EMPLOYMENT
AGREEMENT
This EMPLOYMENT AGREEMENT (this “
Agreement ”) is entered into as of the 25th day of
February, 2009 (the “ Effective Date ”), by and
between Emtec, Inc., a Delaware corporation (the “
Company ”) and Ronald Seitz (the “
Executive ”).
WITNESSETH
THAT:
WHEREAS, the Executive is a valued employee of
the Company;
WHEREAS, the parties desire to enter into this
Agreement pertaining to the employment of the Executive by the
Company.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements set forth below and intending to be
legally bound, it is hereby covenanted and agreed by the Executive
and the Company as follows:
1.
Employment; Position and Responsibilities; Term .
(a) During
the Agreement Term (as defined below), and subject to the terms of
this Agreement, the Executive shall be employed by the Company and
shall occupy the position of President of Emtec Systems
Group. The Executive agrees to serve in that position or
in such other executive offices or positions with the Company or a
Subsidiary (as defined below), as shall from time to time be
determined by the Board of Directors (the “ Board
”). The Executive represents that his employment
with the Company does not violate any other agreement to which he
is a party.
(b) During
the Agreement Term, the Executive shall report solely and directly
to the Chief Executive Officer of the Company or his
designee.
(c) During
the Agreement Term, while employed by the Company, the Executive
shall devote his full time and best efforts to the business of the
Company and shall perform all duties and services for and on behalf
of the Company as shall be reasonably requested by the Board in its
sole and absolute discretion. The Executive’s
duties may include providing executive services for both the
Company and the Subsidiaries, as determined by the
Board.
(d) During
the Agreement Term, the Company shall use its reasonable best
efforts to maintain an office within 15 miles of Suwanee,
Georgia.
(e) The
term of employment under this Agreement shall commence on the
Effective Date and, unless earlier terminated under Section 3
below, shall terminate on August 31, 2010 (the “
Agreement Term ”). Thereafter, the
Agreement Term may be extended annually for additional one-year
periods with the mutual consent of the Company and the
Executive.
(f) For
purposes of this Agreement, the following terms shall have the
meanings set forth in this Section 1(f):
(i) “Change
in Control” shall mean:
(1) the
acquisition after the Effective Date by an individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934 (the “Exchange Act”))
of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of more than 50% of the total
voting power of the voting securities of the Company entitled to
vote generally in the election of directors (the “Voting
Securities”); provided, however, that the following
acquisitions shall not constitute a Change in Control: (A) any
acquisition, directly or indirectly by or from the Company or any
Subsidiary, by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Subsidiary or by the
Executive (whether directly or indirectly), (B) any acquisition by
any underwriter in connection with any firm commitment underwriting
of securities to be issued by the Company, (C) any acquisition by
any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) who, as of the Effective
Date, beneficially owns 20% or more of the Voting Securities or (D)
any acquisition by any corporation if, immediately following such
acquisition, 50% or more of the then outstanding shares of common
stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation (entitled to vote
generally in the election of directors), are beneficially owned,
directly or indirectly, by all or substantially all of the
individuals and entities who, immediately prior to such
acquisition, were the beneficial owners of the Voting Securities in
substantially the same proportions, respectively, as their
ownership, immediately prior to such acquisition of the Voting
Securities;
(2) the
consummation after the Effective Date of (A) a complete liquidation
or substantial dissolution of the Company or (B) the sale or other
disposition, during any 12-month period ending on the date of the
most recent sale or disposition, of assets of the Company that have
a total gross fair market value equal to or more than 75% of the
total gross fair market value of all of the assets of the Company
immediately before such sale or disposition, in each case other
than to a subsidiary, wholly-owned, directly or indirectly, by the
Company or to a holding company of which the Company is a direct or
indirect wholly owned subsidiary prior to such transaction;
or
(3) the
occurrence of a merger, reorganization or consolidation, other than
a merger, reorganization or consolidation with respect to which all
or substantially all of the individuals and entities who were the
beneficial owners, immediately prior to such merger, reorganization
or consolidation, of the common stock of the Company (“Common
Stock”) and the Voting Securities beneficially own, directly
or indirectly, immediately after such reorganization, merger or
consolidation 50% or more of the then outstanding common stock and
voting securities (entitled to vote generally in the election of
directors) of the corporation resulting from such reorganization,
merger or consolidation in substantially the same proportions as
their respective ownership, immediately prior to such
reorganization, merger or consolidation, of the Common Stock and
the Voting Securities.
