EXHIBIT
10.1
EMPLOYMENT
CONTRACT
This Employment Contract
(“Agreement”) is executed and delivered as of
February12, 2007, by and between Mace Security International, Inc.,
a Delaware corporation (“Company”), and Gregory M.
Krzemien, an individual (“Employee”).
RECITALS
The Company conducts diversified businesses,
including, without limitation, electronic and personal security
device marketing and car washes (“Business”). The
Employee is an executive with extensive experience in corporate
management. The Company and Employee are parties to an Employment
Contract dated March 26, 1999 under which Employee is employed by
the Company on a month to month basis. This Agreement replaces in
its entirety, the Employment Contract dated March 26, 1999. The
Company desires to retain Employee as Chief Financial Officer and
Treasurer of the Company and the Employee desires to remain
employed as the Chief Financial Officer and Treasurer.
Employee will be employed by Company in a
confidential relationship wherein Employee, in the course of
employment with Company, will become familiar with and aware of
information as to the specific manner of doing business and the
customers of Company and its affiliates and the Company’s
future plans. The information Employee has and will have knowledge
of is trade secrets and constitutes valuable goodwill of Company.
Employee recognizes that the business of Company is dependent upon
a number of trade secrets and confidential business information,
including customer lists and customer data. The protection of these
trade secrets is of critical importance to Company. Company will
sustain great loss and damage if, for whatever reason, during the
term of this Agreement or Employee’s employment with Company
and for a period following the termination of this Agreement or
Employee’s employment, Employee should violate the provisions
of paragraph 4 of this Agreement. Further, Employee acknowledges
that any such violation would cause irreparable harm to Company and
that Company would be entitled, without limitation, to injunctive
relief to remedy such violation.
NOW, THEREFORE , in consideration of the mutual promises, terms
and conditions set forth herein and the performance of each, the
parties hereby agree as follows:
(a) Company hereby employs Employee as its Chief
Financial Officer and Treasurer, and the material duties of
Employee may not be changed without the Employee’s consent.
The Company shall provide Employee a furnished and equipped office
from where Employee is to perform his duties (“Office”)
and a staff sufficient for Employee to perform his duties
(“Staff”). The location of the Office, at the time this
Agreement is executed is 1000 Crawford Place, Suite 400, Mount
Laurel, New Jersey. During any period that Louis D. Paolino, Jr. is
the Chief Executive Officer of the Company, the physical location
of the Office and the number and type of Staff may be changed
without the consent of Employee. If Employee is not satisfied with
the changed location of the Office or the change in Staff,
Employee’s only recourse is to resign his employment. During
any period that Louis D. Paolino, Jr. is not the Chief Executive
Officer of the Company, (i) changes in the physical location of the
Office are limited to a twenty five mile radius from the physical
location of the Office at the time Louis D. Paolino, Jr. resigned
or was terminated as Chief Executive Officer of the Company, and
(ii) the number and type of Staff may not be significantly changed
by the Company, unless the Employee consents to the Office or Staff
change in writing.
(b) Employee hereby accepts employment upon the
terms and conditions contained in this Agreement. Employee shall
faithfully adhere to, execute and fulfill all directions and
policies established by the Company for its employees.
(c) Employee’s employment shall be for a
full time position. Employee shall not, during the term of his
employment, without the prior written consent of Company, be
engaged in any other business activity pursued for gain, profit or
other pecuniary advantage, if such activity prevents Employee from
devoting a minimum of forty hours per week to Employee’s
duties and responsibilities under this Agreement. Employee may make
personal investments in any form or manner, regardless of whether
Employee provides services in the operation or affairs of the
companies or enterprises in which such investments are made;
provided that Employee does not violate the terms of Paragraph 4 of
this Agreement and devotes a minimum of forty hours per week to
Employee’s duties to the Company.
(a) For all services to be rendered by Employee
to Company, Company shall pay Employee an initial base annual
salary computed and earned ratably over twelve months at the rate
of Two Hundred Thirty Thousand Dollars ($230,000) per year,
commencing on the date hereof, payable in accordance with
Company’s normal payroll procedures. The Company’s
Compensation Committee shall each calendar year commission a
compensation study for Employee’s position and shall review
Employee’s annual salary after taking into account the
recommendations set forth in the compensation study.
