EXECUTIVE EMPLOYMENT AGREEMENT
EXHBIT
10.1
This
Executive Employment Agreement (“Agreement”),
made
and entered into as of March 31, 2006, is by and between Measurement
Specialties, Inc., a New Jersey corporation (the “Company”),
and
Xxxxx Xxxxxxx (the “Executive”). The Company and the Executive are sometimes
individually referred to herein as a “Party”
or
collectively referred to herein as the “Parties.”
W
I T N E S S E T H:
WHEREAS,
Executive has been acting as Chief Executive Officer of the Company since June
2002, initially on an interim basis pursuant to an agreement dated May 13,
2002
with Corporate Revitalization Partners, LLC (“CRP”),
of
which Executive is a principal, and subsequently on a leased basis pursuant
to
an engagement agreement dated as of April 1, 2003 (the “Engagement
Agreement”)
with
Four Corners Capital Partners LP (“Four
Corners”),
of
which Executive is also a principal; and
WHEREAS,
the Parties desire that Executive continue to serve in the capacity of Chief
Executive Officer of the Company and believe that is it appropriate and in
the
best interests of the Company that Executive be engaged directly by the Company
as an executive employee on the terms and conditions set forth herein;
and
WHEREAS,
the Parties intend that upon their execution of this Agreement, this Agreement
shall supersede and replace the Engagement Agreement as well as that certain
Noncompetition Agreement dated as of April 1, 2003 between the Company and
the
Executive (the “Noncompetition
Agreement”),
and
shall be the sole agreement governing the terms of and relating to the
employment of the Executive by the Company;
NOW,
THEREFORE, the Parties hereto, in consideration of the foregoing recitals and
the mutual covenants and promises set forth herein, do hereby agree as
follows:
1. Definitions
As
used
herein, the following terms have the following meanings:
“Agreement”
means
this Agreement.
“Board”
means
the Board of Directors of the Company.
“Change
of Control”
means
(i) any liquidation, dissolution or winding-up of the Company, whether voluntary
or involuntary; (ii) any merger, consolidation, conversion transaction or
reorganization of the Company with or into any other entity or entities that
results in the conversion or exchange of outstanding Common Stock (or any
securities into which such Common Stock may be converted or exchanged) of the
Company for securities issued or other consideration paid or caused to be issued
or paid by any such entity or affiliate thereof (other than a merger of the
Company with or into another entity that does not result in the holders of
Common Stock immediately prior to the consummation of such transaction ceasing
to own a majority of the voting securities of the entity surviving or resulting
from the merger); or (iii) any sale, transfer or disposition of all or
substantially all of the property or assets of the Company. For purposes of
the
immediately preceding sentence, sale, transfer or disposition of substantially
all of the property or assets of the Company shall mean the sale of property
or
assets, in a single transaction or a series of related transactions, having
a
value in excess of 50% of the value of assets reflected on the balance sheet
of
the Company immediately prior to the first such sale.
“Annual
Salary”
has
the
meaning given such term in Section 5 of this Agreement.
“Bonus
Plan”
has
the
meaning given such term in Section 6 of this Agreement.
“Cause”
has
the
meaning given such term in Section 9 of this Agreement.
“Company”
has
the
meaning given such term in the Recitals to this Agreement.
“CRP”
has
the
meaning given such term in the Recitals to this Agreement.
“Disability”
has
the
meaning given such term in Section 10 of this Agreement.
“Engagement
Agreement”
has
the
meaning given such term in the Recitals to this Agreement.
“Executive”
has
the
meaning given such term in the Recitals to this Agreement.
“Four
Corners”
has
the
meaning given such term in the Recitals to this Agreement.
“Good
Reason”
has
the
meaning given such term in Section 9 of this Agreement.
“Guaranteed
Bonus”
has
the
meaning given such term in Section 6 of this Agreement.
“Initial
Term”
has
the
meaning set forth in Section 2 of this Agreement.
“Noncompetition
Agreement”
has
the
meaning given such term in the Recitals to this Agreement.
“Option”
has
the
meaning given such term in Section 7 of this Agreement.