Notwithstanding
the foregoing, a “Change in Control” shall not include
any event, circumstance or transaction which results from the
action of any entity or group which includes, is affiliated with,
or is wholly or partially controlled by, one or more executive
officers of the Company and in which the Executive participates
(whether directly or indirectly).
(ii) “
Good Reason ” shall mean, except as specifically
provided in Section 2(a) below, following the occurrence of a
Change in Control, a material reduction by the Company in the
Executive’s Base Salary from the rate in effect immediately
prior to such Change in Control.
(iii)
Subsidiary ” shall mean any corporation, partnership,
joint venture or other entity during any period in which at least a
50% interest in such entity is owned, directly or indirectly, by
the Company (or a successor to the Company).
2.
Compensation and Other Benefits .
(a)
Base Salary . During the Agreement Term, the
Executive shall receive an annual base salary (“ Base
Salary ”), payable in accordance with the Company’s
normal payroll practices, of $288,750. The Board shall
increase such Base Salary by 5% as of each August 5
th during the Agreement
Term. Notwithstanding the foregoing, the Company may
reduce the Executive’s Base Salary if such reduction is in
connection with an across-the-board salary reduction applicable to
the Company’s other senior executives (any such reduction
shall not constitute Good Reason).
(b)
Bonus . In respect of each fiscal year ending
during the Agreement Term, the Executive shall participate in the
Company’s Annual Incentive Plan (the “ AIP
”) as maintained by the Company for the benefit of senior
executives, and shall be eligible to receive an annual bonus (the
“ Bonus ”) if the Executive and/or the Company
achieve performance goals established by the Board in good faith
and consistent with the AIP. Such Bonus shall be payable
in accordance with the terms of the AIP, but in no event may be
paid later than March 15 th next following the close of the fiscal year to
which the Bonus relates.
(c)
Employee Benefits . During the Agreement Term,
the Executive shall be entitled to participate on the same basis as
the other executive employees of the Company, in any pension,
retirement, savings, medical, disability or other welfare benefit
plans maintained by the Company as of the Effective Date, in
accordance with the terms thereof, and as the same may be amended
and in effect from time to time.
(d)
Expense Reimbursement . During the Agreement
Term, the Company shall reimburse the Executive for all
out-of-pocket travel, lodging, meal and other reasonable expenses
incurred by him in connection with his performance of services
hereunder, upon submission of appropriate evidence, in accordance
with the Company’s policy, of the incurrence and purpose of
each such expense and otherwise in accordance with the
Company’s business travel and expense reimbursement policy as
in effect from time to time.
(e)
Vacation . During the Agreement Term, Executive
shall be entitled to four weeks of paid vacation on an annualized
basis. Vacation shall be prorated for part of a year
worked. Such vacation shall be taken at such times as
shall be approved by the Company, in the reasonable exercise of its
discretion.
(f)
Automobile Allowance . During the Agreement Term,
the Executive shall be entitled to an automobile allowance of
$15,000 per year, payable in equal monthly
installments. During the Agreement Term, the Company
shall also reimburse the Executive, after receipt of appropriate
documentation, for all reasonable costs of maintaining the
automobile acquired by the Executive pursuant to such allowance,
including, but not limited to, the costs of repair, maintenance,
insurance, registration and fuel.
(g)
Additional Cash Payment . During the Agreement
Term, the Executive shall be entitled to an annual cash payment in
the pre-tax amount of $12,000, which amount shall be payable to the
Executive in equal monthly installments of $1,000.
