EMPLOYMENT AGREEMENT
AGREEMENT, dated as of June 26, 1996 between Computer Power,
Inc., a New Jersey corporation (the "Company"), and Hiro Hiranandani (the
"Executive").
W I T N E S S E T H :
WHEREAS, the Company and the Executive desire that he shall be
employed by the Company as President, Chief Executive Officer of the Company,
upon the terms and conditions hereinafter set forth
NOW, THEREFORE, in consideration of the premise and other good
and valuable consideration, receipt of which is hereby acknowledged, the parties
covenant and agree as follows:
1. Term of Employment.
(a) The Company shall employ the Executive and the Executive
accepts employment by the Company on the terms and conditions herein contained
for a period commencing on the date hereof, and ending on December 31, 1998 (the
"Employment Period").
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2. Duties
(a) The Executive shall serve as the President, Chief Executive
Officer of the Company, and shall perform such services and duties for the
Company as may be reasonably assigned or delegated to him by the Board of
Directors of the Company consistent with his position as President, Chief
Executive Officer. The Executive shall be the primary management officer of the
Company, reporting only to the Board of Directors. In addition, the Executive
shall be appointed a Director of the Company upon execution and delivery of this
Agreement to serve until the next Annual Meeting of Shareholders. Thereafter, so
long as this Agreement shall be in effect the Company shall nominate the
Executive to the Board of Directors to be voted upon by the shareholders at each
Annual Meeting.
(b) The Executive shall exert substantially his full business
time and best efforts in the promotion of the Company's interests.
3. Compensation.
(a) As compensation for his services hereunder, the Company shall
pay the Executive during the Employment Period a salary at the rate of One
Hundred Thousand Dollars ($100,000) per annum, payable in accordance with the
Company's customary payroll procedures for executive employees, subject to all
applicable tax and payroll deductions.
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(b) In the event the Company receives a capital infusion at least
of $1,000,000, by way of term debt (other than asset backed financing) or equity
or any combination thereof on terms acceptable to the Board of Directors of the
Company, prior to December 31, 1996, the salary payable to Executive from
January 1, 1997 through the end of the Employment Period shall be increased to
the rate of One Hundred and Twenty Thousand Dollars ($120,000) per annum. In the
event such capital infusion is at least $2,000,000 prior to December 31, 1996,
the salary so payable shall be One Hundred and Forty Thousand Dollars ($140,000)
per annum commencing January 1, 1997. In the event the Company receives such
capital infusion of at least $1,000,000 after January 1, 1997, the salary
payable to Executive shall increase to the rate of One Hundred and Twenty
Thousand Dollars ($120,000) effective on the date such capital infusion is made
and, if the Company receives a capital infusion of at least $2,000,000 after
January 1, 1997, the salary payable to Executive shall increase to One Hundred
and Forty Thousand Dollars ($140,000) commencing on the date the Company
receives such capital infusion.
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(c) Upon the execution and delivery of this Agreement, the
Company agrees to issue to Executive Warrants having a ten year term to purchase
377,999 shares of Common Stock of the Company, 125,999 shares of which shall be
exercisable immediately at $.33 per share, 125,999 shares of which shall be
exercisable on April 30, 1997 at $.40 per share (if Executive shall be employed
by the Company as President and Chief Executive Officer at such date) and
126,001 shares on April 30, 1998 at $.40 per share (if Executive shall be
employed by the Company as President and Chief Executive Officer at such date).
In the event the Company adopts a Qualified Incentive Stock Option Plan, or
issues additional warrants not related to new capital infusion described above
in 3(b) the Company agrees that through the Employment Period it will grant
Executive options, at the same time and at the same terms issued to other
employees, in such amounts such that Executive shall maintain equity ownership
or the right to equity ownership, including the right to acquire common stock
through options and warrants, of at least 10% of the total outstanding equity on
a fully diluted basis. In addition, if during the Employment Period, Company
issues additional equity, the Executive shall have the right to participate on
the same terms as at that time being then offered, up to 10% of such issuance.
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(d) The Company will further reimburse the Executive for all
expenses incurred by him in the performance of his duties hereunder which, if
not in the ordinary course of business and consistent with Company policy, have
been approved by the Company by an executive officer of the Company other than
Executive, or by the Board of Directors, prior to expenditure. Such expenses
will be so reimbursed on presentation of properly itemized charges and invoices
or receipts therefor consistent with normal Company policies and procedures for
officers of the Company.
(e) The Executive shall be entitled to participate in all
employee benefit plans of the Company which are available to executive employees
as of the date of this Agreement and such other plans or modifications of
existing plans as any may become effective during the Employment Period, all
consistent with Company policies and practices, generally applied. In addition,
the Executive shall be entitled to the same benefits, including use of a company
fleet car and use of company housing facilities, granted Executive's immediate
predecessor as President, Chief Executive Officer of the Company as well as
payment, by the Company, of premiums for health insurance provided Executive by
Pitney Xxxxx. Executive shall also be entitled to an annual medical physical to
be paid by the Company. All such payments to Executive shall be grossed-up to
give effect to any applicable federal or state income taxes payable by Executive
in respect of any such benefit in the event a final determination is made by the
Internal Revenue Service or state taxing authority that income taxes are due
thereon.
