Exhibit 10.01
EASTCO INDUSTRIAL SAFETY CORP.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of this 1st day of July, 1995
by and between EASTCO INDUSTRIAL SAFETY CORP., a New York corporation, having
an office at 130 West 10th Street, Huntington, New York 11746 (hereinafter
referred to as "Employer") and ALAN E. DENSEN, an individual residing at 325
Doral Court, Jericho, New York 11753 (hereinafter referred to as "Employee");
W I T N E S S E T H:
WHEREAS, Employer employs, and desires to continue to
employ, Employee as President; and
WHEREAS, Employee is willing to continue to be employed as
President in the manner provided for herein and to perform the duties of said
position upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein set forth it is agreed as follows:
1. Employment of President. Employer hereby employs Employee
as President of Employer.
2. Term.
a. Subject to Section 10 below and further subject
to Section 2(b) below, the term of this Agreement shall commence on July 1,
1995 and end on June 30, 2000. Each 12 month period from July 1 through June
30 during the term hereof shall be referred to as an "Annual Period." During
the term hereof, Employee shall devote substantially all of his business time
and efforts to Employer.
b. Subject to Section 10 below, unless the Board of
Directors (the "Board") of Employer shall determine to the contrary and shall
so notify Employee in writing on or before the end of any Annual Period, then
at the end of each Annual Period, the term of this Agreement shall be
automatically extended for one (1) additional Annual Period to be added at the
end of the then current term of this Agreement.
3. Duties. The Employee shall perform those functions
generally performed by persons of such title and position, shall attend
meetings of the stockholders and
the Board, shall perform any and all related duties and shall have any and all
powers as may be reasonably prescribed by resolution of the Board, and shall
be available to confer and consult with and advise the officers and directors
of Employer at such times that may be required by Employer upon reasonable
notice and subject to Employee's reasonable availability. Employee shall
report directly and solely to the Board.
4. Compensation.
a. (i) Employee shall be paid a minimum of $125,000
through and including June 30, 1996. Employee's salary shall be increased
annually at the beginning of each Annual Period at the discretion of the
Board, but in no event shall said increase be less than 10% of the minimum
compensation paid Employee in the prior Annual Period. Employee shall be paid
periodically in accordance with the policies of the Employer during the term
of this Agreement, but not less than monthly.
(ii) Employee is eligible for annual bonuses
which shall be equal to 31/3% of the Company's earnings before interest and
taxes for the fiscal year just ended. Said bonuses shall be paid within 30
days of the completion of Employer's audited financial statement for each
fiscal year and shall be paid in cash or registered shares of common stock of
Employer, at the option of Employee.
b. Employer shall include Employee, his spouse and
minor children, if any, in its health insurance program available to
Employer's executive officers or such program having greater benefits
available to other Employees of Employer.
c. Employer shall maintain a life, accidental death
and dismemberment insurance policy or policies on Employee for the benefit of
a beneficiary named by Employee in a total amount not less than $750,000.
Ownership of the policy or policies shall be assigned to Employee upon
termination of Employee's employment under this Agreement without payment of
any consideration by Employee.
d. Employee shall receive $700 per month as an
automobile allowance, plus reimbursement for reasonable operating,
maintenance, insurance and repair expenses.
e. Employer shall institute, and Employee shall be
eligible to participate in, a Senior Management Performance-based Stock Option
Plan to motivate and reward Employee for his role in improving Employer's
earnings and shareholder value.
f. Employee shall be paid a one-time bonus equal to
his total minimum base salary for the next three years if there is a Change of
Control as hereinafter defined, said bonus to be paid within thirty (30) days
thereof.
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g. If there is a Change of Control as hereinafter
defined, Employee shall be immediately compensated by Employer for all amounts
(including interest) not yet received by Employee as a result of his
participation in a total of $250,000 of junior participations with Congress
Financial Corporation in loans to the Company made during September 1993,
without regard to whether such amount is currently due pursuant to the terms
thereof.
h. All Rights as hereinafter defined which may
become exercisable for any reason during the term hereof shall be paid for (i)
in cash, (ii) by the transfer by Employee to Employer of so much of Employee's
Rights which, when valued at the highest trading price of the underlying
securities of Employer during the previous six months, will offset the total
exercise price or (iii) some combination of (i) and (ii) above, at the option
of Employee.
i. Employee shall have the right to participate in
any other employee benefit plans established by Employer.
5. Board of Directors. Employer agrees that so long as this
Agreement is in effect, Employee shall be nominated to the Board as part of
management's slate of Directors.
