EMPLOYMENT AGREEMENT
EXHIBIT
99.1
AGREEMENT
dated as of the 1st day of April, 2007 by and between Techprecision Corporation,
a Delaware corporation with its principal office at Xxxxx Xxxxx, Xxxxxxxxxxx,
Xxxxxxxxxxxxx 00000 (the “Company”),
and Xxxxx X. Xxxxxx, residing at 000
X. Xxxxxxxxxx Xxxx, Xxxxxxx Xxxxxx, XX 00000
(the “Executive”).
W
I T N E S S E T H:
WHEREAS,
the Company has engaged Executive as its chief executive officer pursuant to
a
management agreement (the “Management Agreement”) dated February 24, 2006,
between the Company and Techprecision, LLC, a Delaware limited liability
company; and
WHEREAS,
the Management Agreement has been terminated, and the Company desires to
continue to obtain the benefits of Executive’s knowledge, skill and ability in
connection with managing the operations of the Company and to employ Executive
on the terms and conditions hereinafter set forth; and
WHEREAS,
Executive desires to provide his services to the Company and to accept
employment by the Company on the terms and conditions hereinafter set
forth;
NOW,
THEREFORE, in consideration of the mutual promises set forth in this Agreement,
the parties agree as follows:
1. Employment
and Duties.
(a) Subject
to the terms and conditions hereinafter set forth, the Company hereby employs
Executive as its Chief Executive Officer, and he shall have the duties and
responsibilities associated with the Chief Executive officer of a public
corporation. During the Term, as hereinafter defined, Executive shall report
to
the Company’s board of directors or, if the board of directors has an executive
committee, the executive committee. Executive shall also perform such other
duties and responsibilities as may be determined by the Company’s board of
directors or executive committee, as long as such duties and responsibilities
are consistent with those of the Company’s Chief Executive Officer.
(b) Executive
shall serve as a director of the Company
and/or any of its subsidiaries, if elected, and in such executive capacity
or
capacities with respect to any affiliate of the Company to which he may be
elected or appointed, provided that such duties are consistent with those of
the
Company’s Chief Executive Officer. During the Term, Executive shall receive no
additional compensation for services rendered pursuant to this Section 1(b).
For
purposes of this Agreement, the term
“affiliate” shall mean an entity that is controlled by the Company.
(c) Unless
terminated earlier as provided in Section 5 of this Agreement, this Agreement
shall have an initial term (the “Initial Term”) commencing as of the date of
this Agreement and expiring on March 31, 2008, and continuing on a year-to-year
basis thereafter unless terminated by either party on not less than ninety
(90)
days notice prior to the expiration of the Initial Term or any one-year
extension. The Initial Term and the one-year extensions are collectively
referred to as the “Term.”
2. Executive’s
Performance. Executive hereby accepts the employment contemplated by this
Agreement. During the Term, Executive shall devote substantially all of his
business time to the performance of his duties under this Agreement, and shall
perform such duties diligently, in good faith and in a manner consistent with
the best interests of the Company.
3. Compensation
and Other Benefits.
(a) (i)For
his
services to the Company during the Term, the Company shall pay Executive an
annual salary (“Salary”) for the year 2007 at the rate of one hundred sixty
thousand dollars ($160,000).
All Salary payments shall be payable in such installments as the Company
regularly pays its executive officers, but not less frequently than
semi-monthly.
(ii) Executive’s
base salary as set forth in Paragraph 3(a)(i) above may be increased at the
discretion of the compensation committee of the Board of Directors.
(b) Executive
shall be eligible for bonus compensation and stock options or other equity-based
incentives at the discretion of the compensation committee of the Board of
Directors.
(c) Executive
shall receive the following benefits during the Term:
(i) Major
medical health and dental insurance for Executive and members of his immediate
family
at the sole discretion of the Executive. Executive may elect not to accept
such
insurance benefits at this point but reserves the right to accept such benefits
in the future at Executive’s sole discretion.
(ii) Commuting
expenses, which shall include travel from Executive’s home and lodging in or
around Westminster, Massachusetts or any other location where the Company
maintains its principal executive office. Such expenses will not be included
as
part of the Executive’s base compensation.
(iii) Vacation
in accordance with Company policy
which shall provide for not less than four (4) weeks per year.
(iv) In
the event of a termination of Executive’s employment as a result of his death or
Disability, as hereinafter defined, the Company shall continue to pay to
Executive or his beneficiary, his Salary at the annual rate in effect at the
date of death or termination resulting from a Disability, until the earlier
of
(i) six (6) months from the date of death or such termination or (ii) the
expiration of the Term.
