EXHIBIT 10.1
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EXECUTION COPY
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EMPLOYMENT AGREEMENT
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AGREEMENT dated the 28th day of February, 2005 by and
between TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC., a Delaware
corporation with its principal place of business at 0
Xxxxxxxxxxxx Xxxxxxx, Xxxxxxxx, Xxx Xxxx 00000 ("TASA" or the
"Corporation") and XXXX X. XXXXXXXX, an individual with an
address at X.X. Xxx 000, Xxxxxx, XX 00000 ("Employee").
W I T N E S S E T H:
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WHEREAS, the Corporation recognizes that the current business
environment makes it difficult to attract and retain highly
qualified employees unless a certain degree of security can be
offered; and
WHEREAS, the Corporation desires to employ Employee and
Employee desires to accept such employment; and
WHEREAS, the Corporation believes it is essential to provide
Employee with such degree of security and secure the services of
Employee for the Corporation, and, in order to accomplish these
objectives, has authorized the President on behalf of the
Corporation to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements set forth herein, the parties hereto, intending
to be legally bound, agree as follows:
1. EMPLOYMENT AND TERM. Subject to the terms and conditions
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of this Agreement, the Corporation agrees to employ Employee, and
Employee hereby accepts employment by the Corporation, for a term
beginning February 28, 2005 (the "Effective Date") and, except as
set forth in the next sentence, ending on the first anniversary of
the Effective Date ("Initial Term"). Commencing on the expiration
date of the Initial Term, and on each annual anniversary of such
date (such date and each annual anniversary thereof is hereafter
referred to as the "Renewal Date"), the term of this Agreement
shall be automatically extended so as to terminate one year from
such Renewal Date, unless at least sixty (60) days prior to the
Renewal Date either the Corporation or Employee shall give written
notice to the other that the term of the Agreement shall not be so
extended.
2. CERTAIN DEFINITIONS.
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(a) A reference herein to a section of the Internal
Revenue Code of 1986, as amended (the "Code") or a subdivision
thereof shall be construed to incorporate reference to any section
or subdivision of the Code enacted as a successor thereto, any
applicable proposed, temporary or final regulations promulgated
pursuant to such sections and any applicable interpretation thereof
by the Internal Revenue Service.
(b) A reference herein to a section of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any rule
or regulation promulgated thereunder shall be construed to
incorporate reference to any section of the Exchange Act or any
rule or regulation enacted or promulgated as a successor thereto.
(c) "Subsidiary(ies)" means a company 50% or more of the
voting securities of which are owned by the Corporation or a
subsidiary of the Corporation.
(d) "Employee Benefit Plan" means any written plan
providing benefits for employees of the Corporation.
3. DUTIES. During the Term of this Agreement, Employee
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shall serve in a capacity as Senior Vice President and Chief
Operating Officer - TASA Proprietary Unit, or in such other related
capacity or capacities as may be determined by the Board. Employee
shall perform such services as are customary for the chief
operating officer of a corporation the principal business of which
is test assessment and development, including, but not limited to
analysis, presentation, reporting, management and leadership of the
operational functions of the company, i.e., sales, marketing,
product development, human resources and purchasing (with the
notable exclusions of TASA Corporate inclusive of its corporate
services and Information Technology), and such other services as
may be required or requested by the Board or the President in
connection with the operation of the Corporation. Employee shall
report directly to the President of the Corporation and shall be
headquartered at Brewster, New York, or any office or location of
the Corporation as the Board or the President shall request.
During the Term of this Agreement, and excluding any periods of
vacation and sick leave, Employee agrees to devote full time, best
efforts to the business and affairs of the Corporation to discharge
the responsibilities assigned to Employee hereunder, and to perform
faithfully and efficiently such responsibilities. During the Term
of this Agreement it shall not be a violation of this Agreement for
Employee to (A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions, and (C) manage personal
investments, so long as Employee's duties in connection therewith
do not unreasonably interfere with Employee's duties under this
Agreement. Activities of Employee consistent with this Section 3
shall not permit the Corporation to terminate Employee's employment
for "Cause", as defined below.
