This Employment
Agreement (the “ Agreement ”) is entered into on
July 6, 2009, by and between John D. Kavazanjian, an
individual (“ Executive ”) and Ultralife
Corporation, a Delaware corporation (the “ Company
”).
WHEREAS, the
Company and Executive desire to establish an agreement pursuant to
which Executive will be retained as the President and Chief
Executive Officer of the Company, effective July 6, 2009, and
to provide for Executive’s employment by the Company upon the
terms and conditions set forth herein.
Now,
Therefore , in consideration of the mutual covenants contained
herein, the parties hereby agree as follows:
1.
Employment . Executive will serve as President and Chief
Executive Officer of the Company for the Employment Term specified
in Section 2 below. Executive will report to the Board of
Directors of the Company (the “ Board ”), and
Executive will render such services, consistent with the foregoing
role, as the Board may from time to time direct.
2.
Term . The employment of Executive pursuant to this
Agreement shall continue from the effective date noted in the
Recitals through the end of the calendar year (the “
Employment Term ”), unless extended or earlier
terminated as provided in this Agreement. The Employment Term shall
automatically be extended for additional one-year periods
commencing on January 1 of each year and continuing each year
thereafter, unless either Executive or the Company gives the other
written notice, in accordance with Section 12(a) and at least
ninety (90) days prior to the then scheduled expiration of the
Employment Term, of such party’s intention not to extend the
Employment Term.
3.
Salary . As compensation for the services rendered by
Executive under this Agreement, the Company shall pay to Executive
a base salary initially equal to $420,000 per year (“Base
Salary”) for calendar year 2009, payable to Executive in
accordance with the Company’s payroll practices. The Base
Salary shall be subject to adjustment by the Board but may not be
decreased unless it is part of a strategic measure required by the
Company to meet deteriorating financial or economic
conditions.
4.
Bonus . In addition to his Base Salary, Executive shall be
entitled to participate in the Company’s executive bonus
program. Bonuses shall be paid in accordance with the guidelines
set forth under the bonus program but in all events a bonus shall
be paid between January 1 and December 31 of the year
following the year in which the bonus is earned.
(a)
Employee and Executive Benefits . Executive will be entitled
to receive all benefits provided to senior executives, executives
and employees of the Company generally, provided that in respect to
each such plan Executive is otherwise eligible and insurable in
accordance with the terms of such plans.
(b)
PTO and Sabbatical . Executive shall be entitled to Paid
Time Off, holidays and sabbatical in accordance with the policies
of the Company as they exist.
(a)
At Will Employment . Executive’s employment shall be
“at will.” Either the Company or Executive may
terminate this Agreement and Executive’s employment at any
time, with or without Business Reasons (as defined in Section 7(a)
below), in its or his sole discretion, upon sixty
(60) days’ prior written notice of
termination.
(b)
Involuntary Termination . If at any time during the term of
this Agreement, other than following a Change in Control to which
Section 6(c) applies, the Company terminates the employment of
Executive without Business Reasons or a Constructive Termination
occurs, then Executive shall be entitled to receive the
following:
(i) salary
and the cash value of any accrued Paid Time Off (consistent with
the Company’s Paid Time Off policies then in effect) through
the Termination Date plus continued salary for a period of
twenty-four (24) months following the Termination Date,
payable in accordance with the Company’s regular payroll
schedule as in effect from time to time,
(ii) an
amount equal to the average of the bonuses paid to Executive during
the two preceding fiscal years or, if no bonuses were paid during
such period, an amount equal to Executive’s then current
annual target bonus, to be paid between January 1 and
December 31 of the year following the year in which the
termination occurs,
(iii) acceleration
of vesting of all outstanding stock options and other equity
arrangements (including but not limited to restricted stock, stock
appreciation rights, and such instruments) subject to vesting and
held by Executive subject to the provision, however, that the
acceleration shall not cover more than two (2) years from the
Termination Date (and in this regard, all such options and other
exercisable rights held by Executive shall remain exercisable for
one year following the Termination Date, or through the original
expiration date of the stock options or other exercisable rights,
if earlier),
(iv) to
the extent COBRA shall be applicable to the Company, continuation
of health benefits for Executive, Executive’s spouse and any
dependent children, at Executive’s cost, for a period of
18 months after the Termination Date or such longer period as
may be applicable under the Company’s policies then in
effect, provided the Executive makes the appropriate election and
payments, and
(v) no
other compensation, severance or other benefits, except only that
this provision shall not limit any benefits otherwise available to
Executive under Section 6(c) in the case of a termination following
a Change in Control.
