EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of February 1999 by and between Acme
Electric Corporation, a New York corporation having an office at 000 Xxxxxx
Xxxx, Xxxx Xxxxxx, Xxx Xxxx, (the "Company") and Xx. Xxxxxx X. XxXxxxx,
residing at 0 Xxxxxxxxxxx Xxxxx, Xxxxxxx Xxxx, Xxx Xxxx, ("Xx. XxXxxxx").
W I T N E S S E T H:
WHEREAS, Xx. XxXxxxx is Chief Executive Officer ("CEO"), Chairman and
President of the Company; and
WHEREAS, the Company believes that it is in its best interest to
assure the continued service of Xx. XxXxxxx as its CEO, Chairman and
President on the terms and conditions hereinafter set forth; and
WHEREAS, Xx. XxXxxxx is desirous of receiving assurances that, should
a "change in control" as hereinafter defined take place at the Company, he
will be provided with security as to his position, compensation and
benefits.
NOW, THEREFORE, in consideration of the premises and mutual agreement
hereinafter contained, the parties hereto agree as follows:
1. The Company hereby employs Xx. XxXxxxx and Xx. XxXxxxx hereby
accepts employment with the Company as its CEO, Chairman and President upon
the terms and conditions herein contained.
2A. The initial Term shall be for a period commencing on the date
hereof and terminating three years from the date of commencement or three
years from its most recent extension date, whichever is later.
At the end of each month during the Term, the Term shall be
automatically continued and extended for one additional month, unless on or
before fifteen days prior to the end of any month during the Term, the
Company shall give to Xx. XxXxxxx or Xx. XxXxxxx shall give to the Company
a notice not to extend. Then, in such event, the Term as theretofore
automatically extended shall be deemed further extended for one additional
month, and thereafter there shall be no further automatic extensions. (As
an example, should the Company or Xx. XxXxxxx give to the other party a
written notice not to extend on November 15, 1999, the Agreement would be
deemed extended to, and would expire on, December 31, 2002.) "Term" as
used in this Agreement shall be deemed to mean the period of employment
from the date hereof through February 1, 2002, or as automatically extended
pursuant to this Paragraph 2A.
2B. Should the Company breach this Agreement pursuant to the
provisions of Paragraphs 8A, 8B, 8C and 9 herein, Xx. XxXxxxx shall be
entitled to the following:
a. Payments in an amount equal to the base salary payable each
year of the then remaining Term of the Agreement, with such base
salary to be in an amount equal to Xx. XxXxxxx'x base salary in effect
prior to such breach, plus bonus each year of the remaining Term of
the Agreement. The bonus amount each year will be equal to the
average of Xx. XxXxxxx'x greatest two out of the previous three years'
bonuses, or 30% of base salary, whichever is greater.
b. Company paid full medical, dental and disability insurance
benefits and life insurance benefits comparable to those enjoyed prior
to such breach, which shall extend for the duration of Xx. XxXxxxx'x
life or until he accepts other full-time employment.
c. The continuation over the then remaining Term of this
Agreement, in such amounts and in a manner consistent with that
provided immediately prior to such breach, of: contributions in Xx.
XxXxxxx'x behalf based on his base salary to the Company's Pension
Plan for Salaried Employees and to the Supplemental Executive
Retirement Plan; Xx. XxXxxxx'x Company furnished automobile; and dues
and fees for Xx. XxXxxxx'x club memberships.
d. Payments made pursuant to this Paragraph 2B shall be made
monthly from the date the Company breached this Agreement throughout
the then remaining Term of the Agreement, or at Xx. XxXxxxx'x option
in a lump sum within thirty (30) days of notification of such breach.
Such lump sum shall be an amount equal to the discounted present value
of the payments which were to be paid over the Term specified herein
discounted at a rate of 5% per annum.
2C. "Change in Control" as used in this Agreement shall mean any one
of the following:
a. An acquisition of 35% or more of the beneficial ownership,
directly or indirectly, of the Company's then outstanding stock, or
merger or consolidation by or with another person, entity or group;
b. A tender offer or tender offers for the Company's stock in
which 35% or more of the then outstanding stock of the Company is
tendered or purchased by a person, single entity or affiliated group;
c. A reclassification of securities or recapitalization of the
Company which, directly or indirectly, disproportionately increases or
decreases the outstanding shares of any class of equity securities of
the Company by 35% or more;
d. A sale, lease, exchange, mortgage, pledge, transfer or other
disposition of all or substantially all the assets of the Company
approved by the Board of Directors to which Xx. XxXxxxx dissented;
e. A change in control shall be deemed to have occurred if at
any time less than 51% of the members of the Board of Directors shall
be persons who were either nominated for election by the Board of
Directors or were elected by the Board of Directors.
