Exhibit 10.1
EMPLOYMENT
AGREEMENT
This Employment Agreement
(“Agreement”) is made as of July 29, 2008,
by and between Mace Security International, Inc., a Delaware
corporation (“Company”), and
Dennis Raefield, an individual
(“Employee”).
RECITALS
The Company conducts diversified businesses,
including, without limitation, electronic and personal security
device marketing, digital media marketing and car washes
(“Business”). The Company desires to hire
Employee as its Chief Executive Officer and President and the
Employee desires to be hired as the Company’s Chief Executive
Officer and President.
Employee will be employed by Company in a
confidential relationship wherein Employee, in the course of
employment with Company, will become familiar with and aware of
information as to the specific manner of doing business and the
customers of Company and its affiliates and the Company’s
future plans. Certain of the information Employee will
have knowledge of is trade secrets and constitutes valuable
goodwill of Company. Employee recognizes that the
business of Company is dependent upon a number of trade secrets and
confidential business information, including customer lists and
customer data. The protection of these trade secrets is
of critical importance to Company. Company will sustain
great loss and damage if, for whatever reason, Employee should
violate the provisions of paragraph 4 of this
Agreement. Further, Employee acknowledges that any such
violation would cause irreparable harm to Company and that Company
would be entitled, without limitation, to injunctive relief to
remedy such violation.
NOW, THEREFORE , in consideration of the mutual promises, terms
and conditions set forth herein and the performance of each, the
parties hereby agree as follows:
1. Services .
(a) Company hereby employs Employee as
its Chief Executive Officer and President, and the material duties
of Employee may not be changed without the Employee’s
consent. The material duties of Employee shall be to
supervise the Company’s employees and to be in over all
charge of the Business. Employee shall report to the
Company’s Board of Directors and shall follow the directives
and instructions of the Board of Directors; provided, the
instructions would not cause Employee to violate any laws, are
consistent with the usual and customary duties of Chief Executive
Officer and President, and are not inconsistent with this
Agreement.
(b) The Nominating Committee of the
Board of Directors shall nominate Employee for election as a
director of the Company at each of the Company’s Annual
Shareholder Meetings held during the Term.
(c) The Employee shall not be required
to perform his duties from any specific Company office or
facility. Employee shall work from and inspect all of
the Company’s offices and facilities, from time to time, on a
regular
basis.
(d) Employee hereby accepts employment
upon the terms and conditions contained in this
Agreement. Employee shall faithfully adhere to, execute
and fulfill all directions and policies established by the Board of
Directors of the Company; provided that such directions and
policies would not result in the violation of any laws and are not
inconsistent with this Agreement.
(e) Employee’s
employment shall be for a full time position. Employee
shall not, during the term of his employment, without the prior
written consent of Company, be engaged in any other business
activity pursued for gain, profit or other pecuniary advantage;
however, Employee may serve as a director of corporations that do
not compete with the Company and may engage in minor and incidental
activities for gain, profit or pecuniary
advantage. Employee may make personal investments in any
form or manner, regardless of whether Employee provides services in
the operation or affairs of the companies or enterprises in which
such investments are made; provided that Employee does not violate
the terms of Paragraph 4 of this Agreement. Employee
shall devote a minimum of forty hours per week to Employee’s
duties to the Company.
(f) Employee shall receive four (4)
weeks of paid vacation annually during the Term.
2. Compensation
.
(a) For all services to be rendered by
Employee to Company, Company shall pay Employee an initial base
annual salary computed and earned ratably over twelve months at the
rate of Three Hundred Seventy Five Thousand Dollars
($375,000) per year, commencing on the date hereof, payable in
accordance with Company’s normal payroll
procedures. As a one time incentive to execute this
Agreement, Employee shall be paid Fifty Thousand Dollars ($50,000)
within five days of the Agreement’s execution by both
parties. The Company will reimburse Employee his legal
expenses incurred to have this Agreement reviewed by
Employee’s legal counsel, up to a maximum amount of Five
Thousand Dollars ($5,000).