(c)
Change in Control . If at any time during the term of this
Agreement a “ Change in Control ” occurs (as
defined below), and the Company terminates the employment of
Executive without Business Reasons or a Constructive Termination
occurs within eighteen (18) months of the date of the Change
in Control, then Executive shall be entitled to receive the
following:
(i) salary
and the cash value of any accrued Paid Time Off (consistent with
the Company’s Paid Time Off policies then in effect) through
the Termination Date plus an amount equal to twenty-four
(24) months of Executive’s salary as then in effect,
payable immediately upon the Termination Date,
(ii) an
amount equal to the greater of the average of the bonuses paid to
Executive during the two preceding fiscal years or
Executive’s then current annual target bonus, to be paid
between January 1 and December 31 of the year following the
year in which the termination occurs,
(iii) acceleration
in full of vesting of all outstanding stock options and other
equity arrangements (including but not limited to restricted stock,
stock appreciation rights, and such instruments) subject to vesting
and held by Executive (and in this regard, all such options and
other exercisable rights held by Executive shall remain exercisable
for one year following the Termination Date, or through the
original expiration date of the stock options or other exercisable
rights, if earlier),
(iv) to
the extent COBRA shall be applicable to the Company, continuation
of health benefits for Executive, Executive’s spouse and any
dependent children, at Executive’s cost, for a period of
eighteen (18) months after the Termination Date,
and
(v) no
other compensation, severance or other benefits.
Payment of
benefits shall be accelerated and the severance payments under
Section 6(c)(i) shall be made in a lump sum upon a Change in
Control only if such Change in Control constitutes a “change
in control” within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended, and the Treasury
Regulations and official guidance issued thereunder (collectively
“Section 409A”). If such a cceleration and
payment is not permissible, no acceleration will occur and the
severance payments shall be made in accordance with
Section 6(b )(i ).
(vi) Limitation
on Parachute Payments. The Executive’s severance payments and
other benefits to be received in connection with a Change in
Control under this Agreement or otherwise (commonly referred to
collectively as “parachute payments”) are capped at no
more than three times his average annual compensation for the
previous five years to the extent necessary for him not to incur
excise tax under Section 4999 of the Internal Revenue Code of
1986, as amended (the “Code”) and for the Company not
to have its deduction limited under Section 280G of the Code.
In the event that the parachute payments to be received by the
Executive need to be reduced to comply with the foregoing
limitation, the Company shall
determine which
parachute payments shall be reduced and the extent of each
reduction, each in a manner that will not cause a violation of
Section 409A. If it is subsequently determined that the
parachute payments actually received by the Executive exceed the
foregoing limitation, then the Executive shall have an obligation
to pay the Company upon demand an amount equal to the
excess.
(d)
Termination for Disability . If at any time during the term
of this Agreement, other than following a Change in Control to
which Section 6(c) applies, Executive shall become unable to
perform his duties as an employee as a result of incapacity, which
gives rise to termination of employment for Disability, then
Executive shall be entitled to receive the following:
(i) salary
and the cash value of any accrued Paid Time Off (consistent with
the Company’s PTO policies then in effect) through the
Termination Date plus continued salary for a period of twenty-four
(24) months following the Termination Date, payable in
accordance with the Company’s regular payroll schedule as in
effect from time to time,
(ii) an
amount equal to the annual target bonus for the fiscal year in
which the Termination Date occurs (plus any unpaid bonus from the
prior fiscal year), to be paid between January 1 and
December 31 of the year following the year in which the
termination occurs,
(iii) acceleration
in full of vesting of all outstanding stock options held by
Executive subject to the provision, however, that the acceleration
shall not cover more than two (2) years from the Termination
Date (and in this regard, all such options and other exercisable
rights held by Executive shall remain exercisable for one year
following the Termination Date, or through the original expiration
date of the stock options or other exercisable rights, if
earlier),
(iv) to
the extent COBRA shall be applicable to the Company, continuation
of health benefits for Executive, Executive’s spouse and any
dependent children, at Executive’s cost, for a period of
18 months after the Termination Date, or such longer period as
may be applicable under the Company’s policies then in
effect, provided Executive makes the appropriate election and
payments, and
(v) no
other compensation, severance or other benefits, except only that
this provision shall not limit any benefits otherwise available to
Executive under Section 6(c) in the case of a termination following
a Change in Control. Notwithstanding the foregoing, however, the
Company may deduct from the salary specified in clause
(i) hereof the amount of any payments then received by
Executive under any disability benefit program maintained by the
Company to the extent permissible under
Section 409A.
(e)
Voluntary Termination or Involuntary Termination for Business
Reasons . If (A) Executive voluntarily terminates his
employment (other than in the case of a Constructive Termination),
or (B) Executive is terminated involuntarily for Business
Reasons, then in any such event Executive or his representatives
shall be entitled to receive the following: (i) salary and the
cash value of any accrued Paid Time Off (consistent with the
Company’s PTO policies
then in effect)
through the Termination Date only, (ii) the right to exercise,
for ninety (90) days following the Termination Date, or through the
original expiration date of the stock options, if earlier, all
stock options held by Executive, but only to the extent vested as
of the Termination Date, (iii) to the extent COBRA shall be
applicable to the Company, continuation of health benefits for
Executive, Executive’s spouse and any dependent children, at
Executive’s cost, for a period of eighteen (18) months
after the Termination Date, or such longer period as may be
applicable under the Company’s policies then in effect,
provided Executive makes the appropriate electio
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