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(f) The Executive shall be entitled to take vacations consistent
with Company policy. Unused vacation days may not be accumulated year to year
and no additional compensation shall be paid for unused vacation time.
(g) In the event of the Executive's disability (as hereinafter
defined) or death, the Executive or his estate shall receive his salary pursuant
to subsection 3(a) above for a period of three months. (For the purpose of this
Section 3(g), the date the disability occurred shall be the expiration of the
sixty day period referred to below). No further or additional salary or
compensation shall be due the Executive or his estate, except as may otherwise
be payable under such Company benefit plans in which the Executive shall be
participating at that time. For the purpose of this Agreement, disability shall
mean the inability of the Executive to render substantially all of the material
and/or primary services of the character contemplated by this Agreement by
reason of physical or mental conditions due to illness, accident or mental or
physical incapacity or infirmity continuing for more than sixty (60) consecutive
days. In the event of a dispute, the matter shall be referred to a physician
mutually acceptable to the Company and the Executive.
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(h) Executive shall be entitled to an annual bonus for the
calendar years 1997 and 1998 calculated as follows and payable at time of
completion of the year-end audit and calculated in accordance with generally
accepted accounting principals ("GAAP"), with only such changes from the
accounting procedures used in connection with the 1995 audit as required by
GAAP:
(i) In the event the Company achieves a pre-tax profit of
$500,000 or more in calendar year 1997, the bonus payable to
Executive shall equal $25,000 plus five (5%) percent of the
pre-tax profit in excess of $500,000;
(ii) In the event the Company achieves a pre-tax profit of
$1,000,000 or more in calendar year 1998, the bonus payable to
Executive shall equal $35,000 plus five (5%) percent of the
pre-tax profit in excess of $1,000,000.
(i) The Executive shall be entitled to indemnification to
the fullest extent permitted by New Jersey corporate law.
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4. Rights Under Other Plans and Programs.
No provision of this Agreement is intended, nor shall it be
construed, to reduce or in any way restrict, any benefit to which the Executive
may be entitled under any other agreement, plan or program of the Company or its
subsidiaries or affiliates providing benefits for the Executive. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan or program of the Company shall be payable in accordance with the
terms of such plan or program.
5. Termination of Agreement.
(a) The Company may terminate the employment of the Executive
hereunder:
(i) for "cause", if the Executive has failed to
substantially comply in a material way with his material
covenants and obligations under this Agreement and such failure
continues unabated for a period of thirty (30) days after the
Executive's receipt of written notice from the Company specifying
the exact details of such alleged failure or if the Executive has
been convicted of a felony or a crime involving moral turpitude
or in the case of proven dishonesty against the Company or if
Executive shall otherwise be culpable in respect of any act of
gross negligence in the performance of his duties which in the
judgment of at least five out of six members of the Board of
Directors of the Company (other than Executive) makes it not in
the best interest of the Company that Executive continue in the
Company's employ; or
(ii) if the Executive becomes disabled (as defined in
Section 3(g) above); or
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(iii) if the Executive dies. In the event of any termination
under this Section 5(a), the Company shall pay to the Executive
or his estate all accrued salary through the date of such
termination and such other benefits consistent with the terms and
provisions of benefit plans in which the Executive is then
participating. In addition, in the case of termination due to
disability or death, the Company shall pay the Executive or his
estate all amounts required under Section 3(g) above.
(b) The Company may also terminate the employment of Executive
hereunder without cause, in which case the Executive shall be entitled to all
accrued salary through Employment Period, such other benefits consistent with
the terms and provisions of benefit plans in which the Executive is then
participating through the Employment Period and a severance payment, payable on
December 31, 1998, equal to six (6) months of the annual base compensation
payable under Section 3 hereof, subject to normal withholding. Additionally, the
Executive shall have all warrants and stock options theretofore granted to the
Executive vested as of the date of such termination.
(c) Executive may terminate this Agreement in the event the
Company breeches any of its obligations hereunder, and, in the case of such
termination, Executive shall receive the severance pay referred to in this
Agreement. Additionally, the Executive shall have all warrants and stock options
theretofore granted to the Executive vested as of the date of such termination.
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(d) In the unlikely event the Executive decides to terminate his
employment and the Company has not breached its obligations hereunder, the
Executive shall not be entitled to any salary or bonus after the date of such
termination, shall not receive any severance, but shall remain obligated under
only Section 7 for six (6) months and shall be freed from all other obligations
and liabilities under this Agreement. Additionally, the Executive shall have all
warrants and stock options theretofore granted to the Executive vested as of the
date of such termination.
