Exhibit 10.12
EXECUTIVE EMPLOYMENT
AGREEMENT
This Executive Employment Agreement
(the “Agreement”) is made and entered into as of the
14th day of February, 2007, by and between Martin Moskovits (the
“Executive”) and API Nanotronics Corp. (the
“Company”).
WHEREAS , the Company desires to employ Executive in an
executive capacity in connection with its business and operations
and desires to enter into an agreement, effective as of the
Effective Date (as defined below), embodying the terms and
conditions of such employment; and
WHEREAS , Executive desires to accept such employment
and enter into such an agreement setting forth the terms and
conditions of his employment, effective as of the Effective
Date.
NOW, THEREFORE
, in consideration of the premises
and mutual covenants herein and for other good and valuable
consideration, the parties agree as follows:
1. Term of Employment .
Subject to the provisions of Section 8 of this Agreement,
Executive shall be employed by the Company commencing on
May 1, 2007 or such earlier date as the parties may mutually
agree (the “Effective Date”) and shall continue until
terminated by either party as provided herein (the
“Employment Term”).
2. Position .
a. During the Employment Term,
Executive shall serve as the Chief Technology Officer
(“CTO”) of the Company. In such position, Executive
shall have such duties and authority as shall be determined from
time to time by the Chairman of the Company and the Board of
Directors of the Company, consistent with such position. Without
limiting the foregoing, as CTO Executive will be responsible for
(i) staffing and managing the engineering team of the Company
and will be the primary contact between the engineering team and
the sales team of the Company and (ii) overseeing the opening
and operations the Company’s MEMS facility. In addition,
Executive will be involved in (i) oversight of the
Company’s entire manufacturing processes and procedures and
(ii) the identification and evaluation of potential
acquisition opportunities for the Company and the integration of
acquired entities and lines of businesses into the Company’s
operations.
b. The Company contemplates forming
an executive management team, the members of which will be kept
informed of the Company’s strategic plans, contemplated
acquisitions and operations. The Executive will be a member of the
executive management team.
c. During the Employment Term,
Executive will devote Executive’s full business time and best
efforts to the performance of Executive’s duties hereunder
and will not engage in any other business, profession or occupation
for compensation or otherwise which would conflict or interfere
with the rendition of
such services, either directly or
indirectly, without the prior written consent of the Chairman of
the Company. Commencing not later than September 15, 2007,
Executive shall be working out of the Company’s offices in
Long Island, New York. Notwithstanding the foregoing, nothing
herein shall preclude Executive, subject to the prior approval of
the Chairman of the Company, from accepting appointment to or
continuing to serve on any board of directors or trustees of any
business corporation or any charitable organization or engaging in
any other academic or business undertaking; provided , in
each case, and in the aggregate, that such activities do not
conflict or interfere with the performance of Executive’s
duties hereunder or conflict with Section 11 or
Section 12. Set forth on Exhibit A hereto is a complete
list, as of the Effective Date, of the Executive’s positions
on any board of directors or trustees of any business corporation
or any charitable organization as well as his academic and business
undertakings.
d. At all times during the
Employment Term, Executive shall adhere to and obey all of the
Company’s written rules, regulations and policies, including
without limitation the Company’s code of business ethics,
which govern the operation of the Company’s business and the
conduct of employees of the Company.
3. Base Salary . During the
Employment Term, the Company shall pay Executive a base salary at
the annual rate of $375,000, payable in regular installments in
accordance with the Company’s usual payroll practices. The
Base Salary shall be subject to annual review for increase, but not
decrease, in the discretion of the Board. Executive’s annual
base salary, as in effect from time to time, is hereinafter
referred to as the “Base Salary.”
4. Annual Bonus . With
respect to each full fiscal year during the Employment Term,
Executive shall be eligible to earn an annual bonus award (an
“Annual Bonus”) as determined in the discretion of the
Compensation Committee of the Company; provided, however, that a
portion of the bonus will be based upon specified performance
milestones recommended by the Chairman and approved by the Board of
Directors of the Company, or if appointed, the Compensation
Committee of the Board of Directors (the “Compensation
Committee”). The Compensation Committee’s bonus
determination will be consistent with the Company’s general
compensation objectives and policies. The Annual Bonus shall be
paid to Executive within two and one-half (2.5) months after
the end of the applicable fiscal year.
5. Stock Option Awards .
Prior to the date of this Agreement, Executive has been granted
options to purchase 1,100,000 shares of common stock of the
Company, which options vest upon the occurrence of certain dates
and/or specified events and Executive’s continued employment
or engagement by the Company, as set forth in the instruments
evidencing the options. All of the options are non-qualified stock
options and 1,000,000 of the options were issued under the
Company’s 2006 Equity Incentive Plan.