“Option
Agreement”
has
the
meaning given such term in Section 7 of this Agreement.
“Option
Plan”
has
the
meaning given such term in Section 7 of this Agreement.
2
“Renewal
Term”
has
the
meaning set forth in Section 2 of this Agreement.
“Subsidiary”
or “Subsidiaries”
means
any entity at least a majority of whose voting securities is at the time owned
by the Company or one of the Company’s Subsidiaries.
“Term”
has
the
meaning set forth in Section 2 of this Agreement.
2. Term
of Employment
The
service of Executive pursuant to this Agreement shall commence effective as
of
March 30, 2006 and continue until March 31, 2008 (the “Initial
Term”)
unless
sooner terminated in accordance with the provisions of this Agreement.
Notwithstanding the foregoing, this Agreement shall be automatically renewed for
successive one-year terms (each, a “Renewal
Term,”
and
all Renewal Terms together with the Initial Term, the “Term”)
unless
either Party gives written notice to the other, not less than sixty (60) days
prior to the end of the Initial Term or any Renewal Term, as the case may be,
of
such Party’s intention not to renew this Agreement.
3. Duties
of Executive
Executive
shall serve as the Chief Executive Officer of the Company during the Term,
and
in connection therewith shall perform the services and duties attendant to
such
office as set forth herein or in the Bylaws of the Company, subject in all
respects to the direction and supervision of the Board, provided that such
services and duties are consistent with the normal and customary
responsibilities of a Chief Executive Officer and that Executive retains the
title of Chief Executive Officer.
4. Exclusive
Services and Best Efforts
The
Parties agree that Executive will devote substantially all of his business
time,
his best efforts, energies and skill to the discharge of the duties and
responsibilities attributable to his position; provided that nothing herein
shall prevent Executive from (i) engaging in investment activities on behalf
of
himself or his family or (ii) engaging in religious, charitable or other
community or nonprofit activities.
5. Compensation
In
consideration of the services to be provided by
Executive hereunder, the Company shall pay Executive a salary of $450,000 per
year during the Initial Term (“Annual Salary”), payable in arrears in
approximately equal bi-weekly installments in accordance with the Company’s
customary payroll practices, subject to the following two sentences. Increases
in such Salary may be decided by the Board in its sole discretion after taking
account of, among other things, performance and compensation for similar
positions in the Company’s geographic region. The Salary shall be reviewed by
the Board for increase (but not decrease) not less frequently than on an annual
basis (including, without limitation, with respect to the second year of the
Initial Term and any Renewal Term).
3
6. Bonus
In
addition to the Salary payable pursuant to Section 5 above, Executive shall,
with respect to the first year of the Initial Term, receive a guaranteed bonus
in the amount of $50,000 (the “Guaranteed
Bonus”),
payable upon execution of this Agreement by the Parties. Executive shall also
be
eligible to receive an annual bonus pursuant to the Company’s Bonus Plan (the
“Bonus
Plan”),
payable in accordance with the terms thereof, based upon annual performance
criteria and goals established by the Compensation Committee of the Board (the
“Compensation Committee”). The amount of such bonus, if any, will be determined
by the Compensation Committee or the Board on an annual basis, provided that
the
targeted bonus amount for Executive upon achievement of the goals established
for Executive under the Bonus Plan shall be fifty five percent (55%) of the
Executive’s then current Annual Salary (i.e., initially a targeted bonus amount
of $250,000). The Guaranteed Bonus shall be credited against the aggregate
of
any bonus amount payable during the first year of the Initial Term.
7. Stock
Option
On
March
31, 2006, the Company shall grant to Executive an option to purchase up to
300,000 shares of the Company’s Common Stock (the “Option”)
at an
exercise price per share equal to the fair market value of a share of the
Company’s Common Stock on March 30, 2006. The Option shall be granted pursuant
to the Company’s 2006 Stock Option Plan (the “Option
Plan”)
and
shall be subject to the terms, conditions and provisions thereof and of the
certificate or agreement evidencing the Option (the “Option
Agreement”).
