FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended January 2, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 1-8277
ACME ELECTRIC CORPORATION
(Exact name of registrant as specified in its charter)
STATE OF NEW YORK 16-0324980
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 Quaker Road, East Aurora, New York 14052
(Address of principal executive offices)
716/655-3800
(Telephone Number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
(1) YES x NO ____
(2) YES x NO ____
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Class Outstanding at January 2, 1999
Common Stock, Par Value $1.00 Per Share 5,057,554
<PAGE>
ACME ELECTRIC CORPORATION
PART I - FINANCIAL INFORMATION
ITEM I - FINANCIAL STATEMENTS
BALANCE SHEET
Unaudited Audited
January 2, 1999 June 30, 1998
(000s) (000s)
------ ------
ASSETS
- ------
Current Assets:
Cash $ 382 $ 629
Accounts receivable, net 10,804 12,552
Inventories, net 10,041 11,961
Deferred income taxes 1,280 1,269
Other current assets 596 695
------ ------
Total current assets 23,103 27,106
------ ------
Property, plant and equipment, at cost 38,399 37,794
Less accumulated depreciation (23,704) (22,679)
------ ------
Total property, plant
& equipment, net 14,695 15,115
------ ------
Other Assets 3,722 3,274
------ -----
Total Assets $41,520 $45,495
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts payable $ 3,678 $ 4,734
Accrued compensation and other 3,993 4,376
Current portion of long-term debt 2,747 2,754
------ -----
Total current liabilities 10,418 11,864
------ ------
Long-term debt 9,279 12,833
Other long-term liabilities 1,796 1,723
------ ------
Total Liabilities $21,493 $26,420
------ ------
Shareholders' Equity:
Common stock, Par Value $1.00
Authorized 8,000,000 shares
Issued 5,057,554 and 5,051,444 shares 5,058 5,051
Capital in excess of par value 19,082 19,061
Accumulated deficit (4,105) (5,029)
Less: Treasury stock at cost
(699 Shares) (8) (8)
------ ------
Total Shareholders' Equity 20,027 19,075
------ ------
Total Liabilities and Shareholders' Equity $41,520 $45,495
====== ======
See accompanying Notes to Financial Statements.
<PAGE>
ACME ELECTRIC CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
13 Weeks 13 Weeks 26 Weeks 26 Weeks
Ended Ended Ended Ended
01/02/99 12/27/97 01/02/99 12/27/97
(000s) (000s) (000s) (000s)
NET SALES $18,803 $22,752 $41,181 $44,931
------ ------ ------ ------
COSTS AND EXPENSES:
Cost of Sales 13,694 16,570 30,430 33,425
Research and Engineering
Expenses 894 1,030 1,862 2,039
Selling and Administrative
Expenses 3,349 3,891 6,915 7,522
Interest Expense 208 426 460 831
------ ------ ------ ------
TOTAL COSTS AND EXPENSES 18,145 21,917 39,667 43,817
------ ------ ------ ------
INCOME BEFORE TAXES 658 835 1,514 1,114
INCOME TAX EXPENSE 256 337 590 446
------ ------ ------ ------
NET INCOME $ 402 $ 498 $ 924 $ 668
======= ======= ======= =======
Weighted Average Number of
Shares Outstanding Used
to Compute Net Income per
Common Share:
Basic 5,057 5,044 5,056 5,043
Incremental Shares from
assumed conversion of
stock options 31 15 22 15
------ ----- ----- -----
Diluted 5,088 5,059 5,078 5,058
===== ===== ===== =====
NET INCOME PER COMMON SHARE
(Basic & Diluted) $.08 $.10 $.18 $.13
=== === === ===
See accompanying Notes to Financial Statements
<PAGE>
ACME ELECTRIC CORPORATION
STATEMENT OF CASH FLOWS
(Unaudited)
26 Weeks Ended 26 Weeks Ended
January 2, 1999 December 27, 1997
(000's) (000's)
------- -------
Cash flows from operating activities:
Net Income $ 924 $ 668
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization 1,103 1,221
Loss on sale of fixed assets 35 --
Change in assets and liabilities:
Accounts receivable, net 1,748 154
Inventories, net 1,920 (116)
Deferred taxes and other assets (360) 48
Accounts payable (1,056) (1,409)
Accrued compensation and other (310) (188)
------ ------
Net cash provided from
operating activities 4,004 378
------ ------
Cash flows from investing activities:
Proceeds from disposition 4 --
Additions to property,
plant and equipment (722) (639)
------ ------
Net cash used in investing activities (718) (639)
------- ------
Cash flows from financing activities:
Decrease of borrowings, net (3,561) (81)
Proceeds from employee stock purchase
and stock options plans 28 30
------ ------
Net cash used in financing activities (3,533) (51)
------ ------
Net decrease in cash (247) (312)
Cash at beginning of period 629 398
------ ------
Cash at end of period $ 382 $ 86
======= ========
See accompanying Notes to Financial Statements.
<PAGE>
ACME ELECTRIC CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. The Balance Sheet of Acme Electric Corporation ("Registrant") at
January 2, 1999, the Statement of Operations for the thirteen- and
twenty-six-week periods ended January 2, 1999, and December 27, 1997,
and the Statement of Cash Flows for the twenty-six-week periods ended
January 2, 1999, and December 27, 1997, include all adjustments
necessary for a fair representation of the results for such periods.
The unaudited financial data included herein was compiled in
accordance with the "Summary of Significant Accounting Principles and
Practices" (Note 1 of Notes to Financial Statements) contained in the
Registrant's 1998 Annual Report filed on Form 10-K.
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income." The Statement establishes standards for
reporting and display of comprehensive income and its components in a
full set of general-purpose financial statements. The Statement is
effective for fiscal years beginning after December 15, 1997. The
Company had no other components of comprehensive income other than net
income for all periods presented.
Recently issued accounting standards not yet adopted.
The provisions of Statement of Financial Accounting Standards (SFAS)
No. 131, "Disclosures about Segments of an Enterprise and Related
Information," will become effective for the Company's fiscal year-end
1999. SFAS No. 131 requires that public companies report a measure of
segment profit or loss, certain specific revenue and expense items,
and segment assets. Generally, financial information is required to
be reported on that basis that is used internally for evaluating
segment performance and resource allocation. The Company will adopt
SFAS No. 131 for the fiscal year-end 1999 financial statements and is
expected to have expanded segment disclosures as a result of the
adoption.
In February 1998, the Financial Accounting Standards Board (FASB)
issued SFAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits." The Statement revises the employers'
disclosures about pension and other postretirement benefit plans. The
Company plans to make the revised disclosures for the fiscal year-end
1999 financial statements.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Statement establishes
accounting and reporting standards for derivative instruments. The
Company intends to adopt the Statement during the first quarter of
fiscal year 2000. The financial statement impact from the adoption is
not expected to be material.
2. Accounts receivables included in the Balance Sheet are as follows:
January 2, 1999 June 30, 1998
($000's) ($000's)
-------- --------
Billed $11,143 $12,921
Unbilled 26 97
------ ------
Subtotal 11,169 13,018
Less allowance for
doubtful accounts 365 466
$10,804 $12,552
====== ======
Unbilled receivables are comprised of revenue amounts on long-term
contracts, which have been earned but not yet billed. Management
anticipates that all unbilled receivables will be substantially
invoiced and collected within a twelve-month period.
3. Inventories included in the Balance Sheet are as follows:
January 2, 1999 June 30, 1998
($000's) ($000's)
-------- --------
Raw Material $5,249 $5,875
Work-In-Process 1,419 1,685
Finished Goods 3,373 4,401
------ -------
$10,041 $11,961
====== ======
Inventories are reported net of reserves for obsolescence of
$1,116,000 and $782,000 at January 2 and June 30, respectively.
<PAGE>
ACME ELECTRIC CORPORATION
Item 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following is Management's discussion and analysis of certain
significant factors which have affected the Registrant's financial
condition and results of operations during the periods included in the
accompanying financial statements.
A summary of the period-to-period change in the principal items
included in the balance sheets and which affect financial condition
follows:
Comparison of Balance Sheets at
January 2, 1999
and
June 30, 1998
Increase (Decrease)
(000's)
Current Assets $(4,003)
Property, Plant & Equipment Net (420)
Other Assets 448
-------
$(3,975)
======
Current Liabilities $ (1,446)
Long-Term Debt and
Other Liabilities (3,481)
Shareholders' Equity 952
-------
$(3,975)
=======
Current assets at January 2, 1999, decreased $4,003,000, or 14.8%,
from June 30, 1998, levels due primarily to the decrease in accounts
receivable of $1,748,000 and inventories of $1,920,000. The decrease in
receivables is reflective of a lower volume of product shipments incurred
in November and December compared with May and June. This is primarily due
to the winding down of the Cisco Systems program in the Company's
electronics business, coupled with some softening experienced in the
electrical transformer market. The inventory reduction is the result of
the loss of the Cisco program, with shipments being curtailed as of January
1999.
The net decrease in property, plant and equipment of $420,000, or
2.8%, primarily represents year-to-date expenditures in the amount of
$722,000, offset by depreciation of approximately $1,103,000 and net fixed
asset retirements of $39,000.
Current liabilities decreased $1,446,000, or 12.2%, primarily the
result of a decrease in accounts payable associated with lower inventories
and a reduction in accrued expenses as a result of performance incentive
payouts made against June 30, 1998, accruals.
Long-term debt and other liabilities decreased approximately
$3,481,000, or 23.9%. Debt reduction resulted from both positive cash flow
from operations, as well as reduced working capital (receivables and
inventory) requirements associated with the loss of the Cisco program.
The increase in shareholders' equity of $952,000 is primarily due the
profit year-to-date of $924,000.
The Company has financed its working capital requirements, as well as
year-to-date capital expenditures, through operations. The Company expects
that operating activities for the remainder of fiscal year 1999 will
provide adequate cash flow to support any working capital requirements, as
well as support, in part, the anticipated $1.5 million of capital
expenditures.
The Company has in place a credit agreement which provides for two
secured term loans, with current principal balances of $1,687,000 and
$1,033,000, and a secured revolving credit line, with a $21,000,000 limit
and a maturity date of December 31, 2000, against which the Company has
combined outstanding borrowings and letters of credit of approximately
$5,128,000 at January 2, 1999. Outstanding borrowings against the
revolving credit facility are limited by formula to specified amounts of
accounts receivable and inventory, reduced by outstanding term debt. As of
January 2, 1999, the Company's eligible (formula-based) unborrowed funds
available on the line of credit were approximately $8,667,000. Management
believes that this will provide adequate liquidity for the foreseeable
future.
Expectation for Year 2000 Compliance
As noted in the Company's June 30, 1998, 10-K filing, the business is
reliant on systems which utilize time-based mechanisms for asset and
information management, and management recognizes that such systems may
encounter problems affecting the capability thereof due to the year 2000
(Y2K) date change. The Company also has business relationships with
vendors, product purchasers, and financial institutions, among others, who
are reliant on such systems. It is possible that, given problems
encountered by the Company or these parties, the Company could send or
receive improper billings, produce products which are unaccounted for,
experience production shortages or delays, encounter collection delays, or
report inaccurate data, among other things.
The Company's Year 2000 Task Group, with member participation from all
operating units, as well as the corporate office, has completed its
assessment program, which included an inventory and identification of the
Company's mission critical information technology (IT) system, as well as
non-IT systems (i.e., equipment microcontrollers).
The Company has commenced, in a test environment, testing and
implementation of its mission critical systems, the AIX operating system,
and purchased Oracle software upgrades. Management anticipates that
testing will be completed by spring of 1999, with full implementation
accomplished by the fall of 1999.
The Company is in the process of assessing the year 2000 readiness on
the part of its supply base, as well as customers utilizing EDI avenues of
commerce. Both vendor and customer letters requesting responses and/or
certifications to their year 2000 readiness have been substantially
completed, including responses, with scheduled follow-up contact being
pursued with those identified to be mission critical.
The Company currently is in the process of developing a contingency
plan should aspects of the year 2000 project not be completed or vendors
and customers fail to insure their Y2K readiness. This process is
anticipated to be completed by early fall 1999.
Management anticipates that additional costs associated with the year
2000 project, aside from normal IT annual budget, should not exceed
$300,000.
Results of Operations:
Thirteen- and twenty-six-week periods ended January 2, 1999,
compared with the comparable thirteen- and twenty-six-week periods
ended December 27, 1997
-----------------------
Consolidated sales for the thirteen- and twenty-six-week periods ended
January 2, 1999, were $18,803,000 and $41,181,000, respectively, compared
with $22,752,000 and $44,931,000 for the comparable periods of a year
earlier. This is a decrease from the prior year quarter and year-to-date
of 17.4% and 8.3%, respectively. This decrease is primarily due to the
wind down of the Cisco Systems program, resulting in $3.1 million fewer
sales within the custom electronics business for the quarter. In addition,
a softening in certain segments of the capital goods market resulted in
slightly lower sales of transformer products sold through distribution for
the quarter. As a result of the void created by the loss of the Cisco
business, the Company has accordingly realigned the labor and overhead
costs in its electronics operations, while increasing efforts to fill the
void with new programs.