(v) As
used in this Agreement, the term “Cash Compensation” shall include Salary, any
bonus awarded Executive. One month’s Cash Compensation shall mean one twelfth
(1/12) of the sum of (i) the annual Salary, (ii) the bonus, if any, for previous
year, including the amount treated as compensation for Executive for stock
options or other equity-based incentives, to the extent that such amount is
reflected as current compensation in the Summary Compensation Table in the
Company’s filings with the Securities and Exchange Commission.
4. Reimbursement
of Expenses.
The Company shall reimburse Executive, upon presentation of proper expense
statements, for all authorized, ordinary and necessary out-of-pocket expenses
reasonably incurred by Executive during the Term in connection with the
performance of his services pursuant to this Agreement hereunder in accordance
with the Company’s expense reimbursement policy.
5. Termination
of Employment.
(a) This
Agreement and Executive’s employment hereunder shall terminate immediately upon
the death of Executive.
(b) This
Agreement and Executive’s employment pursuant to this Agreement, may be
terminated by Executive or the Company on not less than thirty (30) days’
written notice in the event of Executive’s Disability. The term “Disability”
shall mean any illness, disability or incapacity of Executive which prevents
him
from substantially performing his regular duties for a period of three (3)
consecutive months or four (4) months, even though not consecutive, in any
twelve (12) month period. However, if Executive is covered by long-term
disability insurance, the Company may not terminate this Agreement pursuant
to
this Section 5(b) unless Executive is eligible for disability payments under
his
long-term disability insurance.
(c) The
Company may terminate this Agreement and Executive’s employment and consulting
relationship pursuant to this Agreement for cause, in which event no further
Cash Compensation shall be payable to Executive subsequent to the date of such
termination. The term “cause” shall mean:
(i) Repeated
failure to perform material instructions from the Company’s board of directors
or executive committee, provided that such instructions are reasonable and
consistent with Executive’s duties as set forth in Section 1 of this Agreement
or any other failure or refusal by Executive to perform his duties required
by
said Section 1; provided, however, that Executive shall have received notice
from the Board specifying the nature of such failure in reasonable detail and
Executive shall have failed to cure the failure within ten (10) business days
after receipt of such notice;
(ii) a
breach of Section 6, 7 or 8 of this Agreement;
(iii) a
breach of trust whereby Executive obtains personal gain or benefit at the
expense of or to the detriment of the Company;
(iv) Executive’s
use of illegal substances;
(v) Executive’s
abuse of alcohol continuing after written notice from the board of directors
or
executive committee;
(vi) any
fraudulent or dishonest conduct by Executive or any other conduct by Executive
which damages the Company or any of its affiliates or their property, business
or reputation;
(vii) a
conviction of or plea of nolo contendere by Executive of (A) any felony or
(B)
any other crime involving fraud, theft, embezzlement or use or possession of
illegal substances; or
(viii) the
admission by Executive of any matters set forth in Section 5(c)(vii) of this
Agreement.
(d) Executive’s
resignation prior to the expiration of the Term, other than for Good Reason,
as
hereinafter defined, shall be treated in the same manner as a termination for
cause.
(e) In
the event that the Company terminates Executive’s employment other than as
provided in Sections 5(a), (b), (c) or (g) of this Agreement:
(i) The
Company shall pay to Executive as severance payments, within thirty (30) days
of
the termination of Executive’s employment, (A) his Salary at the rate in effect
on the date of termination for the balance of the Term, and (B) an amount equal
to any cash bonus paid to Executive for the previous year.
(ii) If,
at the time of termination, the Executive is covered by the major medical and
dental insurance provided in Section 3(b)(i), the Company shall continue such
coverage until the earlier of (A) the date the Term would have expired if this
Agreement had not been terminated pursuant to this Section 5(e), or (B) the
date
Executive has insurance coverage provided by another employer.
(iii) Any
options or other equity-based incentives held by Executive on the date of such
termination which shall not have vested on such date shall become fully
vested.
(iv) The
provisions of Section 7(a) of this Agreement shall terminate.
(f) The
term “Good Reason” shall mean:
(i) Any
material breach by the Company of its obligations under this Agreement which
are
not cured within ten (10) business days after notice from Executive which sets
forth in reasonable detail the nature of the breach.
(ii) Any
change in Executive’s duties such that Executive is no longer the Company’s
Chief Executive Officer,
unless such change was made with his consent.
(iii) Any
action on the part of the Company which impairs Executive’s ability to exercise
his duties as the Company’s Chief Executive Officer.
(g) The
following provisions shall apply in the event that a change of control, as
hereinafter defined, shall occur.
