EMPLOYMENT
AGREEMENT
EMPLOYMENT
AGREEMENT (the “Agreement”), entered into on
August 18, 2006, by and between Ionatron, Inc., a Delaware
corporation (the “Company”), and Dana A. Marshall
(the “Executive”).
WITNESSETH:
WHEREAS,
the Company desires to employ the Executive as its President
and Chief Executive Officer upon the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS,
the Executive is willing to accept such employment upon such
terms;
NOW,
THEREFORE, in consideration of the covenants and agreements
hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as
follows:
1.
EMPLOYMENT AND DUTIES
1.1.
Term of Employment .
The Executive’s employment under this Agreement shall
commence on August 18, 2006 (the “Start Date”) and
shall continue until terminated pursuant to Section 5 hereof (such
period being herein referred to as the “Term,” and the
period from the Start Date through December 31, 2006 and any
year thereafter ending on December 31 shall be referred to as
an “Employment Year”).
1.2.
General .
1.2.1.
During
the Term, the Executive shall have the titles of President and
Chief Executive Officer of the Company and shall have such
duties as may be from time to time delegated to him by the
Board of Directors of the Company (the “Board”).
The Executive shall faithfully and diligently discharge his
duties hereunder and use his best efforts to implement the
policies established by the Board. The Executive's
responsibilities shall include, among other things, to render
executive, policy, operations and other management services to
the Company of the type customarily provided by persons
situated in similar executive and management
capacities.
The
Executive shall devote all of his business time, attention,
knowledge and skills faithfully, diligently and to the best of
his ability, in furtherance of the business and activities of
the Company; provided that the Executive shall be entitled to
continue to serve as an outsider director of Research-Electro
Optics, a privately held company.
1.3.
Reimbursement of Expenses .
The Company shall pay to the Executive the reasonable expenses
incurred by him in the performance of his duties hereunder,
including, without limitation, those incurred in connection with
business related travel or entertainment, or, if such expenses are
paid directly by the Executive, the Company shall promptly
reimburse him for such payments (including for travel as
contemplated by Section 3 hereof), provided that the Executive
properly accounts for such expenses in accordance with the
Company's policy.
1.4.
Consideration .
In consideration for the Executive’s execution of this
Agreement, the Company agrees that the Executive shall become
employed by the Company as set forth in this Agreement, the
Executive shall be permitted access to the Company’s
confidential information and shall be eligible to receive post-Term
severance payments (Sections 5.4.2 and 5.4.3) as set forth in this
Agreement (subject to his compliance with Sections 7, 8 and 9 of
this Agreement). The Executive understands, acknowledges and agrees
that the Executive would not receive the consideration specified in
this Section 1.4, except for the Executive’s execution of
this Agreement and the fulfillment of the promises contained
herein.
2.
COMPENSATION
2.1.
Base Salary .
During the Term, the Executive shall be entitled to receive a base
salary (“Base Salary”) at a rate of Two Hundred Fifty
Thousand Dollars ($250,000) per annum during the Term, which Base
Salary shall be payable in arrears in equal installments not less
frequently than on a bi-monthly basis in accordance with the
payroll practices of the Company, with such increases as may be
determined by the Board from time to time.
2.2.
Signing Bonus .
In addition to the Base Salary, the Company shall pay to the
Executive a signing bonus of $15,000, which bonus shall be paid on
the Start Date.
2.3.
Incentive Bonus .
The Executive shall be eligible to receive, for each Employment
Year during the Term, an annual incentive bonus in each calendar
year commencing after December 31, 2006 of up to an amount equal to
50% of the Base Salary for the Employment Year (the
“Incentive Bonus”) if the Company achieves goals and
objectives established by the Compensation Committee of the Board
of Directors within 120 days from the Start Date for the 2007
Employment Year and 30 days following each anniversary of the Start
Date for the following Employment year for each Employment Year
after December 31, 2007 and the Executive shall be entitled to
receive Incentive Bonus for the calendar ending December 31, 2006
as may be determined by the Compensation Committee of the Board of
Directors
. The
Incentive Bonus shall be paid in a single lump sum no later than 15
calendar days following the date on which the Company files with
the Securities and Exchange Commission (the “SEC”) its
Annual Report on Form 10-K (or Form 10-KSB) which includes audited
financial statements for such Employment Year audited by an
independent registered public accounting firm.
2.4.
Stock Options .
In addition to the Base Salary and Incentive Bonuses, if any, the
Executive shall receive, as incentive compensation, non-plan
options (“Options”) to purchase up to an aggregate of
800,000 shares (the “Shares”) of common stock of the
Company, pursuant to and upon the terms and conditions set forth in
the form of Option Agreement (the “Option Agreement”)
attached as Exhibit A hereto. The Options shall vest and be
exercisable as to 200,000 of the Shares on each of the first four
anniversaries of the Start Date, subject to earlier vesting as set
forth in Section 5.4.4, at any time during the five-year period
commencing upon the date of grant, subject to earlier termination
as provided in the Option Agreement, at an exercise price per share
of $6.30. The Company agrees to file a registration statement on
Form S-8 with the Securities and Exchange Commission prior to
August 18, 2007 covering the Shares.
2.5.
Additional Compensation .
In addition to the Base Salary, Additional Salary and the Incentive
Bonuses, if any, and the Options, the Executive shall be entitled
to receive such other cash bonuses and such other compensation in
the form of stock, stock options or other property or rights as may
from time to time be awarded him by the Board during or in respect
of his employment hereunder.
