Exhibit 10.1

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

LLOYD HOFFMAN 

 

CHIEF EXECUTIVE OFFICER 

 

 

This Executive Employment Agreement (this “Agreement”) is made and entered into
this 31st day of August, 2016 (the “Effective Date”) by and between Alpha Pro
Tech, Ltd. (the “Company”) and Lloyd Hoffman (the “Executive”).

 

Recital

 

The Executive has served the Company since November of 1991, and the Company
desires to continue to employ the Executive pursuant to the terms and conditions
set forth herein; and, the Executive desires to continue to be employed by the
Company on such terms and conditions. The Executive has been and will continue
to be a key employee of the Company with significant access to confidential
information concerning the Company and its business. The disclosure or misuse of
such confidential information or the engaging in competitive activities by the
Executive would cause substantial harm to the Company.

 

Agreement

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:

 

1.     Term. The Company shall employ the Executive for a term commencing on the
Effective Date hereof and continuing until January 1, 2021, unless earlier
terminated pursuant to this Section or Section 9 hereof; provided that, on
January 1, 2021 and on each annual anniversary thereafter (such date and each
annual anniversary thereof, a “Renewal Date”), the Agreement shall be deemed to
be automatically extended, upon the same terms and conditions, for successive
periods of one year, unless either party provides written notice of its
intention not to extend the term of the Agreement at least 90 days prior to the
applicable Renewal Date. If either party elects not to renew this Agreement,
such election shall be treated as a termination without Cause (as defined in
Section 9 hereof).

 

 
 

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2.     Duties. The Executive will initially serve as the Chief Executive Officer
of the Company and shall have such duties of an executive nature as the Board of
Directors of the Company (the “Board”) shall assign or the Bylaws shall provide.

 

3.     Full Time; Best Efforts. The Executive shall use the Executive’s best
efforts to promote the interests of the Company and shall devote the Executive’s
full business time and efforts to its business and affairs. The Executive shall
not engage in any other activity which could reasonably be expected to interfere
with the performance of the Executive’s duties, services and responsibilities
hereunder.

 

4.    Compensation and Benefits. During the term of Executive’s employment with
the Company under this Agreement, the Executive shall be entitled to
compensation and benefits as follows:

 

(a)     Base Salary. The Executive shall receive an annual salary of $500,000
U.S. Dollars (“USD”) (the “Base Salary”). The Base Salary shall be paid in equal
installments in accordance with the Company’s then existing payroll practices.
Each installment of the Base Salary shall, at the time of payment to the
Executive, be converted from USD and shall be paid to the Executive in Canadian
Dollars using the Company’s presently existing conversion formula (“Conversion
Rate”), which formula is based upon publicly established currency exchange
rates. The Base Salary may from time to time be increased, but not decreased, by
the Board. The Base Salary shall be increased to $550,000 USD on January 1, 2017
and to $600,000 USD on January 1, 2018.

 

(b)     Discretionary Bonus. The Executive will be eligible for an annual bonus
in the form of cash (which shall be payable in USD and converted at the time of
payment using the Conversion Rate), stock options and/or restricted stock (to
the extent that such equity awards are available under the Company’s then
existing equity incentive plans). The payment of any bonus under this provision
shall be within the total discretion of the Board, which discretion shall be
exercised by the Board considering the financial performance of the Company and
the performance of the Executive during the Company’s preceding fiscal year.

 

 
 

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(c)     Benefits. In addition to the Base Salary and any discretionary bonus,
the Executive shall be entitled to receive the following benefits that are
generally available to the Company’s executive and/or other employees in
accordance with the then existing terms and conditions of the Company’s
policies:

 

(1)     Vacation plan or plans in effect from time to time during the period of
the Executive’s employment.

 

(2)     RRSP plan or other retirement savings plan, if any, in effect during the
period of the Executive’s employment.

 

(3)     Health care plan (including Medical Reimbursement Plan), if any, in
effect during the period of the Executive’s employment.