Cost of sales as a percentage of sales for the thirteen- and twenty-
six-week periods ended January 2, 1999, were 72.8% and 73.9%, respectively,
compared to 72.8% and 74.4% for the comparable periods of the prior year.
The net improvement in the year-to-date comparison reflects the
productivity improvements made in the Company's aerospace operation, as
well as the avoidance of one-time overhead costs like those incurred in the
prior year associated with the introduction of demand flow processes in the
Company's power distribution products business.
Research and engineering expenses as a percent of net sales for the
thirteen- and twenty-six-week periods ended January 2, 1999, were 4.8% and
4.5%, respectively, compared to 4.5% for the comparable periods of the
prior year. Actual costs were reduced by more than $150,000 (quarter and
year-to-date) associated with the electronics business overhead
realignment.
Selling and administrative costs as a percent of net sales were 17.8%
and 16.8% for the thirteen- and twenty-six-week periods ended January 2,
1999, compared to 17.1% and 16.7% for the comparable periods of the prior
year. While the comparisons on a percentage basis are relatively
consistent, actual selling and administrative costs year-to-date were down
by more than $600,000. The Company realized relative cost savings in its
management information systems area during the first half of F/Y '99 as a
result of the completion of the systems conversion (mainframe to
client/server) in the prior fiscal year, thus avoiding the "mainframe
system" costs experienced in fiscal 1998. In addition, the Company reduced
sales support costs in its power distribution products business.
In fiscal 1999 year-to-date, the Company has recorded in excess of
$400,000 more income (throughout the various expense categories, combined)
associated with its overfunded pension plans than in the prior year similar
period. This reflects the favorable returns earned in the pension plans,
which surpassed the actuarial assumptions.
Interest expense as a percent of net sales for the thirteen- and
twenty-six-week periods ended January 2, 1999, decreased to 1.1% from 1.8%
for the comparable periods of the prior year. Interest expense for the
thirteen- and twenty-six-week periods compared to the prior year same
periods decreased $218,000 and $371,000, respectively. The decrease in
interest expense is a result of lower debt levels, as the Company reduced
its outstanding debt $9,600,000 from December 1997 to December 1998.
Income taxes as a percent of income before taxes for the thirteen- and
twenty-six-week periods ended January 2, 1999, were 39%, compared with 40%
for the comparable periods of the prior year.
Backlog at January 2, 1999, was $13,798,000, compared with $18,264,000
at the end of the comparable period of the prior year. The lower backlog
at January 2, 1999, primarily reflects the decline in orders at the
Company's Electronics Division due to the loss of the Cisco Systems
program.
PART II
OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders
- ----------------------------------------------------------
At the Annual Meeting of Shareholders held on October 30, 1998, the
following directors were elected to serve until the next annual meeting and
until their successors have been elected and qualified:
Votes For Votes Withheld
Robert D. Batting 4,453,764 177,914
Robert T. Brady 4,456,552 175,126
Randall L. Clark 4,460,392 171,286
Terry M. Manon 4,454,336 177,342
Robert J. McKenna 4,462,098 169,580
In addition, proposal Nos. 2 and 3 were approved as follows:
Votes Votes Broker
For Against Abstentions Non-Votes
--- ------- ----------- ---------
Proposal 2
Approval of the proposed
1998 Stock Option Plan 2,584,456 537,811 51,656 1,441,780
Proposal 3
Ratification of the
reappointment of
PricewaterhouseCoopers
LLP as independent
auditors 4,536,990 40,668 54,015 1
Item 5. Other Information
- --------------------------
a. Exhibits
Employment Agreement
effective as of February 1, 1999,
between Robert J. McKenna
and Acme Electric Corporation. Exhibit 10.1
Employment Agreement
effective as of February 1, 1999,
between Daniel K. Corwin
and Acme Electric Corporation. Exhibit 10.2
Employment Agreement
effective as of February 1, 1999,
between Nicola T. Arena
and Acme Electric Corporation. Exhibit 10.3
Employment Agreement
effective as of February 1, 1999,
between John E. Gleason
and Acme Electric Corporation. Exhibit 10.4
Employment Agreement
effective as of February 1, 1999,
between Michael A. Simon
and Acme Electric Corporation. Exhibit 10.5
Interim Report dated
February 5, 1999, for the
quarter ended January 2,
1999. Exhibit 13.
Financial Data Schedule. Exhibit 27.
News Release of January 19,
1999, announcing the second
quarter results for fiscal year 1999. Exhibit 99.
b. There were no reports filed on Form 8-K during the thirteen-
week period ended January 2, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
ACME ELECTRIC CORPORATION
(Registrant)
Date: February 16, 1999 /s/
Robert J. McKenna
Chairman, President and
Chief Executive Officer
Date: February 16, 1999 /s/
Michael A. Simon
Corporate Controller and
Assistant Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> JAN-02-1999
<CASH> 382
<SECURITIES> 0
<RECEIVABLES> 11,169
<ALLOWANCES> 365
<INVENTORY> 10,041
<CURRENT-ASSETS> 23,103
<PP&E> 38,399
<DEPRECIATION> 23,704
<TOTAL-ASSETS> 41,520
<CURRENT-LIABILITIES> 10,418
<BONDS> 12,026
0
0
<COMMON> 24,140
<OTHER-SE> (4,113)
<TOTAL-LIABILITY-AND-EQUITY> 41,520
<SALES> 18,803
<TOTAL-REVENUES> 18,803
<CGS> 13,694
<TOTAL-COSTS> 17,937
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 208
<INCOME-PRETAX> 658
<INCOME-TAX> 256
<INCOME-CONTINUING> 402
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 402
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
To Our Shareholders:
Net income was $402,000 for the second quarter, compared to $498,000
for the same quarter last year. This drop off in earnings was due
largely to the rapid decline in our electronics business with Cisco
Systems and some general softening in certain segments of the capital
goods market impacting our sales of electrical transformers.
Several years ago, we introduced sealed FNC nickel cadmium rechargeable
batteries, the first entirely maintenance-free high performance battery
designed specifically for aerospace applications. Many of the early
users of this battery have found its performance and operational savings
to be even greater than first anticipated. In recent months, several
major OEMs have invited us to review new programs under their development
where this technology might be appropriate. It is likely, in the years
ahead, that the application base for our sealed FNC nickel cadmium
batteries will expand into new applications throughout the aerospace and
military markets.
Our Electronics Division continues to focus on developing new sales to
fill the void created by the loss of Cisco Systems. This spring, we look
forward to the startup of two new programs for McDATA and the production
ramp up of new business with Picker International.
The Power Distribution Products Division is making good progress
penetrating Latin American markets. The Division is expected to have a
new distribution warehouse and manufacturing facility in Monterrey,
Mexico, by year-end. Renewed focus on domestic OEMs is beginning to
yield results, with several new orders pending.
Our balance sheet is the strongest it has been in a decade, and,
operationally, in our 82-year history, we have never been more efficient.
Our focus throughout the organization is on new sales growth.
Robert J. McKenna
Chairman and CEO
February 5, 1999
<PAGE>
ACME ELECTRIC CORPORATION
East Aurora, New York
The following tables set forth certain unaudited financial information
for the twenty-six-week periods ended January 2, 1999, and December 27,
1997 (in thousands, except for per share data):
BALANCE SHEET
-------------
01/02/99 12/27/97 06/30/98
-------- -------- --------
Current Assets $23,103 $29,217 $27,106
Fixed Assets
and Other - Net 18,417 19,948 18,389
------ ------ ------
Total $41,520 $49,165 $45,495
====== ====== ======
Current Liabilities $10,423 $11,410 $11,864
Long-Term Debt 11,075 20,568 14,556
Shareholders' Equity 20,022 17,187 19,075
------ ------ ------
Total $41,520 $49,165 $45,495
====== ====== ======
INCOME STATEMENT
----------------
13 Weeks 13 Weeks 13 Weeks 13 Weeks 13 Weeks
Ended Ended Ended Ended Ended
01/02/99 12/27/98 01/02/99 12/27/97 06/30/98
-------- -------- -------- -------- --------
Net Sales $18,803 $22,752 $41,181 $44,931 $90,916
Net Income $402 $498 $924 $668 $2,529
Net Income Per
Common Share
(Basic and Diluted) $.08 $.10 $.18 $.13 $.50
Weighted Average Number
of Shares Outstanding
Used to Compute Income
Per Common Share:
Basic 5,057 5,044 5,056 5,043 5,046
Diluted 5,088 5,059 5,078 5,058 5,060
EXHIBIT 99
NEWS RELEASE
CONTACT:
Richard Becht
(716) 655-3800
FOR IMMEDIATE RELEASE
ACME ELECTRIC CORPORATION REPORTS SECOND QUARTER RESULTS
EAST AURORA, N.Y., January 19, 1999 -- Acme Electric Corporation
(NYSE: ACE) announced today that for the second quarter of its 1999 fiscal
year ended January 2, 1999, net sales were $18,803,000, compared to
$22,752,000 for the comparable period of the previous
year, with net income of $402,000, or $.08 per share, compared to net
income of $498,000, or $.10 per share, the previous year. Net sales for
the twenty-six-week period ended January 2, 1999, were $41,181,000,
compared with $44,931,000 for the comparable period of the previous year.
Net income for the twenty-six-week period ended January 2, 1999, was
$924,000, or $.18 per share, compared with a net income of $668,000, or
$.13 per share, for the comparable period of the previous year.
Robert J. McKenna, Chairman and CEO, stated that, "The decline in
sales is primarily attributable to the loss of a major customer in our
electronics business, occurring sooner than expected, and softness in
certain segments of the capital goods market that has impacted our
electrical power distribution products sales volume. On a more optimistic
note, our quoting activity and new product design programs are very active.
Several new programs with both existing and new customers are presently in
the design stage and should yield solid sales and earnings with the next
year."
Founded in 1917, Acme Electric Corporation is a leader in the design
and manufacture of power conversion equipment for electronic and electrical
systems for industrial, commercial, residential, and military and aerospace
applications. Corporate headquarters are in East Aurora, N.Y., with
operations in Cuba, N.Y., Lumberton, N.C., and Tempe, Ariz.
# # # #
<PAGE>
ACME ELECTRIC CORPORATION
Comparative Analysis
(in thousands, except per share data)
13 Weeks Ended 26 Weeks Ended
-------------- --------------
01/02/99 12/27/97 01/02/99 12/27/97
-------- -------- -------- --------
Net Sales $18,803 $22,752 $41,181 $44,931
Net Income $402 $498 $924 $668
Net Income Per Common Share
(Basic and Diluted) $.08 $.10 $.18 $.13
Weighted Average Number of Shares
Outstanding Used to Compute
Income Per Common Share:
Basic 5,057 5,044 5,056 5,043
Diluted 5,088 5,059 5,078 5,058
Company news is available by FAX: dial 1-800-758-5804, and input
extension 006675; or visit our web site at acmeelec.com
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of February 1999 by and between Acme
Electric Corporation, a New York corporation having an office at 400 Quaker
Road, East Aurora, New York, (the "Company") and Mr. Robert J. McKenna,
residing at 5 Hummingbird Court, Orchard Park, New York, ("Mr. McKenna").
W I T N E S S E T H:
WHEREAS, Mr. McKenna is Chief Executive Officer ("CEO"), Chairman and
President of the Company; and
WHEREAS, the Company believes that it is in its best interest to
assure the continued service of Mr. McKenna as its CEO, Chairman and
President on the terms and conditions hereinafter set forth; and
WHEREAS, Mr. McKenna is desirous of receiving assurances that, should
a "change in control" as hereinafter defined take place at the Company, he
will be provided with security as to his position, compensation and
benefits.
NOW, THEREFORE, in consideration of the premises and mutual agreement
hereinafter contained, the parties hereto agree as follows:
1. The Company hereby employs Mr. McKenna and Mr. McKenna hereby
accepts employment with the Company as its CEO, Chairman and President upon
the terms and conditions herein contained.
2A. The initial Term shall be for a period commencing on the date
hereof and terminating three years from the date of commencement or three
years from its most recent extension date, whichever is later.
At the end of each month during the Term, the Term shall be
automatically continued and extended for one additional month, unless on or
before fifteen days prior to the end of any month during the Term, the
Company shall give to Mr. McKenna or Mr. McKenna shall give to the Company
a notice not to extend. Then, in such event, the Term as theretofore
automatically extended shall be deemed further extended for one additional
month, and thereafter there shall be no further automatic extensions. (As
an example, should the Company or Mr. McKenna give to the other party a
written notice not to extend on November 15, 1999, the Agreement would be
deemed extended to, and would expire on, December 31, 2002.) "Term" as
used in this Agreement shall be deemed to mean the period of employment
from the date hereof through February 1, 2002, or as automatically extended
pursuant to this Paragraph 2A.