(b) To the extent that Company, from time to
time in its sole discretion, offers or provides any of the
following to its employees, Employee, on an equal basis with such
other employees, shall be entitled to: (i) participation in all, if
any, life, health, medical, hospital, accident and disability
insurance programs of Company in existence for the benefit of its
employees and for which Employee qualifies; (ii) participation in
all, if any, pension, retirement, profit sharing or stock purchase
plans for which Employee qualifies; and (iii) participation in any
other employee benefits which Company accords to its employees and
for which Employee qualifies.
(c) During the term of Employee’s
employment with Company, Employee shall be entitled to
reimbursement for reasonable business expenses, including gasoline,
incurred on behalf of Company. Reimbursement for business expenses
will be provided to Employee on the same basis and under the same
guidelines as are applicable to all of Company’s employees.
The Company shall also provide the Employee with a seven hundred
dollars ($700.00) per month car allowance.
(d) On the date that is within two business days
after this Agreement is executed by all parties to it, Employee
shall be awarded an option grant exercisable into Sixty Thousand
shares of the Corporation’s common stock
(“Option”). The Option shall be granted under the
Corporation’s Stock Option Plan at an exercise price equal to
the close of market on the date of grant. The Option shall be a ten
year option and shall vest over two years with the first twenty
thousand (20,000) option shares vesting on the date of grant, the
next twenty thousand (20,000) option shares vesting twelve months
from the date of grant and the last twenty thousand (20,000) option
shares vesting twenty four months from the date of grant.
Notwithstanding the vesting schedule, the Option shall completely
vest upon the occurrence of the Retention Payment Trigger Event, as
defined in Paragraph 2(e) below.
(e) To encourage, Employee to remain Employed
with the Company, the Company shall pay Employee a Retention
Payment, as hereafter defined, upon the occurrence of the Retention
Payment Trigger Event, as hereafter defined; provided that Employee
is employed by the Company at the time of the Retention Payment
Trigger Event. For purposes of this Agreement, the term
“Retention Payment” shall mean a lump sum cash payment
equal to the Employee’s then current annual base salary,
without consideration for any bonuses or the value of any option
award. The Retention Payment shall be paid to Employee within ten
(10) business days after the date that the Retention Payment
Trigger Event occurred. For purposes of this Agreement the
Retention Payment Trigger Event has occurred when both of the
following items have occurred (i) Louis D. Paolino, Jr no longer
serves as the Company’s Chief Executive Officer, and (ii) any
one of the events set forth in items (a) through and including (c)
below have taken place. The Retention Payment Trigger Event shall
have occurred when both item (i) and (ii) occur regardless of which
of the items occurs first or whether there is a time gap between
the items. By way of example, if any one of the items in (a)
through (c) below occurs in October 1, 2007 and Louis Paolino, Jr.
remains the Chief Executive Officer until December 30, 2007, the
Retention Payment Trigger Event has not occurred until December 30,
2007. Items (a) through (c) are as follows:
(a) the acquisition in one or more transactions
by any “Person”, excepting Employee, as the term
“Person” is used for purposes of Sections 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the
“1934 Act”), of “Beneficial Ownership” (as
the term beneficial ownership is used for purposes or Rule 13d-3
promulgated under the 1934 Act) of the fifty percent (50%) or more
of the combined voting power of the Company’s then
outstanding voting securities (the “Voting
Securities”). For purposes of this Paragraph 2(e)(a), Voting
Securities acquired directly from the Company and from third
parties by any Person shall be included in the determination of
such Person’s Beneficial Ownership of Voting
Securities.
(b) the approval by the shareholders of the
Company and the consummation of: (A) a merger, reorganization or
consolidation involving the Company, if the shareholders of the
Company immediately before such merger, reorganization or
consolidation do not or will not own directly or indirectly
immediately following such merger, reorganization or consolidation,
more than fifty percent (50%) of the combined voting power of the
outstanding Voting Securities of the corporation resulting from or
surviving such merger, reorganization or consolidation in
substantially the same proportion as their ownership of the Voting
Securities immediately before such merger, reorganization or
consolidation, or (B) a complete liquidation or dissolution of the
Company, or (C) an agreement for the sale or other disposition of
50% or more of the assets of the Company and a distribution of the
proceeds of the sale to the shareholders.