4. COMPENSATION.
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(a) BASE SALARY. During the Term of this Agreement, the
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Corporation shall pay to Employee, in equal installments no less
frequently than semi-monthly (or at such other intervals as are in
effect from time to time for other officers of the Corporation), an
annual base salary (the "Base Salary") of One Hundred Seventy
Thousand ($170,000.00) Dollars.
(b) BONUS. In addition to Base Salary, Executive shall
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be eligible for a guaranteed bonus of Thirty-Five Thousand Dollars
($35,000) during the Initial Term payable at the time and not later
than bonuses are paid to other executive level employees of the
Corporation under the Senior Level Bonus Program for 2005. In
connection with each Renewal Term, if any, Employee shall be
eligible to participate in such Senior Level Bonus Program as is
established for executive level employees of the Corporation and
approved by the Compensation Committee of the Corporation.
(c) INCENTIVE, SAVINGS, WELFARE BENEFIT PLANS AND
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RETIREMENT PLANS. In addition to Base Salary, Employee shall be
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eligible to participate in or benefit from, such medical insurance,
life insurance, disability insurance, pension, bonus, profit-
sharing, stock option, stock purchase and any other fringe benefit
plans, practices, programs or policies provided by the Corporation
in accordance with the terms of such plans, practices, programs and
policies, as amended from time to time.
(d) KEY MAN INSURANCE. Employee agrees that the
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Corporation may obtain key man life insurance with respect to
Employee, and in connection therewith, agrees to submit to all
reasonable and customary examinations requested by the provider of
such life insurance.
(e) EXPENSES. Employee shall be entitled to
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reimbursement for all normal and reasonable travel, entertainment
and other expenses necessarily incurred by her in the performance
of her duties hereunder in accordance with the policies, practices
and procedures of the Corporation as amended from time to time.
(e) DISABILITY. Except as hereinafter provided, the
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Corporation shall pay Employee for any period, up to a maximum of
three months in each sixty month period during the Term of this
Agreement in which, pursuant to written certification of her
physician, she is unable substantially to perform her duties
because of physical or mental disability or incapacity, an amount
equal to the Base Salary due her for such period pursuant to
Section 4(a), less the aggregate amount of all income disability
benefits which for such period she may receive by reason of (i) any
group health insurance plan, or disability insurance plan paid for
by the Corporation, in each case which is intended to function as a
salary replacement plan, (ii) any applicable compulsory state
disability law, (iii) the Federal Social Security Act, (iv) any
applicable workmen's compensation law or similar law and (v) any
plan towards which the Corporation or any subsidiary or affiliate
of the Corporation (including any predecessor of any thereof) has
contributed or for which it has made payroll deductions, such as
group accident or health policies, other than those which reimburse
for actual medical expenses.
(f) VACATION. During the Term of this Agreement,
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Employee shall be entitled to paid vacation in accordance with the
plans, practices, policies and programs of the Corporation as
amended from time to time.
5. STOCK OPTIONS.
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(a) As part of the consideration to be paid to Employee
for her services hereunder, Employee shall be eligible to
participate in any stock incentive plan adopted by the Corporation
(the "Plan") for which an executive level employee may participate.
(b) The Corporation hereby agrees that it shall cause to
be filed with the Securities and Exchange Commission a registration
statement on Form S-8 (or equivalent form as may be in effect at
such time) with respect to all options heretofore granted to
Employee under the Plan. The Corporation covenants that it will
keep such registration statement current until Employee is no
longer employed by the Corporation. The Corporation hereby agrees
that, for so long as either the Corporation does not have an
effective registration statement on Form S-8 or the Corporation has
an effective registration statement on Form S-8 but Employee is
restricted in her ability to resell shares acquired pursuant to the
exercise of options because of the provisions of General
Instruction C.2(b) to Form S-8, Employee shall have "piggyback"
registration rights with respect to the options granted to Employee
under the Plan and the shares underlying such options.