3. Except as otherwise herein provided during the Term of the
Agreement, the Company shall employ Xx. XxXxxxx as its CEO, Chairman and
President and he shall serve the Company in such capacity, performing the
normal duties of a CEO, Chairman and President of a corporation in the
Company's business, subject at all times to the direction and control of
the Board of Directors of the Company, shall devote his time, attention,
skill and energy to the business, welfare and affairs of the Company and
shall use his best efforts to promote the interests of the Company, it
being understood that the conduct of such duties does not require his
attendance at the offices of the Company during any particular fixed
periods. Xx. XxXxxxx hereby consents to continue to serve as a Director of
the Company or any subsidiary thereof without additional compensation.
4A. The Company shall pay and Xx. XxXxxxx shall accept as
compensation for all services to be rendered hereunder and during the Term
a base salary determined by the Board of Directors of the Company pursuant
to its normal procedure for setting yearly salaries for officers of the
Company (currently, $287,000 per annum). Such payments hereunder shall be
payable in accordance with the prevailing salary payroll practices of the
Company and subject to such deductions as are agreed to by Xx. XxXxxxx.
Nothing contained in this Agreement shall be deemed to prevent the Company
during the Term hereof from giving bonuses or other additional
consideration to Xx. XxXxxxx from time to time as determined by the Board
of Directors or, except as otherwise specifically provided herein, prevent
Xx. XxXxxxx from receiving benefits in accordance with any benefit plan or
program made available by the Company to its officers, salaried employees
or directors.
4B. The Company shall reimburse Xx. XxXxxxx for all expenses
reasonably incurred by him in connection with his performance of services
to the Company, including entertainment and travel. Xx. XxXxxxx shall be
entitled to receive or participate in all other fringe benefits, such as
medical and hospital plans, profit-sharing plans and pension plans, stock
options under the then existing corporate stock option plan, and use and
maintenance of an automobile of a type and in a manner consistent with the
practices prevailing at the time of the execution of this Agreement.
4C. Notwithstanding anything herein to the contrary, the Company
shall not be obligated to pay any portion of any amount otherwise payable
to Xx. XxXxxxx pursuant to this Agreement if the Company could not
reasonably deduct such portion in accordance with the Internal Revenue Code
then in effect.
5A. Xx. XxXxxxx acknowledges that during the course of his employment
hereunder he will acquire, possess and become exposed to confidential and
proprietary information and materials of the Company. Accordingly, during
his employment hereunder and for a period of eighteen (18) months
thereafter, he shall not, for any reason whatever, except in the regular
authorized course of the Company's business under appropriate secrecy
provisions, directly or indirectly, use or exploit or disclose or divulge
to anyone (who is not authorized to receive the same), without the prior
written permission of the Company, any proprietary information, including,
but not limited to, trade secrets, know-how, data, materials or other
knowledge relating to or pertaining to the business of the Company, unless
the same (i) has been published and/or has become a part of the public
domain other than by acts of omission by Xx. XxXxxxx; (ii) has been
lawfully furnished or made known to Xx. XxXxxxx by a third party without
restriction on disclosure or use; and (iii) was in Xx. XxXxxxx'x possession
at the time he first became associated with the Company and was not
acquired by Xx. XxXxxxx either directly or indirectly from the Company.
5B. All documents, records, prototypes or other tangible embodiments
or evidence of the discoveries, trade secrets, information, know-how, data,
materials or other knowledge previously referred to, which may at any time
be acquired by or come into the possession of Xx. XxXxxxx during his
employment hereunder (except materials excluded in Subparagraph A hereof),
are the sole and exclusive property of the Company and must be surrendered
to the Company, without demand therefor, upon termination of Xx. XxXxxxx'x
employment hereunder, or upon the request by the Company at any other time;
and, in addition, prior to such termination of employment or upon the
reasonable request by the Company at any other time, Xx. XxXxxxx will
prepare materials to accurately and adequately describe, set forth or
embody any of the foregoing and deliver the same to the Company in order to
accomplish or complete the transfer of any and all of the foregoing to the
Company and shall be reimbursed by the Company for all of his reasonable
out-of-pocket expenses in connection therewith.
5C. Xx. XxXxxxx agrees to execute all documents and to take all such
other action as the Company may reasonably require (being reimbursed for
all of his reasonable out-of-pocket expenses in this connection) in order
to assign to the Company any and all rights to any materials prepared by
him during and in connection with his employment hereunder.
