EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of February 1999 by and between Acme
Electric Corporation, a New York corporation having an office at 000 Xxxxxx
Xxxx, Xxxx Xxxxxx, Xxx Xxxx, (the "Company") and Xx. Xxxxxxx X. Xxxxx,
residing at 00 Xxxxxx Xxxxx, Xxxx Xxxxxx, Xxx Xxxx, ("Executive").
W I T N E S S E T H:
WHEREAS, Executive is Corporate Controller of the Company; and
WHEREAS, the Company believes that it is in its best interest to
assure the continued service of Executive on the terms and conditions
hereinafter set forth; and
WHEREAS, Executive is desirous of receiving assurances that, should a
"change in control" as hereinafter defined take place at the Company, he
will be provided with security as to his position, compensation and
benefits.
NOW, THEREFORE, in consideration of the premises and mutual agreement
hereinafter contained, the parties hereto agree as follows:
1. The Company hereby employs Executive and Executive hereby accepts
employment with the Company as Corporate Controller upon the terms and
conditions herein contained.
2A. The initial Term shall be for a period commencing on the date
hereof and terminating one year from the date of commencement or one year
from its most recent extension date, whichever is later.
At the end of each month during the Term, the Term shall be
automatically continued and extended for one additional month, unless on or
before fifteen days prior to the end of any month during the Term, the
Company shall give to Executive or Executive shall give to the Company a
notice not to extend. Then, in such event, the Term as theretofore
automatically extended shall be deemed further extended for one additional
month, and thereafter there shall be no further automatic extensions. (As
an example, should the Company or Executive give to the other party a
written notice not to extend on November 15, 1999, the Agreement would be
deemed extended to, and would expire on, December 31, 2000.) "Term" as
used in this Agreement shall be deemed to mean the period of employment
from the date hereof through February 1, 2000, or as automatically extended
pursuant to this Paragraph 2A.
2B. Should the Company breach this Agreement pursuant to the
provisions of Paragraphs 8A, 8B, 8C and 9 herein, Executive shall be
entitled to the following:
a. Payments in an amount equal to the base salary payable each
year of the then remaining Term of the Agreement, with such base
salary to be in an amount equal to Executive's base salary in effect
prior to such breach, plus bonus each year of the remaining Term of
the Agreement. The bonus amount each year will be equal to the
average of Executive's greatest two out of the previous three years'
bonuses, or 10% of base salary, whichever is greater.
b. Company paid full medical, dental and disability insurance
benefits and life insurance benefits comparable to those enjoyed prior
to such breach, which shall extend for the duration of Executive's
life or until he accepts other full-time employment.
c. The continuation over the then remaining Term of this
Agreement, in such amounts and in a manner consistent with that
provided immediately prior to such breach, of contributions in
Executive's behalf based on his base salary to the Company's Pension
Plan for Salaried Employees.
d. Payments made pursuant to this Paragraph 2B shall be made
monthly from the date the Company breached this Agreement throughout
the then remaining Term of the Agreement, or at Executive's option in
a lump sum within thirty (30) days of notification of such breach.
Such lump sum shall be an amount equal to the discounted present value
of the payments which were to be paid over the Term specified herein
discounted at a rate of 5% per annum.
2C. "Change in Control" as used in this Agreement shall mean any one
of the following:
a. An acquisition of 35% or more of the beneficial ownership,
directly or indirectly, of the Company's then outstanding stock, or
merger or consolidation by or with another person, entity or group;
b. A tender offer or tender offers for the Company's stock in
which 35% or more of the then outstanding stock of the Company is
tendered or purchased by a person, single entity or affiliated group;
c. A reclassification of securities or recapitalization of the
Company which, directly or indirectly, disproportionately increases or
decreases the outstanding shares of any class of equity securities of
the Company by 35% or more;
d. A sale, lease, exchange, mortgage, pledge, transfer or other
disposition of all or substantially all the assets of the Company;
e. A change in control shall be deemed to have occurred if at
any time less than 51% of the members of the Board of Directors shall
be persons who were either nominated for election by the Board of
Directors or were elected by the Board of Directors.
