EXHIBIT 10.10
EASTCO INDUSTRIAL SAFETY CORP.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of this 1st day of July,
1995 by and between EASTCO INDUSTRIAL SAFETY CORP., a New York
corporation, having an office at 000 Xxxx 00xx Xxxxxx, Xxxxxxxxxx,
Xxx Xxxx 00000 (hereinafter referred to as "Employer") and XXXXXXXX
XXXXXX, an individual residing at 0 Xxxxxx Xxxxx, Xx. Xxxxx, Xxx
Xxxx 00000 (hereinafter referred to as "Employee");
W I T N E S S E T H:
WHEREAS, Employer employs, and desires to continue to
employ, Employee as Senior Vice-President; and
WHEREAS, Employee is willing to continue to be employed
as Senior Vice-President in the manner provided for herein and to
perform the duties of said position upon the terms and conditions
herein set forth;
NOW, THEREFORE, in consideration of the promises and
mutual covenants herein set forth it is agreed as follows:
1. Employment of Senior Vice-President. Employer
hereby employs Employee as Senior Vice-President.
2. Term.
a. Subject to Section 10 below and further subject
to Section 2(b) below, the term of this Agreement shall commence on
July 1, 1995 and end on June 30, 2000. Each 12 month period from
July 1 through June 30 during the term hereof shall be referred to
as an "Annual Period." During the term hereof, Employee shall
devote substantially all of his business time and efforts to
Employer.
b. Subject to Section 10 below, unless the Board
of Directors (the "Board") of Employer shall determine to the
contrary and shall so notify Employee in writing on or before the
end of any Annual Period, then at the end of each Annual Period,
the term of this Agreement shall be automatically extended for one
(1) additional Annual Period to be added at the end of the then
current term of this Agreement.
3. Duties. The Employee shall perform those functions
generally performed by persons of such title and position, shall
attend meetings of the stockholders and the Board, shall perform
any and all related duties and shall have any and all powers as may
be reasonably prescribed by resolution of the Board, and shall be
available to confer and consult with and advise the officers and
directors of Employer at such times that may be required by
Employer upon reasonable notice and subject to Employee's
reasonable availability. Employee shall report directly and solely to
the President.
4. Compensation.
a. (i) Employee shall be paid a minimum of
$105,000 through and including June 30, 1996. Employee's salary
shall be increased annually at the beginning of each Annual Period
at the discretion of the Board, but in no event shall said increase
be less than 10% of the minimum compensation paid Employee in the
prior Annual Period. Employee shall be paid periodically in
accordance with the policies of the Employer during the term of
this Agreement, but not less than monthly.
(ii) Employee is eligible for annual bonuses
which shall be equal to 3 % of the Company's earnings before
interest and taxes plus 0.75% of the Company's revenues in excess
of $20.5 million. Said bonuses shall be paid within 30 days of the
completion of Employer's audited financial statement for each
fiscal year and shall be paid in cash or registered shares of
common stock of Employer, at the option of Employee.
b. Employer shall include Employee, his spouse and
minor children, if any, in its health insurance program available
to Employer's executive officers or such program having greater
benefits available to other Employees of Employer.
c. Employer shall maintain a life, accidental
death and dismemberment insurance policy or policies on Employee
for the benefit of a beneficiary named by Employee in a total
amount not less than $750,000. Ownership of the policy or policies
shall be assigned to Employee upon termination of Employee's
employment under this Agreement without payment of any
consideration by Employee.
d. Employee shall receive $700 per month as an
automobile allowance, plus reimbursement for reasonable operating,
maintenance, insurance and repair expenses.
e. Employer shall institute, and Employee shall be
eligible to participate in, a Senior Management Performance-based
Stock Option Plan to motivate and reward Employee for his role in
improving Employer's earnings and shareholder value.
f. Employee shall be paid a one-time bonus equal
to his total minimum base salary for the next three years if there
is a Change of Control as hereinafter defined, said bonus to be
paid within thirty (30) days thereof.
g. If there is a Change of Control as hereinafter
defined, Employee shall be immediately compensated by Employer for
all amounts (including interest) not yet received by Employee as a
result of his participation in a total of $250,000 of junior
participations with Congress Financial Corporation in loans to the
Company made during September 1993 without regard to whether such
amount is currently due pursuant to the terms thereof.
h. All Rights as hereinafter defined which
may become exercisable for any reason during the term hereof shall
be paid for (i) in cash, (ii) by the transfer by Employee to
Employer of so much of Employee's Rights which, when valued at the
highest trading price of the underlying securities of Employer
during the previous six months, will offset the total exercise
price or (iii) some combination of (i) and (ii) above, at the
option of Employee.
i. Employee shall have the right to
participate in any other employee benefit plans established by Employer.