6A. Xx. XxXxxxx agrees that, during his employment hereunder for a
period of eighteen (18) months after termination of his employment
hereunder for whatever reason (except in the event such termination is
caused by (a) a material breach of this Agreement by the Company, or (b)
the Company's bankruptcy (as defined in Paragraph 14 hereof)), he shall not
(without the prior written consent of the Company) (i) solicit as a client
or customer in competition with the Company any persons or entities which
were, during his employment hereunder, clients or customers of the Company,
(ii) enter into any business arrangements with any of the foregoing which
could be reasonably deemed to be materially competitive with or materially
injurious to any business in which the Company is engaged at the time of
such termination, or (iii) solicit, or be instrumental in any way in
causing, any other person to leave the employ of the Company. Xx. XxXxxxx
further agrees that he shall not (without the prior written consent of the
Company) for a period of eighteen (18) months after the termination of his
employment hereunder for any reason (except in the event the termination is
caused by a breach of this Agreement by the Company), directly or
indirectly, individually or as a director, partner, employee, officer or
agent, engage in any employment, performance of services or other activity
on behalf of any company if such employment, performance of services or
other activity can be reasonably deemed to be materially competitive with
or materially injurious to any business in which the Company is engaged at
the time of such termination.
6B. For purposes only of determining whether services by Xx. XxXxxxx
during the aforesaid eighteen (18) month period after his termination of
employment hereunder shall be "materially competitive with or materially
injurious to the Company" within the meaning of this paragraph, either
party may initiate arbitration proceedings to make such determination
pursuant to Paragraph 13 hereof.
6C. If Xx. XxXxxxx commits a material breach of any of the provisions
of Paragraph 5A, 5B, 5C or 6A, the Company shall have the right and remedy
to have such provisions specifically enforced by any court having equity
jurisdiction, since any such breach or threatened breach will cause
irreparable injury to the Company and money damages will not provide an
adequate remedy to the Company. The initiation of, or participation in,
any such proceeding shall not constitute a waiver of the arbitration
provisions of Paragraph 10.
7. During the Term, Xx. XxXxxxx will not directly or indirectly
engage in the business of, or own or control any interest in (except as a
passive investor owning less than ten percent (10%) of the equity
securities of a publicly-owned company), or act as a director, officer or
employee of, or consultant to, any individual, partnership, joint venture,
corporation or other business entity directly or indirectly engaged
anywhere in the United States in any business competing with the business
carried on by the Company or any of its subsidiaries.
8A. It is specifically understood and agreed that the Company may
terminate this Agreement and its obligations to Xx. XxXxxxx hereunder prior
to a change in control or upon voluntary retirement by Xx. XxXxxxx from
active employment with the Company. Notwithstanding the foregoing, at any
time during the Term of this Agreement, after a change of control has taken
place, any termination or notice of termination shall be deemed a breach of
this Agreement and a notice not to extend, and the provisions of Paragraph
2B above shall apply so as to have the effect of fixing the Term as
provided herein and terminating Xx. XxXxxxx'x employment with the Company.
8B. At any time during the Term of this Agreement, after a change in
control has taken place, should the Company reduce the compensation or
benefits then being paid to Xx. XxXxxxx, it shall be deemed a breach of
this Agreement and a notice not to extend, and the provisions of Paragraph
2B above shall apply so as to have the effect of fixing the Term as
provided herein and terminating Xx. XxXxxxx'x employment with the Company.
8C. At any time during the Term of this Agreement, after a change in
control has taken place, should the Company change Xx. XxXxxxx'x position
or duties without his written consent, it shall be deemed a breach of this
Agreement and a notice not to extend, and the provisions of Paragraph 2B
above shall apply so as to have the effect of fixing the Term as provided
herein and terminating Xx. XxXxxxx'x employment with the Company.
9. In the event that during Xx. XxXxxxx'x lifetime and during the
Term of this Agreement, after a change in control has taken place, the
Company defaults as to any payment under this Agreement or fails to make
any payments provided for in this Agreement and fails to cure such default
or make such payment within ten (10) days after written notice thereof, or
written demand therefor, or in the event that the Company terminates this
Agreement for cause and it is ultimately determined that such termination
was wrongful, Xx. XxXxxxx may elect to treat such default or wrongful
termination as a breach of this Agreement and shall he entitled to recover
all of his expenses, including reasonable attorneys' fees, in prosecuting
or defending any actions or proceedings arising out of, or in any other way
relating to, the matters referred to in this paragraph, and the provisions
of Paragraph 2B of this Agreement shall apply.
