EMPLOYMENT AGREEMENT
Exhibit 99.1
This Employment Agreement (the “Agreement”) is entered into on April ___, 2007, by and
between Xxxx X. Xxxxxxxxxxx, an individual (“Executive”) and Ultralife Batteries, Inc., a
Delaware corporation (the “Company”).
The Company and Executive desire to set forth their agreement pursuant to which Executive will
be retained as the President and Chief Executive Officer of the Company, effective January 1, 2007,
and to provide for Executive’s employment by the Company upon the terms and conditions set forth
herein.
4. Bonus. In addition to his Base Salary, Executive shall be entitled to participate
in the Company’s executive bonus program. The annual target bonus shall be established by the
Board
or its Compensation and Management Committee, in the discretion of the Board or such
Committee, and shall be payable based on achievement of specified Company objectives.
(a) Employee and Executive Benefits. Executive will be entitled to receive all
benefits provided to senior executives, executives and employees of the Company generally from time
to time, including medical, dental, life insurance and long-term disability, and the executive
split-dollar life insurance and executive disability plan, in each case so long as and to the
extent the same exist; provided, that in respect to each such plan Executive is otherwise eligible
and insurable in accordance with the terms of such plans.
(b) Vacation, Sick Leave, Holidays and Sabbatical. Executive shall be entitled to
vacation, sick leave, holidays and sabbatical in accordance with the policies of the Company as
they exist from time to time. Vacation which is not used during any calendar year will roll over
to the following year only to the extent provided under the Company’s vacation policies as they
exist from time to time.
(a) At Will Employment. Executive’s employment shall be “at will.” Either the
Company or Executive may terminate this Agreement and Executive’s employment at any time, with or
without Business Reasons (as defined in Section 7(a) below), in its or his sole discretion, upon
sixty (60) days’ prior written notice of termination.
(b) Involuntary Termination. If at any time during the term of this Agreement, other
than following a Change in Control to which Section 6(c) applies, the Company terminates the
employment of Executive without Business Reasons or a Constructive Termination occurs, then
Executive shall be entitled to receive the following: (i) salary and the cash value of any accrued
vacation (consistent with the Company’s vacation policies then in effect) through the Termination
Date plus continued salary for a period of twenty-four (24) months following the Termination Date,
payable in accordance with the Company’s regular payroll schedule as in effect from time to time,
(ii) an amount equal to the average of the bonuses paid to Executive during the two preceding
fiscal years or, if no bonuses were paid during such period, an amount equal to Executive’s then
current annual target bonus, (iii) acceleration of vesting of all outstanding stock options, and
other equity arrangements subject to vesting and held by Executive subject to the provision,
however, that the acceleration shall not cover more than two (2) years from the Termination Date
(and in this regard, all such options and other exercisable rights held by Executive shall remain
exercisable for one year following the Termination Date), (iv) to the extent COBRA shall be
applicable to the Company, continuation of health benefits for Executive, Executive’s spouse and
any dependent children, at Executive’s cost, for a period of 18 months after the Termination Date
or such longer period as may be applicable under the Company’s policies then in effect,
provided the Executive makes the appropriate election and
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payments, and (v) no other compensation, severance or other benefits, except only that this
provision shall not limit any benefits otherwise available to Executive under Section 6(c) in the
case of a termination following a Change in Control.
(c) Change in Control.