5. Board of Directors. Employer agrees that so long as
this Agreement is in effect, Employee shall be nominated to the
Board as part of management's slate of Directors.
6. Expenses. Employee shall be reimbursed for all of
his actual out-of-pocket expenses incurred in the performance of
his duties hereunder, provided such expenses are acceptable to
Employer, which approval shall not be unreasonably withheld, for
business related travel and entertainment expenses, and that
Employee shall submit to Employer reasonably detailed receipts with
respect thereto.
7. Vacation. Employee shall be entitled to receive six
(6) weeks paid vacation time after each year of employment upon
dates reasonably agreed upon by Employer. Upon each anniversary of
this agreement and upon separation of employment, for any reason,
vacation time accrued and not used shall be paid at the salary rate
of Employee in effect at that time.
8. Secrecy. At no time shall Employee disclose to
anyone any confidential or secret information (not already
constituting information available to the public) concerning (a)
internal affairs or proprietary business operations of Employer or
(b) any trade secrets, new product developments or patents,
especially unique processes or methods.
9. Covenant Not to Compete. Subject to, and limited
by, Section 11(b), Employee will not, at any time, anywhere in the
world, during the term of this Agreement, and for one (1) year
thereafter, either directly or indirectly, engage in, with or for
any enterprise, institution, whether or not for profit, business,
or company, competitive with the business (as identified herein) of
Employer as such business may be conducted on the date thereof, as
a creditor, guarantor, or financial backer, stockholder, director,
officer, consultant, advisor, employee, member, inventor, or
otherwise of or through any corporation, partnership, association,
sole proprietorship or other entity; provided, that an investment
by Employee, his spouse or his children is permitted if such
investment is not more than five percent (5%) of the total debt or
equity capital of any such competitive enterprise or business and
further provided that said competitive enterprise or business is a
publicly held entity whose stock is listed and traded on a national
stock exchange or through the Nasdaq Stock Market. As used in this
Agreement, the business of Employer shall be deemed to include the
manufacture and distribution of industrial protective clothing and
safety products.
10. Termination.
a. Termination by Employer
(i) Employer may terminate this Agreement
upon written notice for Cause. For purposes hereof, "Cause" shall
mean (A) engaging by the Employee in conduct that constitutes
activity in competition with Employer; (B) the conviction of
Employee for the commission of a felony; and/or (C) the habitual
abuse of alcohol or controlled substances. Notwithstanding
anything to the contrary in this Section 10(a)(i), Employer may not
terminate Employee's employment under this Agreement for Cause
unless Employee shall have first received notice from the Board
advising Employee of the specific acts or omissions alleged to
constitute Cause, and such acts or omissions continue after
Employee shall have had a reasonable opportunity (at least 10 days
from the date Employee receives the notice from the Board) to
correct the acts or omissions so complained of. In no event shall
alleged incompetence of Employee in the performance of Employee's
duties be deemed grounds for termination for Cause.
(ii) Employer may terminate Employee's
employment under this Agreement if, as a result of any physical or
mental disability, Employee shall fail or be unable to perform his
duties under this Agreement for any consecutive period of 120 days
during any twelve-month period. If Employee's employment is
terminated under this Section 10(a)(ii): (A) for the first six
months after termination, Employee shall be paid 100% of his full
compensation under Section 4(a) of this Agreement at the rate in
effect on the date of termination, and in each successive 12 month
period thereafter Employee shall be paid an amount equal to 65% of
his compensation under Section 4(a) of this agreement at the rate
in effect on the date of termination, on an after-tax basis, which
obligation Employer may fulfill in whole or in part by purchasing
disability insurance coverage; (B) Employer's obligation to pay
life insurance premiums on the policy referred to in Section 4(c)
shall continue in effect until five years from the date of
termination; and (C) Employee shall continue to be entitled,
insofar as is permitted under applicable insurance policies or
plans, to such general medical and employee benefit plans
(including profit sharing or pension plans) as Employee had been entitled
to on the date of termination. Employer shall purchase disability
insurance for the benefit of Employee and any amounts payable by
Employer to Employee under this paragraph shall be reduced by the
amount of any disability payments paid by said insurance and
actually received by Employee.