2.6.
Relocation Allowance .
Prior to your relocation to the Tucson, Arizona area, for a period
of two years commencing on the Start Date, the Executive shall be
entitled to receive a temporary housing allowance in an amount
equal to the Executive’s actual rental expense (plus an
amount equal to any additional tax consequences to the Executive
for such payment, if any) up to $2,500 per month, provided however,
that such payments shall terminate earlier upon the Executive
establishing a permanent residence in the Tucson, Arizona
area.
3.
PLACE OF PERFORMANCE. In connection with his employment by the
Company, the Executive shall initially be based in St. Louis,
Missouri for not more than two (2) years following the Start Date
and will travel to the Company’s principal executive offices
in Tucson, Arizona as necessary to perform his duties under this
Agreement, and, thereafter, the Executive shall be based at the
Company’s principal executive offices in Tucson, Arizona,
subject to the mutual agreement of the Executive and the Company to
relocate him to another office of the Company.
4.
EMPLOYEE BENEFITS
4.1.
Benefit Plans .
The Executive shall, during the Term, be included to the extent
eligible thereunder in all employee benefit plans, programs or
arrangements of general application (including, without limitation,
any plans, programs or arrangements providing for retirement
benefits, options and other equity-based incentive compensation,
profit sharing, bonuses, disability benefits, health and life
insurance, or vacation and paid holidays) which shall be
established by the Company or any affiliate of the Company, for, or
made available to, their respective senior executives
(“Benefits”). During the Term, the Benefits described
in this paragraph 4 may only be reduced as a result of a general
reduction for senior executives.
4.2.
Vacation .
The Executive shall be entitled to up to four (4) weeks vacation at
full pay for each year during the Term. Such vacation may be taken
in the Executive’s discretion, upon reasonable notice to the
Board of Directors and at such time or times as are not
inconsistent with the reasonable business needs of the
Company.
5.
TERMINATION OF EMPLOYMENT
5.1.
General .
The Executive’s employment under this Agreement may be
terminated by either the Company or the Executive without any
breach of this Agreement as follows:
5.1.1.
Termination without Cause .
The Company may terminate this Agreement without Cause (as defined
in Section 5.1.2 hereof upon thirty (30) days written notice to the
Executive. The Executive may terminate this Agreement for any
reason upon thirty (30) days written notice to the Company for any
reason.
5.1.2.
Cause .
The Company may terminate the Executive’s employment under
this Agreement for Cause. Termination for “Cause” shall
mean termination of the Executive’s employment because of the
occurrence of any of the following as determined by the
Board:
(i)
the
failure or refusal by the Executive to substantially perform
his obligations under this Agreement (other than any such
failure resulting from the Executive’s incapacity due to
physical or mental incapacity, illness or disease);
provided ,
however ,
that the Company shall have provided the Executive with written
notice that such actions are occurring and the Executive has been
afforded a reasonable opportunity of at least fifteen (15) days to
cure same, or
(ii)
the
indictment of the Executive for a felony or other crime
involving moral turpitude or dishonesty; or
(iii)
a
breach of Section 7, Section 8 or Section 9 hereof or a breach
of any representation contained in this Agreement by the
Executive; or
(iv)
a
breach of fiduciary duty involving personal profit;
or
(v)
a
material act of dishonesty in connection with his employment
with the Company; or
(vi)
the
Executive’s possession or use of illicit drugs, a
prohibited substance or alcohol, to such extent that it
impairs his ability to perform his duties and responsibilities
or failure to comply with the Company’s Drug Testing
Policy (as defined in Section 9 hereof); or
(vii)
the
Executive having committed acts or omissions constituting
gross negligence or willful misconduct (including theft,
fraud, embezzlement, and securities law violations) which is
injurious to the Company, monetarily, or otherwise. For
purposes of this Section 5.1.2(vii), no act, or failure to
act, on the part of the Executive shall be considered
“gross negligence” or “willful” unless
done, “or” omitted to be done, by him in bad faith
and without reasonable belief that his action or omission was
in the best interest of the Company; or.
(viii)
the
Executive having committed any violation of, or noncompliance
with, any securities law, rule or regulation or stock exchange
or Nasdaq Stock Market regulation rule relating to or
affecting the Company, including without limitation
(A) the Executive’s failure or refusal to honestly
provide the chief executive officer and/or principal executive
officer certification required under the Sarbanes-Oxley Act of
2002, including the rules and regulations promulgated
thereunder (the “
Sarbanes-Oxley Act ”)
or failure to take reasonable and appropriate steps to determine
whether or not any such certificate was accurate or otherwise in
compliance with the requirements of the Sarbanes-Oxley Act, or (B)
the Executive’s failure to establish and administer effective
systems and controls necessary for the Company to timely file
reports pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
(ix)
The
Executive’s failure to obtain or, once obtained, failure
to maintain all security clearances required by the Company
for the operation of its business.
5.2.
Notice of Termination .
Any termination of the Executive’s employment by the Company
or by the Executive (other than termination by reason of the
Executive’s death) shall be communicated by written Notice of
Termination to the other party of this Agreement. For purposes of
this Agreement, a “Notice of Termination” shall mean a
notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision
so indicated.
5.3.
Date of Termination .
The “Date of Termination” shall mean (a) if the
Executive’s employment is terminated
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