3. Except as otherwise herein provided during the Term of the
Agreement, the Company shall employ Executive as Corporate Controller and
he shall serve the Company in such capacity, performing the normal duties
of that position in a corporation in the Company's business, subject at all
times to the direction and control of the Board of Directors of the
Company, shall devote his time, attention, skill and energy to the
business, welfare and affairs of the Company and shall use his best efforts
to promote the interests of the Company, it being understood that the
conduct of such duties does not require his attendance at the offices of
the Company during any particular fixed periods.
4A. The Company shall pay and Executive shall accept as compensation
for all services to be rendered hereunder and during the Term a base salary
determined by the Company pursuant to its normal procedure for setting
yearly salaries for employees of the Company (currently, $73,500 per
annum). Such payments hereunder shall be payable in accordance with the
prevailing salary payroll practices of the Company and subject to such
deductions as are agreed to by Executive. Nothing contained in this
Agreement shall be deemed to prevent the Company during the Term hereof
from giving bonuses or other additional consideration to Executive from
time to time as determined by the Company or, except as otherwise
specifically provided herein, prevent Executive from receiving benefits in
accordance with any benefit plan or program made available by the Company
to its salaried employees.
4B. The Company shall reimburse Executive for all expenses reasonably
incurred by him in connection with his performance of services to the
Company, including entertainment and travel. Executive shall be entitled
to receive or participate in all other fringe benefits, such as medical and
hospital plans, management incentive plan and pension plan, and stock
options under the then existing corporate stock option plan in a manner
consistent with the practices prevailing at the time of the execution of
this Agreement.
4C. Notwithstanding anything herein to the contrary, the Company
shall not be obligated to pay any portion of any amount otherwise payable
to Executive pursuant to this Agreement if the Company could not reasonably
deduct such portion in accordance with the Internal Revenue Code then in
effect.
5A. Executive acknowledges that during the course of his employment
hereunder he will acquire, possess and become exposed to confidential and
proprietary information and materials of the Company. Accordingly, during
his employment hereunder and for a period of twelve (12) months thereafter,
he shall not, for any reason whatever, except in the regular authorized
course of the Company's business under appropriate secrecy provisions,
directly or indirectly, use or exploit or disclose or divulge to anyone
(who is not authorized to receive the same), without the prior written
permission of the Company, any proprietary information, including, but not
limited to, trade secrets, know-how, data, materials or other knowledge
relating to or pertaining to the business of the Company, unless the same
(i) has been published and/or has become a part of the public domain other
than by acts of omission by Executive; (ii) has been lawfully furnished or
made known to Executive by a third party without restriction on disclosure
or use; and (iii) was in Executive's possession at the time he first became
associated with the Company and was not acquired by Executive either
directly or indirectly from the Company.
5B. All documents, records, prototypes or other tangible embodiments
or evidence of the discoveries, trade secrets, information, know-how, data,
materials or other knowledge previously referred to, which may at any time
be acquired by or come into the possession of Executive during his
employment hereunder (except materials excluded in Subparagraph A hereof),
are the sole and exclusive property of the Company and must be surrendered
to the Company, without demand therefor, upon termination of Executive's
employment hereunder, or upon the request by the Company at any other time;
and, in addition, prior to such termination of employment or upon the
reasonable request by the Company at any other time, Executive will prepare
materials to accurately and adequately describe, set forth or embody any of
the foregoing and deliver the same to the Company in order to accomplish or
complete the transfer of any and all of the foregoing to the Company and
shall be reimbursed by the Company for all of his reasonable out-of-pocket
expenses in connection therewith.
5C. Executive agrees to execute all documents and to take all such
other action as the Company may reasonably require (being reimbursed for
all of his reasonable out-of-pocket expenses in this connection) in order
to assign to the Company any and all rights to any materials prepared by
him during and in connection with his employment hereunder.