(h)
Other Perquisites . During the Agreement
Term:
(i) The
Company shall provide the Executive with a monthly cash allowance
of $500.
(ii) The
Executive shall be entitled to travel business class for all of his
international business travel and coach class for all of his
domestic business travel, and he shall be entitled to use any
airline miles earned through his business travel to upgrade to
first class.
3.
Termination of Employment . The Executive’s
employment with the Company during the Agreement Term may be
terminated by the Company or the Executive without breach of this
Agreement only as provided in this Section 3.
(a)
Termination Due to Disability . The
Executive’s employment hereunder may be terminated by the
Company in the event of the Executive’s Disability (as
defined below). For purposes of this Agreement, “
Disability ” shall mean that the Executive is unable
to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a
continuous period of not less than 12 months, or the Executive is,
by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12
months, receiving income replacement benefits for a period of not
less than three months under an accident and health plan covering
employees of the Company. The determination of the
Executive’s Disability shall ( i ) be made by an
independent physician selected by the Company and the Executive
(provided that if the Executive and the Company cannot agree as to
such an independent physician, each shall appoint one physician and
those two physicians shall appoint a third physician who shall make
such determination), ( ii ) be final and binding on the
parties hereto and ( iii ) be made taking into account such
competent medical evidence as shall be presented to such
independent physician by the Executive and/or the Company or by any
physician or group of physicians or other competent medical experts
employed by the Executive and/or the Company to advise such
independent physician.
(b)
Termination Due to Death . The Executive’s
employment hereunder shall terminate upon the Executive’s
death.
(c)
Termination by the Company for Cause . The
Company may immediately terminate the Executive’s employment
hereunder at any time for Cause (as defined
below). “ Cause ” shall mean (
i ) the continued failure of the Executive substantially to
perform his duties hereunder or his negligent performance of such
duties (other than any such failure due to the Executive’s
physical or mental illness), ( ii ) the Executive having
engaged in misconduct that has caused or is reasonably expected to
result in material injury to the Company or any of its
Subsidiaries, ( iii ) a material violation by the Executive
of a Company policy, ( iv ) the breach by the Executive of
any of his material obligations hereunder or under any other
written agreement or covenant with the Company or any of its
Subsidiaries, ( v ) a material failure by the Executive to
timely comply with a lawful direction or instruction given to him
by the Board or the Chief Executive Officer, ( vi ) the
Executive having been convicted of, or entering a plea of guilty or
nolo contendere to, a crime that constitutes a felony or a
misdemeanor involving moral turpitude (or comparable crime in any
jurisdiction that uses a different nomenclature), including any
offense involving dishonesty as such dishonesty relates to the
Company’s assets or business or the theft of Company property
and ( vii ) the Executive’s insobriety or use of
illegal drugs, chemicals or controlled substances either ( A
) in the course of performing the Executive’s duties and
responsibilities under this Agreement, or ( B ) otherwise
affecting the ability of the Executive to perform the
same. In the event of litigation concerning the
Company’s termination of Executive for Cause, the Company
shall prove that it terminated the Executive for Cause by a
standard of clear and convincing evidence. In the case
of a termination for Cause as described in clauses (i), (ii),
(iii), (iv) and (v) of this Section, the Board or the Chief
Executive Officer, as applicable, shall give the Executive written
notice of its or his intention to terminate him for Cause, such
notice to state in detail the particular circumstances that
constitute the grounds on which the proposed termination for Cause
is based. The Executive shall have ten (10) days, after
receiving such special notice, to cure such grounds, to the extent
such cure is possible (as reasonably determined by the Board in its
sole discretion). If he fails to cure such grounds to
the Board’s reasonable satisfaction, the Executive shall
thereupon be terminated for Cause.