 

(4)     Car allowance for gas, repairs and insurance, if any, in effect during
the period of the Executive’s employment.

 

5.     Confidentiality; Intellectual Property. The Executive agrees that during
the Executive’s employment with the Company, whether or not under this
Agreement, and at all times thereafter:

 

(a)     The Executive will not at any time, directly or indirectly, disclose or
divulge any Confidential Information, except as required in connection with the
performance of the Executive’s duties for the Company, and except to the extent
required by law (but only after the Executive has provided the Company with
reasonable notice and opportunity to take action against any legally required
disclosure). As used herein, “Confidential Information” means all trade secrets
and all other information of a business, financial, marketing, technical or
other nature relating to the business of the Company including, without
limitation, any customer or vendor lists, prospective customer names, financial
statements and projections, know-how, pricing policies, operational methods,
methods of doing business, technical processes, formulae, designs and design
projects, inventions, computer hardware, software programs, business plans and
projects pertaining to the Company and including any information of others that
the Company has agreed to keep confidential; provided that Confidential
Information shall not include any information that has entered or enters the
public domain through no fault of the Executive.

 

(b)     The Executive shall make no use whatsoever, directly or indirectly, of
any Confidential Information at any time, except as required in connection with
the performance of the Executive’s duties for the Company.

 

(c)     Upon the Company’s request at any time and for any reason, the Executive
shall immediately deliver to the Company all materials (including all soft and
hard copies) in the Executive’s possession which contain or relate to
Confidential Information.

 

 
 

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(d)     All inventions, modifications, discoveries, designs, developments,
improvements, processes, software programs, works of authorship, documentation,
formulae, data, techniques, know-how, secrets or intellectual property rights or
any interest therein (collectively, the “Developments”) made by the Executive,
either alone or in conjunction with others, at any time or at any place during
the Executive’s employment with the Company, whether or not reduced to writing
or practice during such period of employment, which relate to the business in
which the Company is engaged or in which the Company intends to engage, shall be
and hereby are the exclusive property of the Company without any further
compensation to the Executive. In addition, without limiting the generality of
the prior sentence, all Developments which are copyrightable work by the
Executive are intended to be “work made for hire” as defined in Section 101 of
the Copyright Act of 1976, as amended, and shall be and hereby are the property
of the Company.

 

(e)      The Executive shall promptly disclose any Developments to the Company.
If any Development is not the property of the Company by operation of law, this
Agreement or otherwise, the Executive will, and hereby does, assign to the
Company all right, title and interest in such Development, without further
consideration, and will assist the Company and its nominees in every way, at the
Company’s expense, to secure, maintain and defend the Company’s rights in such
Development. The Executive shall sign all instruments necessary for the filing
and prosecution of any applications for, or extension or renewals of, letters
patent (or other intellectual property registrations or filings) of the United
States or any foreign country which the Company desires to file and relates to
any Development. The Executive hereby irrevocably designates and appoints the
Company and its duly authorized officers and agents as such Executive’s agent
and attorney-in-fact (which designation and appointment shall be deemed coupled
with an interest and shall survive the Executive’s death or incapacity), to act
for and in the Executive’s behalf to execute and file any such applications,
extensions or renewals and to do all other lawfully permitted acts to further
the prosecution and issuance of such letters patent, other intellectual property
registrations or filings or such other similar documents with the same legal
force and effect as if executed by the Executive.

