Exhibit 10.3
EXECUTIVE AGREEMENT between Sono-Tek Corporation, a New York
corporation (the "Company") and Xxxxxx Xxxxxx ("Executive"), dated as of the 1st
day of September, 2007.
W I T N E S S E T H:
WHEREAS, Executive is an employee of the Company and is an integral
part of its management; and
WHEREAS, it is in the best interest of the Company that Executive
continue in the service of the Company without the benefits which would accrue
to Executive pursuant to an employment agreement; and
WHEREAS, the Company wishes to assure itself of continuity of
management during the critical period of any actual or threatened change in
control of the Company.
NOW, THEREFORE, it is hereby agreed by and between the parties as
follows:
1. Employment Status.
In consideration of the benefits provided to Executive pursuant to
this Executive Agreement, Executive hereby agrees to continue to be employed by
the Company as an employee-at-will without the benefit of an employment
agreement. Nothing expressed or implied herein shall create any right or duty
(on the part of the Company or Executive) to have Executive remain in the
employment of the Company, each reserving all rights to terminate the employment
relationship at any time, with or without "Cause" (as hereinafter defined).
2. Term.
The term of this Executive Agreement shall commence on the date
hereof and shall terminate on the earlier to occur of (i) termination of
Executive's employment for whatever reason, unless a Change of Control (as
hereinafter defined) shall have occurred prior to such termination or (ii)
twelve months following written notice of termination of this Executive
Agreement given by the Company or Executive.
3. Payment Subsequent to Change of Control.
e. Except as may otherwise be required in accordance with
Section 8 hereof, in the event that a Change of Control of the Company shall
occur during the time Executive is employed by the Company, there shall be
payable to Executive upon the termination of Executive's employment without
Cause or Executive's Resignation for Good Reason (as hereinafter defined) within
18 months following such Change of Control a lump sum (net of any required tax
or other withholding) equal to one year of Executive's annual base and bonus
compensation paid by the Company for the previous calendar year (or such lesser
period as Executive shall have been employed by the Company) immediately
preceding the Change of Control as reflected in Executive's Forms W-2 in respect
of such year. Payment made in accordance with this Section 3(a) shall represent
full satisfaction of all of the obligations of the Company under this Executive
Agreement and concurrent with receipt of such payment Executive shall execute a
document satisfactory to the Company to that effect.
f. For the purpose of this Executive Agreement, a "Change of
Control" of the Company shall mean any of the following:
i. The sale to a "Non-Affiliate" (as defined below)
of all or substantially all of the assets of the
Company;
ii. The merger of the Company with or into a
Non-Affiliate where immediately following such
transaction 50% or more of the outstanding voting
stock of the remaining entity is not owned by
persons who were shareholders of the Company
immediately prior to such transaction;
iii. The acquisition by any person who is not on the
date hereof an Affiliate or Major Shareholder (as
such terms are defined below) of 50% or more of
the issued and outstanding stock of the Company;
or
iv. The Board of Directors of the Company shall cease
to be a "Qualified Board" (as defined below).
g. For purposes of this Executive Agreement:
i. Persons or entities shall be "Affiliates" if one
controls the other or if they are under common
control. "Control" shall mean the ownership of 50%
or more of the issued and outstanding stock of any
such entity.
ii. "Major Shareholder" shall mean any person or
entity who directly or indirectly currently owns
as of the date of this Agreement 25% of the issued
and outstanding stock of the Company.
iii. "Qualified Board" shall mean the Board of
Directors of the Company which is comprised of no
fewer than five persons at least a majority of
whose members are currently directors of the
Company or shall have been elected or nominated to
the Board by a "Qualified Board."
iv. "Cause" shall mean: (1) proven or admitted (A)
embezzlement, or (B) material dishonest misuse of
the Company funds or assets; (2) an admitted or
proven act constituting a felony or misdemeanor
(other than minor offenses such as traffic
violations) or conviction for such act; (3)
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continued conduct materially adverse to the
interests of the Company which does not cease
within thirty (30) days of written notice from the
Board of Directors of the Company; (4) repeated
material failure by Executive, after written
warning by the Board of Directors of the Company,
to perform the duties of his or her employment
(including without limitation material failure to
follow or comply with the reasonable and lawful
written directives of the Board of Directors of
the Company); or (5) breach of any statutory or
common law fiduciary duty of loyalty to the
Company which is not cured within thirty (30) days
of written notice from the Board of Directors of
the Company.