2B. Should the Company breach this Agreement pursuant to the
provisions of Paragraphs 8A, 8B, 8C and 9 herein, Mr. McKenna shall be
entitled to the following:
a. Payments in an amount equal to the base salary payable each
year of the then remaining Term of the Agreement, with such base
salary to be in an amount equal to Mr. McKenna's base salary in effect
prior to such breach, plus bonus each year of the remaining Term of
the Agreement. The bonus amount each year will be equal to the
average of Mr. McKenna's greatest two out of the previous three years'
bonuses, or 30% of base salary, whichever is greater.
b. Company paid full medical, dental and disability insurance
benefits and life insurance benefits comparable to those enjoyed prior
to such breach, which shall extend for the duration of Mr. McKenna's
life or until he accepts other full-time employment.
c. The continuation over the then remaining Term of this
Agreement, in such amounts and in a manner consistent with that
provided immediately prior to such breach, of: contributions in Mr.
McKenna's behalf based on his base salary to the Company's Pension
Plan for Salaried Employees and to the Supplemental Executive
Retirement Plan; Mr. McKenna's Company furnished automobile; and dues
and fees for Mr. McKenna's club memberships.
d. Payments made pursuant to this Paragraph 2B shall be made
monthly from the date the Company breached this Agreement throughout
the then remaining Term of the Agreement, or at Mr. McKenna's option
in a lump sum within thirty (30) days of notification of such breach.
Such lump sum shall be an amount equal to the discounted present value
of the payments which were to be paid over the Term specified herein
discounted at a rate of 5% per annum.
2C. "Change in Control" as used in this Agreement shall mean any one
of the following:
a. An acquisition of 35% or more of the beneficial ownership,
directly or indirectly, of the Company's then outstanding stock, or
merger or consolidation by or with another person, entity or group;
b. A tender offer or tender offers for the Company's stock in
which 35% or more of the then outstanding stock of the Company is
tendered or purchased by a person, single entity or affiliated group;
c. A reclassification of securities or recapitalization of the
Company which, directly or indirectly, disproportionately increases or
decreases the outstanding shares of any class of equity securities of
the Company by 35% or more;
d. A sale, lease, exchange, mortgage, pledge, transfer or other
disposition of all or substantially all the assets of the Company
approved by the Board of Directors to which Mr. McKenna dissented;
e. A change in control shall be deemed to have occurred if at
any time less than 51% of the members of the Board of Directors shall
be persons who were either nominated for election by the Board of
Directors or were elected by the Board of Directors.
3. Except as otherwise herein provided during the Term of the
Agreement, the Company shall employ Mr. McKenna as its CEO, Chairman and
President and he shall serve the Company in such capacity, performing the
normal duties of a CEO, Chairman and President of a corporation in the
Company's business, subject at all times to the direction and control of
the Board of Directors of the Company, shall devote his time, attention,
skill and energy to the business, welfare and affairs of the Company and
shall use his best efforts to promote the interests of the Company, it
being understood that the conduct of such duties does not require his
attendance at the offices of the Company during any particular fixed
periods. Mr. McKenna hereby consents to continue to serve as a Director of
the Company or any subsidiary thereof without additional compensation.
4A. The Company shall pay and Mr. McKenna shall accept as
compensation for all services to be rendered hereunder and during the Term
a base salary determined by the Board of Directors of the Company pursuant
to its normal procedure for setting yearly salaries for officers of the
Company (currently, $287,000 per annum). Such payments hereunder shall be
payable in accordance with the prevailing salary payroll practices of the
Company and subject to such deductions as are agreed to by Mr. McKenna.
Nothing contained in this Agreement shall be deemed to prevent the Company
during the Term hereof from giving bonuses or other additional
consideration to Mr. McKenna from time to time as determined by the Board
of Directors or, except as otherwise specifically provided herein, prevent
Mr. McKenna from receiving benefits in accordance with any benefit plan or
program made available by the Company to its officers, salaried employees
or directors.
4B. The Company shall reimburse Mr. McKenna for all expenses
reasonably incurred by him in connection with his performance of services
to the Company, including entertainment and travel. Mr. McKenna shall be
entitled to receive or participate in all other fringe benefits, such as
medical and hospital plans, profit-sharing plans and pension plans, stock
options under the then existing corporate stock option plan, and use and
maintenance of an automobile of a type and in a manner consistent with the
practices prevailing at the time of the execution of this Agreement.
4C. Notwithstanding anything herein to the contrary, the Company
shall not be obligated to pay any portion of any amount otherwise payable
to Mr. McKenna pursuant to this Agreement if the Company could not
reasonably deduct such portion in accordance with the Internal Revenue Code
then in effect.
5A. Mr. McKenna acknowledges that during the course of his employment
hereunder he will acquire, possess and become exposed to confidential and
proprietary information and materials of the Company. Accordingly, during
his employment hereunder and for a period of eighteen (18) months
thereafter, he shall not, for any reason whatever, except in the regular
authorized course of the Company's business under appropriate secrecy
provisions, directly or indirectly, use or exploit or disclose or divulge
to anyone (who is not authorized to receive the same), without the prior
written permission of the Company, any proprietary information, including,
but not limited to, trade secrets, know-how, data, materials or other
knowledge relating to or pertaining to the business of the Company, unless
the same (i) has been published and/or has become a part of the public
domain other than by acts of omission by Mr. McKenna; (ii) has been
lawfully furnished or made known to Mr. McKenna by a third party without
restriction on disclosure or use; and (iii) was in Mr. McKenna's possession
at the time he first became associated with the Company and was not
acquired by Mr. McKenna either directly or indirectly from the Company.
5B. All documents, records, prototypes or other tangible embodiments
or evidence of the discoveries, trade secrets, information, know-how, data,
materials or other knowledge previously referred to, which may at any time
be acquired by or come into the possession of Mr. McKenna during his
employment hereunder (except materials excluded in Subparagraph A hereof),
are the sole and exclusive property of the Company and must be surrendered
to the Company, without demand therefor, upon termination of Mr. McKenna's
employment hereunder, or upon the request by the Company at any other time;
and, in addition, prior to such termination of employment or upon the
reasonable request by the Company at any other time, Mr. McKenna will
prepare materials to accurately and adequately describe, set forth or
embody any of the foregoing and deliver the same to the Company in order to
accomplish or complete the transfer of any and all of the foregoing to the
Company and shall be reimbursed by the Company for all of his reasonable
out-of-pocket expenses in connection therewith.
5C. Mr. McKenna agrees to execute all documents and to take all such
other action as the Company may reasonably require (being reimbursed for
all of his reasonable out-of-pocket expenses in this connection) in order
to assign to the Company any and all rights to any materials prepared by
him during and in connection with his employment hereunder.
6A. Mr. McKenna agrees that, during his employment hereunder for a
period of eighteen (18) months after termination of his employment
hereunder for whatever reason (except in the event such termination is
caused by (a) a material breach of this Agreement by the Company, or (b)
the Company's bankruptcy (as defined in Paragraph 14 hereof)), he shall not
(without the prior written consent of the Company) (i) solicit as a client
or customer in competition with the Company any persons or entities which
were, during his employment hereunder, clients or customers of the Company,
(ii) enter into any business arrangements with any of the foregoing which
could be reasonably deemed to be materially competitive with or materially
injurious to any business in which the Company is engaged at the time of
such termination, or (iii) solicit, or be instrumental in any way in
causing, any other person to leave the employ of the Company. Mr. McKenna
further agrees that he shall not (without the prior written consent of the
Company) for a period of eighteen (18) months after the termination of his
employment hereunder for any reason (except in the event the termination is
caused by a breach of this Agreement by the Company), directly or
indirectly, individually or as a director, partner, employee, officer or
agent, engage in any employment, performance of services or other activity
on behalf of any company if such employment, performance of services or
other activity can be reasonably deemed to be materially competitive with
or materially injurious to any business in which the Company is engaged at
the time of such termination.
6B. For purposes only of determining whether services by Mr. McKenna
during the aforesaid eighteen (18) month period after his termination of
employment hereunder shall be "materially competitive with or materially
injurious to the Company" within the meaning of this paragraph, either
party may initiate arbitration proceedings to make such determination
pursuant to Paragraph 13 hereof.
6C. If Mr. McKenna commits a material breach of any of the provisions
of Paragraph 5A, 5B, 5C or 6A, the Company shall have the right and remedy
to have such provisions specifically enforced by any court having equity
jurisdiction, since any such breach or threatened breach will cause
irreparable injury to the Company and money damages will not provide an
adequate remedy to the Company. The initiation of, or participation in,
any such proceeding shall not constitute a waiver of the arbitration
provisions of Paragraph 10.
7. During the Term, Mr. McKenna will not directly or indirectly
engage in the business of, or own or control any interest in (except as a
passive investor owning less than ten percent (10%) of the equity
securities of a publicly-owned company), or act as a director, officer or
employee of, or consultant to, any individual, partnership, joint venture,
corporation or other business entity directly or indirectly engaged
anywhere in the United States in any business competing with the business
carried on by the Company or any of its subsidiaries.
8A. It is specifically understood and agreed that the Company may
terminate this Agreement and its obligations to Mr. McKenna hereunder prior
to a change in control or upon voluntary retirement by Mr. McKenna from
active employment with the Company. Notwithstanding the foregoing, at any
time during the Term of this Agreement, after a change of control has taken
place, any termination or notice of termination shall be deemed a breach of
this Agreement and a notice not to extend, and the provisions of Paragraph
2B above shall apply so as to have the effect of fixing the Term as
provided herein and terminating Mr. McKenna's employment with the Company.
8B. At any time during the Term of this Agreement, after a change in
control has taken place, should the Company reduce the compensation or
benefits then being paid to Mr. McKenna, it shall be deemed a breach of
this Agreement and a notice not to extend, and the provisions of Paragraph
2B above shall apply so as to have the effect of fixing the Term as
provided herein and terminating Mr. McKenna's employment with the Company.
8C. At any time during the Term of this Agreement, after a change in
control has taken place, should the Company change Mr. McKenna's position
or duties without his written consent, it shall be deemed a breach of this
Agreement and a notice not to extend, and the provisions of Paragraph 2B
above shall apply so as to have the effect of fixing the Term as provided
herein and terminating Mr. McKenna's employment with the Company.
9. In the event that during Mr. McKenna's lifetime and during the
Term of this Agreement, after a change in control has taken place, the
Company defaults as to any payment under this Agreement or fails to make
any payments provided for in this Agreement and fails to cure such default
or make such payment within ten (10) days after written notice thereof, or
written demand therefor, or in the event that the Company terminates this
Agreement for cause and it is ultimately determined that such termination
was wrongful, Mr. McKenna may elect to treat such default or wrongful
termination as a breach of this Agreement and shall he entitled to recover
all of his expenses, including reasonable attorneys' fees, in prosecuting
or defending any actions or proceedings arising out of, or in any other way
relating to, the matters referred to in this paragraph, and the provisions
of Paragraph 2B of this Agreement shall apply.
10. Any controversy, claim or dispute arising out of or relating to
this Agreement, including without limitation, any claim for breach of this
Agreement, shall be settled by arbitration in accordance with the Rules of
the American Arbitration Association (AAA) obtaining at the time of such
proceeding, except that the authority of the arbitrators shall be limited
to the interpretation and enforcement of the terms and conditions of this
Agreement and the arbitrators shall set forth in writing the reasons for
their decisions. Judgment upon any award rendered by the arbitrators
pursuant hereto may be entered in any court having jurisdiction thereof and
thereafter enforced. Either party shall have the right to initiate
arbitration proceedings. Any arbitration shall take place under the
auspices of the AAA in Buffalo, New York. There shall be three
arbitrators. Each party shall appoint one arbitrator. If either party
fails to appoint an arbitrator within five (5) days from the date upon
which the notice of the initiating party of its intention to arbitrate is
received by the other party to such proceedings, the AAA shall make the
appointment for that party. The two arbitrators appointed in the manner
provided for above shall appoint a third arbitrator, mutually acceptable to
them. If the two arbitrators first appointed cannot, for any reason, agree
upon a third arbitrator, or an acceptable person is unable to act, the AAA
shall appoint the third arbitrator in accordance with its rules.
11. Mr. McKenna may terminate this Agreement prior to the date of
expiration of the Term hereinabove set forth by written notice to the
Company if the Company shall file a petition in bankruptcy, make a
voluntary assignment for the benefit of creditors, file a petition or an
answer seeking an arrangement with creditors or take advantage of any
insolvency law, or if the Company applies for or consents to the
appointment of a receiver or trustee of all or a substantial part of its
assets, or an order, judgment or decree shall be entered in any court of
competent jurisdiction appointing a receiver of all or a substantial part
of its assets, and such order, judgment or decree shall continue unstayed
and in effect for any consecutive period of ninety (90) days.
12. This Agreement and all rights hereunder are personal to Mr.
McKenna and shall not be assignable; provided, however, that all of Mr.
McKenna's rights under the Agreement shall inure to the benefit of his
heirs, distributees, personal representatives or designees or other legal
representatives, as the case may be. Any person, firm or corporation
succeeding to the business of the Company by merger, purchase,
consolidation or otherwise, shall assume by contract or operations of law
the obligations of the Company hereunder; provided, however, that the
Company shall, notwithstanding such assumption or assignment, remain liable
and responsible for fulfilling the obligations of the Company under this
Agreement.
This Agreement supersedes and replaces any and all present
written or oral agreements of employment between the parties hereto, and
all such agreements are hereby deemed canceled, revoked and of no further
force or effect; provided, however, that in the event that Mr. McKenna's
employment is terminated prior to a change in control or under
circumstances not involving a breach of this Agreement, Mr. McKenna shall
be entitled to an amount equal to six (6) months base salary paid in a lump
sum in accordance with the letter of August 12, 1992 from the Company to
Mr. McKenna.