(i) Benefits. If at any time during the term of this Agreement a “Change in
Control” occurs (as defined below), and the Company terminates the employment of Executive
without Business Reasons or a Constructive Termination occurs within eighteen (18) months of the
date of the Change in Control, then Executive shall be entitled to receive the following: (i)
salary and the cash value of any accrued vacation (consistent with the Company’s vacation policies
then in effect) through the Termination Date plus an amount equal to twenty-four (24) months of
Executive’s salary as then in effect, payable immediately upon the Termination Date, (ii) an amount
equal to the greater of the average of the bonuses paid to Executive during the two preceding
fiscal years or Executive’s then current annual target bonus, (iii) acceleration in full of vesting
of all outstanding stock options, and other equity arrangements subject to vesting and held by
Executive (and in this regard, all such options and other exercisable rights held by Executive
shall remain exercisable one year following the Termination Date), (iv) to the extent COBRA shall
be applicable to the Company, continuation of health benefits for Executive, Executive’s spouse and
any dependent children, at Executive’s cost, for a period of eighteen (18) months after the
Termination Date or such longer period as may be applicable under the Company’s policies then in
effect, provided Executive makes the appropriate election and payments, and (v) no other
compensation, severance or other benefits.
(ii) Additional Payments by the Company. If it is determined that any payment or
distribution by the Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or otherwise pursuant to or by
reason of any other agreement, policy, plan, program or arrangement, including without limitation
any stock option, stock appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a “Payment”),
would be subject to the excise tax imposed by Section 4999 of the Code (or any successor provision
thereto) or to any similar tax imposed by state or local law, or any interest or penalties with
respect to such excise tax (such tax or taxes, together with any such interest and penalties, are
hereafter collectively referred to as the “Excise Tax”), then Executive will be entitled to
receive an additional payment or payments (a “Gross-Up Payment”) in an amount such that,
after payment by Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(d) Termination for Disability. If at any time during the term of this Agreement,
other than following a Change in Control to which Section 6(c) applies, Executive shall become
unable to perform his duties as an employee as a result of incapacity, which gives rise to
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termination of employment for Disability, then Executive shall be entitled to receive the
following: (i) salary and the cash value of any accrued vacation (consistent with the Company’s
vacation policies then in effect) through the Termination Date plus continued salary for a period
of twenty-four (24) months following the Termination Date, payable in accordance with the Company’s
regular payroll schedule as in effect from time to time, (ii) an amount equal to the annual target
bonus for the fiscal year in which the Termination Date occurs (plus any unpaid bonus from the
prior fiscal year), (iii) acceleration in full of vesting of all outstanding stock options held by
Executive subject to the provision, however, that the acceleration shall not cover more than two
(2) years from the Termination Date (and in this regard, all such options and other exercisable
rights held by Executive shall remain exercisable one year following the Termination Date), (iv) to
the extent COBRA shall be applicable to the Company, continuation of health benefits for Executive,
Executive’s spouse and any dependent children, at Executive’s cost, for a period of 18 months after
the Termination Date, or such longer period as may be applicable under the Company’s policies then
in effect, provided Executive makes the appropriate election and payments, and (v) no other
compensation, severance or other benefits, except only that this provision shall not limit any
benefits otherwise available to Executive under Section 6(c) in the case of a termination following
a Change in Control. Notwithstanding the foregoing, however, the Company may deduct from the
salary specified in clause (i) hereof the amount of any payments then received by Executive under
any disability benefit program maintained by the Company.
(e) Voluntary Termination or Involuntary Termination for Business Reasons. If (A)
Executive voluntarily terminates his employment (other than in the case of a Constructive
Termination), or (B) Executive is terminated involuntarily for Business Reasons, then in any such
event Executive or his representatives shall be entitled to receive the following: (i) salary and
the cash value of any accrued vacation (consistent with the Company’s vacation policies then in
effect) through the Termination Date only, (ii) the right to exercise, for thirty (30) days
following the Termination Date (or such longer period as may be provided in the applicable stock
option plan or agreement), all stock options held by Executive, but only to the extent vested as of
the Termination Date, (iii) to the extent COBRA shall be applicable to the Company, continuation of
health benefits for Executive, Executive’s spouse and any dependent children, at Executive’s cost,
for a period of eighteen (18) months after the Termination Date, or such longer period as may be
applicable under the Company’s policies then in effect, provided Executive makes the appropriate
election and payments, and (iv) no other compensation, severance, or other benefits.