(i) In
the event that, following a change of control, Executive is dismissed other
than
pursuant to Sections 5(a), (b) or (c) of this Agreement, the Company shall
pay
Executive severance pay in an amount (determined at the rate in effect on the
date of dismissal or resignation) equal to the sum of twelve (12) months’ Cash
Compensation, which shall be paid to Executive on the date of the termination
of
his employment.
(ii) A
change of control shall occur or be deemed to have occurred if (A) any “person”
(as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing forty percent (40%) or
more of the combined voting power of the Company’s then outstanding securities.
Notwithstanding the foregoing, a change of control shall not result from the
issuance of stock upon conversion of the Company’s series A convertible
preferred stock or upon the exercise or conversion of the warrants issued in
the
Company’s February 2006 private placement.
(h) In
the event of any termination of Executive’s employment, including termination
for cause, Executive shall be entitled to all rights under the Company’s benefit
plans which had vested as of the date of termination of his
employment.
6. Trade
Secrets and Proprietary Information.
Executive recognizes and acknowledges that the Company, through the expenditure
of considerable time and money, has developed and will continue to develop
in
the future information concerning customers, clients, marketing, products,
services, business, research and development activities and operational methods
of the Company and its customers or clients, contracts, financial or other
data,
technical data or any other confidential or proprietary information possessed,
owned or used by the Company, the disclosure of which could or does have a
material adverse effect on the Company, its business, any business it proposes
to engage in, its operations, financial condition or prospects and that the
same
are confidential and proprietary and considered “confidential information” of
the Company for the purposes of this Agreement. In consideration of his
employment and engagement as a consultant, Executive agrees that he will not,
during or after the Term, without the consent of the chief executive officer,
make any disclosure of confidential information
now or hereafter possessed by the Company, to any person, partnership,
corporation or entity either during or after the term here of, except that
nothing in this Agreement shall be construed to prohibit Executive from using
or
disclosing such information (a) if such disclosure is necessary in the normal
course of the Company’s business in accordance with Company policies or
instructions or authorization from the board of directors or executive
committee, (b) such information shall become public knowledge other than by
or
as a result of disclosure by a person not having a right to make such
disclosure, (c) complying with legal process; provided, that in the event
Executive is required to make disclosure pursuant to legal process, Executive
shall give the Company prompt notice thereof and the opportunity to object
to
the disclosure, or (d) subsequent to the Term, if such information shall have
either (i) been developed by Executive independent of any of the Company’s
confidential or proprietary information or (ii) been disclosed to Executive
by a
person not subject to a confidentiality agreement with or other obligation
of
confidentiality to the Company. For the purposes of Sections 6, 7 and 8 of
this
Agreement, the term “Company” shall include the Company, its parent, its
subsidiaries and its affiliates.
7. Covenant
Not To Solicit or Compete.
(a) During
the period from the date of this Agreement until one (1) year following the
date
on which Executive’s employment or consulting relationship is terminated,
Executive will not, directly or indirectly:
(i) Persuade
or attempt to persuade any person or entity which is or was a customer, client
or supplier of the Company to cease doing business with the Company,
or to
reduce the amount of business it does with the Company (the terms “customer” and
“client” as used in this Section 7 to include any potential customer or client
to whom the Company submitted bids or proposals, or with whom the Company
conducted negotiations, during the term of Executive’s employment or consulting
relationship hereunder or during the twelve (12) months preceding the
termination of his employment or consulting relationship, as the case may
be);
(ii) solicit
for himself or any other person or entity other than the Company the business
of
any person or entity which is a customer or client of the Company, or was a
customer or client of the Company within one (1) year prior to the termination
of his employment or consulting relationship;
(iii) persuade
or attempt to persuade any employee of the Company, or any individual who was
an
employee of the Company during the one (1) year period prior to the lawful
and
proper termination of this Agreement, to leave the Company’s employ, or to
become employed by any person or entity other than the Company; or
(iv) engage
in any business in the United States whether as an officer, director,
consultant, partner, guarantor, principal, agent, employee, advisor or in any
manner, which directly competes with the business of the Company as it is
engaged in at the time of the termination of this Agreement, unless, at the
time
of such termination or thereafter during the period that Executive is bound
by
the provisions of this Section 7, the Company ceases to be engaged in such
activity, provided, however, that nothing in this Section 7 shall be construed
to prohibit Executive from owning an interest of not more than five (5%) percent
of any public company engaged in such activities.
