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Exhibit
10.1
EMPLOYMENT
AGREEMENT
EMPLOYMENT
AGREEMENT (the “Agreement”), entered into on
October 26, 2007, by and between Ionatron, Inc., a Delaware
corporation (the “Company”), and Kenneth M.
Wallace (the “Executive”).
W
I T N E S S E T H:
WHEREAS,
the Company desires to continue to employ the Executive as its
Chief Financial Officer upon the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS,
the Executive is willing to continue 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 initial term of Executive’s employment under this
Agreement shall commence on the date hereof and shall continue
until terminated pursuant to Section 5 hereof (such period being
herein referred to as the “Term,” and the period from
the date hereof through December 31, 2007, and any calendar
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 title of Chief
Financial Officer of the Company and shall have such duties as may
be from time to time delegated to him by the President and Chief
Executive Officer, the Board of Directors of the Company and the
Audit Committee of the Board (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 manage the corporate finance staff
reporting thereto, develop and install an effective management
information system, develop and implement strategies relating to
accounting and reporting, internal controls, external reporting
(including SEC and regulatory reporting and compliance) capital
structure and provide 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.
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 Twenty
Five Thousand Dollars ($225,000) 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.
Initial Bonus and Incentive Bonus .
The Executive shall receive a bonus of $60,000 which shall be paid
within ten (10) business days of the date of this Agreement
. The
Executive shall be eligible to receive, for each Employment Year
during the Term, an annual incentive bonus in each calendar year
including 2007 of up to an amount equal to 25% 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 for each
Employment Year commencing December 31, 2007. The Incentive Bonus
shall be paid in a single lump sum no later than the earlier of (i)
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 and (ii) December
31
st of
the following calendar year.
2.3.
Equity Compensation .
In addition to the Base Salary and Incentive Bonuses, if any, the
Executive shall receive, as incentive compensation, 80,000 Shares
of restricted common stock of the Company (the
“Shares”), pursuant to and upon the terms and
conditions set forth in the form of Restricted Stock Agreement (the
“RS Agreement”) attached as Exhibit A hereto. The
Shares shall vest as to 26,666 of the Shares on January 10, 2008
and an additional 26,667 of the Shares on each of January 10, 2009
and January 10, 2010, subject to earlier vesting as set forth in
Section 5.4.4, subject to earlier termination in the event of
termination of the Executive’s employment with the Company as
provided in the RS Agreement.
2.4.
Additional Compensation .
In addition to the Base Salary, 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.
3.
PLACE OF PERFORMANCE .
In connection with his employment by the Company, 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 five (5) 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
financial officer and/or principal financial 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 by his death, the date
of his death, (b) if the Executive’s employment is
terminated pursuant to subsection 5.1.1 above, the date set forth
in the Notice of Termination, and (c) if the Executive’s
employment is terminated pursuant to subsection 5.1.2 above, the
date specified in the Notice of Termination after the expiration of
any applicable cure periods, if any.
5.4.
Compensation Upon Termination .
5.4.1.
Termination for Cause .
If the Executive’s employment shall be terminated for Cause
or by the Executive for any reason, the Company shall pay the
Executive his Base Salary through the Dat
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