EXHIBIT 10.4
EMPLOYMENT CONTRACT
Environmental Technologies, Inc., (ENTECH) a Nevada Corporation, addressed at
0000 Xxxxxxxxx Xxxxxx, Xxxxxx Xxxxxxxxx, XX 00000, Advanced Fuel Filtration
Systems, inc. ("AFFS"), a California corporation, 0000 Xxxxxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxx and Xxxxx X. Xxxxxx ("Xxxxxx"), an individual, of 00000 Xxxxxxx
Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, in consideration of the mutual promises made
herein, agree as follows:
ARTICLE 1. TERM OF EMPLOYMENT
Specified Period
Section 1.01. ENTECH/AFFS employs Xxxxxx and Xxxxxx accepts employment with
ENTECH and AFFS for a period of three (3) years beginning on December 15th, 2003
terminating on November 30th, 2006.
Automatic Renewal
Section 1.02. This agreement shall be renewed automatically for two succeeding
terms of Three (3) years, each unless either party gives notice to the other at
least 180 days prior to the expiration of any term of his or its intention not
to renew.
"Employment Term" Defined
Section 1.03. "Employment term" refers to the entire period of employment of
Xxxxxx by ENTECH and AFFS, whether for the periods provided above, or whether
terminated earlier as hereinafter provided or extended by mutual agreement
between ENTECH/AFFS and Xxxxxx.
ARTICLE 2. DUTIES AND OBLIGATIONS OF XXXXXX
General Duties
Section 2.01. Xxxxxx shall serve as the Chief Operating Officer of AFFS. In his
capacity as Chief Operating Officer of AFFS, Xxxxxx shall do and perform all
services, acts, or things necessary or advisable, consistent with the normal
duties of the chief operating officer of a company to manage and conduct the
business of AFFS, including the hiring and firing of all employees other than
the officers of AFFS, subject at all times to the reasonable and prudent
policies set by AFFS's Board of Directors, and to the consent of the Board when
required by the terms of this contract. In addition, throughout the employment
term.
Matters Requiring Consent of Board of Directors
Section 2.02. Xxxxxx shall not, without specific approval of AFFS's Board of
Directors, do or contract to do any of the following:
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(1) Borrow on behalf of AFFS more than set forth in the fiscal budget approved
by the Board of Directors of ENTECH or AFFS.
(2) Purchase capital equipment for amounts in excess of the amounts budgeted for
expenditure by the Board of Directors of ENTECH or AFFS.
(3) Sell any capital asset of AFFS.
(4) Terminate the services of any other officer of AFFS or hire any replacement
of any officer whose services have been terminated.
(5) Commit AFFS to the expenditure of funds for the development and sale of new
products or services more than set forth in the fiscal budget approved by the
Board of Directors of AFFS.
Devotion to AFFS's Business
Section 2.03. (a) Xxxxxx shall devote his entire productive time, ability, and
attention to the business of AFFS during the term of this contract.
(b) Xxxxxx shall not engage in any other business duties or pursuits whatsoever,
or directly or indirectly render any services of a business, commercial, or
professional nature to any other person or organization, whether for
compensation or otherwise, without the prior written notice to AFFS's Board of
Directors. The expenditure of reasonable amounts of time for outside activities,
e.g., educational, charitable, professional or political activities shall not be
deemed a breach of this agreement if those activities do not materially
interfere with the services required under this agreement and shall not require
the prior written notice to AFFS's Board of Directors.
(c) This agreement shall not prohibit Xxxxxx from making passive personal
investments or conducting private business affairs if those activities do not
materially interfere with the services required under this agreement. However,
Xxxxxx shall not directly or indirectly acquire, hold, or retain any interest in
any business competing with or similar in nature to the business of AFFS.
Competitive Activities
Section 2.04. (a) During the term of this contract, Xxxxxx shall not, directly
or indirectly, either as an employee, consultant, agent, principal, partner,
stockholder, corporate officer, director, or in any other individual or
representative capacity, engage or participate in any business that is in
competition in any manner whatsoever with the business of AFFS.
(b) Xxxxxx, subject to receiving compensation as set forth at Paragraph 8.0.5.
in the event of termination, agrees that during the term of this contract and
for a period of Three (3) years after termination of this agreement, Xxxxxx
shall not directly or indirectly solicit, hire, recruit, or encourage any other
employee of AFFS to leave AFFS.