6. Employee Benefits . During
the Employment Term, the Company shall provide to Executive such
health, life and disability insurance, if any, on the terms of and
of the type that the Company regularly provides to its executive
employees and shall be entitled to participate in the employee
benefit plans of the Company (other than annual bonus
plans,
2
severance plans and incentive plans, unless
explicitly approved by the Compensation Committee). Notwithstanding
the foregoing, at Executive’s request the Company agrees to
spend up to $15,000 to purchase health insurance for the Executive.
Nothing herein shall be construed to require the Company to
establish or adopt any insurance or benefit program not currently
in existence, or continue any such insurance or benefit program in
the future. Company shall reimburse Executive for all reasonably
incurred expenses incurred by Executive and his spouse as a result
of or in connection with his move to the Long Island, New York area
up to a maximum amount equal to $50,000.00. Company shall reimburse
Executive for his reasonable out-of-pocket legal expenses properly
incurred to review and settle this Agreement up to a maximum of
$5,000.
7. Vacation, Holidays and Sick
Leave . Executive shall be entitled to twenty (20) days of
vacation in each full calendar year of employment. For calendar
years in which Executive is not employed for a full calendar year,
such days of vacation shall be prorated. Executive shall be
entitled to such paid holidays and sick leave policy regularly
recognized by the Company for its employees.
8 Business Expenses . During
the Employment Term, reasonable business expenses incurred by
Executive in the performance of Executive’s duties hereunder
shall be reimbursed by the Company in accordance with Company
policies; provided, any individual reimbursement in excess of
$1,000 shall be approved in advance by the Chairman of the Company.
Such reimbursements shall occur no more than forty-five
(45) days following the date such expenses are submitted for
reimbursement. Notwithstanding any Company policy to the contrary,
Executive shall be entitled to travel business class when traveling
for Company business and Executive shall be reimbursed for
same.
9. Budgets; Research
.
a. The Board of Directors of the
Company shall approve an annual budget reasonably sufficient for
Executive to carry out his responsibilities and the Company’s
objectives for staffing and managing the engineering team of the
Company. Executive agrees to make budget recommendations to the
Board of Directors with such supporting materials as the Board of
Directors may request.
b. In addition, subject to the
achievement by the Company of various milestones as agreed by the
Board of Directors and Executive, for each calendar year during the
Employment Term, Executive shall have an annual research budget of
$500,000 for nanotechnology research projects (the “Research
Budget”). A substantial portion of the Research Budget shall
be used to purchase or acquire rights to use intellectual property
from academic institutions, including University of California,
Santa Barbara (“UCSB”). Executive agrees that prior to
the purchase of any intellectual property (i) from UCSB or
other institutions or entities by whom Executive was formerly
employed or engaged or of which Executive is a co-inventor, or
(ii) in any transaction that may be considered a related party
transaction under the United States securities laws, he shall
receive all required approvals of the Board of Directors or the
Audit Committee of the Board of Directors of the Company. The
amount of the Research Budget shall be pro-rated for the 2007
year.
3
10. Termination . The
Employment Term and Executive’s employment hereunder may be
terminated by either party at any time and for any reason;
provided that Executive shall be required to give the
Company at least 30 days advance written notice of any resignation
of Executive’s employment other than for Constructive
Termination and the Company shall be required to give Executive at
least 30 days advance written notice of termination if terminated
by the Company without Cause. Notwithstanding any other provision
of this Agreement, the provisions of this Section 10 shall
exclusively govern Executive’s rights upon termination of
employment with the Company and its affiliates.
a. By the Company For Cause or By
Executive’s Resignation Other than For Constructive
Termination .
(i) The Employment Term and
Executive’s employment hereunder may be terminated by the
Company for Cause (as defined below) and shall terminate
automatically upon Executive’s resignation other than for
Constructive Termination (as defined below); provided that
Executive shall be required to give the Company at least 30 days
advance written notice of a resignation other than for Constructive
Termination.