(c) As an incentive to enter into this Agreement, the
Corporation, immediately upon the Effective Date of this Agreement,
shall deliver to Employee a Stock Option Agreement pursuant to its
2000 Stock Option Incentive Plan, granting to Employee ten (10)
year options for 40,000 shares of the common stock of the
Corporation at fair market value as of the Effective Date,
exercisable one year after the anniversary of the date of the
grant.
6. RIGHTS OF TERMINATION.
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(a) CAUSE. During the Term of this Agreement, the
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Corporation shall have the right, at any time effective upon notice
to Employee, to terminate Employee's employment for "Cause" (as
hereinafter defined). For purposes of this Agreement, "Cause"
shall mean (i) an act or acts of personal dishonesty engaged in by
Employee, (ii) failure by Employee to perform Employee's
obligations under Section 3 of this Agreement which are not
remedied within thirty (30) days after receipt of written notice
from the Corporation; (iii) commission by Employee of a felony or
any act of embezzlement or misappropriation of funds, (iv) material
breach of any representation or warranty hereunder or fraud or
negligence in the performance of her duties hereunder, or (v)
material breach of the provisions of Section 8 or 9 hereof.
(b) DISABILITY; DEATH. In the event that Employee, due
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to physical or mental disability or incapacity, is unable for a
period of three or more months in any twelve month period of the
Term of this Agreement to substantially perform her duties
hereunder in the reasonable opinion of the President, the
Corporation shall have the right to terminate this Agreement and
Employee's employment hereunder upon 30 days' prior written notice
and termination shall be effective on the 30th day after receipt of
such notice by the Employee (the "Disability Effective Date"). In
the event that Employee is able to and recommences rendering
services and substantially performing her duties hereunder within
such 30-day notice period, Employee shall be reinstated and such
notice shall be without further force or effect. If Employee dies
during the Term, this Agreement shall terminate immediately upon
her death.
(c) EXPIRATION OF THIS AGREEMENT WITHOUT RENEWAL. If
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not previously terminated pursuant to the provisions of Sections
6(a) and (b), this Agreement shall terminate on the last day of the
Initial Term, or if extended as provided in Section 1, on the last
day of the Renewal Term in which notice of termination has been
given.
(d) NOTICE OF TERMINATION. Any termination of
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Employee's employment by the Corporation or by Employee shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 16 of this Agreement.
(e) DATE OF TERMINATION. "Date of Termination" means
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the date of receipt of a Notice of Termination or any later date
specified therein, as the case may be; provided, however, that if
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Employee's employment is terminated by reason of (i) death or
Disability, the Date of Termination shall be the date of death of
Employee or the Disability Effective Date, as the case may be, or
(ii) expiration of term of this Agreement without renewal, the Date
of Termination shall be the last day of the Initial Term, or if
extended as provided in Section 1, the last day of the Renewal Term
in which notice of termination has been given.
7. EFFECTS OF TERMINATION. In the event that
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Employee's employment is terminated pursuant to Section 6 hereof,
Employee's employment hereunder shall terminate without further
obligations to Employee, other than those obligations accrued or
earned and vested (if applicable) by Employee through the Date of
Termination, including for this purpose all "Accrued Obligations",
defined as those obligations accrued or earned and vested (if
applicable) by Employee as of the Date of Termination, including,
for this purpose (i) Employee's pro rata Base Salary accrued but
unpaid as of the Date of Termination, (ii) any compensation
previously deferred by Employee (together with any accrued earning
thereon) and not yet paid by the Corporation, (iii) any accrued
vacation pay not yet paid by the Company (iv) if applicable, all
amounts payable to the estate or designated beneficiaries of
Employee under any pension, savings, life insurance or other plans,
practices, policies and programs of the Corporation and (v) if
termination is a result of the death or Disability of Employee,
such Bonus, if any, pursuant to Section 4(b) hereof calculated pro
rata, based upon the actual number of complete months that Employee
is employed in the applicable fiscal year of the Corporation.