 

6.     Noncompetition; Nonsolicitation. The Executive agrees that during the
Executive’s employment with the Company, whether or not under this Agreement,
and thereafter for two (2) years:

 

(a)     the Executive will not, directly or indirectly, engage in or assist any
other person or entity to engage in any business which competes with any
business in which the Company is engaging or in which the Company plans to
engage during or at the time of termination of the Executive’s employment,
anywhere in the United States or anywhere else in the world where the Company
does business or plans to do business (the “Territory”); provided however, that
should a court determine that the Territory to which this Agreement applies is a
different Territory, this Agreement shall be effective within the Territory so
established; and

 

 
 

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(b)     the Executive will not, directly or indirectly: (i) solicit or endeavor
to entice away from the Company, or offer employment or any consulting
arrangement to, or otherwise interfere with the business relationship of the
Company with any person or entity who is, or was within the one (1) year period
immediately prior thereto, employed by, associated with or a consultant to the
Company; or, (ii) solicit or endeavor to entice away from the Company or
otherwise interfere with the business relationship of the Company with any
person or entity who is, or was within the one (1) year period immediately prior
thereto, a customer or client of, supplier to or other party having material
business relations with the Company.

 

7.     Remedies. Without limiting the remedies available to the Company, the
Executive acknowledges that a breach of any of the covenants contained in
Sections 5 or 6 herein could result in irreparable injury to the Company for
which there might be no adequate remedy at law, and that, in the event of such a
breach or threat thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary injunction and a permanent injunction
restraining the Executive from engaging in any activities prohibited by Sections
5 or 6 herein or such other equitable relief as may be required to enforce
specifically any of the covenants of Sections 5 or 6 herein. The foregoing
provisions and the provisions of Sections 5 or 6 herein shall survive the term
of this Agreement and the termination of the Executive’s employment with the
Company, and shall continue thereafter in full force and effect in accordance
with their terms. For purposes of Sections 5, 6 and 7 of this Agreement, the
term “Company” shall include the Company, each of its affiliated companies,
subsidiaries and parent companies, and their respective successors and assigns.
In the event there is a breach of this Agreement, the prevailing party shall be
entitled to recover reasonable costs and attorney’s fees.

 

8.     Review of Agreement; Reasonable Restrictions. The Executive (a) has
carefully read and understands all of the provisions of this Agreement and has
had the opportunity for this Agreement to be reviewed by counsel, (b)
acknowledges that the duration, geographical scope and subject matter of
Sections 5, 6 and 7 of this Agreement are reasonable and necessary to protect
the goodwill, customer relationships, legitimate business interests and
Confidential Information of the Company and its affiliates, and (c) will be able
to earn a satisfactory livelihood without violating this Agreement.

 

 
 

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9.     Termination.

 

(a)     General. The Executive’s employment with the Company may be terminated
(i) by notice of nonrenewal of this Agreement pursuant to Section 1 hereof; (ii)
at any time by the Company with Cause or without Cause; or (iii) by the
Retirement, death or Disability of the Executive, each of which events entitle
the Executive to payments pursuant to the terms hereof.

 

(b)     Definitions. As used herein, the following terms shall have the
following meanings:

 

“Cause” means the willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company.

 

For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered “willful” unless it is done, or omitted to be
done, by the Executive in bad faith. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or based upon
the advice of counsel for the Company shall be conclusively presumed to be done,
or omitted to be done, by the Executive in good faith and in the best interests
of the Company. The cessation of employment of the Executive shall not be deemed
to be for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Board at a meeting of
the Board called and held for such purpose (after reasonable notice is provided
to the Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board), finding that, in the good faith opinion
of the Board, the Executive is guilty of the conduct described above, and
specifying the particulars thereof in detail.

 

“Change of Control” means the occurrence of any of the following after the
Effective Date:

 

(i) one person (or more than one person acting as a group) acquires ownership of
stock of the Company that, together with the stock held by such person or group,
constitutes more than 50% of the total fair market value or total voting power
of the stock of the Company; provided that, a Change of Control shall not occur
if any person (or more than one person acting as a group) owns more than 50% of
the total fair market value or total voting power of the Company’s stock and
acquires additional stock;

 

 
 

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(ii) one person (or more than one person acting as a group) acquires (or has
acquired during the twelve-month period ending on the date of the most recent
acquisition) ownership of the Company’s stock possessing 30% or more of the
total voting power of the stock of the Company;

 

(iii) a majority of the members of the Board are replaced during any
twelve-month period by directors whose appointment or election is not endorsed
by a majority of the Board before the date of appointment or election; or

 

(iv) the sale of all or substantially all of the Company’s assets.