(b) Employee and the Company agree
that they shall within forty five (45) days from the date of this
Agreement, develop a mutually acceptable annual bonus plan for the
Employee. The bonus plan shall be designed to provide
profitability targets for the Company, that if achieved will allow
the Employee to earn annual bonuses of between thirty percent (30%)
to fifty percent (50%) of his base salary. If any bonus
is paid under the annual bonus plan, and the Company thereafter
restates its financial statements such that the bonus or a portion
thereof would not have been earned based on the restated financial
statements, Employee shall be obligated to repay to the Company the
bonus he received or portion thereof. Employee
shall repay the bonus or portion thereof within twenty days of the
date that the restated financial statements were filed with the
Securities Exchange Commission.
(c) To the extent that Company, from
time to time in its sole discretion, offers or provides any of the
following to its employees, Employee, on an equal basis with such
other employees, shall be entitled to: (i) participation
in all, if any, life, health, medical, hospital, accident and
disability insurance programs of Company in existence for the
benefit of its employees and for which Employee qualifies; (ii)
participation in all, if any, pension, retirement, profit sharing
or stock purchase plans for which Employee qualifies; and (iii)
participation in any other employee benefits which Company accords
to its employees and for which Employee qualifies. The
Company shall with Employee’s participation devise a benefits
package for its executive employees. The Employee shall
be entitled to the executive employee benefit package, when it is
implemented by the Company.
(d) During the Term, Employee shall be
entitled to reimbursement for business expenses incurred in
connection with his duties hereunder, including, gasoline,
reasonable travel, and entertainment. The Company shall
lease and maintain an automobile selected by Employee for
Employee’s sole use, at a monthly lease payment of no greater
than eight hundred dollars ($800.00).
(e) On the date that is within two business days
after this Agreement is executed by all parties to it, Employee
shall be awarded an option grant exercisable into Two Hundred Fifty
Thousand shares of the Corporation’s common stock
(“First Option Grant”). On the date that is
within two business days before the one year anniversary date of
that this Agreement is executed by both parties, Employee shall be
awarded an option grant exercisable into Two Hundred Fifty Thousand
shares of the Corporation’s common stock (“Second
Option Grant”). The First Option Grant shall vest
upon issuance. The Second Option Grant shall vest over
two years with the first one hundred twenty five thousand (125,000)
option shares vesting twelve months from the date of grant and the
last one hundred twenty five thousand (125,000) option shares
vesting twenty four months from the date of grant. The
First Option Grant and Second Option Grant (“Option
Grants”) shall be granted under the Corporation’s Stock
Option Plan at an exercise price equal to the close of market on
the date of grant. The Option Grants shall be a ten year
options. Notwithstanding the vesting
schedule, the Option Grants shall completely vest on the
resignation of Employee pursuant to Paragraph 7(b), and the
occurrence of a Change of Control Event, as defined in Paragraph
2(f) below.
(f) For purpose of this Agreement a
“Change of Control Event” shall have occurred upon any
of items (i) through (iii) having taken place. Items (i)
through (iii) are as follows:
(i) the acquisition in one or more
transactions by any “Person”, excepting Employee, as
the term “Person” is used for purposes of Sections
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended
(the “1934 Act”), of “Beneficial
Ownership” (as the term beneficial ownership is used for
purposes or Rule 13d-3 promulgated under the 1934 Act) of the fifty
percent (50%) or more of the combined voting power of the
Company’s then outstanding voting securities (the
“Voting Securities”). For purposes of this
Paragraph 2(f)(i), Voting Securities acquired directly from the
Company and from third parties by any Person shall be included in
the determination of such Person’s Beneficial Ownership of
Voting Securities.
(ii) the consummation of: (A) a
merger, reorganization or consolidation involving the Company, if
the shareholders of the Company immediately before such merger,
reorganization or consolidation do not or will not own directly or
indirectly immediately following such merger, reorganization or
consolidation, more than fifty percent (50%) of the combined voting
power of the outstanding Voting Securities of the corporation
resulting from or surviving such merger, reorganization or
consolidation in substantially the same proportion as their
ownership of the Voting Securities immediately before such merger,
reorganization or consolidation, or (B) a liquidation or
dissolution of the Company, or (C) a sale or other disposition of
50% or more of the assets of the Company and a distribution of the
proceeds of the sale to the shareholders.