(i) All Accrued Obligations specified in:
(x) Sections 7(i), (ii) and (iii) shall be
paid to Employee in a lump sum in cash within 30 days of the Date
of Termination
(y) Section 7(iv) shall be paid in accordance
with Employee's specific elections pursuant to, and otherwise in
accordance with the terms of, any plan, practice, policy or program
providing benefits forming a part of such Accrued Obligations; and
(z) Section 7(v), if any, shall be paid not
later than the date bonuses are paid to executive level employees
under the Senior Level Bonus Program in effect for the applicable
fiscal year of termination.
(ii) all then non-exercisable options shall
immediately and automatically terminate, and
(iii) any registration rights theretofore
granted which have not been invoked with respect to shares of
Common Stock of the Corporation either acquired by Employee
pursuant to the exercise of stock options or underlying vested
options shall immediately and automatically terminate.
8. CONFIDENTIALITY.
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(a) Employee understands and acknowledges that as a
result of Employee's employment with the Corporation, and
involvement with the business of the Corporation she is or shall
necessarily become informed of, and have access to, confidential
information of the Corporation including, without limitation,
inventions, patents, patent applications, trade secrets, technical
information, know-how, plans, specifications, financial information
and business strategy, marketing plans and information, pricing
information, identity of customers and prospective customers and
identity of suppliers, and that such information, even though it
may have been or may be developed or otherwise acquired by
Employee, is the exclusive property of the Corporation to be held
by Employee in trust and solely for the Corporation's benefit.
Employee shall not at any time, either during or subsequent to her
employment hereunder, reveal, report, publish, transfer or
otherwise disclose to any person, corporation or other entity, or
use, any of the Corporation's confidential information, without the
written consent of the Board, except for use on behalf of the
Corporation in connection with the Corporation's business, and
except for such information which legally and legitimately is or
becomes of general public knowledge from authorized sources other
than Employee.
(b) Upon the termination of her employment with the
Corporation for any reason, Employee shall promptly deliver to the
Corporation, and keep no copies of, all drawings, manuals, letters,
notes, notebooks, reports, and all other materials regardless of
the media in which stored or the form thereof, and copies thereof,
including, without limitation, those of a secret or confidential
nature, relating to the Corporation's business which are in
Employee's possession or control.
(c) For purposes of this Section 8 and Section 9, the
term "Corporation" includes the Corporation and any other
predecessor corporation, and Subsidiaries and joint ventures.
(d) Employee represents and warrants to the Corporation
that the execution and delivery of this Agreement shall not
conflict with, or violate the terms of, or constitute a breach of
any other agreement or document to which she is a party, including,
but not limited to any employment, consulting, non-competition,
restrictive covenant or similar agreement or form of
confidentiality agreement.
(e) Employee represents and warrants to the Corporation
that all data provided in her resume, related papers and oral
interviews is true, complete and correct and acknowledges that
falsification, misrepresentation or deliberate omission of data
will be deemed a material breach of this Agreement and sufficient
cause for immediate termination of employment. Employee shall
provide such information and consents as shall be requested in
connection with a background investigation to be conducted by the
Corporation, including, but not limited to, criminal conduct.
9. NON-COMPETITION. Employee agrees that, for a period
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commencing on the date hereof and ending one year after the
termination of her employment with the Corporation for any reason,
she shall not, anywhere in the United States (or for such lesser
area or such lesser period as may be determined by a court of
competent jurisdiction to be a reasonable limitation on the
competitive activity of Employee) directly or indirectly:
(a) solicit or attempt to solicit business of any
customers of the Corporation (including prospective customers
solicited by the Corporation during the term of her employment) for
products or services the same or in competition with those offered,
sold, produced or under development by the Corporation during the
term of her employment therewith or dealt in by Employee during her
employment with the Corporation;
(b) solicit or attempt to solicit for any business
endeavor any employee of the Corporation;
(c) interfere with any business relationship between the
Corporation and any other person or entity;
(d) use the name of the Corporation or a name similar
thereto; or
(e) render any services as an officer, director,
employee, partner, consultant or otherwise to, or have any interest
as a stockholder, partner, lender or otherwise in, any entity which
is engaged in activities which, if performed by Employee would
violate this Section 9.