13. Without in any way implying that any provisions hereof is invalid
or unenforceable, the validity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other
provision.
14. This Agreement constitutes the whole agreement between the
parties hereto, and there are no terms other than those stated herein. No
variation hereof shall be deemed valid unless in writing and signed by the
parties hereto, and no discharge of the terms hereof shall be deemed valid
unless by full performance by the parties hereto or by a writing signed by
the parties hereto. No waiver by either party of any provisions or
condition of this Agreement to be performed by them should be deemed a
waiver of any other provisions of this Agreement.
15. Any notice, statement, report, request or demand required or
permitted to be given by this Agreement shall be in writing, and shall be
sufficient if addressed and sent by certified mail, return receipt
requested, to the parties at the addresses set forth above, or at such
other place that either party may designate by notice to the other and
shall be deemed given when so mailed.
16. This Agreement has been made in, and shall be interpreted
according to the laws of, the State of New York. The parties hereto submit
to the jurisdiction of the courts of the New York Supreme Court, County of
Erie, for the purpose of any actions or proceedings which may be required
to enforce the provisions of this Agreement or an award made in any
arbitration proceeding initiated hereunder.
IN WITNESS WHEREOF, the parties have hereunto set their respective
hands and seals causing these presents to be executed as of the day and
year first above written.
Witnessed:
Cora M. Martin /s/
Robert J. McKenna
Witnessed: ACME ELECTRIC CORPORATION
Sonia M. Dolegala By: /s/
John B. Drenning
Secretary
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of February 1999 by and between Acme
Electric Corporation, a New York corporation having an office at 400 Quaker
Road, East Aurora, New York, (the "Company") and Mr. Daniel K. Corwin,
residing at 105 Curley Drive, Orchard Park, New York, ("Executive").
W I T N E S S E T H:
WHEREAS, Executive is Vice President and General Manager of the
Company's Electronics Division; and
WHEREAS, the Company believes that it is in its best interest to
assure the continued service of Executive on the terms and conditions
hereinafter set forth; and
WHEREAS, Executive is desirous of receiving assurances that, should a
"change in control" as hereinafter defined take place at the Company, he
will be provided with security as to his position, compensation and
benefits.
NOW, THEREFORE, in consideration of the premises and mutual agreement
hereinafter contained, the parties hereto agree as follows:
1. The Company hereby employs Executive and Executive hereby accepts
employment with the Company as Vice President and General Manager of the
Electronics Division upon the terms and conditions herein contained.
2A. The initial Term shall be for a period commencing on the date
hereof and terminating two years from the date of commencement or two years
from its most recent extension date, whichever is later.
At the end of each month during the Term, the Term shall be
automatically continued and extended for one additional month, unless on or
before fifteen days prior to the end of any month during the Term, the
Company shall give to Executive or Executive shall give to the Company a
notice not to extend. Then, in such event, the Term as theretofore
automatically extended shall be deemed further extended for one additional
month, and thereafter there shall be no further automatic extensions. (As
an example, should the Company or Executive give to the other party a
written notice not to extend on November 15, 1999, the Agreement would be
deemed extended to, and would expire on, December 31, 2001.) "Term" as
used in this Agreement shall be deemed to mean the period of employment
from the date hereof through February 1, 2001, or as automatically extended
pursuant to this Paragraph 2A.
2B. Should the Company breach this Agreement pursuant to the
provisions of Paragraphs 8A, 8B, 8C and 9 herein, Executive shall be
entitled to the following:
a. Payments in an amount equal to the base salary payable each
year of the then remaining Term of the Agreement, with such base
salary to be in an amount equal to Executive's base salary in effect
prior to such breach, plus bonus each year of the remaining Term of
the Agreement. The bonus amount each year will be equal to the
average of Executive's greatest two out of the previous three years'
bonuses, or 20% of base salary, whichever is greater.
b. Company paid full medical, dental and disability insurance
benefits and life insurance benefits comparable to those enjoyed prior
to such breach, which shall extend for the duration of Executive's
life or until he accepts other full-time employment.
c. The continuation over the then remaining Term of this
Agreement, in such amounts and in a manner consistent with that
provided immediately prior to such breach, of contributions in
Executive's behalf based on his base salary to the Company's Pension
Plan for Salaried Employees and to the Supplemental Executive
Retirement Plan.
d. Payments made pursuant to this Paragraph 2B shall be made
monthly from the date the Company breached this Agreement throughout
the then remaining Term of the Agreement, or at Executive's option in
a lump sum within thirty (30) days of notification of such breach.
Such lump sum shall be an amount equal to the discounted present value
of the payments which were to be paid over the Term specified herein
discounted at a rate of 5% per annum.
2C. "Change in Control" as used in this Agreement shall mean any one
of the following:
a. An acquisition of 35% or more of the beneficial ownership,
directly or indirectly, of the Company's then outstanding stock, or
merger or consolidation by or with another person, entity or group;
b. A tender offer or tender offers for the Company's stock in
which 35% or more of the then outstanding stock of the Company is
tendered or purchased by a person, single entity or affiliated group;
c. A reclassification of securities or recapitalization of the
Company which, directly or indirectly, disproportionately increases or
decreases the outstanding shares of any class of equity securities of
the Company by 35% or more;
d. A sale, lease, exchange, mortgage, pledge, transfer or other
disposition of all or substantially all the assets of the Company;
e. A change in control shall be deemed to have occurred if at
any time less than 51% of the members of the Board of Directors shall
be persons who were either nominated for election by the Board of
Directors or were elected by the Board of Directors.
3. Except as otherwise herein provided during the Term of the
Agreement, the Company shall employ Executive as Vice President and Manager
of its Electronic Division and he shall serve the Company in such
capacities, performing the normal duties of those positions in a
corporation in the Company's business, subject at all times to the
direction and control of the Board of Directors of the Company, shall
devote his time, attention, skill and energy to the business, welfare and
affairs of the Company and shall use his best efforts to promote the
interests of the Company, it being understood that the conduct of such
duties does not require his attendance at the offices of the Company during
any particular fixed periods.
4A. The Company shall pay and Executive shall accept as compensation
for all services to be rendered hereunder and during the Term a base salary
determined by the Board of Directors of the Company pursuant to its normal
procedure for setting yearly salaries for officers of the Company
(currently, $160,000 per annum). Such payments hereunder shall be payable
in accordance with the prevailing salary payroll practices of the Company
and subject to such deductions as are agreed to by Executive. Nothing
contained in this Agreement shall be deemed to prevent the Company during
the Term hereof from giving bonuses or other additional consideration to
Executive from time to time as determined by the Board of Directors or,
except as otherwise specifically provided herein, prevent Executive from
receiving benefits in accordance with any benefit plan or program made
available by the Company to its salaried employees.
4B. The Company shall reimburse Executive for all expenses reasonably
incurred by him in connection with his performance of services to the
Company, including entertainment and travel. Executive shall be entitled
to receive or participate in all other fringe benefits, such as medical and
hospital plans, management incentive plan and pension plan, stock options
under the then existing corporate stock option plan, and use and
maintenance of an automobile of a type and in a manner consistent with the
practices prevailing at the time of the execution of this Agreement.
4C. Notwithstanding anything herein to the contrary, the Company
shall not be obligated to pay any portion of any amount otherwise payable
to Executive pursuant to this Agreement if the Company could not reasonably
deduct such portion in accordance with the Internal Revenue Code then in
effect.
5A. Executive acknowledges that during the course of his employment
hereunder he will acquire, possess and become exposed to confidential and
proprietary information and materials of the Company. Accordingly, during
his employment hereunder and for a period of eighteen (18) months
thereafter, he shall not, for any reason whatever, except in the regular
authorized course of the Company's business under appropriate secrecy
provisions, directly or indirectly, use or exploit or disclose or divulge
to anyone (who is not authorized to receive the same), without the prior
written permission of the Company, any proprietary information, including,
but not limited to, trade secrets, know-how, data, materials or other
knowledge relating to or pertaining to the business of the Company, unless
the same (i) has been published and/or has become a part of the public
domain other than by acts of omission by Executive; (ii) has been lawfully
furnished or made known to Executive by a third party without restriction
on disclosure or use; and (iii) was in Executive's possession at the time
he first became associated with the Company and was not acquired by
Executive either directly or indirectly from the Company.
5B. All documents, records, prototypes or other tangible embodiments
or evidence of the discoveries, trade secrets, information, know-how, data,
materials or other knowledge previously referred to, which may at any time
be acquired by or come into the possession of Executive during his
employment hereunder (except materials excluded in Subparagraph A hereof),
are the sole and exclusive property of the Company and must be surrendered
to the Company, without demand therefor, upon termination of Executive's
employment hereunder, or upon the request by the Company at any other time;
and, in addition, prior to such termination of employment or upon the
reasonable request by the Company at any other time, Executive will prepare
materials to accurately and adequately describe, set forth or embody any of
the foregoing and deliver the same to the Company in order to accomplish or
complete the transfer of any and all of the foregoing to the Company and
shall be reimbursed by the Company for all of his reasonable out-of-pocket
expenses in connection therewith.
5C. Executive agrees to execute all documents and to take all such
other action as the Company may reasonably require (being reimbursed for
all of his reasonable out-of-pocket expenses in this connection) in order
to assign to the Company any and all rights to any materials prepared by
him during and in connection with his employment hereunder.
6A. Executive agrees that, during his employment hereunder for a
period of eighteen (18) months after termination of his employment
hereunder for whatever reason (except in the event such termination is
caused by (a) a material breach of this Agreement by the Company, or (b)
the Company's bankruptcy (as defined in Paragraph 14 hereof)), he shall not
(without the prior written consent of the Company) (i) solicit as a client
or customer in competition with the Company any persons or entities which
were, during his employment hereunder, clients or customers of the Company,
(ii) enter into any business arrangements with any of the foregoing which
could be reasonably deemed to be materially competitive with or materially
injurious to any business in which the Company is engaged at the time of
such termination, or (iii) solicit, or be instrumental in any way in
causing, any other person to leave the employ of the Company. Executive
further agrees that he shall not (without the prior written consent of the
Company) for a period of eighteen (18) months after the termination of his
employment hereunder for any reason (except in the event the termination is
caused by a breach of this Agreement by the Company), directly or
indirectly, individually or as a director, partner, employee, officer or
agent, engage in any employment, performance of services or other activity
on behalf of any company if such employment, performance of services or
other activity can be reasonably deemed to be materially competitive with
or materially injurious to any business in which the Company is engaged at
the time of such termination.
6B. For purposes only of determining whether services by Executive
during the aforesaid eighteen (18) month period after his termination of
employment hereunder shall be "materially competitive with or materially
injurious to the Company" within the meaning of this paragraph, either
party may initiate arbitration proceedings to make such determination
pursuant to Paragraph 13 hereof.
6C. If Executive commits a material breach of any of the provisions
of Paragraph 5A, 5B, 5C or 6A, the Company shall have the right and remedy
to have such provisions specifically enforced by any court having equity
jurisdiction, since any such breach or threatened breach will cause
irreparable injury to the Company and money damages will not provide an
adequate remedy to the Company. The initiation of, or participation in,
any such proceeding shall not constitute a waiver of the arbitration
provisions of Paragraph 10.
7. During the Term, Executive will not directly or indirectly engage
in the business of, or own or control any interest in (except as a passive
investor owning less than ten percent (10%) of the equity securities of a
publicly-owned company), or act as a director, officer or employee of, or
consultant to, any individual, partnership, joint venture, corporation or
other business entity directly or indirectly engaged anywhere in the United
States in any business competing with the business carried on by the
Company or any of its subsidiaries.
8A. It is specifically understood and agreed that the Company may
terminate this Agreement and its obligations to Executive hereunder prior
to a change in control, and that, further, this Agreement and its
obligations to Executive hereunder shall terminate in the event that prior
to a change in control there is a change or re-assignment of Executive's
position or the voluntary retirement by Executive from active employment
with the Company. Notwithstanding the foregoing, at any time during the
Term of this Agreement, after a change of control has taken place, any
termination or notice of termination shall be deemed a breach of this
Agreement and a notice not to extend, and the provisions of Paragraph 2B
above shall apply so as to have the effect of fixing the Term as provided
herein and terminating Executive's employment with the Company.
8B. At any time during the Term of this Agreement, after a change in
control has taken place, should the Company reduce the compensation or
benefits then being paid to Executive, it shall be deemed a breach of this
Agreement and a notice not to extend, and the provisions of Paragraph 2B
above shall apply so as to have the effect of fixing the Term as provided
herein and terminating Executive's employment with the Company.
8C. At any time during the Term of this Agreement, after a change in
control has taken place, should the Company change Executive's position or
duties without his written consent, it shall be deemed a breach of this
Agreement and a notice not to extend, and the provisions of Paragraph 2B
above shall apply so as to have the effect of fixing the Term as provided
herein and terminating Executive's employment with the Company.