6A. Executive agrees that, during his employment hereunder for a
period of twelve (12) months after termination of his employment hereunder
for whatever reason (except in the event such termination is caused by (a)
a material breach of this Agreement by the Company, or (b) the Company's
bankruptcy (as defined in Paragraph 14 hereof)), he shall not (without the
prior written consent of the Company) (i) solicit as a client or customer
in competition with the Company any persons or entities which were, during
his employment hereunder, clients or customers of the Company, (ii) enter
into any business arrangements with any of the foregoing which could be
reasonably deemed to be materially competitive with or materially injurious
to any business in which the Company is engaged at the time of such
termination, or (iii) solicit, or be instrumental in any way in causing,
any other person to leave the employ of the Company. Executive further
agrees that he shall not (without the prior written consent of the Company)
for a period of twelve (12) months after the termination of his employment
hereunder for any reason (except in the event the termination is caused by
a breach of this Agreement by the Company), directly or indirectly,
individually or as a director, partner, employee, officer or agent, engage
in any employment, performance of services or other activity on behalf of
any company if such employment, performance of services or other activity
can be reasonably deemed to be materially competitive with or materially
injurious to any business in which the Company is engaged at the time of
such termination.
6B. For purposes only of determining whether services by Executive
during the aforesaid twelve (12) month period after his termination of
employment hereunder shall be "materially competitive with or materially
injurious to the Company" within the meaning of this paragraph, either
party may initiate arbitration proceedings to make such determination
pursuant to Paragraph 13 hereof.
6C. If Executive commits a material breach of any of the provisions
of Paragraph 5A, 5B, 5C or 6A, the Company shall have the right and remedy
to have such provisions specifically enforced by any court having equity
jurisdiction, since any such breach or threatened breach will cause
irreparable injury to the Company and money damages will not provide an
adequate remedy to the Company. The initiation of, or participation in,
any such proceeding shall not constitute a waiver of the arbitration
provisions of Paragraph 10.
7. During the Term, Executive will not directly or indirectly engage
in the business of, or own or control any interest in (except as a passive
investor owning less than ten percent (10%) of the equity securities of a
publicly-owned company), or act as a director, officer or employee of, or
consultant to, any individual, partnership, joint venture, corporation or
other business entity directly or indirectly engaged anywhere in the United
States in any business competing with the business carried on by the
Company or any of its subsidiaries.
8A. It is specifically understood and agreed that the Company may
terminate this Agreement and its obligations to Executive hereunder prior
to a change in control, and that, further, this Agreement and its
obligations to Executive hereunder shall terminate in the event that prior
to a change in control there is a change or re-assignment of Executive's
position or the voluntary retirement by Executive from active employment
with the Company. Notwithstanding the foregoing, at any time during the
Term of this Agreement, after a change of control has taken place, any
termination or notice of termination shall be deemed a breach of this
Agreement and a notice not to extend, and the provisions of Paragraph 2B
above shall apply so as to have the effect of fixing the Term as provided
herein and terminating Executive's employment with the Company.
8B. At any time during the Term of this Agreement, after a change in
control has taken place, should the Company reduce the compensation or
benefits then being paid to Executive, it shall be deemed a breach of this
Agreement and a notice not to extend, and the provisions of Paragraph 2B
above shall apply so as to have the effect of fixing the Term as provided
herein and terminating Executive's employment with the Company.
8C. At any time during the Term of this Agreement, after a change in
control has taken place, should the Company change Executive's position or
duties without his written consent, it shall be deemed a breach of this
Agreement and a notice not to extend, and the provisions of Paragraph 2B
above shall apply so as to have the effect of fixing the Term as provided
herein and terminating Executive's employment with the Company.
9. In the event that during Executive's lifetime and during the Term
of this Agreement, after a change in control has taken place, the Company
defaults as to any payment under this Agreement or fails to make any
payments provided for in this Agreement and fails to cure such default or
make such payment within ten (10) days after written notice thereof, or
written demand therefor, or in the event that the Company terminates this
Agreement for cause and it is ultimately determined that such termination
was wrongful, Executive may elect to treat such default or wrongful
termination as a breach of this Agreement and shall he entitled to recover
all of his expenses, including reasonable attorneys' fees, in prosecuting
or defending any actions or proceedings arising out of, or in any other way
relating to, the matters referred to in this paragraph, and the provisions
of Paragraph 2B of this Agreement shall apply.