(c) the acceptance by shareholders of the
Company of shares in a share exchange, if the shareholders of the
Company immediately before such share exchange do not or will not
own directly or indirectly following such share exchange more than
fifty percent (50%) of the combined voting power of the outstanding
Voting Securities of the corporation resulting from or surviving
such share exchange in substantially the same proportion as the
ownership of the Voting Securities outstanding immediately before
such share exchange.
3. Term . The period of
Employee’s employment with the Company shall commence on the
date of this Agreement and shall continue for three years
thereafter, unless sooner terminated in accordance with the
provisions of this Agreement (“Term”). After expiration
of the Term, Employee’s employment shall continue thereafter
on an at-will month-to-month basis, until terminated by either
party to the Agreement. During the month-to-month period the
provisions of this Agreement shall no longer apply, except for the
provisions of Paragraph 15 which survive the Term. During the
at-will month-to month period, Employee shall continue to be paid
the Employee’s then current annual base salary under the
provisions of Paragraph 2(a), benefits under Paragraph 2(b) and the
car allowance under Paragraph 2(c).
4. Noncompetition Covenants
.
(a) Employee agrees that the noncompetition
covenants contained in this Paragraph 4 are a material and
substantial part of this Agreement.
(b) Employee covenants that during
Employee’s employment with Company and for three months
following the termination of Employee’s employment
(regardless of the reason for the termination) the Employee shall
not, directly or indirectly, without the prior express written
consent of Company, do any of the things set forth in item (i)
through (v) below:
(i) engage, as an officer, director,
shareholder, owner, partner, joint venturer, agent, or in a
managerial capacity, whether as an employee, independent
contractor, consultant, advisor or sales representative, in the
personal security device industry or in the car wash services
industry within the United States (the
“Territory”);
(ii) call upon any person who is, at the time of
the contact, an employee of Company or its affiliates, if the
purpose and intent of the contact is to entice such employee away
from or out of the employ of Company or its affiliates;
(iii) call upon any person or entity which is,
at the time of the contact, a customer of the Company or its
affiliates for the purpose of soliciting or selling any of the
items or services which are the items or services offered by the
Company or its affiliates;
(iv) disclose the identity of the customers of
Company or its affiliates, whether in existence or proposed, to any
person, firm, partnership, corporation or other entity whatsoever,
for any reason or purpose whatsoever; or
(v) promote, or assist, financially or
otherwise, any person, firm, partnership, corporation or other
entity whatsoever to do any of the above.
For the purposes of this Agreement,
the term “affiliates” shall mean one or more of: (A)
each subsidiary of Company, and (B) each other entity under the
direct or indirect control of the Company.
(c) The Company will sustain significant losses
and damages, if Employee breaches the covenants in this Paragraph
4. There is no adequate monetary remedy for the immediate and
irreparable damage that would be caused to Company by
Employee’s breach of its non-competition covenants. Employee
agrees that, in the event of a breach by him of the foregoing
covenants, such covenants may be enforced by Company by, without
limitation, injunctions and restraining orders.
(d) It is agreed by the parties that the
covenants in this Paragraph 4 impose a reasonable restraint on
Employee in light of the activities and business of Company on the
date of the execution of this Agreement and the future plans of
Company.
(e) The covenants in this Paragraph 4 are
severable and separate, and the unenforceability of any specific
covenant shall not affect the provisions of any other covenant. If
any court of competent jurisdiction shall determine that the scope,
time or territorial restrictions set forth are unreasonable, then
it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable,
and the Agreement shall thereby be reformed.
(f) The covenants in this Paragraph 4 shall be
construed as independent of any other provision of this Agreement
and the existence of any claim or cause of action of Employee
against Company whether predicated on this Agreement, or otherwise,
shall not constitute a defense to the enforcement by Company of
such covenants. It is specifically agreed that the duration of the
noncompetition covenants stated above shall be computed by
excluding from such computation all time during which Employee is
in violation of any provision of this Paragraph 4 and all time
during which ther
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