Notwithstanding the foregoing, Executive acknowledges that the Option Plan
is
subject to approval by the shareholders of the Company, and in the event that
such approval is not obtained, the Option shall be rescinded by the Company
and
the Company shall have no liability or obligation to Executive with respect
thereto. In the event shareholder approval of the Option Plan is not obtained,
the Executive and the Company will negotiate in good faith to agree upon a
comparable alternative variable compensation arrangement.
8. Benefits;
Expenses
Executive
shall be entitled to take up to five weeks of paid vacation per year. In
addition, during the Term, the Company shall provide Executive with such
benefits (at no cost to the Executive), including medical, dental, life and
disability insurance, as are provided to senior executives of the Company under
the Company’s employee benefit and welfare plans, and Executive shall be
eligible to participate in such incentive compensation plans of the Company
(including, without limitation, the Bonus Plan, as described in Section 6
hereof, and the Option Plan) as are in effect from time to time and are made
available to senior executives of the Company. The Company shall reimburse
Executive, in accordance with the policies and practices of the Company in
effect from time to time with respect to senior executives of the Company,
for
all reasonable and necessary traveling expenses and other disbursements incurred
by Executive for or on behalf of the Company or its Subsidiaries in connection
with the performance of his duties hereunder, upon presentation by Executive
to
the Company of appropriate documentation therefor.
4
9. Termination
of Employment
(a)
General.
Either
Party may terminate this Agreement at any time by providing the other Party
with
at least sixty (60) days’ advance written notice of such termination; provided,
however, that in the case of a termination for Cause or for Good Reason, as
such
terms are defined below, the thirty (30)-day period following any notice given
pursuant to paragraph (b)(ii)(C), (b)(ii)(D), or (c)(ii), as the case may be,
shall be deemed to be included within said sixty (60)-day period. If the
termination is for Cause or for Good Reason, the notice shall set forth the
specific grounds for the termination. Except as expressly set forth in this
Section 9 and in Section 10 hereof (with respect to the death or disability
of
Executive), upon a termination of Executive’s employment with the Company, the
Company shall have no further obligations to Executive and Executive shall
be
entitled to no further benefits under this Agreement.
(b)
Termination
by the Company for Cause.
(i) The
Company may terminate the employment of Executive for Cause. Upon a termination
of employment for Cause, Executive shall be entitled to receive payment from
the
Company, within twenty (20) business days after the date of termination, of
the
amount of Executive’s Salary accrued through the date of termination and unpaid
as of that date, together with the amount of any earned but unpaid bonus, and
any outstanding business expenses incurred by Executive prior to the date of
termination but not reimbursed as of such date.
(ii)
For
purposes of this Section 9, “Cause”
shall
mean one or more of the following: (A) the conviction of Executive by a court
of
competent jurisdiction of a felony, based on Executive’s commission of a
criminal act; (B) Executive’s commission of fraud; (C) Executive’s willful
neglect or refusal to discharge his duties pursuant to this Agreement, assuming
such duties are lawful, which continues for a period of thirty (30) days
following written notice thereof by the Board to Executive, or (D) a material
breach of this Agreement by Executive, which continues for a period of thirty
(30) days following notice written thereof by the Board to Executive. No act
or
failure on Executive’s part shall be considered “willful” unless it is done, or
omitted to be done by Executive, in bad faith or without reasonable belief
that
Executive’s action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a specific
resolution duly adopted by the Board or based upon the advice of counsel for
the
Company shall be conclusively presumed to be done, or omitted to be done, by
Executive in good faith and in the best interests of the Company.
(iii)
Notwithstanding the foregoing, the Company may not terminate Executive’s
employment for Cause until: (A) Executive has been afforded the opportunity
to
appear before the Board, with or without legal representation, to address the
Board’s stated reason for termination, (B) the affirmative vote of the majority
of the Board members (excluding the Executive if he is a member of the Board,
and any other member of the Board reasonably believed by the Board to be
involved in the events leading the Board to terminate Executive’s employment for
Cause) agreeing that the actions or inactions of the Executive, as specified
in
the notice of termination occurred, that such actions or inactions constitute
Cause, and that the employment of Executive should, accordingly, be terminated
for Cause, and (C) the Board provides Executive with a written determination
setting forth the specific details that form the basis of such
termination.