10. Any controversy, claim or dispute arising out of or relating to
this Agreement, including without limitation, any claim for breach of this
Agreement, shall be settled by arbitration in accordance with the Rules of
the American Arbitration Association (AAA) obtaining at the time of such
proceeding, except that the authority of the arbitrators shall be limited
to the interpretation and enforcement of the terms and conditions of this
Agreement and the arbitrators shall set forth in writing the reasons for
their decisions. Judgment upon any award rendered by the arbitrators
pursuant hereto may be entered in any court having jurisdiction thereof and
thereafter enforced. Either party shall have the right to initiate
arbitration proceedings. Any arbitration shall take place under the
auspices of the AAA in Buffalo, New York. There shall be three
arbitrators. Each party shall appoint one arbitrator. If either party
fails to appoint an arbitrator within five (5) days from the date upon
which the notice of the initiating party of its intention to arbitrate is
received by the other party to such proceedings, the AAA shall make the
appointment for that party. The two arbitrators appointed in the manner
provided for above shall appoint a third arbitrator, mutually acceptable to
them. If the two arbitrators first appointed cannot, for any reason, agree
upon a third arbitrator, or an acceptable person is unable to act, the AAA
shall appoint the third arbitrator in accordance with its rules.
11. Executive may terminate this Agreement prior to the date of
expiration of the Term hereinabove set forth by written notice to the
Company if the Company shall file a petition in bankruptcy, make a
voluntary assignment for the benefit of creditors, file a petition or an
answer seeking an arrangement with creditors or take advantage of any
insolvency law, or if the Company applies for or consents to the
appointment of a receiver or trustee of all or a substantial part of its
assets, or an order, judgment or decree shall be entered in any court of
competent jurisdiction appointing a receiver of all or a substantial part
of its assets, and such order, judgment or decree shall continue unstayed
and in effect for any consecutive period of ninety (90) days.
12. This Agreement and all rights hereunder are personal to Executive
and shall not be assignable; provided, however, that all of Executive's
rights under the Agreement shall inure to the benefit of his heirs,
distributees, personal representatives or designees or other legal
representatives, as the case may be. Any person, firm or corporation
succeeding to the business of the Company by merger, purchase,
consolidation or otherwise, shall assume by contract or operations of law
the obligations of the Company hereunder; provided, however, that the
Company shall, notwithstanding such assumption or assignment, remain liable
and responsible for fulfilling the obligations of the Company under this
Agreement.
This Agreement supersedes and replaces any and all present
written or oral agreements of employment between the parties hereto, and
all such agreements are hereby deemed canceled, revoked and of no further
force or effect.
13. Without in any way implying that any provisions hereof is invalid
or unenforceable, the validity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other
provision.
14. This Agreement constitutes the whole agreement between the
parties hereto, and there are no terms other than those stated herein. No
variation hereof shall be deemed valid unless in writing and signed by the
parties hereto, and no discharge of the terms hereof shall be deemed valid
unless by full performance by the parties hereto or by a writing signed by
the parties hereto. No waiver by either party of any provisions or
condition of this Agreement to be performed by them should be deemed a
waiver of any other provisions of this Agreement.
15. Any notice, statement, report, request or demand required or
permitted to be given by this Agreement shall be in writing, and shall be
sufficient if addressed and sent by certified mail, return receipt
requested, to the parties at the addresses set forth above, or at such
other place that either party may designate by notice to the other and
shall be deemed given when so mailed.
16. This Agreement has been made in, and shall be interpreted
according to the laws of, the State of New York. The parties hereto submit
to the jurisdiction of the courts of the New York Supreme Court, County of
Erie, for the purpose of any actions or proceedings which may be required
to enforce the provisions of this Agreement or an award made in any
arbitration proceeding initiated hereunder.
IN WITNESS WHEREOF, the parties have hereunto set their respective
hands and seals causing these presents to be executed as of the day and
year first above written.
Witnessed:
Xxxx X. Xxxxxx /s/
Xxxxxxx X. Xxxxx
Witnessed: ACME ELECTRIC CORPORATION
Xxxx X. Xxxxxx By: /s/
Xxxxxx X. XxXxxxx
Chairman & CEO