For purposes of this Agreement,
“Cause” shall mean:
|
|
(A)
|
willful and
material breach by Executive of any provision of this Agreement;
provided the Company has delivered to Executive a written notice
setting forth with particularity such breach and shall have given
Executive an opportunity to meet with the Company and to cure such
breach during the 30 days following delivery of such written
notice;
|
|
|
(B)
|
any act by
Executive constituting gross misconduct or material fraud
including, but not limited to, stealing or falsification of Company
records or misappropriation of Company funds, with respect to any
aspect of the business of the Company or its affiliates;
|
|
|
(C)
|
the continued
willful failure, other than due to Disability, by Executive to
substantially perform his duties to the Company provided the
Company shall have given Executive an opportunity to meet with the
Company and to cure such failure of performance during the 30 days
following delivery of such written notice; which notice shall
include a detailed explanation of such failure of
performance;;
|
4
|
|
(D)
|
conviction of
or plea of nolo contendere by Executive of a felony, other criminal
offence punishable by incarceration, or a misdemeanor that the
Company, in good faith, determines involves a subject matter which
may reflect negatively on the reputation or business of the Company
or any of its affiliates;
|
|
|
(E)
|
acts by
Executive attempting to secure or securing any personal profit not
fully disclosed to and approved by the Chairman of the Company in
connection with any transaction entered into on behalf of the
Company or any of its affiliates, excluding items of immaterial
value, or misappropriation of a corporate opportunity of the
Company;
|
|
|
(F)
|
material
violation of any lawful policy, rule, regulation or directive of
the Company or any of its affiliates; provided the Company shall
have given Executive an opportunity to cure such violation within
the 30 day period following notice to the Executive of the
violation;
|
|
|
(G)
|
conduct on the
part of Executive, even if not in connection with the performance
of Executive’s duties contemplated under this Agreement, that
results in serious prejudice to the interests of the Company or any
of its affiliates, as determined by the Company in good faith, and
failure by Executive to cease such conduct within 30 days following
receipt of notice to cease such conduct;
|
|
|
(H)
|
acceptance by
Executive of employment with another employer without the consent
of the Company; or
|
|
|
(I)
|
material
violation of any federal or state securities laws, rules or
regulations; provided the Company shall have given Executive an
opportunity to meet with the Company and to cure such violation
during the 30 days following delivery of such written notice;
provided further that this clause shall not be applied to action or
inaction of Executive taken in reliance on advice of the
Company’s legal counsel.
|
5
(ii) If Executive’s employment
is terminated by the Company for Cause, or if Executive resigns
other than for Constructive Termination, Executive shall be
entitled to receive:
|
|
(A)
|
the Base Salary
through the date of termination;
|
|
|
(B)
|
any Annual
Bonus earned, but unpaid, as of the date of termination for the
immediately preceding fiscal year, paid in accordance with
Section 4;
|
|
|
(C)
|
reimbursement,
within 30 days following submission by Executive to the Company of
appropriate supporting documentation, for any unreimbursed business
expenses properly incurred by Executive in accordance with Company
policy prior to the date of Executive’s termination;
provided claims for such reimbursement (accompanied by
appropriate supporting documentation) are submitted to the Company
within 90 days following the date of Executive’s termination
of employment;
|
|
|
(D)
|
such Employee
Benefits, if any, as to which Executive may be entitled under the
employee benefit plans or employee benefits as described in
Sections 6 and 7 (the amounts described in clauses (A) through
(D) hereof being referred to as the “Accrued
Rights”); and
|
|
|
(E)
|
the
Executive’s rights and benefits upon termination under any
other applicable Company plans or programs shall be determined
under the specific terms of such plans or programs.
|
Following such termination of
Executive’s employment by the Company for Cause or
resignation by Executive other than for Constructive Termination,
except as set forth in this Section 10(a)(ii), Executive shall
have no further rights to any compensation or any other benefits
under this Agreement.
b. Disability or Death
.
(i) The Employment Term and
Executive’s employment hereunder shall terminate upon
Executive’s death and may be terminated by the Company if
Executive becomes physically or mentally incapacitated and is
therefore unable for a period of six
(6) consecutive
6
months or for an aggregate of nine
(9) months in any twenty-four (24) consecutive month
period to perform Executive’s duties (such incapacity is
hereinafter referred to as “Disability”). Any question
as to the existence of the Disability of Executive as to which
Executive and the Company cannot agree shall be determined in
writing by a qualified independent physician mutually acceptable to
Executive and the Company. If Executive and the Company cannot
agree as to a qualified independent physician, each shall appoint
such a physician and those two physicians shall select a third who
shall make such determination in writing. The determination of
Disability made in writing to the Company and Executive shall be
final and conclusive for all purposes of the Agreement.
(ii) Upon termination of
Executive’s employment hereunder for either Disability or
death, Executive or Executive’s estate (as the case may be)
shall be entitled to receive:
(A) the Accrued Rights;
(B) subject to Executive’s
continued compliance with the provisions of Sections 11 and 12,
continued payment of the Base Salary in accordance with the
Company’s normal payroll practices, as in effect on the date
of termination of Executive’s employment, for a period of
three months following the date of such termination; and
(C) The Executive’s rights and
benefits upon termination under any other applicable Company plans
or programs shall be determined under the specific terms of such
plans or programs.
Following Executive’s
termination of employment due to death or Disability, except as set
forth in this Section 10(b)(ii), Executive shall have no
further rights to any compensation or any other benefits under this
Agreement.
c. By the Company Without
Cause .
(i) The Employment Term and
Executive’s employment hereunder may be terminated by the
Company without Cause.
(ii) If Executive’s employment
is terminated by the Company without Cause (other than by reason of
death or Disability, or if the Company fails to employ the
Executive on Effective Date), Executive shall be entitled to
receive:
(A) the Accrued Rights;
7
(B) if Executive’s employment
is terminated without Cause prior to the second anniversary of the
Effective Date, and subject to Executive’s continued
compliance with the provisions of Sections 11 and 12, continued
payment of the Base Salary in accordance with the
Company&