6. Expenses. Employee shall be reimbursed for all of his
actual out-of-pocket expenses incurred in the performance of his duties
hereunder, provided such expenses are acceptable to Employer, which approval
shall not be unreasonably withheld, for business related travel and
entertainment expenses, and that Employee shall submit to Employer reasonably
detailed receipts with respect thereto.
7. Vacation. Employee shall be entitled to receive six (6)
weeks paid vacation time after each year of employment upon dates reasonably
agreed upon by Employer. Upon each anniversary of this agreement and upon
separation of employment, for any reason, vacation time accrued and not used
shall be paid at the salary rate of Employee in effect at that time.
8. Secrecy. At no time shall Employee disclose to anyone any
confidential or secret information (not already constituting information
available to the public) concerning (a) internal affairs or proprietary
business operations of Employer or (b) any trade secrets, new product
developments or patents, especially unique processes or methods.
9. Covenant Not to Compete. Subject to, and limited by,
Section 11(b), Employee will not, at any time, anywhere in the world, during
the term of this Agreement, and for one (1) year thereafter, either directly
or indirectly, engage in, with or for any enterprise, institution, whether or
not for profit, business, or company, competitive with the business (as
identified herein) of Employer as such business may be conducted on the date
thereof, as a
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creditor, guarantor, or financial backer, stockholder, director, officer,
consultant, advisor, employee, member, inventor, or otherwise of or through
any corporation, partnership, association, sole proprietorship or other
entity; provided, that an investment by Employee, his spouse or his children
is permitted if such investment is not more than five percent (5%) of the
total debt or equity capital of any such competitive enterprise or business
and further provided that said competitive enterprise or business is a
publicly held entity whose stock is listed and traded on a national stock
exchange or through the Nasdaq Stock Market. As used in this Agreement, the
business of Employer shall be deemed to include the manufacture and
distribution of industrial protective clothing and safety products.
10. Termination.
a. Termination by Employer
(i) Employer may terminate this Agreement
upon written notice for Cause. For purposes hereof, "Cause" shall mean (A)
engaging by the Employee in conduct that constitutes activity in competition
with Employer; (B) the conviction of Employee for the commission of a felony;
and/or (C) the habitual abuse of alcohol or controlled substances.
Notwithstanding anything to the contrary in this Section 10(a)(i), Employer
may not terminate Employee's employment under this Agreement for Cause unless
Employee shall have first received notice from the Board advising Employee of
the specific acts or omissions alleged to constitute Cause, and such acts or
omissions continue after Employee shall have had a reasonable opportunity (at
least 10 days from the date Employee receives the notice from the Board) to
correct the acts or omissions so complained of. In no event shall alleged
incompetence of Employee in the performance of Employee's duties be deemed
grounds for termination for Cause.
(ii) Employer may terminate Employee's
employment under this Agreement if, as a result of any physical or mental
disability, Employee shall fail or be unable to perform his duties under this
Agreement for any consecutive period of 120 days during any twelve-month
period. If Employee's employment is terminated under this Section 10(a)(ii):
(A) for the first six months after termination, Employee shall be paid 100% of
his full compensation under Section 4(a) of this Agreement at the rate in
effect on the date of termination, and in each successive 12 month period
thereafter Employee shall be paid an amount equal to 65% of his compensation
under Section 4(a) of this agreement at the rate in effect on the date of
termination, on an after-tax basis, which obligation Employer may fulfill in
whole or in part by purchasing disability insurance coverage; (B) Employer's
obligation to pay life insurance premiums on the policy referred to in Section
4(c) shall continue in effect until five years from the date of termination;
and (C) Employee shall continue to be entitled, insofar as is permitted under
applicable insurance policies or plans, to such general medical and employee
benefit plans (including profit sharing or pension plans) as Employee had been
entitled to on the date of termination. Employer shall purchase disability
insurance for the benefit of Employee and any
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amounts payable by Employer to Employee under this paragraph shall be reduced
by the amount of any disability payments paid by said insurance and actually
received by Employee.