(f) Termination Upon Death. If Executive’s employment is terminated because of death,
then Executive’s representatives shall be entitled to receive the following: (i) salary and the
cash value of any accrued vacation (consistent with the Company’s vacation policies then in
effect) through the Termination Date, (ii) an amount equal to the annual target bonus for the
fiscal year in which the Termination Date occurs (plus any unpaid bonus from the prior fiscal
year), (iii) except in the case of any such termination following a Change in Control to which
Section 6(c) applies, acceleration in full of vesting of all outstanding stock options, and other
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equity arrangements subject to vesting and held by Executive subject to the provision, however,
that the acceleration shall not cover more than two (2) years from the Termination Date (and in
this regard, all such options and other exercisable rights held by Executive shall remain
exercisable for one year following the Termination Date (iv) to the extent COBRA shall be
applicable to the Company, continuation of health benefits for Executive’s spouse and any dependent
children, at their cost, for a period of eighteen (18) months after the Termination Date, or such
longer period as may be applicable under the Company’s policies then in effect provided Executive’s
estate makes the appropriate election and payments, (v) any benefits payable to Executive or his
representatives upon death under insurance or other programs maintained by the Company for the
benefit of the Executive, and (vi) no further benefits or other compensation, except only that this
provision shall not limit any benefits otherwise available to Executive under Section 6(c) in the
case of a termination following a Change in Control.
(g) Exclusivity. The provisions of this Section 6 are intended to be and are
exclusive and in lieu of any other rights or remedies to which Executive or the Company may
otherwise be entitled, either at law, tort or contract, in equity, or under this Agreement, in the
event of any termination of Executive’s employment. Executive shall be entitled to no benefits,
compensation or other payments or rights upon termination of employment other than those benefits
expressly set forth in paragraph (b), (c), (d), (e) or (f) of this Section 6, whichever shall be
applicable and those benefits required to be provided by law.
(a) Business Reasons. “Business Reasons” means (i) gross negligence, willful
misconduct or other willful malfeasance by Executive in the performance of his duties, (ii)
Executive’s conviction of a felony, or an other criminal offense involving moral turpitude, (iii)
Executive’s material breach of this Agreement, including without limitation any repeated breach of
Section 8 hereof or of any provision of any confidentiality, non-disclosure or non-competition
agreements between the Company and Executive, provided that, in the case of any such breach, the
Board provides written notice of breach to the Executive, specifically identifying the manner in
which the Board believes that Executive has materially breached this Agreement, and Executive shall
have the opportunity to cure such breach to the reasonable satisfaction of the Board within thirty
(30) days following the delivery of such notice. For purpose of this paragraph, no act or failure
to act by Executive shall be considered “willful” unless 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 or its affiliates. Any act, or failure to act, based upon authority given
pursuant to a 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. The Board must notify
Executive of any event constituting Business Reasons within ninety (90) days following the Board’s
actual knowledge of its existence (which period shall be extended during the period
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of any
reasonable investigation conducted in good faith by or on behalf of the Board) or such event shall
not constitute Business Reasons under this Agreement.
(b) Disability. “Disability” shall mean that Executive has been unable to
perform his duties as an employee as the result of his incapacity due to physical or mental
illness, and such inability, at least twenty-six (26) weeks after its commencement, is determined
to be total and permanent by a physician selected by the Company or its insurers and acceptable to
Executive or Executive’s legal representative (such Agreement as to acceptability not to be
unreasonably withheld). Termination resulting from Disability may only be effected after at least
sixty (60) days written notice by the Company of its intention to terminate Executive’s employment.
In the event that Executive resumes the performance of substantially all of his duties hereunder
before the termination of his employment becomes effective, the notice of intent to terminate shall
automatically be deemed to have been revoked.