 

Notwithstanding the foregoing, a Change of Control shall not occur unless such
transaction constitutes a change in the ownership of the Company, a change in
effective control of the Company, or a change in the ownership of a substantial
portion of the Company’s assets under Section 409A (as defined in Section 12
hereof).

 

“Disability” means illness (mental or physical) or accident which results in the
Executive being unable to perform the Executive’s duties as an Executive of the
Company for a total of 120 days in any consecutive twelve (12) month period.

 

“Retirement” means the voluntary resignation of the Executive after the
Executive has been an employee of the Company for at least 20 years.

 

(c)     Effect of Termination for Cause or for Resignation by the Executive
Prior to 20 Years of Service. If the Executive’s employment is terminated during
the term of this Agreement for Cause or if the Executive resigns prior to
reaching twenty years of service for the Company, the Company shall have no
further obligation to make any payments or provide any benefits to the Executive
hereunder after the date of termination or resignation except for payments of
Base Salary and any benefits that had accrued under Sections 4(a) and 4(c)
hereof but had not been paid prior to the date of termination or resignation or
that are otherwise payable as a matter of law. Amounts due under this subsection
(c) shall be payable in USD and shall be converted at the time of payment to
Canadian Dollars using the Conversion Rate. Payment of amounts due under this
subsection (c) shall be paid to the Executive, his estate, beneficiary or
designee within thirty (30) days of termination of employment.

 

 
 

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(d)     Termination without Cause. If the Executive is terminated without Cause
during the term of this Agreement, the Company shall pay to the Executive or his
designee: (i) payments of Base Salary and any benefits that had accrued under
Sections 4(a) or 4(c) hereof but had not been paid prior to the date of
termination or that are required to be paid as a matter of law; and (ii) a
termination payment which shall be calculated by dividing the Executive’s Base
Salary in effect upon the date of termination by 12 and multiplying that number
by the number of the Executive’s years of service for the Company. The
termination payment shall be paid to the Executive in equal monthly installments
commencing thirty (30) days after the date of termination and continuing each
month thereafter until such amount has been paid in full. Each monthly
installment of a termination payment due under this subsection (d) shall be
payable in USD and shall be converted at the time of payment to Canadian Dollars
using the Conversion Rate.

 

(e)      Retirement. If the Executive Retires and is not Disabled, the Executive
shall continue to provide services to the Company, either as a consultant or as
a representative, as requested by the Company, in the form of advice or to
preserve and/or increase the goodwill of the Company. These services shall be
performed by the Executive for a period of four (4) years and shall be rendered
in a manner consistent with the duties of the Executive pursuant to the terms
hereof. The Executive shall be paid for these services on a monthly basis an
amount consisting of 40% of the Executive’s Base Salary in effect on the date of
Retirement. Each payment due under this subsection (e) shall be payable in USD
and shall be converted at the time of payment to Canadian Dollars using the
Conversion Rate. The consulting or representative arrangement may only be
terminated by the Company for Cause.

 

(f)     Disability or Death.     If the Executive dies or becomes Disabled
during the term of this Agreement, the Company shall pay to the Executive, his
estate, beneficiary or other designee: (i) payments of Base Salary and any
Benefits that had accrued under Sections 4(a) or 4(c) hereof but had not been
paid prior to the date of termination or that are required to be paid as a
matter of law; and (ii) a death or disability payment which shall be calculated
by dividing the Executive’s Base Salary in effect on the date of death or
Disability by 24 and multiplying that number by the number of the Executive’s
years of service for the Company. This amount shall be paid to the Executive,
his estate, beneficiary or other designee in equal monthly installments
commencing thirty (30) days from the date of death or Disability and continuing
each month thereafter until such amount has been paid in full. Each payment due
under this subsection (f) shall be payable in USD and shall be converted at the
time of payment to Canadian Dollars using the Conversion Rate.