(iii) This agreement automatically shall
terminate upon the death of Employee, except that Employee's estate shall be
entitled to receive the pro-rata amount payable under any profit sharing plans
Employer may institute for the period prior to Employee's death and any other
amount to which Employee was entitled at the time of his death and Employee's
salary and all health, insurance and other benefits applicable to Employee's
family shall continue for 12 months from the date of Employee's death. In
addition upon the death of Employee all Rights, as hereinafter defined, shall
become vested, accelerate and become immediately exercisable for one year at
50% of their stated exercise price which may be paid for as described in
Section 4.h., above.
b. Termination by Employee
(i) Employee shall have the right to
terminate his employment under this Agreement upon 30 days' notice to Company
given within 90 days following the occurrence of any of the following events
(A) through (F) or within three (3) years following the occurrence of event
(G):
(A) Employee is not elected or
retained as President and a Director of Employer.
(B) Employer acts to materially
reduce Employee's duties and responsibilities hereunder.
(C) Employer acts to change the
geographic location of the performance of Employee's duties from the New York
Metropolitan area. For purposes of this Agreement, the New York Metropolitan
area shall be deemed to be the area within 30 road miles of Employer's present
offices.
(D) a Material Reduction (as
hereinafter defined) in Employee's rate of base compensation, or Employee's
other benefits. "Material Reduction" shall mean a ten percent (10%)
differential;
(E) a failure by Employer to
obtain the assumption of this Agreement by any successor;
(F) a material breach of this
Agreement by Employer, which is not cured within thirty (30) days of written
notice by Employee of such breach.
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(G) a "Change of Control" by which
a person (other than a person who is an officer and a Director of Employer on
the effective date hereof), including a "group" as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, becomes, or obtains the right to
become, the beneficial owner of Employer securities having 20% or more of the
combined voting power of the then outstanding securities of the Employer that
may be cast for the election of directors of the Employer (other than as a
result of an issuance of securities initiated by the Employer in the ordinary
course of business) or the composition of the Board of Employer changes so
that officers of Employer no longer hold a majority of the seats; or
(ii) Anything herein to the contrary
notwithstanding, Employee may terminate this Agreement upon thirty (30) days
written notice.
c. If Employer shall terminate Employee's
employment other than due to his death or disability or for Cause (as defined
in Section 10(a)(i) of this Agreement), or if Employee shall terminate this
Agreement under Section 10(b)(i), Employer's obligations under Section 4 shall
be absolute and unconditional and not subject to any offset or counterclaim
and Employee shall continue to be entitled to receive all amounts provided for
by Section 4 and all additional employee benefits under Section 4 regardless
of the amount of compensation he may earn with respect to any other employment
he may obtain.
11. Consequences of Breach by Employer; Employment
Termination.
a. If this Agreement is terminated pursuant to
Section 10(b)(i)(A)-(F) hereof, or if Employer shall terminate Employee's
employment under this Agreement in any way that is a breach of this Agreement
by Employer, the following shall apply:
(i) Employee shall receive as a bonus, and
in addition to his salary continuation pursuant to Section 10(c), a cash
payment equal to Employee's total base salary plus projected expenses and
bonuses for the remainder of the term hereof, payable within 30 days of the
date of such termination.
(ii) Employee shall be entitled to payment
of any previously declared bonus as provided in Section 4 above.
(iii) All stock options, warrants and
stock appreciation rights ("Rights") granted by Employer to Employee under any
plan or otherwise prior to the date of termination shall become vested,
accelerate and become immediately exercisable; where relevant at an exercise
price of 10(cent) per share. In the event Employee owns or is entitled to
receive any unregistered securities of Employer, then Employer shall use its
best efforts to affect the registration of all such securities as soon as
practicable, but no later than 120 days after the effective date of
termination registration statement; provided, however, that such period may be
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extended or delayed by Employer for one period of up to 60 days if, upon the
advice of counsel at the time such registration is required to be filed, or at
the time Employer is required to exercise its best efforts to cause such
registration statement to become effective, such delay is advisable and in the
best interests of Employer because of the existence of non-public material
information, or to allow Employer to complete any pending audit of its
financial statements.
b. In the event of termination of Employee's
employment by Employer, other than pursuant to Section 10(a) of this
Agreement, or by Employee pursuant to Section 10(b)(i) of this Agreement, or
in the event Employer delays for more than 15 days the making of any payment
hereunder, without in any way excusing Employer's obligations under this
Agreement, the provisions of Section 9 shall not apply to Employee.
12. Remedies
Employer recognizes that because of Employee's
special talents, stature and opportunities in the industry, in the event of
termination by Employer hereunder (except under Section 10(a)(i) or (iii), or
in the event of termination by Employee under Section 10(b)(i) before the end
of the agreed term, Company acknowledges and agrees that the provisions of
this Agreement regarding further payments of base salary, bonuses and the
exercisability of stock options, warrants and stock appreciation rights
constitute fair and reasonable provisions for the consequences of such
termination, do not constitute a penalty, and such payments and benefits shall
not be limited or reduced by amounts Employee might earn or be able to earn
from any other employment of ventures during the remainder of the agreed term
of this Agreement.
