by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand or similar process, to disclose any confidential material
relating to any member of the Company Group, the Executive shall provide the
Company with prompt notice thereof so that the Company may seek an appropriate
protective order and/or waive compliance by the Executive with the provisions
hereof; provided, however, that if in the absence of a protective order or the
receipt of such a waiver, the Executive is, in the opinion of counsel for the
Company, compelled to disclose confidential material not otherwise disclosable
hereunder to any legislative, judicial or regulatory body, agency or authority,
or else be exposed to liability for contempt, fine or penalty or to other
censure, such confidential material may be so disclosed.
8. Equitable Relief. In the event of a breach or threatened breach by the
Executive of any of the provisions of Section 7 of this Agreement, the Executive
hereby consents and agrees that the Company shall be entitled to pre-judgment
injunctive relief or similar equitable relief restraining the Executive from
committing or continuing any such breach or threatened breach or granting
specific performance of any act required to be performed by the Executive under
any of such provisions, without the necessity of showing any actual damage or
that money damages would not afford an adequate remedy and without the necessity
of posting any bond or other security. The parties hereto hereby consent to the
jurisdiction of the Federal courts for the Eastern District of Pennsylvania and
the state courts located in such District for any proceedings under this Section
8. Nothing herein shall be construed as prohibiting the Company from pursuing
any other remedies at law or in equity which it may have.
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9. Indemnification. The Company shall indemnify the Executive to the
fullest extent permitted by the laws of the state of incorporation of the
Company, as amended from time to time, for all amounts (including, without
limitation, judgments, fines, settlement payments, expenses and attorney's fees)
incurred or paid by the Executive in connection with any action, suit,
investigation or proceeding arising out of or relating to the performance by the
Executive of services for, or acting by the Executive as a director, officer or
executive of, the Company or any other person or enterprise at the Company's
request, and shall to the fullest extent permitted by the laws of the state of
incorporation of the Company, as amended from time to time, advance all expenses
incurred or paid by the Executive in connection with, and until disposition of
any action, suit, investigation or proceeding arising out of or relating to the
performance by the Executive of services for, or acting by the Executive as a
director, officer or executive of, the Company or any other person or enterprise
at the Company's request.
10. Successors and Assigns.
10.1 Assignment by the Company. The Company shall require any
successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform if no such
succession had taken place. As used in this Section, the "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law and this Agreement shall be
binding upon, and inure to the benefit of, the Company, as so defined.
10.2 Assignment by the Executive. The Executive may not assign this
Agreement or any part thereof without the prior written consent of the Chairman
of the Board of the Company; provided, however, that nothing herein shall
preclude one or more beneficiaries of the Executive from receiving any amount
that may be payable following the occurrence of his legal incompetency or his
death and shall not preclude the legal representative of his estate from
receiving such amount or from assigning any right hereunder to the person or
persons entitled thereto under his will or, in the case of intestacy, to the
person or persons entitled thereto under the laws of intestacy applicable to his
estate. The term "beneficiaries," as used in this Agreement, shall mean a
beneficiary or beneficiaries so designated to receive any such amount or, if no
beneficiary has been so designated, the legal representative of the Executive
(in the event of his incompetency) or the Executive's estate.
11. Governing Law. This Agreement shall be deemed a contract made under,
and for all purposes shall be construed in accordance with, the laws of the
State of New Jersey applicable to contracts to be performed entirely within such
State.
12. Entire Agreement. This Agreement contains all the understandings and
representations between the parties hereto pertaining to the subject matter
hereof and supersede
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all undertakings and agreements, whether oral or in writing, if there be any,
previously entered into by them with respect thereto. No modification of this
Agreement shall be effective unless in writing and signed by the party against
which enforcement is sought to be enforced.
13. Modification and Amendment; Waiver. The provisions of this Agreement
may be modified, amended or waived, but only upon the written consent of the
party against whom enforcement of such modification, amendment or waiver is
sought and then such modification, amendment or waiver shall be effective only
to the extent set forth in such writing. No delay or failure on the part of any
party hereto in exercising any right, power or remedy hereunder shall effect or
operate as a waiver thereof, nor shall any single or partial exercise thereof or
any abandonment or discontinuance of steps to enforce such right, power or
remedy preclude any further exercise thereof or of any other right, power or
remedy.
14. Notices. All notices, requests or instructions hereunder shall be in
writing and delivered personally, sent by telecopier or sent by registered or
certified mail, postage prepaid, as follows:
If to the Company:
EA Industries, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxx Xxxx Xxxxxx, XX 00000
Attn: Chairman of the Board
With a copy delivered in the same manner to:
Xxxxxxx X. Xxxxx, Esquire
Mesirov Xxxxxx Xxxxx Xxxxxx & Xxxxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
If to the Executive:
00 Xxxxxx Xxxxxxxx Xxx
Xxxxxxx, X.X. 00000
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered or telecopied, and two business days after the date of
mailing, if mailed.
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14. Severability. Should any provision of this Agreement be held by a
court of competent jurisdiction to be enforceable only if modified, such holding
shall not affect the validity of the remainder of this Agreement, the balance of
which shall continue to be binding upon the parties hereto with any such
modification to become a part hereof and treated as though originally set forth
in this Agreement. The parties further agree that any such court is expressly
authorized to modify any such unenforceable provision of this Agreement in lieu
of severing such unenforceable provision from this Agreement in its entirety,
whether by rewriting the offending provision, deleting any or all of the
offending provision, adding additional language to this Agreement, or by making
such other modifications as it deems warranted to carry out the intent and
agreement of the parties as embodied herein to the maximum extent permitted by
law. The parties expressly agree that this Agreement as so modified by the court
shall be binding upon and enforceable against each of them. In any event, should
one or more of the provisions of this Agreement be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions hereof, and if such provision or
provisions are not modified as provided above, this Agreement shall be construed
as if such invalid, illegal or unenforceable provisions had never been set forth
herein.
15. Withholding. Anything to the contrary notwithstanding, all payments
required to be made by the Company hereunder to the Executive or his
beneficiaries, including his estate, shall be subject to withholding of such
amounts relating to taxes as the Company may reasonably determine it should
withhold pursuant to any applicable law or regulation. In lieu of withholding
such amounts, in whole or in part, the Company, may, in its sole discretion,
accept other provision for payment of taxes as permitted by law, provided it is
satisfied in its sole discretion that all requirements of law affecting its
responsibilities to withhold such taxes have been satisfied.
16. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
17. Expenses. Each of the parties hereto shall bear his or its own costs
and expenses, including attorneys' fees and disbursements, incurred in
connection with this Agreement and the transactions contemplated hereby.
18. Titles. Titles of the sections of this Agreement are intended solely
for convenience and no provision of this Agreement is to be construed by
reference to the title of any section.
19. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
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* * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the date first above written.
EA Industries, Inc.
By:_________________________________
____________________________________
Xxxx X. Xxxxx