9. In the event that during Executive's lifetime and during the Term
of this Agreement, after a change in control has taken place, the Company
defaults as to any payment under this Agreement or fails to make any
payments provided for in this Agreement and fails to cure such default or
make such payment within ten (10) days after written notice thereof, or
written demand therefor, or in the event that the Company terminates this
Agreement for cause and it is ultimately determined that such termination
was wrongful, Executive may elect to treat such default or wrongful
termination as a breach of this Agreement and shall he entitled to recover
all of his expenses, including reasonable attorneys' fees, in prosecuting
or defending any actions or proceedings arising out of, or in any other way
relating to, the matters referred to in this paragraph, and the provisions
of Paragraph 2B of this Agreement shall apply.
10. Any controversy, claim or dispute arising out of or relating to
this Agreement, including without limitation, any claim for breach of this
Agreement, shall be settled by arbitration in accordance with the Rules of
the American Arbitration Association (AAA) obtaining at the time of such
proceeding, except that the authority of the arbitrators shall be limited
to the interpretation and enforcement of the terms and conditions of this
Agreement and the arbitrators shall set forth in writing the reasons for
their decisions. Judgment upon any award rendered by the arbitrators
pursuant hereto may be entered in any court having jurisdiction thereof and
thereafter enforced. Either party shall have the right to initiate
arbitration proceedings. Any arbitration shall take place under the
auspices of the AAA in Buffalo, New York. There shall be three
arbitrators. Each party shall appoint one arbitrator. If either party
fails to appoint an arbitrator within five (5) days from the date upon
which the notice of the initiating party of its intention to arbitrate is
received by the other party to such proceedings, the AAA shall make the
appointment for that party. The two arbitrators appointed in the manner
provided for above shall appoint a third arbitrator, mutually acceptable to
them. If the two arbitrators first appointed cannot, for any reason, agree
upon a third arbitrator, or an acceptable person is unable to act, the AAA
shall appoint the third arbitrator in accordance with its rules.
11. Executive may terminate this Agreement prior to the date of
expiration of the Term hereinabove set forth by written notice to the
Company if the Company shall file a petition in bankruptcy, make a
voluntary assignment for the benefit of creditors, file a petition or an
answer seeking an arrangement with creditors or take advantage of any
insolvency law, or if the Company applies for or consents to the
appointment of a receiver or trustee of all or a substantial part of its
assets, or an order, judgment or decree shall be entered in any court of
competent jurisdiction appointing a receiver of all or a substantial part
of its assets, and such order, judgment or decree shall continue unstayed
and in effect for any consecutive period of ninety (90) days.
12. This Agreement and all rights hereunder are personal to Executive
and shall not be assignable; provided, however, that all of Executive's
rights under the Agreement shall inure to the benefit of his heirs,
distributees, personal representatives or designees or other legal
representatives, as the case may be. Any person, firm or corporation
succeeding to the business of the Company by merger, purchase,
consolidation or otherwise, shall assume by contract or operations of law
the obligations of the Company hereunder; provided, however, that the
Company shall, notwithstanding such assumption or assignment, remain liable
and responsible for fulfilling the obligations of the Company under this
Agreement.
This Agreement supersedes and replaces any and all present
written or oral agreements of employment between the parties hereto, and
all such agreements are hereby deemed canceled, revoked and of no further
force or effect.
13. Without in any way implying that any provisions hereof is invalid
or unenforceable, the validity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other
provision.
14. This Agreement constitutes the whole agreement between the
parties hereto, and there are no terms other than those stated herein. No
variation hereof shall be deemed valid unless in writing and signed by the
parties hereto, and no discharge of the terms hereof shall be deemed valid
unless by full performance by the parties hereto or by a writing signed by
the parties hereto. No waiver by either party of any provisions or
condition of this Agreement to be performed by them should be deemed a
waiver of any other provisions of this Agreement.
15. Any notice, statement, report, request or demand required or
permitted to be given by this Agreement shall be in writing, and shall be
sufficient if addressed and sent by certified mail, return receipt
requested, to the parties at the addresses set forth above, or at such
other place that either party may designate by notice to the other and
shall be deemed given when so mailed.
16. This Agreement has been made in, and shall be interpreted
according to the laws of, the State of New York. The parties hereto submit
to the jurisdiction of the courts of the New York Supreme Court, County of
Erie, for the purpose of any actions or proceedings which may be required
to enforce the provisions of this Agreement or an award made in any
arbitration proceeding initiated hereunder.
IN WITNESS WHEREOF, the parties have hereunto set their respective
hands and seals causing these presents to be executed as of the day and
year first above written.
Witnessed:
Cora M. Martin /s/
Daniel K. Corwin
Witnessed: ACME ELECTRIC CORPORATION
Cora M. Martin By: /s/
Robert J. McKenna
Chairman & CEO
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of February 1999 by and between Acme
Electric Corporation, a New York corporation having an office at 400 Quaker
Road, East Aurora, New York, (the "Company") and Mr. Nicola T. Arena,
residing at 550 Lake Forest Drive, S.E., Pinehurst, North Carolina,
("Executive").
W I T N E S S E T H:
WHEREAS, Executive is Vice President and General Manager of the
Company's Power Distribution Products Division; and
WHEREAS, the Company believes that it is in its best interest to
assure the continued service of Executive on the terms and conditions
hereinafter set forth; and
WHEREAS, Executive is desirous of receiving assurances that, should a
"change in control" as hereinafter defined take place at the Company, he
will be provided with security as to his position, compensation and
benefits.
NOW, THEREFORE, in consideration of the premises and mutual agreement
hereinafter contained, the parties hereto agree as follows:
1. The Company hereby employs Executive and Executive hereby accepts
employment with the Company as Vice President and General Manager of the
Power Distribution Products Division upon the terms and conditions herein
contained.
2A. The initial Term shall be for a period commencing on the date
hereof and terminating two years from the date of commencement or two years
from its most recent extension date, whichever is later.
At the end of each month during the Term, the Term shall be
automatically continued and extended for one additional month, unless on or
before fifteen days prior to the end of any month during the Term, the
Company shall give to Executive or Executive shall give to the Company a
notice not to extend. Then, in such event, the Term as theretofore
automatically extended shall be deemed further extended for one additional
month, and thereafter there shall be no further automatic extensions. (As
an example, should the Company or Executive give to the other party a
written notice not to extend on November 15, 1999, the Agreement would be
deemed extended to, and would expire on, December 31, 2001.) "Term" as
used in this Agreement shall be deemed to mean the period of employment
from the date hereof through February 1, 2001, or as automatically extended
pursuant to this Paragraph 2A.
2B. Should the Company breach this Agreement pursuant to the
provisions of Paragraphs 8A, 8B, 8C and 9 herein, Executive shall be
entitled to the following:
a. Payments in an amount equal to the base salary payable each
year of the then remaining Term of the Agreement, with such base
salary to be in an amount equal to Executive's base salary in effect
prior to such breach, plus bonus each year of the remaining Term of
the Agreement. The bonus amount each year will be equal to the
average of Executive's greatest two out of the previous three years'
bonuses, or 20% of base salary, whichever is greater.
b. Company paid full medical, dental and disability insurance
benefits and life insurance benefits comparable to those enjoyed prior
to such breach, which shall extend for the duration of Executive's
life or until he accepts other full-time employment.
c. The continuation over the then remaining Term of this
Agreement, in such amounts and in a manner consistent with that
provided immediately prior to such breach, of contributions in
Executive's behalf based on his base salary to the Company's Pension
Plan for Salaried Employees.
d. Payments made pursuant to this Paragraph 2B shall be made
monthly from the date the Company breached this Agreement throughout
the then remaining Term of the Agreement, or at Executive's option in
a lump sum within thirty (30) days of notification of such breach.
Such lump sum shall be an amount equal to the discounted present value
of the payments which were to be paid over the Term specified herein
discounted at a rate of 5% per annum.
2C. "Change in Control" as used in this Agreement shall mean any one
of the following:
a. An acquisition of 35% or more of the beneficial ownership,
directly or indirectly, of the Company's then outstanding stock, or
merger or consolidation by or with another person, entity or group;
b. A tender offer or tender offers for the Company's stock in
which 35% or more of the then outstanding stock of the Company is
tendered or purchased by a person, single entity or affiliated group;
c. A reclassification of securities or recapitalization of the
Company which, directly or indirectly, disproportionately increases or
decreases the outstanding shares of any class of equity securities of
the Company by 35% or more;
d. A sale, lease, exchange, mortgage, pledge, transfer or other
disposition of all or substantially all the assets of the Company;
e. A change in control shall be deemed to have occurred if at
any time less than 51% of the members of the Board of Directors shall
be persons who were either nominated for election by the Board of
Directors or were elected by the Board of Directors.
3. Except as otherwise herein provided during the Term of the
Agreement, the Company shall employ Executive as Vice President and Manager
of its Power Distribution Products Division and he shall serve the Company
in such capacities, performing the normal duties of those positions in a
corporation in the Company's business, subject at all times to the
direction and control of the Board of Directors of the Company, shall
devote his time, attention, skill and energy to the business, welfare and
affairs of the Company and shall use his best efforts to promote the
interests of the Company, it being understood that the conduct of such
duties does not require his attendance at the offices of the Company during
any particular fixed periods.
4A. The Company shall pay and Executive shall accept as compensation
for all services to be rendered hereunder and during the Term a base salary
determined by the Board of Directors of the Company pursuant to its normal
procedure for setting yearly salaries for officers of the Company
(currently, $134,000 per annum). Such payments hereunder shall be payable
in accordance with the prevailing salary payroll practices of the Company
and subject to such deductions as are agreed to by Executive. Nothing
contained in this Agreement shall be deemed to prevent the Company during
the Term hereof from giving bonuses or other additional consideration to
Executive from time to time as determined by the Board of Directors or,
except as otherwise specifically provided herein, prevent Executive from
receiving benefits in accordance with any benefit plan or program made
available by the Company to its salaried employees.
4B. The Company shall reimburse Executive for all expenses reasonably
incurred by him in connection with his performance of services to the
Company, including entertainment and travel. Executive shall be entitled
to receive or participate in all other fringe benefits, such as medical and
hospital plans, management incentive plan and pension plan, stock options
under the then existing corporate stock option plan, and use and
maintenance of an automobile of a type and in a manner consistent with the
practices prevailing at the time of the execution of this Agreement.
4C. Notwithstanding anything herein to the contrary, the Company
shall not be obligated to pay any portion of any amount otherwise payable
to Executive pursuant to this Agreement if the Company could not reasonably
deduct such portion in accordance with the Internal Revenue Code then in
effect.
5A. Executive acknowledges that during the course of his employment
hereunder he will acquire, possess and become exposed to confidential and
proprietary information and materials of the Company. Accordingly, during
his employment hereunder and for a period of eighteen (18) months
thereafter, he shall not, for any reason whatever, except in the regular
authorized course of the Company's business under appropriate secrecy
provisions, directly or indirectly, use or exploit or disclose or divulge
to anyone (who is not authorized to receive the same), without the prior
written permission of the Company, any proprietary information, including,
but not limited to, trade secrets, know-how, data, materials or other
knowledge relating to or pertaining to the business of the Company, unless
the same (i) has been published and/or has become a part of the public
domain other than by acts of omission by Executive; (ii) has been lawfully
furnished or made known to Executive by a third party without restriction
on disclosure or use; and (iii) was in Executive's possession at the time
he first became associated with the Company and was not acquired by
Executive either directly or indirectly from the Company.
5B. All documents, records, prototypes or other tangible embodiments
or evidence of the discoveries, trade secrets, information, know-how, data,
materials or other knowledge previously referred to, which may at any time
be acquired by or come into the possession of Executive during his
employment hereunder (except materials excluded in Subparagraph A hereof),
are the sole and exclusive property of the Company and must be surrendered
to the Company, without demand therefor, upon termination of Executive's
employment hereunder, or upon the request by the Company at any other time;
and, in addition, prior to such termination of employment or upon the
reasonable request by the Company at any other time, Executive will prepare
materials to accurately and adequately describe, set forth or embody any of
the foregoing and deliver the same to the Company in order to accomplish or
complete the transfer of any and all of the foregoing to the Company and
shall be reimbursed by the Company for all of his reasonable out-of-pocket
expenses in connection therewith.
5C. Executive agrees to execute all documents and to take all such
other action as the Company may reasonably require (being reimbursed for
all of his reasonable out-of-pocket expenses in this connection) in order
to assign to the Company any and all rights to any materials prepared by
him during and in connection with his employment hereunder.
6A. Executive agrees that, during his employment hereunder for a
period of eighteen (18) months after termination of his employment
hereunder for whatever reason (except in the event such termination is
caused by (a) a material breach of this Agreement by the Company, or (b)
the Company's bankruptcy (as defined in Paragraph 14 hereof)), he shall not
(without the prior written consent of the Company) (i) solicit as a client
or customer in competition with the Company any persons or entities which
were, during his employment hereunder, clients or customers of the Company,
(ii) enter into any business arrangements with any of the foregoing which
could be reasonably deemed to be materially competitive with or materially
injurious to any business in which the Company is engaged at the time of
such termination, or (iii) solicit, or be instrumental in any way in
causing, any other person to leave the employ of the Company. Executive
further agrees that he shall not (without the prior written consent of the
Company) for a period of eighteen (18) months after the termination of his
employment hereunder for any reason (except in the event the termination is
caused by a breach of this Agreement by the Company), directly or
indirectly, individually or as a director, partner, employee, officer or
agent, engage in any employment, performance of services or other activity
on behalf of any company if such employment, performance of services or
other activity can be reasonably deemed to be materially competitive with
or materially injurious to any business in which the Company is engaged at
the time of such termination.