(c) Termination Date. “Termination Date” shall mean (i) if this Agreement is
terminated on account of death, the date of death; (ii) if this Agreement is terminated for
Disability, the date specified in Section 7(b); (iii) if this Agreement is terminated by the
Company, the date which is indicated in a notice of termination is given to Executive by the
Company in accordance with Sections 6(a) and 9; (iv) if the Agreement is terminated by Executive,
the date which is indicated in a notice of termination given to the Company by Executive in
accordance with Sections 6(a) and 9(a); or (v) if this Agreement expires by its terms, then the
last day of the term of this Agreement.
(d) Constructive Termination. A “Constructive Termination” shall be deemed to
occur if (A) (1) Executive’s position changes as a result of an action by the Company such that (w)
Executive shall no longer be President and Chief Executive Officer of the Company, (x) Executive
shall have duties and responsibilities demonstrably less than those typically associated with a
President and Chief Executive Officer or (y) Executive shall no longer report directly to the
Company’s Chief Executive Officer or the Board or (2) Executive is required to relocate his place
of employment, other than a relocation within fifty (50) miles of Executive’s current residence or
the Company’s current Newark, New York headquarters, (3) there is a reduction in Executive’s base
salary or target bonus other than any such reduction consistent with a general reduction of pay
across the executive staff as a group, as an economic or strategic measure due to poor financial
performance by the Company or (4) there occurs any other material breach of this Agreement by the
Company (other than a reduction of Executive’s base salary or target bonus which is not described
in the immediately preceding clause (3)) after a written demand for substantial performance is
delivered to the Board by Executive which specifically identifies the manner in which Executive
believes that the Company has materially breached this Agreement,
and the Company has failed to cure such breach to the reasonable satisfaction of Executive
within thirty (30) days following the delivery of such notice and (B) within the ninety (90) day
period immediately following an action described in clauses (A)(1) through (4), Executive elects to
terminate his employment voluntarily.
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(e) Change in Control. A “Change in Control” shall be deemed to have occurred
if:
(i) any “Person,” as such term is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other than (i) the
Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of
the Company, or (iii) any company owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of stock of the Company), becomes the
“Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 51% or more of the combined voting power of
the Company’s then-outstanding securities;
(ii) the stockholders of the Company approve any transaction or series of transactions under
which the Company is merged or consolidated with any other company, other than a merger or
consolidation (A) which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 66 2/3% of the combined voting
power of the voting securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation and (B) after which no Person holds 20% or more of the combined
voting power of the then-outstanding securities of the Company or such surviving entity;
(iii) the stockholders of the Company approve a plan of complete liquidation of the Company or
an agreement for the sale or disposition by the Company of all or substantially all of the
Company’s assets;
(iv) the Board adopts a resolution to the effect that, for purposes of this Agreement, a
Change in Control has occurred; or
(v) a majority of the Board is replaced in a 12-month period by directors whose appointment or
election was not endorsed by a majority of the Board before their appointment or election.
(a) Executive agrees that in his individual capacity he will not enter into any agreement,
arrangement or understanding, whether written or oral, with any supplier, contractor, distributor,
wholesaler, sales representative, representative group or customer, relating to the
business of the Company or any of its subsidiaries, without the express written consent of the
Company.
(b) As long as Executive is employed by the Company or any of its subsidiaries, Executive
agrees that he will not, except with the express written consent of the Company, become engaged in,
render services for, or permit his name to be used in connection with, any
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for-profit business
other than the business of the Company, any of its subsidiaries or any corporation or partnership
in which the Company or any of its subsidiaries have an equity interest.
(a) Notice. Notices and all other communications contemplated by this Agreement shall
be in writing, shall be effective when given, and in any event shall be deemed to have been duly
given (i) when delivered, if personally delivered, (ii) three (3) business days after deposit in
the U.S. mail, if mailed by U.S. registered or certified mail, return receipt requested, or (iii)
one (1) business day after the business day of deposit with Federal Express or similar overnight
courier, if so delivered, freight prepaid. In the case of Executive, notices shall be addressed to
him at the home address which he most recently communicated to the Company in writing. In the case
of the Company, notices shall be addressed to its corporate headquarters, and all notices shall be
directed to the attention of its Corporate Secretary.