(iii) This agreement automatically shall
terminate upon the death of Employee, except that Employee's estate
shall be entitled to receive the pro-rata amount payable under any
profit sharing plans Employer may institute for the period prior to
Employee's death and any other amount to which Employee was
entitled at the time of his death, and Employee's salary and all
health, insurance and other benefits applicable to Employee's
family shall continue for 12 months from the date of Employee's
death. In addition upon the death of Employee all Rights, as
hereinafter defined, shall become vested, accelerate and become
immediately exercisable for one year at 50% of their stated
exercise price which may be paid for as described in Section 4.h.,
above.
b. Termination by Employee
(i) Employee shall have the right to terminate
his employment under this Agreement upon 30 days' notice to Company
given within 90 days following the occurrence of any of the
following events (A) through (F) or within three (3) years
following the occurrence of event (G):
(A) Employee is not elected or retained
as Senior Vice-President and a Director of Employer.
(B) Employer acts to materially reduce
Employee's duties and responsibilities hereunder.
(C) Employer acts to change the geographic
location of the performance of Employee's duties from the
New York Metropolitan area. For purposes of this Agreement, the
New York Metropolitan area shall be deemed to be the area within 30
road miles of Employer's present offices.
(D) a Material Reduction (as hereinafter
defined) in Employee's rate of base compensation, or Employee's
other benefits. "Material Reduction" shall mean a ten percent
(10%) differential;
(E) a failure by Employer to obtain the
assumption of this Agreement by any successor;
(F) a material breach of this Agreement
by Employer, which is not cured within thirty (30) days of written
notice by Employee of such breach.
(G) a "Change of Control" by which a
person (other than a person who is an officer and a Director of
Employer on the effective date hereof), including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
becomes, or obtains the right to become, the beneficial owner of
Employer securities having 20% or more of the combined voting power
of the then outstanding securities of the Employer that may be cast
for the election of directors of the Employer (other than as a
result of an issuance of securities initiated by the Employer in
the ordinary course of business) or the composition of the Board of
Employer changes so that officers of Employer no longer hold a
majority of the seats; or
(ii) Anything herein to the contrary
notwithstanding, Employee may terminate this Agreement upon thirty (30)
days written notice.
c. If Employer shall terminate Employee's
employment other than due to his death or disability or for Cause
(as defined in Section 10(a)(i) of this Agreement), or if Employee
shall terminate this Agreement under Section 10(b)(i), Employer's
obligations under Section 4 shall be absolute and unconditional and
not subject to any offset or counterclaim and Employee shall
continue to be entitled to receive all amounts provided for by
Section 4 and all additional employee benefits under Section 4
regardless of the amount of compensation he may earn with respect
to any other employment he may obtain.
11. Consequences of Breach by Employer; Employment
Termination.
a. If this Agreement is terminated pursuant to
Section 10(b)(i)(A)-(F) hereof, or if Employer shall terminate
Employee's employment under this Agreement in any way that is a
breach of this Agreement by Employer, the following shall apply:
(i) Employee shall receive as a bonus, and in
addition to his salary continuation pursuant to Section 10(c), a
cash payment equal to Employee's total base salary plus projected
expenses and bonuses for the remainder of the term hereof, payable
within 30 days of the date of such termination.
(ii) Employee shall be entitled to payment of
any previously declared bonus as provided in Section 4 above.
(iii) All stock options, warrants and
stock appreciation rights ("Rights") granted by Employer to
Employee under any plan or otherwise prior to the date of
termination shall become vested, accelerate and become immediately
exercisable; where relevant at an exercise price of $0.10 per share.
In the event Employee owns or is entitled to receive any
unregistered securities of Employer, then Employer shall use its best
efforts to affect the registration of all such securities as soon
as practicable, but no later than 120 days after the effective date
of termination registration statement; provided, however, that such
period may be extended or delayed by Employer for one period of up
to 60 days if, upon the advice of counsel at the time such
registration is required to be filed, or at the time Employer is
required to exercise its best efforts to cause such registration
statement to become effective, such delay is advisable and in the
best interests of Employer because of the existence of non-public
material information, or to allow Employer to complete any pending
audit of its financial statements.
b. In the event of termination of Employee's
employment by Employer, other than pursuant to Section 10(a) of
this Agreement, or by Employee pursuant to Section 10(b)(i) of this
Agreement, or in the event Employer delays for more than 15 days
the making of any payment hereunder, without in any way excusing
Employer's obligations under this Agreement, the provisions of
Section 9 shall not apply to Employee.
12. Remedies
Employer recognizes that because of Employee's
special talents, stature and opportunities in the industry, in the
event of termination by Employer hereunder (except under Section
10(a)(i) or (iii), or in the event of termination by Employee under
Section 10(b)(i) before the end of the agreed term, Company
acknowledges and agrees that the provisions of this Agreement
regarding further payments of base salary, bonuses and the
exercisability of stock options, warrants and stock appreciation
rights constitute fair and reasonable provisions for the
consequences of such termination, do not constitute a penalty, and such
payments and benefits shall not be limited or reduced by amounts
Employee might earn or be able to earn from any other employment of
ventures during the remainder of the agreed term of this Agreement.