13. Excise Tax. In the event that any payment or benefit
received or to be received by Employee in connection with a termination of his
employment with Employer would constitute a "parachute payment" within the
meaning of Code Section 280G or any similar or successor provision to 280G
and/or would be subject to any excise tax imposed by Code Section 4999 of the
Code or any similar or successor provision then Employer shall assume all
liability for the payment of any such tax and Employer shall immediately
reimburse Employee on a "grossed-up" basis for any income taxes attributable
to Employee by reason of such Employer payment and reimbursements.
14. Arbitration. Any controversies between Employer and
Employee involving the construction or application of any of the terms,
provisions or conditions of this Agreement, save and except for any breaches
arising out of Sections 8 and 9 hereof, shall on the written request of either
party served on the other by submitted to arbitration. Such arbitration shall
comply with and be governed by the rules of the American Arbitration
Association. An arbitration demand must be made within one (1) year of the
date on which the party demanding arbitration first had notice of the
existence of the claim to be arbitrated, or the right to arbitration along
with such claim shall be considered to have been waived. An arbitrator shall
be selected according to the procedures of the American Arbitration
Association, the cost
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of arbitration shall be born by the losing party or in such proportions as the
arbitrator shall decide. The arbitrator shall have no authority to add to,
subtract from or otherwise modify the provisions of this Agreement, or to
award punitive damages to either party.
15. Attorneys' Fees and Costs. If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which he may be
entitled.
16. Entire Agreement; Survival.
a. This Agreement contains the entire agreement
between the parties with respect to the transactions contemplated herein and
supersedes, as of the effective date hereof any prior agreement or
understanding between Employer and Employee with respect to Employee's
employment by Employer. The unenforceability of any provision of this
Agreement shall not effect the enforceability of any other provision. This
Agreement may not be amended except by an agreement in writing signed by the
Employee and the Employer, or any waiver, change, discharge or modification as
sought. Waiver of or failure to exercise any rights provided by this Agreement
and in any respect shall not be deemed a waiver of any further or future
rights.
b. The provisions of Sections 4, 8, 9, 10(a)(ii),
10(c), 11, 12, 13, 14, 15, 18, 19 and 20 shall survive the termination of this
Agreement.
17. Assignment. This Agreement shall not be assigned to
other parties, but shall be binding upon any purported successors and assigns
of Employer.
18. Governing Law. This Agreement and all the amendments
hereof, and waivers and consents with respect thereto shall be governed by the
internal laws of the state of New York, without regard to the conflicts laws
principles thereof.
19. Notices. All notices, responses, demands or other
communications under this Agreement shall be in writing and shall be deemed to
have been given when
a. delivered by hand;
b. sent be telex or telefax, (with receipt
confirmed), provided that a copy is mailed by registered or certified mail,
return receipt requested; or
c. received by the addressee as sent be express
delivery service (receipt requested) in each case to the appropriate
addresses, telex numbers and telefax numbers as the party may designate to
itself by notice to the other parties:
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(i) if to the Employer:
Eastco Industrial Safety Corp.
130 West 10th Street
Huntington, New York 11746
Attention: President
Telephone: 516-427-1802
Telefax: 516-427-1840
Gersten, Savage, Kaplowitz & Curtin
575 Lexington Avenue
27th Floor
New York, New York 10022
Attention: Jay M. Kaplowitz, Esq.
Telephone: 212-752-9700
Telefax: 212-980-5192
(ii) if to the Employee:
Alan E. Densen
14 Ormond Park Road
Brookville, New York 11545
20. Severability of Agreement. Should any part of this
Agreement for any reason be declared invalid by a court of competent
jurisdiction, such decision shall not affect the validity of any remaining
portion, which remaining provisions shall remain in full force and effect as
if this Agreement had been executed with the invalid portion thereof
eliminated, and it is hereby declared the intention of the parties that they
would have executed the remaining portions of this Agreement without including
any such part, parts or portions which may, for any reason, be hereafter
declared invalid.
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IN WITNESS WHEREOF, the undersigned have executed this
agreement as of the day and year first above written.
EASTCO INDUSTRIAL SAFETY CORP.
By: Anthony P. Towell
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Its: Vice President
/s/ ALAN E. DENSEN
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ALAN E. DENSEN
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