6B. For purposes only of determining whether services by Executive
during the aforesaid eighteen (18) month period after his termination of
employment hereunder shall be "materially competitive with or materially
injurious to the Company" within the meaning of this paragraph, either
party may initiate arbitration proceedings to make such determination
pursuant to Paragraph 13 hereof.
6C. If Executive commits a material breach of any of the provisions
of Paragraph 5A, 5B, 5C or 6A, the Company shall have the right and remedy
to have such provisions specifically enforced by any court having equity
jurisdiction, since any such breach or threatened breach will cause
irreparable injury to the Company and money damages will not provide an
adequate remedy to the Company. The initiation of, or participation in,
any such proceeding shall not constitute a waiver of the arbitration
provisions of Paragraph 10.
7. During the Term, Executive will not directly or indirectly engage
in the business of, or own or control any interest in (except as a passive
investor owning less than ten percent (10%) of the equity securities of a
publicly-owned company), or act as a director, officer or employee of, or
consultant to, any individual, partnership, joint venture, corporation or
other business entity directly or indirectly engaged anywhere in the United
States in any business competing with the business carried on by the
Company or any of its subsidiaries.
8A. It is specifically understood and agreed that the Company may
terminate this Agreement and its obligations to Executive hereunder prior
to a change in control, and that, further, this Agreement and its
obligations to Executive hereunder shall terminate in the event that prior
to a change in control there is a change or re-assignment of Executive's
position or the voluntary retirement by Executive from active employment
with the Company. Notwithstanding the foregoing, at any time during the
Term of this Agreement, after a change of control has taken place, any
termination or notice of termination shall be deemed a breach of this
Agreement and a notice not to extend, and the provisions of Paragraph 2B
above shall apply so as to have the effect of fixing the Term as provided
herein and terminating Executive's employment with the Company.
8B. At any time during the Term of this Agreement, after a change in
control has taken place, should the Company reduce the compensation or
benefits then being paid to Executive, it shall be deemed a breach of this
Agreement and a notice not to extend, and the provisions of Paragraph 2B
above shall apply so as to have the effect of fixing the Term as provided
herein and terminating Executive's employment with the Company.
8C. At any time during the Term of this Agreement, after a change in
control has taken place, should the Company change Executive's position or
duties without his written consent, it shall be deemed a breach of this
Agreement and a notice not to extend, and the provisions of Paragraph 2B
above shall apply so as to have the effect of fixing the Term as provided
herein and terminating Executive's employment with the Company.
9. In the event that during Executive's lifetime and during the Term
of this Agreement, after a change in control has taken place, the Company
defaults as to any payment under this Agreement or fails to make any
payments provided for in this Agreement and fails to cure such default or
make such payment within ten (10) days after written notice thereof, or
written demand therefor, or in the event that the Company terminates this
Agreement for cause and it is ultimately determined that such termination
was wrongful, Executive may elect to treat such default or wrongful
termination as a breach of this Agreement and shall he entitled to recover
all of his expenses, including reasonable attorneys' fees, in prosecuting
or defending any actions or proceedings arising out of, or in any other way
relating to, the matters referred to in this paragraph, and the provisions
of Paragraph 2B of this Agreement shall apply.
10. Any controversy, claim or dispute arising out of or relating to
this Agreement, including without limitation, any claim for breach of this
Agreement, shall be settled by arbitration in accordance with the Rules of
the American Arbitration Association (AAA) obtaining at the time of such
proceeding, except that the authority of the arbitrators shall be limited
to the interpretation and enforcement of the terms and conditions of this
Agreement and the arbitrators shall set forth in writing the reasons for
their decisions. Judgment upon any award rendered by the arbitrators
pursuant hereto may be entered in any court having jurisdiction thereof and
thereafter enforced. Either party shall have the right to initiate
arbitration proceedings. Any arbitration shall take place under the
auspices of the AAA in Pinehurst, North Carolina or such other city as
Executive shall select. There shall be three arbitrators. Each party
shall appoint one arbitrator. If either party fails to appoint an
arbitrator within five (5) days from the date upon which the notice of the
initiating party of its intention to arbitrate is received by the other
party to such proceedings, the AAA shall make the appointment for that
party. The two arbitrators appointed in the manner provided for above
shall appoint a third arbitrator, mutually acceptable to them. If the two
arbitrators first appointed cannot, for any reason, agree upon a third
arbitrator, or an acceptable person is unable to act, the AAA shall appoint
the third arbitrator in accordance with its rules.
11. Executive may terminate this Agreement prior to the date of
expiration of the Term hereinabove set forth by written notice to the
Company if the Company shall file a petition in bankruptcy, make a
voluntary assignment for the benefit of creditors, file a petition or an
answer seeking an arrangement with creditors or take advantage of any
insolvency law, or if the Company applies for or consents to the
appointment of a receiver or trustee of all or a substantial part of its
assets, or an order, judgment or decree shall be entered in any court of
competent jurisdiction appointing a receiver of all or a substantial part
of its assets, and such order, judgment or decree shall continue unstayed
and in effect for any consecutive period of ninety (90) days.
12. This Agreement and all rights hereunder are personal to Executive
and shall not be assignable; provided, however, that all of Executive's
rights under the Agreement shall inure to the benefit of his heirs,
distributees, personal representatives or designees or other legal
representatives, as the case may be. Any person, firm or corporation
succeeding to the business of the Company by merger, purchase,
consolidation or otherwise, shall assume by contract or operations of law
the obligations of the Company hereunder; provided, however, that the
Company shall, notwithstanding such assumption or assignment, remain liable
and responsible for fulfilling the obligations of the Company under this
Agreement.
This Agreement supersedes and replaces any and all present
written or oral agreements of employment between the parties hereto, and
all such agreements are hereby deemed canceled, revoked and of no further
force or effect.
13. Without in any way implying that any provisions hereof is invalid
or unenforceable, the validity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other
provision.
14. This Agreement constitutes the whole agreement between the
parties hereto, and there are no terms other than those stated herein. No
variation hereof shall be deemed valid unless in writing and signed by the
parties hereto, and no discharge of the terms hereof shall be deemed valid
unless by full performance by the parties hereto or by a writing signed by
the parties hereto. No waiver by either party of any provisions or
condition of this Agreement to be performed by them should be deemed a
waiver of any other provisions of this Agreement.
15. Any notice, statement, report, request or demand required or
permitted to be given by this Agreement shall be in writing, and shall be
sufficient if addressed and sent by certified mail, return receipt
requested, to the parties at the addresses set forth above, or at such
other place that either party may designate by notice to the other and
shall be deemed given when so mailed.
16. This Agreement has been made in, and shall be interpreted
according to the laws of, the State of New York. The parties hereto submit
to the jurisdiction of the courts of the New York Supreme Court, County of
Erie, for the purpose of any actions or proceedings which may be required
to enforce the provisions of this Agreement or an award made in any
arbitration proceeding initiated hereunder.
IN WITNESS WHEREOF, the parties have hereunto set their respective
hands and seals causing these presents to be executed as of the day and
year first above written.
Witnessed:
Karen H. McLellen /s/
Nicola T. Arena
Witnessed: ACME ELECTRIC CORPORATION
Cora M. Martin By: /s/
Robert J. McKenna
Chairman & CEO
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of February 1999 by and between Acme
Electric Corporation, a New York corporation having an office at 400 Quaker
Road, East Aurora, New York, (the "Company") and Mr. John E. Gleason,
residing at 631 South Boulder Court, Gilbert, Arizona, ("Executive").
W I T N E S S E T H:
WHEREAS, Executive is Vice President and General Manager of the
Company's Aerospace Division; and
WHEREAS, the Company believes that it is in its best interest to
assure the continued service of Executive on the terms and conditions
hereinafter set forth; and
WHEREAS, Executive is desirous of receiving assurances that, should a
"change in control" as hereinafter defined take place at the Company, he
will be provided with security as to his position, compensation and
benefits.
NOW, THEREFORE, in consideration of the premises and mutual agreement
hereinafter contained, the parties hereto agree as follows:
1. The Company hereby employs Executive and Executive hereby accepts
employment with the Company as Vice President and General Manager of the
Aerospace Division upon the terms and conditions herein contained.
2A. The initial Term shall be for a period commencing on the date
hereof and terminating two years from the date of commencement or two years
from its most recent extension date, whichever is later.
At the end of each month during the Term, the Term shall be
automatically continued and extended for one additional month, unless on or
before fifteen days prior to the end of any month during the Term, the
Company shall give to Executive or Executive shall give to the Company a
notice not to extend. Then, in such event, the Term as theretofore
automatically extended shall be deemed further extended for one additional
month, and thereafter there shall be no further automatic extensions. (As
an example, should the Company or Executive give to the other party a
written notice not to extend on November 15, 1999, the Agreement would be
deemed extended to, and would expire on, December 31, 2001.) "Term" as
used in this Agreement shall be deemed to mean the period of employment
from the date hereof through February 1, 2001, or as automatically extended
pursuant to this Paragraph 2A.
2B. Should the Company breach this Agreement pursuant to the
provisions of Paragraphs 8A, 8B, 8C and 9 herein, Executive shall be
entitled to the following:
a. Payments in an amount equal to the base salary payable each
year of the then remaining Term of the Agreement, with such base
salary to be in an amount equal to Executive's base salary in effect
prior to such breach, plus bonus each year of the remaining Term of
the Agreement. The bonus amount each year will be equal to the
average of Executive's greatest two out of the previous three years'
bonuses, or 20% of base salary, whichever is greater.
b. Company paid full medical, dental and disability insurance
benefits and life insurance benefits comparable to those enjoyed prior
to such breach, which shall extend for the duration of Executive's
life or until he accepts other full-time employment.
c. The continuation over the then remaining Term of this
Agreement, in such amounts and in a manner consistent with that
provided immediately prior to such breach, of contributions in
Executive's behalf based on his base salary to the Company's Pension
Plan for Salaried Employees.
d. Payments made pursuant to this Paragraph 2B shall be made
monthly from the date the Company breached this Agreement throughout
the then remaining Term of the Agreement, or at Executive's option in
a lump sum within thirty (30) days of notification of such breach.
Such lump sum shall be an amount equal to the discounted present value
of the payments which were to be paid over the Term specified herein
discounted at a rate of 5% per annum.
2C. "Change in Control" as used in this Agreement shall mean any one
of the following:
a. An acquisition of 35% or more of the beneficial ownership,
directly or indirectly, of the Company's then outstanding stock, or
merger or consolidation by or with another person, entity or group;
b. A tender offer or tender offers for the Company's stock in
which 35% or more of the then outstanding stock of the Company is
tendered or purchased by a person, single entity or affiliated group;
c. A reclassification of securities or recapitalization of the
Company which, directly or indirectly, disproportionately increases or
decreases the outstanding shares of any class of equity securities of
the Company by 35% or more;
d. A sale, lease, exchange, mortgage, pledge, transfer or other
disposition of all or substantially all the assets of the Company;
e. A change in control shall be deemed to have occurred if at
any time less than 51% of the members of the Board of Directors shall
be persons who were either nominated for election by the Board of
Directors or were elected by the Board of Directors.
3. Except as otherwise herein provided during the Term of the
Agreement, the Company shall employ Executive as Vice President and Manager
of its Aerospace Division and he shall serve the Company in such
capacities, performing the normal duties of those positions in a
corporation in the Company's business, subject at all times to the
direction and control of the Board of Directors of the Company, shall
devote his time, attention, skill and energy to the business, welfare and
affairs of the Company and shall use his best efforts to promote the
interests of the Company, it being understood that the conduct of such
duties does not require his attendance at the offices of the Company during
any particular fixed periods.
4A. The Company shall pay and Executive shall accept as compensation
for all services to be rendered hereunder and during the Term a base salary
determined by the Board of Directors of the Company pursuant to its normal
procedure for setting yearly salaries for officers of the Company
(currently, $138,700 per annum). Such payments hereunder shall be payable
in accordance with the prevailing salary payroll practices of the Company
and subject to such deductions as are agreed to by Executive. Nothing
contained in this Agreement shall be deemed to prevent the Company during
the Term hereof from giving bonuses or other additional consideration to
Executive from time to time as determined by the Board of Directors or,
except as otherwise specifically provided herein, prevent Executive from
receiving benefits in accordance with any benefit plan or program made
available by the Company to its salaried employees.
4B. The Company shall reimburse Executive for all expenses reasonably
incurred by him in connection with his performance of services to the
Company, including entertainment and travel. Executive shall be entitled
to receive or participate in all other fringe benefits, such as medical and
hospital plans, management incentive plan and pension plan, stock options
under the then existing corporate stock option plan, and use and
maintenance of an automobile of a type and in a manner consistent with the
practices prevailing at the time of the execution of this Agreement.