10. REMEDIES AND SURVIVAL. Because the Corporation does not
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have an adequate remedy at law to protect its interest in its trade
secrets, privileged, proprietary or confidential information and
similar commercial assets, or its business from Employee's
competition, the Corporation and each of its Subsidiaries shall be
entitled to injunctive relief, in addition to such other remedies
and relief that would, in the event of a breach of the provisions
of Sections 8 or 9, be available to the Corporation and each of its
Subsidiaries. A breach of any provision of Section 8 or 9 shall be
deemed a material breach under this Agreement. The provisions of
Sections 8 and 9 and this Section 10 shall survive any termination
of Employee's employment with the Corporation for any reason
whatsoever.
11. SET-OFF. The payments and performance by the Corporation
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as provided for in this Agreement shall be subject to any set-off,
counterclaim, recoupment, defense or other claim, right or action
which the Corporation may have against Employee.
12. ENTIRE AGREEMENT. This Agreement sets forth the entire
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understanding of the parties hereto with respect to its subject
matter, merges and supersedes any prior or contemporaneous
agreements or understandings with respect to its subject matter,
and shall not be modified or terminated except by another agreement
in writing executed by the Corporation and Employee. Failure of a
party to enforce one or more of the provisions of this Agreement or
to require at any time performance of any of the obligations hereof
shall not be construed to be a waiver of such provisions by such
party nor to in any way affect the validity of this Agreement or
such party's right thereafter to enforce any provision of this
Agreement, nor to preclude such party from taking any other action
at any time which it would legally be entitled to take.
13. SEVERABILITY. If any provision of this Agreement is held
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to be invalid or unenforceable by any court or tribunal of
competent jurisdiction, the remainder of this Agreement shall not
be affected by such judgment and such provision shall be carried
out as nearly as possible according to its original terms and
intent to eliminate such invalidity or unenforceability.
14. SUCCESSORS AND ASSIGNS. This Agreement is personal to
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Employee and shall not be assignable by Employee. This Agreement
shall inure to the benefit of and be enforceable by Employee's
legal representatives, heirs, and successors. This Agreement shall
inure to the benefit of and be binding upon the Corporation and its
successors and assigns. As used in the Agreement, "Corporation"
shall mean the Corporation as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes
and agrees to perform this Agreement by operation of law or
otherwise.
15. COMMUNICATIONS AND NOTICES. All notices and other
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communications under this Agreement shall be in writing and shall
be deemed to have been duly given three (3) business days after
they are mailed in any United States post office enclosed in a
registered or certified postage-paid envelope and addressed as set
forth at the beginning of this Agreement, or to such other address
as any party may specify by notice to the other party, or delivered
by overnight courier to such address with evidence of delivery;
provided, however, that any notice of change of address shall be
effective only upon receipt.
16. CONSTRUCTION; COUNTERPARTS. The headings contained in
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this Agreement are for convenience only and shall in no way
restrict or otherwise affect the construction of the provisions
hereof. References in this Agreement to Sections are to the
sections of this Agreement. This Agreement may be executed in
multiple counterparts, each of which shall be an original and all
of which together shall constitute one and the same instrument.
17. VALIDITY. The invalidity or unenforceability of any
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provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement. Failure
by a party to insist upon strict compliance with any provision
hereof shall not be deemed to be a waiver of such provision. This
Agreement contains the entire understanding of the Corporation and
Employee with respect to the subject matter hereof but does not
supersede or override the provisions of any stock option, employee
benefit or other plan, program, policy or practice in which
Employee is a participant or under which Employee is a beneficiary.
18. GOVERNING LAW. This Agreement shall be governed by and
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construed under the laws of the State of New York and any cause of
action asserted under this Agreement shall be brought in a court of
competent jurisdiction in the County of Xxxxxx and State of New
York.
IN WITNESS WHEREOF, the undersigned parties have executed and
delivered this Agreement as of the date first above written.
TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
By: /s/ XXXXXX X. XXXXX
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Name: Xxxxxx X. Xxxxx
Title: President
EMPLOYEE:
/s/ XXXX X. XXXXXXXX
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Xxxx X. Xxxxxxxx