13. Excise Tax. In the event that any payment or
benefit received or to be received by Employee in connection with
a termination of his employment with Employer would constitute a
"parachute payment" within the meaning of Code Section 280G or any
similar or successor provision to 280G and/or would be subject to
any excise tax imposed by Code Section 4999 of the Code or any
similar or successor provision then Employer shall assume all
liability for the payment of any such tax and Employer shall
immediately reimburse Employee on a "grossed-up" basis for any
income taxes attributable to Employee by reason of such Employer
payment and reimbursements.
14. Arbitration. Any controversies between Employer
and Employee involving the construction or application of any of
the terms, provisions or conditions of this Agreement, save and
except for any breaches arising out of Sections 8 and 9 hereof,
shall on the written request of either party served on the other by
submitted to arbitration. Such arbitration shall comply with and
be governed by the rules of the American Arbitration Association.
An arbitration demand must be made within one (1) year of the date
on which the party demanding arbitration first had notice of the
existence of the claim to be arbitrated, or the right to arbitration
along with such claim shall be considered to have been waived.
An arbitrator shall be selected according to the procedures of the
American Arbitration Association. the cost of arbitration shall be
born by the losing party or in such proportions as the arbitrator
shall decide. The arbitrator shall have no authority to add to,
subtract from or otherwise modify the provisions of this Agreement,
or to award punitive damages to either party.
15. Attorneys' Fees and Costs. If any action at law or
in equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable
attorney's fees, costs and necessary disbursements in addition to
any other relief to which he may be entitled.
16. Entire Agreement; Survival.
a. This Agreement contains the entire agreement
between the parties with respect to the transactions contemplated
herein and supersedes, as of the effective date hereof any prior
agreement or understanding between Employer and Employee with
respect to Employee's employment by Employer. The unenforceability
of any provision of this Agreement shall not effect the
enforceability of any other provision. This Agreement may not be amended
except by an agreement in writing signed by the Employee and the
Employer, or any waiver, change, discharge or modification as
sought. Waiver of or failure to exercise any rights provided by
this Agreement and in any respect shall not be deemed a waiver of
any further or future rights.
b. The provisions of Sections 4, 8, 9, 10(a)(ii),
10(c), 11, 12, 13, 14, 15, 18, 19 and 20 shall survive the
termination of this Agreement.
17. Assignment. This Agreement shall not be assigned
to other parties, but shall be binding upon any purported
successors and assigns of Employer.
18. Governing Law. This Agreement and all the
amendments hereof, and waivers and consents with respect thereto shall
be governed by the internal laws of the state of New York, without
regard to the conflicts laws principles thereof.
19. Notices. All notices, responses, demands or other
communications under this Agreement shall be in writing and shall
be deemed to have been given when
a. delivered by hand;
b. sent be telex or telefax, (with receipt
confirmed), provided that a copy is mailed by registered or
certified mail, return receipt requested; or
c. received by the addressee as sent be express
delivery service (receipt requested) in each case to the
appropriate addresses, telex numbers and telefax numbers as the party may
designate to itself by notice to the other parties:
(i) if to the Employer:
Eastco Industrial Safety Corp.
000 Xxxx 00xx Xxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attention: President
Telephone: 000-000-0000
Telefax: 000-000-0000
Gersten, Savage, Kaplowitz & Xxxxxx
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxxxxx, Esq.
Telephone: 000-000-0000
Telefax: 212-980-5192
(ii) if to the Employee:
Xxxxxxxx Xxxxxx
0 Xxxxxxx Xxxxx
Xx. Xxxxx, Xxx Xxxx 00000
20. Severability of Agreement. Should any part of this
Agreement for any reason be declared invalid by a court of
competent jurisdiction, such decision shall not affect the validity
of any remaining portion, which remaining provisions shall remain
in full force and effect as if this Agreement had been executed
with the invalid portion thereof eliminated, and it is hereby
declared the intention of the parties that they would have executed
the remaining portions of this Agreement without including any such
part, parts or portions which may, for any reason, be hereafter
declared invalid.
IN WITNESS WHEREOF, the undersigned have executed this
agreement as of the day and year first above written.
EASTCO INDUSTRIAL SAFETY CORP.
By:/s/ Xxxxxxx X. Xxxxxx
--------------------------
Its: Vice President
/s/ Xxxxxxxx Xxxxxx
--------------------------
XXXXXXXX XXXXXX
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