(iii) the acceptance by shareholders
of the Company of shares in a share exchange, if the shareholders
of the Company immediately before such share exchange do not or
will not own directly or indirectly following such share exchange
more than fifty percent (50%) of the combined
voting power of the outstanding Voting Securities of the
corporation resulting from or surviving such share
exchange in substantially the same proportion as the ownership of
the Voting Securities outstanding immediately before such share
exchange.
3. Term . The initial term of Employee’s
employment with the Company shall commence on August 18, 2008 and
shall continue for three years, unless sooner terminated in
accordance with the provisions of this Agreement
(“Term”). After expiration of the Term,
Employee’s employment shall continue thereafter on an at-will
month-to-month basis, until terminated by either party to the
Agreement. During the month-to-month period the
provisions of this Agreement shall no longer apply, except for the
provisions of Paragraphs 4, 15, and 16 which survive the
Term. During the at-will month-to month period, Employee
shall continue to be paid the Employee’s then current annual
base salary under the provisions of Paragraph 2(a), benefits under
Paragraph 2(c) and the business expenses and car allowance under
Paragraph 2(d).
4. Noncompetition
Covenants .
(a) Employee agrees that the
noncompetition covenants contained in this Paragraph 4 are a
material and substantial part of this Agreement.
(b) Employee covenants that during
Employee’s employment with Company and for one year following
the termination of Employee’s employment (regardless of the
reason for the termination), the Employee shall not, directly or
indirectly, without the prior express written consent of Company,
do any of the things set forth in item (i) through (v) below
:
(i) engage, as an officer, director,
shareholder, owner, partner, joint venturer, agent, or in a
managerial capacity, whether as an employee, independent
contractor, consultant, advisor or sales representative, in the
Business within the United States of America (the
“”Territory”), or promote or assist, financially
or otherwise, any person, firm, partnership, corporation or other
entity that engages in the Business within the
Territory;
(ii) call upon any person who is, at
the time of the contact, an employee of Company or its affiliates,
if the purpose and intent of the contact is to entice such employee
away from or out of the employ of Company or its
affiliates;
(iii) call upon any person or entity
which is, at the time of the contact, a customer of the Company or
its affiliates for the purpose of soliciting or selling any of the
items or services which are the items or services offered by the
Company or its affiliates;
(iv) disclose the identity of the
customers of Company or its affiliates, whether in existence or
proposed, to any person, firm, partnership, corporation or other
entity whatsoever, for any reason or purpose whatsoever;
or
(v) promote or assist, financially or
otherwise, any person, firm, partnership, corporation or other
entity whatsoever to do any of the things set forth in items (i)
through (iv) above.
For
the purposes of this Agreement, the term “affiliates”
shall mean one or more of: (A) each subsidiary of Company, and (B)
each other entity under the direct or indirect control of the
Company. Notwithstanding 4(b)(i) above, Employee is
allowed to acquire and own for investment not more than
five percent (5%) of the capital stock of a competing business, the
stock of which is traded on a national securities exchange,
electronic quotation system or over-the-counter.
(c) The Company will sustain
significant losses and damages, if Employee breaches the covenants
in this Paragraph 4. There is no adequate monetary
remedy for the immediate and irreparable damage that would be
caused to Company by Employee’s breach of its non-competition
covenants. Employee agrees that, in the event of a
breach by him of the foregoing covenants, such covenants may be
enforced by Company by, without limitation, injunctions and
restraining orders.
(d) If Employee is employed as
Chief Executive Officer of the Company through the end of the
initial three year Term of this Agreement, and within sixty days
after the end of the initial three year Term, the Employee is then
discharged by the Company or Employee resigns as Chief Executive
Officer of the Company, the Company shall pay Employee, in exchange
for the obligation not to compete as set forth in this Paragraph 4,
the sum of Three Hundred Seventy Five Thousand Dollars ($375,000),
payable in twelve equal monthly installments. The twelve
installment shall be payable on or before the last day of each
month, commencing with the month of discharge or
resignation.
(e) It is agreed by the parties that
the covenants in this Paragraph 4 impose a reasonable restraint on
Employee in light of the activities and business of Company on the
date of the execution of this Agreement and the future plans of
Company.
(f) The covenants in this Paragraph 4
are severable and separate, and the unenforceability of any
specific covenant shall not affect the provisions of any other
covenant. If any court of competent jurisdiction shall
determine that the scope, territorial restriction or ti