5
(c)
Termination
by the Company Without Cause or by Executive for Good Reason.
(i) The
Company may terminate the employment of Executive without Cause, and Executive
may terminate his employment for Good Reason. Upon a termination of Executive’s
employment without Cause or for Good Reason, Executive shall be entitled to
receive from the Company, within twenty (20) business days after the date of
termination, a lump sum payment consisting of (A) the amount of Executive’s
Salary accrued through the date of termination and unpaid, together with the
amount of any earned but unpaid bonus, (B) an additional amount equal to 150%
of
Executive’s Annual Salary as in effect at the date of termination, and (C) the
amount of any outstanding business expenses that were incurred by Executive
prior to the date of termination but not reimbursed as of such date. In
addition, the installment of the Option otherwise vesting as of the end of
the
fiscal year in which the termination of Executive’s employment occurs shall
instead be deemed to have vested pro rata, as and to the extent provided in
the
Option Agreement. Unless otherwise determined by the Board or set forth in
the
Option Agreement, all portions of the Option that remain unvested at the date
of
termination of Executive’s employment shall be forfeited by Executive, except as
expressly set forth above.
(ii)
For
purposes of this Section 9, “Good
Reason”
shall
mean any one or more of the following: (A) any material change in Executive’s
position, scope of authority or responsibilities, or a change in Executive’s
title, to which Executive has not previously agreed, (B) failure by the Company
to fulfill its obligations specified in Paragraphs 5 and 6 of this Agreement,
or
(C) a material breach of the Agreement by the Company. The Company shall have
thirty (30) business days to cure the Good Reason following notice to the
Company by Executive of the same.
(d)
Termination
by Executive other than for Good Reason.
The
Executive may terminate his employment other than for Good Reason. In such
event, Executive shall be entitled to receive payment from the Company, within
twenty (20) business days after the date of termination, of the amount of
Executive’s Salary accrued through the date of termination and unpaid as of that
date, together with the amount of any earned but unpaid bonus, and any
outstanding business expenses incurred by Executive prior to the date of
termination but not reimbursed as of such date.
10. Death
and
Disability
(a)
Death
of Executive. Notwithstanding
anything to the contrary contained in Section 9 hereof, this Agreement shall
terminate automatically on the date of Executive’s death. Within twenty (20)
business days after such termination, the Company shall pay to Executive’s
estate or legal representative the amount of Executive’s Salary accrued through
the date of termination and unpaid at that date, together with the amount of
any
earned but unpaid bonus, and any outstanding business expenses incurred by
Executive prior to the date of termination but not reimbursed as of such
date.
(b)
Disability
of Executive. Notwithstanding
anything to the contrary contained in Section 9 hereof, the employment of
Executive shall terminate upon Executive's Disability. For purposes of this
Agreement, "Disability"
shall
mean a physical or mental disability or infirmity that prevents the material
performance by Executive of his duties hereunder lasting for a continuous period
of six months or longer. The reasoned and good faith judgment of the Board
as to
Disability shall be based on such competent medical evidence as shall be
presented to it by Executive or by any physician or group of physicians or
other
competent medical experts employed by Executive or Employer to advise the Board.
In case of such termination, Executive shall be entitled to receive, within
twenty (20) business days after the date of termination, the amount of
Executive’s Salary accrued through the date of termination and unpaid at that
date, together with the amount of any earned but unpaid bonus, and any
outstanding business expenses incurred by Executive prior to the date of
termination but not reimbursed as of such date.
6
11. Restrictive
Covenant
(a) During
the Term, and for a period of one year following the termination thereof for
any
reason, Executive will not, directly or indirectly, work as an employee,
consultant, agent, principal, partner, manager, stockholder, officer, director
or in any other capacity, for any person or entity inside or outside the United
States of America who or which is directly competitive with the business of
the
Company. The restriction in the preceding sentence shall not apply to (a)
ownership of less than five percent (5%) of the issued and outstanding capital
of stock of any corporation that is publicly traded and for which capital stock
selling and asking prices are published from time to time in The Wall Street
Journal, (b) work that Four Corners and/or CRP or their respective principals
(other than Executive) perform in the turnaround business, (c) Executive’s
ownership interest in Four Corners or CRP, or (d) Executive’s participation in
sales and marketing activities on behalf of both CRP and Four
Corners.