(b) Notice of Termination. Any termination by the Company or Executive shall be
communicated by a notice of termination to the other party hereto given in accordance with
paragraph (a) hereof. Such notice shall indicate the specific termination provision in this
Agreement relied upon.
(c) Successors.
(i) Company’s Successors. Any successor to the Company (whether direct or indirect
and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or
substantially all of the Company’s business and/or assets shall be entitled to assume the rights
and shall be obligated to assume the obligations of the Company under this Agreement and shall
agree to perform the Company’s obligations under this Agreement in the same manner and to the same
extent as the Company would be required to perform such obligations in the absence of a succession.
For all purposes under this Agreement, the term “Company” shall include any successor to the
Company’s business and/or assets which executes and delivers the assumption agreement described in
this subsection (i) or which becomes bound by the terms of this Agreement by operation of law.
(ii) Executive’s Successors. The terms of this Agreement and all rights of Executive
hereunder shall inure to the benefit of, and be enforceable by, Executive’s
personal or legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
(iii) No Other Assignment of Benefits. Except as provided in this Section 9(c), the
rights of any person to payments or benefits under this Agreement shall not be made subject to
option or assignment, either by voluntary or involuntary assignment or by
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operation of law, including (without limitation) bankruptcy, garnishment, attachment or other creditor’s process, and
any action in violation of this subsection (iii) shall be void.
(d) Waiver. No provision of this Agreement shall be modified, waived or discharged
unless the modification, waiver or discharge is agreed to in writing and signed by Executive and by
an authorized officer of the Company (other than Executive). No waiver by either party of any
breach of, or of compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same condition or
provision at another time.
(e) Entire Agreement. This Agreement shall supersede any and all prior agreements,
representations or understandings (whether oral or written and whether express or implied) between
the parties with respect to the subject matter hereof.
(f) Severability. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other provision hereof,
which shall remain in full force and effect.
(g) Arbitration and Governing Law. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in Rochester, New York,
in accordance with the rules of the American Arbitration Association then in effect. Judgment may
be entered on the arbitrator’s award in any court having jurisdiction. No party shall be entitled
to seek or be awarded punitive damages. All attorneys fees and costs shall be allocated or
apportioned as agreed by the parties or, in the absence of an agreement, in such manner as the
arbitrator or court shall determine to be appropriate to reflect the final decision of the deciding
body as compared to the initial positions in arbitration of each party. This Agreement shall be
construed in accordance with and governed by the laws of the State of New York as they apply to
contracts entered into and wholly to be performed within such State by residents thereof.
(h) Employment Taxes. All payments made pursuant to this Agreement will be subject to
withholding of applicable taxes.
(i) Indemnification. In the event Executive is made, or threatened to be made, a
party to any legal action or proceeding, whether civil or criminal, by reason of the fact that
Executive is or was a director or officer of the Company or serves or served any other entity of
which the Company owns 50% or more of the equity in any capacity, Executive shall be
indemnified by the Company, and the Company shall pay Executive’s related expenses when and as
incurred, all to the full extent permitted by law, pursuant to Executive’s existing indemnification
agreement with the Company, if any, in the form made available to all Executive and all other
officers and directors or, if it provides greater protection to Executive, to the maximum extent
allowed under the law of the State of the Company’s incorporation.
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(j) Legal Fees. The Company will pay directly the reasonable fees and expenses of
counsel retained by Executive in connection with the preparation, negotiation and execution of this
Agreement.
(k) Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the
Company by its duly authorized officer, as of the day and year first above written.
| ULTRALIFE BATTERIES, INC. |
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| By: | ||||
| Xxxxxx Xxxxxxxxx | ||||
| Chair of Compensation and | ||||
| Management Committee |
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| Xxxx X. Xxxxxxxxxxx |
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| Xxxx X. Xxxxxxxxxxx | ||||
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