(b) Executive
acknowledges that the restrictive covenants (the “Restrictive Covenants”)
contained in Sections 6 and 7 of this Agreement are a condition of his
employment and his consulting relationship are reasonable and valid in
geographical and temporal scope and in all other respects. If any court
determines that any of the Restrictive Covenants, or any part of any of the
Restrictive Covenants, is invalid or unenforceable, the remainder of the
Restrictive Covenants and parts thereof shall not thereby be affected and shall
remain in full force and effect, without regard to the invalid portion. If
any
court determines that any of the Restrictive Covenants, or any part thereof,
is
invalid or unenforceable because of the geographic or temporal scope of such
provision, such court shall have the power to reduce the geographic or temporal
scope of such provision, as the case may be, and, in its reduced form, such
provision shall then be enforceable.
8. Inventions
and Discoveries.
Executive agrees promptly to disclose in writing to the Company any invention
or
discovery made by him during the period of time that this Agreement remains
in
full force and effect, whether during or after working hours, in any business
in
which the Company is then engaged or which otherwise relates to any product
or
service dealt in by the Company and such inventions and discoveries shall be
the
Company’s sole property. Executive acknowledges that any such invention or
discovery developed by him an any intellectual property rights relating thereto
shall be considered as “work performed for hire.” In the event that any such
intellectual property rights are not, for any reason, deemed work performed
for
hire, Executive hereby assigns to the Company any and all of his right, title
and interest therein to the Company. Upon the Company’s request, Executive shall
execute and assign to the Company all applications for copyrights and letters
patent of the United States and such foreign countries as the Company may
designate, and Executive shall execute and deliver to the Company such other
instruments as the Company deems necessary to confirm the Company’s sole
ownership of all rights, title and interest in and to such inventions and
discoveries, as well as all copyrights and/or patents. If services in connection
with applications for copyrights and/or patents are performed by Executive
at
the Company’s request after the termination of his employment hereunder, the
Company shall pay him reasonable compensation for such services rendered after
termination of this Agreement.
9. Injunctive
Relief.
Executive agrees that his violation or threatened violation of any of the
provisions of Sections 6, 7 or 8 of this Agreement shall cause immediate and
irreparable harm to the Company. In the event of any breach or threatened breach
of any of said provisions, Executive consents to the entry of preliminary and
permanent injunctions by a court of competent jurisdiction prohibiting Executive
from any violation or threatened violation of such provisions and compelling
Executive to comply with such provisions. This Section 9 shall not affect or
limit, and the injunctive relief provided in this Section 9 shall be in addition
to, any other remedies available to the Company at law or in equity or in
arbitration for any such violation by Executive. In the event an injunction
is
issued against any such violation by Executive, the period referred to in
Section 7 of this Agreement shall continue until the later of the expiration
of
the period set forth therein or one (1) month from the date a final judgment
enforcing such provisions is entered and the time for appeal has lapsed. Subject
to Section 5(e)(iv) of this Agreement, the provisions of Sections 6, 7, 8 and
9
of this Agreement shall survive any termination of this Agreement and
Executive’s employment pursuant to this Agreement.
10. Indemnification.
The Company shall provide Executive with payment of legal fees and
indemnification to the maximum extent permitted by the Company’s Certificate of
Incorporation, By-Laws, and the Delaware General Corporation Law.
11. Miscellaneous.
(a) Executive
represents, warrants, covenants and agrees that he has a right to enter into
this Agreement, that he is not a party to any agreement or understanding, oral
or written, which would prohibit performance of his obligations under this
Agreement, and that he will not use in the performance of his obligations
hereunder any proprietary information of any other party which he is legally
prohibited from using.
(b) If
requested by the Company, Executive will cooperate with the Company in
connection with the Company’s application to obtain key-man life insurance on
his life, on which the Company will be the beneficiary. Such cooperation shall
include the execution of any applications or other documents requiring his
signature and submission of insurance applications and submission to a
physical.
(c) Any
notice, consent or communication required under the provisions of this Agreement
shall be given in writing and sent or delivered by hand, overnight courier
or
messenger service, against a signed receipt or acknowledgment of receipt, or
by
registered or certified mail, return receipt requested, or telecopier or similar
means of communication if receipt is acknowledged or if transmission is
confirmed by mail as provided in this Section 11(c), to the parties at their
respective addresses set forth at the beginning of this Agreement or by
telecopier to the Company at (000) 000-0000 or to Executive at 610)
444-0778,
with notice to the Company being sent to the attention of the individual who
executed this Agreement on behalf of the Company. Either party may, by like
notice, change the person, address or telecopier number to which notice is
to be
sent. If no telecopier number is provided for Executive, notice to him shall
not
be sent by telecopier.