4C. Notwithstanding anything herein to the contrary, the Company
shall not be obligated to pay any portion of any amount otherwise payable
to Executive pursuant to this Agreement if the Company could not reasonably
deduct such portion in accordance with the Internal Revenue Code then in
effect.
5A. Executive acknowledges that during the course of his employment
hereunder he will acquire, possess and become exposed to confidential and
proprietary information and materials of the Company. Accordingly, during
his employment hereunder and for a period of eighteen (18) months
thereafter, he shall not, for any reason whatever, except in the regular
authorized course of the Company's business under appropriate secrecy
provisions, directly or indirectly, use or exploit or disclose or divulge
to anyone (who is not authorized to receive the same), without the prior
written permission of the Company, any proprietary information, including,
but not limited to, trade secrets, know-how, data, materials or other
knowledge relating to or pertaining to the business of the Company, unless
the same (i) has been published and/or has become a part of the public
domain other than by acts of omission by Executive; (ii) has been lawfully
furnished or made known to Executive by a third party without restriction
on disclosure or use; and (iii) was in Executive's possession at the time
he first became associated with the Company and was not acquired by
Executive either directly or indirectly from the Company.
5B. All documents, records, prototypes or other tangible embodiments
or evidence of the discoveries, trade secrets, information, know-how, data,
materials or other knowledge previously referred to, which may at any time
be acquired by or come into the possession of Executive during his
employment hereunder (except materials excluded in Subparagraph A hereof),
are the sole and exclusive property of the Company and must be surrendered
to the Company, without demand therefor, upon termination of Executive's
employment hereunder, or upon the request by the Company at any other time;
and, in addition, prior to such termination of employment or upon the
reasonable request by the Company at any other time, Executive will prepare
materials to accurately and adequately describe, set forth or embody any of
the foregoing and deliver the same to the Company in order to accomplish or
complete the transfer of any and all of the foregoing to the Company and
shall be reimbursed by the Company for all of his reasonable out-of-pocket
expenses in connection therewith.
5C. Executive agrees to execute all documents and to take all such
other action as the Company may reasonably require (being reimbursed for
all of his reasonable out-of-pocket expenses in this connection) in order
to assign to the Company any and all rights to any materials prepared by
him during and in connection with his employment hereunder.
6A. Executive agrees that, during his employment hereunder for a
period of eighteen (18) months after termination of his employment
hereunder for whatever reason (except in the event such termination is
caused by (a) a material breach of this Agreement by the Company, or (b)
the Company's bankruptcy (as defined in Paragraph 14 hereof)), he shall not
(without the prior written consent of the Company) (i) solicit as a client
or customer in competition with the Company any persons or entities which
were, during his employment hereunder, clients or customers of the Company,
(ii) enter into any business arrangements with any of the foregoing which
could be reasonably deemed to be materially competitive with or materially
injurious to any business in which the Company is engaged at the time of
such termination, or (iii) solicit, or be instrumental in any way in
causing, any other person to leave the employ of the Company. Executive
further agrees that he shall not (without the prior written consent of the
Company) for a period of eighteen (18) months after the termination of his
employment hereunder for any reason (except in the event the termination is
caused by a breach of this Agreement by the Company), directly or
indirectly, individually or as a director, partner, employee, officer or
agent, engage in any employment, performance of services or other activity
on behalf of any company if such employment, performance of services or
other activity can be reasonably deemed to be materially competitive with
or materially injurious to any business in which the Company is engaged at
the time of such termination.
6B. For purposes only of determining whether services by Executive
during the aforesaid eighteen (18) month period after his termination of
employment hereunder shall be "materially competitive with or materially
injurious to the Company" within the meaning of this paragraph, either
party may initiate arbitration proceedings to make such determination
pursuant to Paragraph 13 hereof.
6C. If Executive commits a material breach of any of the provisions
of Paragraph 5A, 5B, 5C or 6A, the Company shall have the right and remedy
to have such provisions specifically enforced by any court having equity
jurisdiction, since any such breach or threatened breach will cause
irreparable injury to the Company and money damages will not provide an
adequate remedy to the Company. The initiation of, or participation in,
any such proceeding shall not constitute a waiver of the arbitration
provisions of Paragraph 10.
7. During the Term, Executive will not directly or indirectly engage
in the business of, or own or control any interest in (except as a passive
investor owning less than ten percent (10%) of the equity securities of a
publicly-owned company), or act as a director, officer or employee of, or
consultant to, any individual, partnership, joint venture, corporation or
other business entity directly or indirectly engaged anywhere in the United
States in any business competing with the business carried on by the
Company or any of its subsidiaries.
8A. It is specifically understood and agreed that the Company may
terminate this Agreement and its obligations to Executive hereunder prior
to a change in control, and that, further, this Agreement and its
obligations to Executive hereunder shall terminate in the event that prior
to a change in control there is a change or re-assignment of Executive's
position or the voluntary retirement by Executive from active employment
with the Company. Notwithstanding the foregoing, at any time during the
Term of this Agreement, after a change of control has taken place, any
termination or notice of termination shall be deemed a breach of this
Agreement and a notice not to extend, and the provisions of Paragraph 2B
above shall apply so as to have the effect of fixing the Term as provided
herein and terminating Executive's employment with the Company.
8B. At any time during the Term of this Agreement, after a change in
control has taken place, should the Company reduce the compensation or
benefits then being paid to Executive, it shall be deemed a breach of this
Agreement and a notice not to extend, and the provisions of Paragraph 2B
above shall apply so as to have the effect of fixing the Term as provided
herein and terminating Executive's employment with the Company.
8C. At any time during the Term of this Agreement, after a change in
control has taken place, should the Company change Executive's position or
duties without his written consent, it shall be deemed a breach of this
Agreement and a notice not to extend, and the provisions of Paragraph 2B
above shall apply so as to have the effect of fixing the Term as provided
herein and terminating Executive's employment with the Company.
9. In the event that during Executive's lifetime and during the Term
of this Agreement, after a change in control has taken place, the Company
defaults as to any payment under this Agreement or fails to make any
payments provided for in this Agreement and fails to cure such default or
make such payment within ten (10) days after written notice thereof, or
written demand therefor, or in the event that the Company terminates this
Agreement for cause and it is ultimately determined that such termination
was wrongful, Executive may elect to treat such default or wrongful
termination as a breach of this Agreement and shall he entitled to recover
all of his expenses, including reasonable attorneys' fees, in prosecuting
or defending any actions or proceedings arising out of, or in any other way
relating to, the matters referred to in this paragraph, and the provisions
of Paragraph 2B of this Agreement shall apply.
10. Any controversy, claim or dispute arising out of or relating to
this Agreement, including without limitation, any claim for breach of this
Agreement, shall be settled by arbitration in accordance with the Rules of
the American Arbitration Association (AAA) obtaining at the time of such
proceeding, except that the authority of the arbitrators shall be limited
to the interpretation and enforcement of the terms and conditions of this
Agreement and the arbitrators shall set forth in writing the reasons for
their decisions. Judgment upon any award rendered by the arbitrators
pursuant hereto may be entered in any court having jurisdiction thereof and
thereafter enforced. Either party shall have the right to initiate
arbitration proceedings. Any arbitration shall take place under the
auspices of the AAA in Tempe, Arizona or such other city as the Executive
shall select. There shall be three arbitrators. Each party shall appoint
one arbitrator. If either party fails to appoint an arbitrator within five
(5) days from the date upon which the notice of the initiating party of its
intention to arbitrate is received by the other party to such proceedings,
the AAA shall make the appointment for that party. The two arbitrators
appointed in the manner provided for above shall appoint a third
arbitrator, mutually acceptable to them. If the two arbitrators first
appointed cannot, for any reason, agree upon a third arbitrator, or an
acceptable person is unable to act, the AAA shall appoint the third
arbitrator in accordance with its rules.
11. Executive may terminate this Agreement prior to the date of
expiration of the Term hereinabove set forth by written notice to the
Company if the Company shall file a petition in bankruptcy, make a
voluntary assignment for the benefit of creditors, file a petition or an
answer seeking an arrangement with creditors or take advantage of any
insolvency law, or if the Company applies for or consents to the
appointment of a receiver or trustee of all or a substantial part of its
assets, or an order, judgment or decree shall be entered in any court of
competent jurisdiction appointing a receiver of all or a substantial part
of its assets, and such order, judgment or decree shall continue unstayed
and in effect for any consecutive period of ninety (90) days.
12. This Agreement and all rights hereunder are personal to Executive
and shall not be assignable; provided, however, that all of Executive's
rights under the Agreement shall inure to the benefit of his heirs,
distributees, personal representatives or designees or other legal
representatives, as the case may be. Any person, firm or corporation
succeeding to the business of the Company by merger, purchase,
consolidation or otherwise, shall assume by contract or operations of law
the obligations of the Company hereunder; provided, however, that the
Company shall, notwithstanding such assumption or assignment, remain liable
and responsible for fulfilling the obligations of the Company under this
Agreement.
This Agreement supersedes and replaces any and all present
written or oral agreements of employment between the parties hereto, and
all such agreements are hereby deemed canceled, revoked and of no further
force or effect.
13. Without in any way implying that any provisions hereof is invalid
or unenforceable, the validity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other
provision.
14. This Agreement constitutes the whole agreement between the
parties hereto, and there are no terms other than those stated herein. No
variation hereof shall be deemed valid unless in writing and signed by the
parties hereto, and no discharge of the terms hereof shall be deemed valid
unless by full performance by the parties hereto or by a writing signed by
the parties hereto. No waiver by either party of any provisions or
condition of this Agreement to be performed by them should be deemed a
waiver of any other provisions of this Agreement.
15. Any notice, statement, report, request or demand required or
permitted to be given by this Agreement shall be in writing, and shall be
sufficient if addressed and sent by certified mail, return receipt
requested, to the parties at the addresses set forth above, or at such
other place that either party may designate by notice to the other and
shall be deemed given when so mailed.
16. This Agreement has been made in, and shall be interpreted
according to the laws of, the State of New York. The parties hereto submit
to the jurisdiction of the courts of the New York Supreme Court, County of
Erie, for the purpose of any actions or proceedings which may be required
to enforce the provisions of this Agreement or an award made in any
arbitration proceeding initiated hereunder.
IN WITNESS WHEREOF, the parties have hereunto set their respective
hands and seals causing these presents to be executed as of the day and
year first above written.
Witnessed:
Reida Kirkland /s/
John E. Gleason
Witnessed: ACME ELECTRIC CORPORATION
Cora M. Martin By: /s/
Robert J. McKenna
Chairman & CEO
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of February 1999 by and between Acme
Electric Corporation, a New York corporation having an office at 400 Quaker
Road, East Aurora, New York, (the "Company") and Mr. Michael A. Simon,
residing at 84 Pamela Court, West Seneca, New York, ("Executive").
W I T N E S S E T H:
WHEREAS, Executive is Corporate Controller of the Company; and
WHEREAS, the Company believes that it is in its best interest to
assure the continued service of Executive on the terms and conditions
hereinafter set forth; and
WHEREAS, Executive is desirous of receiving assurances that, should a
"change in control" as hereinafter defined take place at the Company, he
will be provided with security as to his position, compensation and
benefits.
NOW, THEREFORE, in consideration of the premises and mutual agreement
hereinafter contained, the parties hereto agree as follows:
1. The Company hereby employs Executive and Executive hereby accepts
employment with the Company as Corporate Controller upon the terms and
conditions herein contained.
2A. The initial Term shall be for a period commencing on the date
hereof and terminating one year from the date of commencement or one year
from its most recent extension date, whichever is later.
At the end of each month during the Term, the Term shall be
automatically continued and extended for one additional month, unless on or
before fifteen days prior to the end of any month during the Term, the
Company shall give to Executive or Executive shall give to the Company a
notice not to extend. Then, in such event, the Term as theretofore
automatically extended shall be deemed further extended for one additional
month, and thereafter there shall be no further automatic extensions. (As
an example, should the Company or Executive give to the other party a
written notice not to extend on November 15, 1999, the Agreement would be
deemed extended to, and would expire on, December 31, 2000.) "Term" as
used in this Agreement shall be deemed to mean the period of employment
from the date hereof through February 1, 2000, or as automatically extended
pursuant to this Paragraph 2A.
2B. Should the Company breach this Agreement pursuant to the
provisions of Paragraphs 8A, 8B, 8C and 9 herein, Executive shall be
entitled to the following:
a. Payments in an amount equal to the base salary payable each
year of the then remaining Term of the Agreement, with such base
salary to be in an amount equal to Executive's base salary in effect
prior to such breach, plus bonus each year of the remaining Term of
the Agreement. The bonus amount each year will be equal to the
average of Executive's greatest two out of the previous three years'
bonuses, or 10% of base salary, whichever is greater.
b. Company paid full medical, dental and disability insurance
benefits and life insurance benefits comparable to those enjoyed prior
to such breach, which shall extend for the duration of Executive's
life or until he accepts other full-time employment.
c. The continuation over the then remaining Term of this
Agreement, in such amounts and in a manner consistent with that
provided immediately prior to such breach, of contributions in
Executive's behalf based on his base salary to the Company's Pension
Plan for Salaried Employees.
d. Payments made pursuant to this Paragraph 2B shall be made
monthly from the date the Company breached this Agreement throughout
the then remaining Term of the Agreement, or at Executive's option in
a lump sum within thirty (30) days of notification of such breach.