(b) During
the Term, and for a period of two years following the termination thereof for
any reason, Executive will not, directly or indirectly, either for himself,
or
on behalf of any other business enterprise, directly or indirectly, under any
circumstance (i) solicit for employment any person who is employed by the
Company or any Subsidiaries during the period of Executive’s service to the
Company, (ii) induce any person who is employed by the Company to terminate
his
or her employment with the Company or any Subsidiaries, or (iii) call on,
solicit, or take away any person or entity who or which is a customer of the
Company or any Subsidiaries.
(c)
It
is
expressly agreed by Executive that the nature and scope of each of the
provisions set forth above in this Section 11 is reasonable and necessary.
If,
for any reason, any aspect of the above provisions as it applies to Executive
is
determined by a court of competent jurisdiction to be unreasonable or
unenforceable, the provisions shall only be modified to the minimum extent
required to make the provisions reasonable and/or enforceable, as the case
may
be.
(d)
This
Section 11 and Sections 12 and 13 hereof (and Sections 14 through 22 hereof
as
they may apply to such Sections) shall survive the expiration or termination
of
this Agreement for any reason.
12. Confidentiality
Executive
acknowledges that during the Term, he may have access to and be entrusted with
confidential information concerning the present and contemplated financial
status and activities of the Company, the disclosure of any of which
confidential information to competitors of the Company would be highly
detrimental to the interests of the Company. The Parties further acknowledge
and
agree that the right to maintain the confidentiality of such information
constitutes a proprietary right that the Company is entitled to protect.
Accordingly, Executive covenants and agrees with the Company that he will not,
both during the Term and thereafter, disclose any of such confidential
information to any person, firm or corporation, nor shall it make use of such
information, except as required in the normal course of service hereunder or
as
required by law or judicial process. For purposes of this Section 12,
“confidential information” shall not include any information which is generally
available to the public or which hereafter becomes generally available to the
public other than as a result of breach of the obligation under this Section
12.
7
13. Company
Property
(a)
Any
patents, inventions, discoveries, applications or processes designed, devised,
planned, applied, created, discovered or invented by Executive in the course
of
Executive’s service under this Agreement and which pertain to any aspect of the
Company’s or Subsidiaries’ business shall be the sole and absolute property of
the Company, and Executive shall promptly report the same to the Company and
promptly execute any and all documents that may from time to time reasonably
be
requested by the Company to assure the Company the full and complete ownership
thereof.
(b)
All
records, files, lists, including computer generated lists, drawings, documents,
equipment and similar items relating to the Company’s business which Executive
shall prepare or receive from the Company shall remain the Company’s sole and
exclusive property. Upon termination of this Agreement, Executive shall promptly
return to the Company all property of the Company in its possession. Executive
further represents that it will not copy or cause to be copied, print out or
cause to be printed out any software, documents or other materials originating
with or belonging to the Company. Executive additionally represents that, upon
termination of this Agreement, Executive will not retain in its possession
any
such software, documents or other materials.
14. Equitable
Relief; Remedies
Executive
acknowledges that a breach of any of the terms of Sections 11, 12 and 13 hereof
may result in damages to the Company and it Subsidiaries for which there shall
be no adequate remedy at law. Accordingly, in the event of any breach of any
of
the provisions of Sections 11, 12 and 13 hereof, the Company shall be entitled
to equitable relief by way of injunction or otherwise in addition to any damages
which the Company may be entitled to recover. The
rights and remedies of the Company under this Agreement are cumulative and
not
alternative.
15. Severability
Each
paragraph of this Agreement shall be and remain separate from and independent
of
and severable from all and any other paragraphs herein except where otherwise
indicated by the context of the Agreement. The decision or declaration that
one
or more of the paragraphs are null and void shall have no effect on the
remaining paragraphs of this Agreement. If
any of
the covenants set forth in Sections 11, 12, and 13 of this Agreement are held
to
be unreasonable, arbitrary, or against public policy, such covenants will be
considered divisible with respect to scope, time, and geographic area, and
in
such lesser scope, time and geographic area, will be effective, binding and
enforceable against the Parties.