 

 
 

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(g)     Change of Control.     If there is a Change of Control of the Company
and the Executive is terminated in connection with such Change of Control or at
any time thereafter during the term of this Agreement, the Company shall pay to
the Executive the amount payable for termination without Cause pursuant to
Section 9(d) hereof. Such amount shall be paid to the Executive in a lump sum
within thirty (30) days after the Change of Control. Any payment due under this
subsection (g) shall be payable in USD and shall be converted at the time of
payment to Canadian Dollars using the Conversion Rate.

 

(h)     Conditions to Payment. Except in the case of death or Disability,
notwithstanding anything to the contrary contained in this Section, the
Company’s obligation to make the payments to the Executive provided for in this
Section shall be subject to the following provisions and conditions:

 

(1)     Release of Claims. The Executive must execute a general release in form
and substance acceptable to the Company and shall acknowledge the continued
application of Sections 5 and 6 hereof.

 

(2)     Consequences of Breach. If the Executive breaches the obligations under
Sections 5 or 6 of this Agreement, the Company may immediately cease payments
and may recover all amounts previously paid to the Executive after the date of
such breach. The cessation and recovery of these payments shall be in addition
to, and not as an alternative to, any other remedies at law or in equity
available to the Company, including without limitation the right to seek
specific performance or an injunction.

 

10.     Survival. The provisions of Sections 5 and 6 of this Agreement shall
survive the term of this Agreement and the termination of the Executive’s
employment with the Company, and shall continue thereafter in full force and
effect in accordance with their terms.

 

11.      Enforceability, Etc. This Agreement shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any provision
hereof shall be prohibited or invalid under any such law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating or nullifying the remainder of such provision or any other
provisions of this Agreement. If any one or more of the provisions contained in
this Agreement shall for any reason be held to be excessively broad as to
duration, geographical scope, activity or subject, such provisions shall be
construed by limiting and reducing it so as to be enforceable to the maximum
extent permitted by applicable law.

 

 
 

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12.     Section 409A.

 

(a)        To the extent that the Internal Revenue Code applies to the
Executive, but not otherwise, this Agreement will be administered, interpreted
and construed in compliance with Section 409A of the Internal Revenue Code and
the regulations and other guidance promulgated thereunder (“Section 409A”),
including any exemption thereunder.  With respect to payments, if any, subject
to Section 409A (and not excepted therefrom), each such payment is paid as a
result of a permissible distribution event, and at a specified time, consistent
with Section 409A.  The Executive has no right to, and there shall not be, any
acceleration or deferral with respect to payments hereunder.  The Executive
acknowledges and agrees that the Company shall not be liable for, and nothing
provided or contained in this Agreement will obligate or cause the Company to be
liable for, any tax, interest or penalties imposed on the Executive related to
or arising with respect to any violation of Section 409A.  For purposes of this
Agreement, any reference to “termination of employment”, “termination” or
similar reference shall be construed to be a reference to “separation from
service” within the meaning of Section 409A. 

 

(b)        Notwithstanding any other provision of this Agreement to the
contrary, to the extent that any amount payable or benefit to be provided under
this Agreement constitutes an amount payable or benefit to be provided under a
“nonqualified deferred compensation plan” (as defined in Section 409A) that is
not exempt from Section 409A, and such amount or benefit is payable or to be
provided as a result of a “separation from service” (as defined in Section
409A), and the Executive is a “specified employee” (as defined and determined
under Section 409A and any relevant procedures that the Company may establish)
at the time of his “separation from service,” then such payment or benefit will
not be made or provided to the Executive until the day after the date that is
six months following the Executive’s “separation from service,” at which time
all payments or benefits that otherwise would have been paid or provided to the
Executive under this Agreement during that six-month period, but were not paid
or provided because of this clause, will be paid or provided, with any cash
payment to be made in a single lump sum (without any interest with respect to
that six-month period).  This six-month delay will cease to be applicable if the
Executive “separates from service” due to death or if the Executive dies before
the six-month period has elapsed, in which event any such payments or benefits
will be paid or provided to the Executive’s estate as contemplated in Section 9
hereof. 