(d)
Termination by Company Without Cause . The
Company may terminate the Executive’s employment hereunder at
any time Without Cause (as defined below) by giving the Executive
prior written Notice of Termination (as defined below), which
notice shall be effective immediately, or at such later time as
specified in such notice. A termination “
Without Cause ” shall mean a termination of the
Executive’s employment by the Company other than as a result
of his Disability or for Cause. Notwithstanding the
foregoing provisions of this Section 3(d), if the Executive’s
employment is terminated by the Company in accordance with this
Section 3(d) and, within a reasonable time period thereafter, it is
determined by the Board that circumstances existed which would have
constituted a basis for termination of the Executive’s
employment for Cause in accordance with Section 3(c), the
Executive’s employment will be deemed to have been terminated
for Cause in accordance with Paragraph 3(c).
(e)
Termination by the Executive for Good Reason
. The Executive may terminate his employment under this
Agreement for Good Reason by providing the Company with a Notice of
Termination specifying the actions giving rise to Good Reason
within [ 30 ] days after the occurrence of such actions;
provided, however, that the Company shall have a period of [
30 ] days following receipt of such Notice of Termination to
cure such actions
(f)
Voluntary Termination by the Executive Without Good Reason
. The Executive may voluntarily terminate his employment
hereunder without Good Reason at any time by giving the Company
prior written Notice of Termination at least 90 days prior to such
termination; provided that the Board may, in its sole discretion,
terminate the Executive’s employment hereunder prior to the
expiration of the 90-day notice period; further provided, that, for
all purposes of this Agreement, such termination shall be deemed a
voluntary termination of employment by the Executive without Good
Reason. In such event and upon the expiration of such
90-day period (or such shorter time as the Board in its sole
discretion may determine), the Executive’s employment
hereunder shall immediately and automatically terminate.
(g)
Notice of Termination . Any termination of the
Executive’s employment by Company or the Executive, other
than a termination due to the Executive’s death, shall be
communicated by a written Notice of Termination addressed to the
appropriate party. A “ Notice of
Termination ” shall mean a notice that indicates the Date
of Termination (as defined below), which shall not be earlier than
the date on which the notice is provided, which indicates the
specific termination provision in this Agreement relied on and
which sets forth in reasonable detail the facts and circumstances,
if any, claimed to provide a basis for termination of the
Executive’s employment under the provision so
indicated.
(h) For
purposes of this Agreement, the “ Date of Termination
” is the last day that the Executive is employed by the
Company, provided the Executive’s employment is terminated in
accordance with the foregoing provisions of this Section
3.
(i)
Resignation upon Termination . As of the Date of
Termination, the Executive shall resign, in writing, from all
positions then held by him with the Company and its
Subsidiaries.
(j)
Cessation of Professional Activity . Upon
delivery of a Notice of Termination by any party, the Company may
relieve the Executive of his responsibilities and require the
Executive to immediately cease all professional activity on behalf
of the Company. In addition, in the event that the Board
determines that there is a reasonable basis for it to investigate
whether circumstances exist that would, if true, permit the Board
to terminate the Executive’s employment for Cause, the Board
may relieve the Executive of his responsibilities during the
pendency of such investigation.
4.
Payments Upon Certain Terminations .
(a)
General . If, during the Agreement Term, the
Executive’s employment terminates for any reason, the
Executive (or his estate, beneficiary or legal representative)
shall be entitled to receive the following:
(i) any
earned or accrued but unpaid Base Salary through the Date of
Termination (including, except in the case of a termination for
Cause, with respect to unused vacation time);
(ii) all
amounts payable and benefits accrued under any otherwise applicable
plan, policy, program or practice of the Company (other than
relating to severance) in which the Executive was a participant
during his employment with Company in accordance with the terms
thereof; provided that the foregoing shall not be construed as
requiring the Executive to be treated as employed by the Company
for purposes of any employee benefit plan or arrangement following
the date of the Executive’s Date of Termination except as
otherwise expressly provided in this Agreement or required by law;
and
(iii) in
the case of a termination of employment Without Cause or by the
Executive for Good Reason, (A) any earned but unpaid Bonus with
respect to any fiscal year of the Company ending prior to the Date
of Termination and (B) provided Executive executes and delivers a
general release of all claims in form and substance satisfactory to
the Company, (1) his Base Salary, at the rate in effect
hereun