h. For purposes of this Executive Agreement "Resignation for
Good Reason" shall be deemed to have occurred if the Executive shall resign from
all of his or her positions as employee, officer, director of the Company, and
its Affiliates within 60 days after the occurrence of any of the following
events:
i. If the Executive is an officer of the Company, the
Executive is removed from that post except for the
purposes of assuming another post in the Company
which other post the Executive accepts.
ii. The imposition on the Executive of a requirement
to relocate the site of his or her employment by
the Company to a place more than 50 miles from the
site of his or her present employment.
iii. A reduction in the Executive's rate of
compensation from the Company, which reduction
continues after the Executive has protested in
writing to the Chief Executive Officer of the
Company referring to this Executive Agreement.
iv. A substantial negative change in the duties,
responsibilities or supervisory authority of the
Executive which change persists for a period of at
least 60 days after written protest by the
Executive to the Chief Executive Officer of the
Company referring to this Executive Agreement.
4. Notices.
All notices, requests, demands and other communications provided for
by this Executive Agreement shall be in writing and shall be sufficiently given
if and when mailed in the continental United States by registered or certified
mail or personally delivered to the party entitled thereto at the address stated
below or to such changed address as the addressee may have given by a similar
notice:
To the Company: Sono-Tek Corporation
0000 Xxxxx 0X
Xxxxxx, XX 00000
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To the Executive: Xxxxxx Xxxxxx
XX Xxx 00
Xxxxxx, XX 00000
5. Agreement for Benefit of Executive.
This Executive Agreement shall be binding upon and shall inure to
the benefit of the Executive, the Executive's heirs and legal representative,
and the Company and its successors.
6. Amendment or Modification; Waiver.
No provision of this Executive Agreement may be amended, modified or
waived unless such amendment, modification or waiver shall be authorized by the
Boards of Director of the Company or any authorized committees of the Boards of
Directors and shall be agreed to in writing, signed by the Executive and by an
officer of the Company thereunto duly authorized. Except as otherwise
specifically provided in this Executive Agreement, no waiver by either party
hereto of any breach by the other party hereto of any condition or provision of
this Executive Agreement to be performed by such other party shall be deemed a
waiver of a subsequent breach of such condition or provision or a waiver of a
similar or dissimilar provision or condition at the same or at any prior or
subsequent time.
7. Governing Law.
This Agreement shall be governed by and interpreted and construed in
accordance with the internal laws of the State of New York (without reference to
principles of conflicts or choice of law).
8. Section 409A.
Notwithstanding anything to the contrary in this Agreement, if the
Company determines (a) that on the date the Executive's employment with the
Company terminates or at such other time that the Company determines to be
relevant, the Executive is a "specified employee" (as such term is defined under
Section 409A of the Internal Revenue Code) of the Company and (b) that any
payments to be provided to the Executive pursuant to this Agreement are or may
become subject to the additional tax under Section 409A(a)(1)(B) of the Code or
any other taxes or penalties imposed under Section 409A of the Code ("Section
409A Taxes") if provided at the time otherwise required under this Agreement,
then such payments shall be delayed until the date (the " Deferred Payment
Date") that is six months after the date of the Executive's "separation from
service" (as such term is defined under Section 409A of the Code) with the
Company, or such shorter period that, as determined by the Company, is
sufficient to avoid the imposition of Section 409A Taxes; it being understood
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that any payments so delayed shall become payable in the aggregate on the
Deferred Payment Date. It is the intent of the parties that the provisions of
this Agreement comply with Section 409A of the Code and related regulations and
Department of the Treasury pronouncements. Accordingly, notwithstanding any
provision in this Agreement to the contrary, this Agreement will be interpreted,
applied and to the minimum extent necessary, unilaterally amended by the Company
in its sole discretion, without the consent of Executive, as the Company deems
appropriate for the Agreement to satisfy the requirements of Section 409A and to
avoid the imposition of Section 409A Taxes. Notwithstanding the foregoing, the
Company shall not be liable for any taxes, penalties, interest or other costs
that may arise under Section 409A or otherwise.
IN WITNESS WHEREOF, the parties hereto have executed this Executive
Agreement as of the day and year first above written.
Sono-Tek Corporation
By /s/ Xxxxxxxxxxx Xxxxxx
-----------------------
Xxxxxxxxxxx X. Xxxxxx
Chief Executive Officer
/s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
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