EMPLOYMENT AGREEMENTEmployment Agreement |
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LGL GROUP INC | M-tron Industries, Inc. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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Search Employment Agreement by:
Exhibit 10(c)
M-TRON
INDUSTRIES, INC.
100
Douglas Street
P.O. Box
630
Yankton,
SD 57078
January
7, 1999
Robert R.
Zylstra
12329
Ethan Avenue
White
Bear Lake, MN 55110
Dear
Bob:
The
following summarizes our agreement regarding your retention by M-tron
Industries, Inc. (the “Company”), effective January 24, 2000.
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1.
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POSITION. You
will serve as President and Chief Executive Officer of the Company. You
will also be made a director of the
Company.
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2.
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COMPENSATION. You
are to receive a base salary, bonus potential and equity incentive as set
forth herein.
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(a) BASE SALARY. Your
initial base salary will be $175,000 per year payable semi-monthly.
(b) BONUS PROGRAM. You
will develop and recommend to the Board of Directors of the Company a bonus
program applicable to you and the other principal executives of the Company for
Year 2000 and beyond.
(c) BONUS. Your bonus for
the year ended December 31, 2000 will be not less than $100,000 provided that
the Company meets its plan target for EBITDA (calculated in the manner as set
forth in Schedule A hereto) of $3,832,000 for said year. The upside follows the
formula in the bonus program adopted in Paragraph 2.(b) above. The bonus will be
paid as soon as practical after the end of Year 2000.
(d) EQUITY INCENTIVE.
It is the parties’ intention to provide you with an equity incentive, intended
to be approximately 3% as set forth herein.
(i) COMPANY GOES PUBLIC.
If the Company shall complete an initial public offering (“IPO”) of its common
stock during your employment and prior to January 24, 2003, you shall be
entitled to purchase at the time of the IPO shares of common stock of the
Company equal to 3% of the outstanding shares of common Stock immediately after
the IPO. The purchase price for the stock will be 33 1/3% of the public offering
price payable in cash or, with the Company’s agreement, structured notes secured
by the stock. The exact structure of your ownership will be structured by the
Company at the time with the Company’s
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tax, book
accounting and “blue sky” law implications taking dominant importance versus
your tax position. It is anticipated that the Company will adopt a stock option
program at the time of an IPO and you will be entitled to participate therein.
You will agree to such restrictions on the shares of stock or options acquired
by you as the underwriters for the IPO may request. The certificates for such
shares and for any shares of Lynch Corporation issued pursuant to Paragraph
2(d)(ii) shall contain such legends including without limitation a securities
acts legend as the Company deems appropriate.
(ii) COMPANY DOES NOT GO
PUBLIC. If the Company has not done an IPO by January 24, 2003 and if you
are then employed by the Company, you shall be entitled, upon any termination of
your employment to an inputed equity value benefit (“IEVB”) equal to 3% of the
increase in the economic value of the Company from January 1, 2000 through the
end of the last fiscal quarter next preceding termination of your employment
(the “Valuation Date”). The economic value of the Company at January 1, 2000
shall be deemed to be 7.5 times the EBITDA (plus cash and marketable securities
and minus debt) of the Company for the year ended December 31, 1999 (calculated
in the manner set forth on Schedule A hereto), and the value at the Valuation
date shall be 7.5 times the EBITDA (plus cash and marketable securities and
minus debt) of the Company for the twelve months ended on the Valuation Date
(with EBITDA for such twelve month period being calculated in the same manner as
on Schedule A). Should there have been any stock issued in connection with any
acquisition included in the calculation, the value of the stock issued, at the
time of issuance, will be deemed to be debt for purposes of the calculation. The
IEVB shall, at the Company’s option, be payable either in (a) cash in three (3)
equal installments payable on the first, second and third anniversary dates of
the date of your termination of employment and such deferred payments shall bear
interest on the outstanding principal amount at an annual rate equal to eight
percent (8%), which interest shall be payable in arrears on each of said
anniversary dates or (ii) in common stock of Lynch Corporation valued at the
average closing market price thereof for the ten trading days on which the stock
traded prior to the date of payment. For purposes of this Paragraph 2(d)(ii)
only, any sale by Lynch Corporation of a majority of common stock of the Company
(other than to its shareholders or in a public offering) or any sale by the
Company of all or substantially all of its assets (excluding its investment in
Spinnaker Industries, Inc. and any successor investments to Spinnaker
Industries, Inc.), in each case other than to an “affiliate” (i.e., a person or
entity that directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with the person or entity) of
the Company, shall be deemed to be a termination of employment effective as of
the date of such event (with you being deemed to have satisfied the three year
vesting requirement).
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(e) EMPLOYEE BENEFIT
PROGRAMS. You will also be entitled to participate in all salaried
employee benefit programs in effect from time to time at the Company in
accordance with their terms.
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3.
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TERM. The term
of this Agreement is two years, subject to earlier termination. In the
event that you are terminated prior to the expiration of your employment
term as provided in this Section 3 (“Terminated”) without “good cause,”
you will be entitled to receive a termination payment equal to your base
salary for the remainder of the two year term, payable over such term when
salary would otherwise have been payable, as your compensation for such
termination. In the event that you are terminated for “good cause,” then
you shall be entitled only to your base Salary through the date of
Termination.
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In the
event that you are terminated due to a “disability,” you shall be entitled to
receive your base salary through the date of Termination. You will also be
entitled to receive any disability benefits that the Company may have provided
to you pursuant to Section 2(e) of this Agreement. A “disability” will have been
deemed to occur if, as a result of your incapacity due to physical or mental
illness, you shall have been absent from the full time performance of your
duties under this agreement for a period of three (3) consecutive months. The
determination of such a disability may be verified, at the Company’s request, by
a doctor or medical group selected by the Company.
In the
event of your death, your estate shall be entitled to receive your base salary
through the date of your death and any other benefits to which your estate may
be entitled pursuant to Section 2(e) of this agreement.
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4.
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YANKTON. You
will move to the Yankton, ND area as soon as practicable. The Company will
reimburse you for moving expenses pursuant to the terms of the Company’s
general policy, subject to a maximum of
$50,000.
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5.
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RULES/CONFIDENTIALITY/NON-COMPETE.
You shall obey all rules, regulations and policies of the Company
including, without limitation those set out in the Salaried Employees
Handbook as it may be amended from time to time. In addition, you agree to
be bound by the confidentiality and non-competition provisions set forth
in Schedule B hereto.
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6.
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(a)
For purposes of this Agreement, “good cause” shall mean that you shall
have (i) willfully or grossly neglected your duties as President, Chief
Executive Officer and a director of the Company and those that may be
assigned to you by the Board of Directors of the Company or any
subsidiary, (ii) continually failed to devote your full time and attention
to the Company and its subsidiaries and your duties, (iii) committed
fraud, embezzlement or misappropriation in connection with your employment
with, the Company or any subsidiary, (iv) committed a felony or crime
involving moral turpitude, or (v) materially breached any covenants or
obligations contained in this Agreement or any other agreement or
instrument applicable to you.
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(b) All
calculations of EBITDA, cash, marketable securities, and debt and/or other value
or economic value of the Company contemplated in this Agreement shall exclude
entirely the Company’s investment in Spinnaker Industries, Inc. and any
successor investments to Spinnaker Industries, Inc. It is also understood that
the Company would probably determine not to include any investment in Spinnaker
Industries, Inc. and any successor investments to Spinnaker Industries, Inc. in
any IPO.