 

 
 

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13.     Notices. All notices, demands and communications under this Agreement
shall be in writing and shall be deemed to have been duly given and received if
(a) delivered personally, (b) mailed, certified mail, return receipt requested,
(c) sent by nationally recognized overnight delivery service, or (d) sent via
email, fax or similar electronic transmission during normal business hours, as
evidenced by mechanical confirmation of such email, fax or other electronic
transmission:

 

(1)           If to the Executive, to:

Lloyd Hoffman

60 Centurian Drive, Suite 112

Markham, Ontario L3R9R2

Canada

Email: lhoffman@alphaprotech.com

 

If to the Company, to:

 

Alpha Pro Tech, Ltd.

60 Centurian Drive, Suite 112

Markham, Ontario L3R9R2

Canada

Telephone: (905) 479-0654

E-mail: amillar@alphaprotech.com

 

With a copy (which shall

not constitute notice) to:

 

David B. Anderson

Anderson Weidner, LLC

505 North 20th Street

Financial Center, Suite 1450

Birmingham, AL 35203

Facsimile: (205) 322-3890

Telephone: (205) 324-1230

E-mail: dbanderson@andersonweidner.com

 

 
 

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or at such other address as may have been furnished by such person in the other
parties in accordance with this Section 13.

 

14.     Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware, without regard to
its choice of law provisions.

 

15.     Amendments and Waivers. This Agreement may be amended or modified only
by a written instrument signed by the Company and the Executive. No waiver of
this Agreement or any provision hereof shall be binding upon the party against
whom enforcement of such waiver is sought unless it is made in writing and
signed by or on behalf of such party. The waiver of a breach of any provision of
this Agreement shall not be construed as a waiver or a continuing waiver of the
same or any subsequent breach of any provision of this Agreement. No delay or
omission in exercising any right under this Agreement shall operate as a waiver
of that or any other right.

 

16.     Binding Effect. This Agreement shall be binding on and inure to the
benefit of the parties hereto and their respective heirs, executors and
administrators, successors and assigns, except that the rights and obligations
of the Executive hereunder are personal and may not be assigned without the
Company’s prior written consent. Any assignment of this Agreement by the Company
shall not be considered a termination of the Executive’s employment.

 

17.     Entire Agreement. This Agreement constitutes the final and entire
agreement of the parties with respect to the matters covered hereby and replaces
and supersedes all other agreements and understandings relating hereto and to
the Executive’s employment.

 

18.     Counterparts. This Agreement may be executed in any number of
counterparts, including counterpart signature pages or counterpart facsimile
signature pages, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

19.     No Conflicting Agreements. The Executive represents and warrants to the
Company that the Executive is not a party to or bound by any confidentiality,
noncompetition, nonsolicitation, employment, consulting or other agreement or
restriction which could conflict with, or be violated by, the performance of the
Executive’s duties to the Company or obligations under this Agreement.

 

 
 

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20.     Captions. The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.

 

21.     No Strict Construction. The parties hereto have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises under any provision of this
Agreement, this Agreement shall be construed as if drafted jointly by the
parties thereto, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of authoring any of the provisions of this
Agreement.

 

22.     Notification of New Employer. In the event that the Executive is no
longer an Executive of the Company, the Executive consents to notification by
the Company to the Executive’s new employer or its agents regarding the
Executive’s rights and obligations under this Agreement.

 

This Agreement has been executed and delivered as of the date first above
written.

 

 

COMPANY

 

        ALPHA PRO TECH, LTD.  

 

 

 

 

 

By:

/s/ Al Millar

 

 

 

Name:   Al Millar                                                 

 

 

 

Its:         President                                          
                  

 

                          EXECUTIVE               /s/Lloyd Hoffman       Lloyd
Hoffman