8
16. Successors
and Assigns, Assignment and Intended Beneficiaries
Neither
this Agreement, nor any of Executive’s or the Company’s respective rights,
powers, duties or obligations hereunder, may be assigned or delegated by
Executive or the Company. This Agreement shall be binding upon and inure to
the
benefit of Executive and his successors and the Company and its successors.
Successors of the Company shall include, without limitation, parents or
Subsidiaries, any corporation or corporations acquiring, directly or indirectly,
all or substantially all of the assets or stock of the Company, whether by
merger, consolidation, purchase, lease or otherwise, and such successor shall
thereafter be deemed the “Company”
for
the
purpose hereof.
17. Notices
Except
as
otherwise expressly provided, any notice, request, demand or other communication
permitted or required to be given under this Agreement shall be in writing,
shall be sent by one of the following means to Executive and the Company at
the
addresses set forth below (or to such other address as shall be designated
hereunder by notice to the other Parties and persons receiving copies, effective
upon actual receipt), and shall be deemed conclusively to have been given:
(a)
on the first business day following the day timely deposited with Federal
Express (or other equivalent national overnight courier) or United States
Express Mail, with the cost of delivery prepaid or for the account of the
sender; (b) on the fifth business day following the day duly sent by certified
or registered United States mail, postage prepaid and return receipt requested;
or (c) when otherwise actually received by the addressee on a business day
(or
on the next business day if received after the close of normal business hours
or
on any non-business day).
If
to the
Company:
Measurement
Specialties, Inc.
000
Xxxxx
Xxx
Xxxxxxx,
Xxxxxxxx 00000
Attn:
Chief Financial Officer
with
a
copy to:
XxXxxxxx
& English, LLP
Four
Gateway Center
000
Xxxxxxxx Xxxxxx
X.X.
Xxx
000
Xxxxxx,
Xxx Xxxxxx 00000-0000
Attn: Xxxxxxx
X. Xxxxxxxx
9
If
to
Executive:
Xxxxx
Xxxxxxx, at the address listed for the Executive in the Company’s payroll
records.
18. Governing
Law/Venue
The
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of New Jersey without giving effect to conflicts of
laws principles thereof. Any disputes or controversies arising under this
Agreement shall be resolved exclusively by the state or federal courts located
in the State of New Jersey and each of the Parties hereto consents to the
exclusive jurisdiction of such courts in connection with the subject matter
hereof.
19. Interpretation/Headings
The
Parties acknowledge and agree that the terms and provisions of this Agreement
have been negotiated, shall be construed fairly as to each of the Parties
hereto, and shall not be construed in favor of or against any Party. The section
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
20. Miscellaneous
The
provisions of this Agreement shall not be extended, varied, changed, modified
or
supplemented other than by agreement in writing signed by the Parties hereto.
There are no other terms or conditions, representations or understandings except
as herein set forth. The failure of either Party to enforce at any time or
for
any period of time any one or more of the provisions hereof shall not be
construed to be a waiver of such provisions or of the right of such Party
thereafter to enforce each such provision.
21. Counterparts
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute a single
instrument.
23. Entire
Agreement
This
Agreement contains the entire understanding between the Parties hereto and
supersedes any prior or contemporaneous written or oral agreements,
representations and warranties between them respecting the subject matter
hereof, including, but not limited to, the Engagement Agreement and the
Noncompetition Agreement.
10
IN
WITNESS WHEREOF the Parties hereto have caused this Agreement to be executed
as
of the date first written above.
| MEASUREMENT SPECIALTIES, INC. | ||
| |
|
|
| By: | /s/ Xxxx Xxxxxxx | |
|
Name: Xxxx Xxxxxxx |
||
| Title: Chief Financial Officer | ||
| /s/ Xxxxx Xxxxxxx | ||
|
Xxxxx Xxxxxxx |
||
11