10. Any controversy, claim or dispute arising out of or relating to
this Agreement, including without limitation, any claim for breach of this
Agreement, shall be settled by arbitration in accordance with the Rules of
the American Arbitration Association (AAA) obtaining at the time of such
proceeding, except that the authority of the arbitrators shall be limited
to the interpretation and enforcement of the terms and conditions of this
Agreement and the arbitrators shall set forth in writing the reasons for
their decisions. Judgment upon any award rendered by the arbitrators
pursuant hereto may be entered in any court having jurisdiction thereof and
thereafter enforced. Either party shall have the right to initiate
arbitration proceedings. Any arbitration shall take place under the
auspices of the AAA in Buffalo, New York. There shall be three
arbitrators. Each party shall appoint one arbitrator. If either party
fails to appoint an arbitrator within five (5) days from the date upon
which the notice of the initiating party of its intention to arbitrate is
received by the other party to such proceedings, the AAA shall make the
appointment for that party. The two arbitrators appointed in the manner
provided for above shall appoint a third arbitrator, mutually acceptable to
them. If the two arbitrators first appointed cannot, for any reason, agree
upon a third arbitrator, or an acceptable person is unable to act, the AAA
shall appoint the third arbitrator in accordance with its rules.
11. Xx. XxXxxxx may terminate this Agreement prior to the date of
expiration of the Term hereinabove set forth by written notice to the
Company if the Company shall file a petition in bankruptcy, make a
voluntary assignment for the benefit of creditors, file a petition or an
answer seeking an arrangement with creditors or take advantage of any
insolvency law, or if the Company applies for or consents to the
appointment of a receiver or trustee of all or a substantial part of its
assets, or an order, judgment or decree shall be entered in any court of
competent jurisdiction appointing a receiver of all or a substantial part
of its assets, and such order, judgment or decree shall continue unstayed
and in effect for any consecutive period of ninety (90) days.
12. This Agreement and all rights hereunder are personal to Xx.
XxXxxxx and shall not be assignable; provided, however, that all of Xx.
XxXxxxx'x rights under the Agreement shall inure to the benefit of his
heirs, distributees, personal representatives or designees or other legal
representatives, as the case may be. Any person, firm or corporation
succeeding to the business of the Company by merger, purchase,
consolidation or otherwise, shall assume by contract or operations of law
the obligations of the Company hereunder; provided, however, that the
Company shall, notwithstanding such assumption or assignment, remain liable
and responsible for fulfilling the obligations of the Company under this
Agreement.
This Agreement supersedes and replaces any and all present
written or oral agreements of employment between the parties hereto, and
all such agreements are hereby deemed canceled, revoked and of no further
force or effect; provided, however, that in the event that Xx. XxXxxxx'x
employment is terminated prior to a change in control or under
circumstances not involving a breach of this Agreement, Xx. XxXxxxx shall
be entitled to an amount equal to six (6) months base salary paid in a lump
sum in accordance with the letter of August 12, 1992 from the Company to
Xx. XxXxxxx.
13. Without in any way implying that any provisions hereof is invalid
or unenforceable, the validity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other
provision.
14. This Agreement constitutes the whole agreement between the
parties hereto, and there are no terms other than those stated herein. No
variation hereof shall be deemed valid unless in writing and signed by the
parties hereto, and no discharge of the terms hereof shall be deemed valid
unless by full performance by the parties hereto or by a writing signed by
the parties hereto. No waiver by either party of any provisions or
condition of this Agreement to be performed by them should be deemed a
waiver of any other provisions of this Agreement.
15. Any notice, statement, report, request or demand required or
permitted to be given by this Agreement shall be in writing, and shall be
sufficient if addressed and sent by certified mail, return receipt
requested, to the parties at the addresses set forth above, or at such
other place that either party may designate by notice to the other and
shall be deemed given when so mailed.
16. This Agreement has been made in, and shall be interpreted
according to the laws of, the State of New York. The parties hereto submit
to the jurisdiction of the courts of the New York Supreme Court, County of
Erie, for the purpose of any actions or proceedings which may be required
to enforce the provisions of this Agreement or an award made in any
arbitration proceeding initiated hereunder.
IN WITNESS WHEREOF, the parties have hereunto set their respective
hands and seals causing these presents to be executed as of the day and
year first above written.
Witnessed:
Xxxx X. Xxxxxx /s/
Xxxxxx X. XxXxxxx
Witnessed: ACME ELECTRIC CORPORATION
Xxxxx X. Xxxxxxxx By: /s/
Xxxx X. Xxxxxxxx
Secretary