6. Disclosure of Information
The Executive agrees that, during the Employment Period and
thereafter, he shall hold and keep confidential any trade secrets, customer
lists and pricing or other confidential information, or any inventions,
discoveries, improvements, products, whether patentable practices, methods or
not, directly or indirectly useful in relating to the business of the Company as
conducted by it from time to time, as to which the Executive shall at any time
during the Employment Period become informed, and he shall not directly or
indirectly disclose any such information to any person, firm or corporation or
use the same except in connection with the business and affairs of the Company.
The foregoing prohibition shall not apply to the extent such information,
knowledge or data (a) was publicly known at the time of disclosure to the
Executive, (b) become publicly known or available thereafter other than by any
means in violation of this Agreement, or (c) is required to be disclosed by the
Executive as a matter of law or pursuant to any court or regulatory order.
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7. Competition.
During the Employment Period and then for a period of six (6)
months thereafter if Executive is paid the severance pay as provided in this
Agreement, the Executive agrees that he will not, without the consent of the
Company, compete with the Company, directly or indirectly or participate as a
director, officer, employee, agent, representative, consultant or otherwise as a
stockholder, partner or joint venturer, or have any direct or indirect financial
interest, including, without limitation, the interest of a creditor in any form,
in any business directly or indirectly engaged in any business which is in
competition with the Company. The ownership by the Executive of publicly traded
stock of any corporation conducting such competing business, provided the
Executive and his associates (as such term is defined in Regulation 14A
promulgated under the Securities Exchange Act of 1934 as in effect on the date
hereof) collectively, do not own more than an aggregate of 5% of the stock of
such corporation, shall not be deemed a violation of this Section 7. In
addition, during the Employment Period, and for a period of six (6) months
thereafter, Executive shall not make any offer of employment to any person
employed by the Company during the Employment Period.
8. Remedies.
The Company and the Executive agree that remedies at law in the
nature of monetary damages may not be adequate to protect or compensate the
Company for violations by the Executive or breaches by him of his obligations
under Section 7 of this Agreement and therefore specifically agree that an
action at equity by way of injunction or similar relief is proper and
appropriate.
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9. Representations and Warranties
The Executive represents and warrants to the Company that he is
free to enter into this Agreement, become an officer and employee of the Company
and to carry out his duties and responsibilities as herein contemplated and is
under no contrary contractual limitation, contractual obligation or prohibition.
The Executive further indemnifies and holds harmless the Company from any costs,
damages and fees, including legal fees, which may result from his breach of the
foregoing representation and warranty.
10. Assignment; Successors.
All of the terms of this Agreement, whether so expressed or not,
shall be binding upon the respective heirs, personal representatives, successors
and assigns of the parties hereto and shall inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, personal
representatives, successors and assigns; provided, however, that this Agreement
shall not be assigned by either party hereto except as set forth herein,
provided, further, that nothing herein shall be construed so as to prevent,
prohibit or limit in any way, the change in control, sale, merger or other
business combination of the Company and any such action or similar action shall
not be deemed an assignment of this Agreement by the Company nor shall it
relieve the Company or its successors or assigns from its obligations to
Executive under this Agreement.
11. Notices.
All notices, request, demands and other communications hereunder
must be in writing and shall be deemed to have been duly given if personally
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delivered, sent by a recognized overnight courier service, or if mailed by First
Class, certified mail, return receipt requested, postage and certification or
registry fees prepaid, and addressed as follows:
(a) If to Executive: Hiro Hiranandani
(b) If to Company: Computer Power, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxx Xxxxxx, Xxx Xxxxxx 00000
Attn: Chairman of the
Board of Directors with a
copy to the Chief Financial
Officer
With a Copy to: Xxxxx X. Xxxxx, Esq.
Shustak Xxxxx Xxxxxxx & Xxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Either party by notice in writing mailed to the other may change the name and
address to which notices, requests, demands and other communications shall be
mailed.
12. Miscellaneous.
(a) This Agreement shall be construed and enforced in accordance
with, and governed by, the laws of the State of New Jersey. The parties hereby
irrevocably consent to the exclusive jurisdiction of the Courts of the State of
New Jersey and of the Federal Court located in such state in connection with any
action or proceeding arising out of or relating to this Agreement. This
Agreement embodies the entire agreement and understanding between the Company
and the Executive and supersedes all prior agreements and understandings
relating to the subject matter hereof, and this Agreement may not be modified or
amended or any term or provision thereof waived or discharged except in writing
signed by the party against whom such amendment, modification, waiver or
discharge is sought to be enforced. The headings of this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
thereof. This Agreement may be executed in several counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
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(b) The parties agree that, prior to resorting to court,
unresolved disputes under this Agreement shall initially be referred by either
party to non-binding mediation before a mutually agreed upon mediator.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the day and year first above written.
/s/ Hiro Hiranandani
---------------------------
Hiro Hiranandani
COMPUTER POWER, INC.
/s/ Xxxxxxx Xxxxxxxx
By:-------------------------
Xxxxxxx Xxxxxxxx, Chairman