Such lump sum shall be an amount equal to the discounted present value
of the payments which were to be paid over the Term specified herein
discounted at a rate of 5% per annum.
2C. "Change in Control" as used in this Agreement shall mean any one
of the following:
a. An acquisition of 35% or more of the beneficial ownership,
directly or indirectly, of the Company's then outstanding stock, or
merger or consolidation by or with another person, entity or group;
b. A tender offer or tender offers for the Company's stock in
which 35% or more of the then outstanding stock of the Company is
tendered or purchased by a person, single entity or affiliated group;
c. A reclassification of securities or recapitalization of the
Company which, directly or indirectly, disproportionately increases or
decreases the outstanding shares of any class of equity securities of
the Company by 35% or more;
d. A sale, lease, exchange, mortgage, pledge, transfer or other
disposition of all or substantially all the assets of the Company;
e. A change in control shall be deemed to have occurred if at
any time less than 51% of the members of the Board of Directors shall
be persons who were either nominated for election by the Board of
Directors or were elected by the Board of Directors.
3. Except as otherwise herein provided during the Term of the
Agreement, the Company shall employ Executive as Corporate Controller and
he shall serve the Company in such capacity, performing the normal duties
of that position in a corporation in the Company's business, subject at all
times to the direction and control of the Board of Directors of the
Company, shall devote his time, attention, skill and energy to the
business, welfare and affairs of the Company and shall use his best efforts
to promote the interests of the Company, it being understood that the
conduct of such duties does not require his attendance at the offices of
the Company during any particular fixed periods.
4A. The Company shall pay and Executive shall accept as compensation
for all services to be rendered hereunder and during the Term a base salary
determined by the Company pursuant to its normal procedure for setting
yearly salaries for employees of the Company (currently, $73,500 per
annum). Such payments hereunder shall be payable in accordance with the
prevailing salary payroll practices of the Company and subject to such
deductions as are agreed to by Executive. Nothing contained in this
Agreement shall be deemed to prevent the Company during the Term hereof
from giving bonuses or other additional consideration to Executive from
time to time as determined by the Company or, except as otherwise
specifically provided herein, prevent Executive from receiving benefits in
accordance with any benefit plan or program made available by the Company
to its salaried employees.
4B. The Company shall reimburse Executive for all expenses reasonably
incurred by him in connection with his performance of services to the
Company, including entertainment and travel. Executive shall be entitled
to receive or participate in all other fringe benefits, such as medical and
hospital plans, management incentive plan and pension plan, and stock
options under the then existing corporate stock option plan in a manner
consistent with the practices prevailing at the time of the execution of
this Agreement.
4C. Notwithstanding anything herein to the contrary, the Company
shall not be obligated to pay any portion of any amount otherwise payable
to Executive pursuant to this Agreement if the Company could not reasonably
deduct such portion in accordance with the Internal Revenue Code then in
effect.
5A. Executive acknowledges that during the course of his employment
hereunder he will acquire, possess and become exposed to confidential and
proprietary information and materials of the Company. Accordingly, during
his employment hereunder and for a period of twelve (12) months thereafter,
he shall not, for any reason whatever, except in the regular authorized
course of the Company's business under appropriate secrecy provisions,
directly or indirectly, use or exploit or disclose or divulge to anyone
(who is not authorized to receive the same), without the prior written
permission of the Company, any proprietary information, including, but not
limited to, trade secrets, know-how, data, materials or other knowledge
relating to or pertaining to the business of the Company, unless the same
(i) has been published and/or has become a part of the public domain other
than by acts of omission by Executive; (ii) has been lawfully furnished or
made known to Executive by a third party without restriction on disclosure
or use; and (iii) was in Executive's possession at the time he first became
associated with the Company and was not acquired by Executive either
directly or indirectly from the Company.
5B. All documents, records, prototypes or other tangible embodiments
or evidence of the discoveries, trade secrets, information, know-how, data,
materials or other knowledge previously referred to, which may at any time
be acquired by or come into the possession of Executive during his
employment hereunder (except materials excluded in Subparagraph A hereof),
are the sole and exclusive property of the Company and must be surrendered
to the Company, without demand therefor, upon termination of Executive's
employment hereunder, or upon the request by the Company at any other time;
and, in addition, prior to such termination of employment or upon the
reasonable request by the Company at any other time, Executive will prepare
materials to accurately and adequately describe, set forth or embody any of
the foregoing and deliver the same to the Company in order to accomplish or
complete the transfer of any and all of the foregoing to the Company and
shall be reimbursed by the Company for all of his reasonable out-of-pocket
expenses in connection therewith.
5C. Executive agrees to execute all documents and to take all such
other action as the Company may reasonably require (being reimbursed for
all of his reasonable out-of-pocket expenses in this connection) in order
to assign to the Company any and all rights to any materials prepared by
him during and in connection with his employment hereunder.
6A. Executive agrees that, during his employment hereunder for a
period of twelve (12) months after termination of his employment hereunder
for whatever reason (except in the event such termination is caused by (a)
a material breach of this Agreement by the Company, or (b) the Company's
bankruptcy (as defined in Paragraph 14 hereof)), he shall not (without the
prior written consent of the Company) (i) solicit as a client or customer
in competition with the Company any persons or entities which were, during
his employment hereunder, clients or customers of the Company, (ii) enter
into any business arrangements with any of the foregoing which could be
reasonably deemed to be materially competitive with or materially injurious
to any business in which the Company is engaged at the time of such
termination, or (iii) solicit, or be instrumental in any way in causing,
any other person to leave the employ of the Company. Executive further
agrees that he shall not (without the prior written consent of the Company)
for a period of twelve (12) months after the termination of his employment
hereunder for any reason (except in the event the termination is caused by
a breach of this Agreement by the Company), directly or indirectly,
individually or as a director, partner, employee, officer or agent, engage
in any employment, performance of services or other activity on behalf of
any company if such employment, performance of services or other activity
can be reasonably deemed to be materially competitive with or materially
injurious to any business in which the Company is engaged at the time of
such termination.
6B. For purposes only of determining whether services by Executive
during the aforesaid twelve (12) month period after his termination of
employment hereunder shall be "materially competitive with or materially
injurious to the Company" within the meaning of this paragraph, either
party may initiate arbitration proceedings to make such determination
pursuant to Paragraph 13 hereof.
6C. If Executive commits a material breach of any of the provisions
of Paragraph 5A, 5B, 5C or 6A, the Company shall have the right and remedy
to have such provisions specifically enforced by any court having equity
jurisdiction, since any such breach or threatened breach will cause
irreparable injury to the Company and money damages will not provide an
adequate remedy to the Company. The initiation of, or participation in,
any such proceeding shall not constitute a waiver of the arbitration
provisions of Paragraph 10.
7. During the Term, Executive will not directly or indirectly engage
in the business of, or own or control any interest in (except as a passive
investor owning less than ten percent (10%) of the equity securities of a
publicly-owned company), or act as a director, officer or employee of, or
consultant to, any individual, partnership, joint venture, corporation or
other business entity directly or indirectly engaged anywhere in the United
States in any business competing with the business carried on by the
Company or any of its subsidiaries.
8A. It is specifically understood and agreed that the Company may
terminate this Agreement and its obligations to Executive hereunder prior
to a change in control, and that, further, this Agreement and its
obligations to Executive hereunder shall terminate in the event that prior
to a change in control there is a change or re-assignment of Executive's
position or the voluntary retirement by Executive from active employment
with the Company. Notwithstanding the foregoing, at any time during the
Term of this Agreement, after a change of control has taken place, any
termination or notice of termination shall be deemed a breach of this
Agreement and a notice not to extend, and the provisions of Paragraph 2B
above shall apply so as to have the effect of fixing the Term as provided
herein and terminating Executive's employment with the Company.
8B. At any time during the Term of this Agreement, after a change in
control has taken place, should the Company reduce the compensation or
benefits then being paid to Executive, it shall be deemed a breach of this
Agreement and a notice not to extend, and the provisions of Paragraph 2B
above shall apply so as to have the effect of fixing the Term as provided
herein and terminating Executive's employment with the Company.
8C. At any time during the Term of this Agreement, after a change in
control has taken place, should the Company change Executive's position or
duties without his written consent, it shall be deemed a breach of this
Agreement and a notice not to extend, and the provisions of Paragraph 2B
above shall apply so as to have the effect of fixing the Term as provided
herein and terminating Executive's employment with the Company.
9. In the event that during Executive's lifetime and during the Term
of this Agreement, after a change in control has taken place, the Company
defaults as to any payment under this Agreement or fails to make any
payments provided for in this Agreement and fails to cure such default or
make such payment within ten (10) days after written notice thereof, or
written demand therefor, or in the event that the Company terminates this
Agreement for cause and it is ultimately determined that such termination
was wrongful, Executive may elect to treat such default or wrongful
termination as a breach of this Agreement and shall he entitled to recover
all of his expenses, including reasonable attorneys' fees, in prosecuting
or defending any actions or proceedings arising out of, or in any other way
relating to, the matters referred to in this paragraph, and the provisions
of Paragraph 2B of this Agreement shall apply.
10. Any controversy, claim or dispute arising out of or relating to
this Agreement, including without limitation, any claim for breach of this
Agreement, shall be settled by arbitration in accordance with the Rules of
the American Arbitration Association (AAA) obtaining at the time of such
proceeding, except that the authority of the arbitrators shall be limited
to the interpretation and enforcement of the terms and conditions of this
Agreement and the arbitrators shall set forth in writing the reasons for
their decisions. Judgment upon any award rendered by the arbitrators
pursuant hereto may be entered in any court having jurisdiction thereof and
thereafter enforced. Either party shall have the right to initiate
arbitration proceedings. Any arbitration shall take place under the
auspices of the AAA in Buffalo, New York. There shall be three
arbitrators. Each party shall appoint one arbitrator. If either party
fails to appoint an arbitrator within five (5) days from the date upon
which the notice of the initiating party of its intention to arbitrate is
received by the other party to such proceedings, the AAA shall make the
appointment for that party. The two arbitrators appointed in the manner
provided for above shall appoint a third arbitrator, mutually acceptable to
them. If the two arbitrators first appointed cannot, for any reason, agree
upon a third arbitrator, or an acceptable person is unable to act, the AAA
shall appoint the third arbitrator in accordance with its rules.
11. Executive may terminate this Agreement prior to the date of
expiration of the Term hereinabove set forth by written notice to the
Company if the Company shall file a petition in bankruptcy, make a
voluntary assignment for the benefit of creditors, file a petition or an
answer seeking an arrangement with creditors or take advantage of any
insolvency law, or if the Company applies for or consents to the
appointment of a receiver or trustee of all or a substantial part of its
assets, or an order, judgment or decree shall be entered in any court of
competent jurisdiction appointing a receiver of all or a substantial part
of its assets, and such order, judgment or decree shall continue unstayed
and in effect for any consecutive period of ninety (90) days.
12. This Agreement and all rights hereunder are personal to Executive
and shall not be assignable; provided, however, that all of Executive's
rights under the Agreement shall inure to the benefit of his heirs,
distributees, personal representatives or designees or other legal
representatives, as the case may be. Any person, firm or corporation
succeeding to the business of the Company by merger, purchase,
consolidation or otherwise, shall assume by contract or operations of law
the obligations of the Company hereunder; provided, however, that the
Company shall, notwithstanding such assumption or assignment, remain liable
and responsible for fulfilling the obligations of the Company under this
Agreement.
This Agreement supersedes and replaces any and all present
written or oral agreements of employment between the parties hereto, and
all such agreements are hereby deemed canceled, revoked and of no further
force or effect.
13. Without in any way implying that any provisions hereof is invalid
or unenforceable, the validity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other
provision.
14. This Agreement constitutes the whole agreement between the
parties hereto, and there are no terms other than those stated herein. No
variation hereof shall be deemed valid unless in writing and signed by the
parties hereto, and no discharge of the terms hereof shall be deemed valid
unless by full performance by the parties hereto or by a writing signed by
the parties hereto. No waiver by either party of any provisions or
condition of this Agreement to be performed by them should be deemed a
waiver of any other provisions of this Agreement.
15. Any notice, statement, report, request or demand required or
permitted to be given by this Agreement shall be in writing, and shall be
sufficient if addressed and sent by certified mail, return receipt
requested, to the parties at the addresses set forth above, or at such
other place that either party may designate by notice to the other and
shall be deemed given when so mailed.
16. This Agreement has been made in, and shall be interpreted
according to the laws of, the State of New York. The parties hereto submit
to the jurisdiction of the courts of the New York Supreme Court, County of
Erie, for the purpose of any actions or proceedings which may be required
to enforce the provisions of this Agreement or an award made in any
arbitration proceeding initiated hereunder.
IN WITNESS WHEREOF, the parties have hereunto set their respective
hands and seals causing these presents to be executed as of the day and
year first above written.
Witnessed:
Cora M. Martin /s/
Michael A. Simon
Witnessed: ACME ELECTRIC CORPORATION
Cora M. Martin By: /s/
Robert J. McKenna
Chairman & CEO