(d) This
Agreement shall in all respects be construed and interpreted in accordance
with,
and the rights of the parties shall be governed by, the laws of the State of
Delaware applicable to contracts executed and to be performed wholly within
such
State, without regard to principles of conflicts of laws.
(e) Except
for actions, suits, or proceedings taken pursuant to or under Section 6, 7,
8 or
9 of this Agreement, any dispute concerning this Agreement or the rights of
the
parties hereunder shall be submitted to binding arbitration in Wilmington,
Delaware before a single arbitrator under the rules of the American Arbitration
Association. The award of the arbitrator shall be final, binding and conclusive
on all parties, and judgment on such award may be entered in any court having
jurisdiction. The arbitrator shall have the power, in his or her discretion,
to
award counsel fees and costs to the prevailing party. The arbitrator shall
have
no power to modify or amend any specific provision of this Agreement except
as
expressly provided in Section 7(b) of this Agreement.
(f) Notwithstanding
the provisions of Section 11(e) of this Agreement, with respect to any claim
for
injunctive relief or other equitable remedy pursuant to Section 9 of this
Agreement or any claim to enforce an arbitration award or to compel arbitration,
each of the parties hereby (i) consents to the exclusive jurisdiction of the
United States District Court for the State of Delaware and state courts of
the
State of Delaware, in the County of New Castle, (ii) agrees that any process
in
any action commenced in such court under this Agreement may be served upon
him
personally, either (A) by certified or registered mail, return receipt
requested, or by overnight courier service which obtains evidence of delivery,
with the same full force and effect as if personally served upon him in New
Castle County, Delaware, as the case may be, or (B) by any other method of
service permitted by law, and (iii) waives any claim that the jurisdiction
of
any such court is not a convenient forum for any such action and any defense
of
lack of in personam
jurisdiction with respect thereof.
(g) If
any term, covenant or condition of this Agreement or the application thereof
to
any party or circumstance shall, to any extent, be determined to be invalid
or
unenforceable, the remainder of this Agreement, or the application of such
term,
covenant or condition to parties or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each
term, covenant or condition of this Agreement shall be valid and be enforced
to
the fullest extent permitted by law, and any court or arbitrator having
jurisdiction may reduce the scope of any provision of this Agreement, including
the geographic and temporal restrictions set forth in Section 7(a) of this
Agreement, so that it complies with applicable law.
(h) This
Agreement constitutes the entire agreement of the Company and Executive as
to
the subject matter hereof, superseding all prior or contemporaneous written
or
oral understandings or agreements, including any and all previous employment
agreements or understandings, all of which are hereby terminated, with respect
to the subject matter covered in this Agreement. This Agreement may not be
modified or amended, nor may any right be waived, except by a writing which
expressly refers to this Agreement, states that it is intended to be a
modification, amendment or waiver and is signed by both parties in the case
of a
modification or amendment or by the party granting the waiver. No course of
conduct or dealing between the parties and no custom or trade usage shall be
relied upon to vary the terms of this Agreement. The failure of a party to
insist upon strict adherence to any term of this Agreement on any occasion
shall
not be considered a waiver or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this
Agreement.
(i) Neither
party hereto shall have the right to assign or transfer any of its or his rights
hereunder except in connection with a merger of consolidation of the Company
or
a sale by the Company of all or substantially all of its business and
assets.
(j) This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, successors, executors, administrators and permitted
assigns.
(k) The
headings in this Agreement are for convenience of reference only and shall
not
affect in any way the construction or interpretation of this
Agreement.
(l) No
delay or omission to exercise any right, power or remedy accruing to either
party hereto shall impair any such right, power or remedy or shall be construed
to be a waiver of or an acquiescence to any breach hereof. No waiver of any
breach hereof shall be deemed to be a waiver of any other breach hereof
theretofore or thereafter occurring. Any waiver of any provision hereof shall
be
effective only to the extent specifically set forth in an applicable writing.
All remedies afforded to either party under this Agreement, by law or otherwise,
shall be cumulative and not alternative and shall not preclude assertion by
such
party of any other rights or the seeking of any other rights or remedies against
any other party.
IN
WITNESS WHEREOF,
the parties have executed this Agreement as of the date first above
written.
| TECHPRECISION CORPORATION | ||
| |
|
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| By: | /s/ Xxxxx X. Xxxxxxx | |
|
Xxxxx
X. Xxxxxxx
Chairman,
Compensation Committee
|
||
| /s/ Xxxxx X. Xxxxxx | ||
|
Xxxxx
X. Xxxxxx
|
||