Uniqueness of Xxxxxx'x Services
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Section 2.05. Xxxxxx represents and agrees that the services to be performed
under the terms of this contract are of a special, unique, unusual,
extraordinary, and intellectual character that gives them a peculiar value, the
loss of which cannot be reasonably or adequately compensated in damages in an
action at law. Xxxxxx, therefore, expressly agrees that AFFS, in addition to any
other rights or remedies that AFFS may possess, shall be entitled to injunctive
and other equitable relief to prevent or remedy a breach of this contract by
Xxxxxx.
Indemnification for Negligence or Misconduct
Section 2.06. Xxxxxx shall indemnify and hold ENTECH and AFFS harmless from all
liability for loss, damage, or injury to persons or property resulting from the
negligence or misconduct of Xxxxxx from acts not in the normal course and/or
scope of his duties and activities as an Officer and/or Director of either
ENTECH or AFFS.
Trade Secrets
Section 2.07. (a) The parties acknowledge and agree that during the term of this
agreement and in the course of the discharge of his duties hereunder, Xxxxxx
shall have access to and become acquainted with financial, personnel, sales,
scientific, technical and other information regarding formulas, patterns,
compilations, programs, devices, methods, techniques, operations, plans and
processes that are owned by AFFS, actually or potentially used in the operation
of AFFS's business, or obtained from third parties under an agreement of
confidentiality, and that such information constitutes AFFS's "trade secrets."
(b) Xxxxxx specifically agrees that he shall not misuse, misappropriate, or
disclose in writing, orally or by electronic means, any trade secrets, directly
or indirectly, to any other person or use them in any way, either during the
term of this agreement or at any other time thereafter, except as is required in
the course of his employment.
(c) Xxxxxx acknowledges and agrees that the sale or unauthorized use or
disclosure in writing, orally or by electronic means, of any of AFFS's trade
secrets obtained by Xxxxxx during the course of his employment under this
agreement, including information concerning AFFS's actual or potential work,
services, or products, the facts that any such work, services, or products are
planned, under consideration, or in production, as well as any descriptions
thereof, constitute unfair competition. Accordingly, Xxxxxx promises and agrees,
while AFFS or their assigns are not otherwise in breach of this agreement, not
to engage in any such unfair competition with AFFS, either during the term of
this agreement or at any other time Thereafter.
Services as Consultant
Section 2.08. Following Xxxxxx'x retirement, and if the employment term has not
been terminated for cause, Xxxxxx shall make his advice and counsel available to
AFFS for such a period as either may desire. The parties agree that this advice
and counsel shall not entail full time service and shall be consistent with
Xxxxxx'x retirement status.
Use of Xxxxxx'x Name
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Section 2.09. (a) AFFS shall have the right to use the name of Xxxxxx as part of
the trade name or trademark of AFFS if it should be deemed advisable to do so,
provided that AFFS is not in breach of any covenant of this agreement. Any trade
name or trademark, of which the name of Xxxxxx is a part, that is adopted by
AFFS during the employment of Xxxxxx may be used thereafter by AFFS for as long
as ENTECH or AFFS deems advisable.
(b) Xxxxxx shall not, during the term of this agreement, use or permit the use
of his name in the trade name or trademark of any other enterprise if that other
enterprise is engaged in a business similar in any respect to that conducted by
AFFS, unless that trade name or trademark clearly indicates that the other
enterprise is a separate entity entirely distinct from and not to be confused
with AFFS and unless that trade name or trademark excludes any words or symbols
stating or suggesting prior or current affiliation or connection by that other
enterprise with either ENTECH or AFFS.
ARTICLE 3. OBLIGATIONS OF AFFS
General Description
Section 3.01. AFFS shall provide Xxxxxx with the compensation, incentives,
benefits, and business expense reimbursement specified elsewhere in this
agreement. In addition, AFFS shall require only those items consistent with
normal duties of the job.
Office and Staff
Section 3.02. AFFS shall provide Xxxxxx with appropriate office space,
furniture, fixtures, and administrative support suitable to Xxxxxx'x position
and adequate for the performance of his duties.
Indemnification of Losses of Xxxxxx
Section 3.03. AFFS shall indemnify Xxxxxx for all necessary expenditures or
losses incurred by Xxxxxx in direct consequence of the discharge of his duties
on AFFS's behalf.
ARTICLE 4. OBLIGATIONS OF ENTECH
Issuance of Shares of ENTECH
Section 4.01. Concurrent with the execution of this agreement and as part of the
inducement to enter into this agreement ENTECH shall have issued One-Hundred
Thousand (100,000) shares of its stock to Xxxxxx. To the extent that such
issuance of shares by ENTECH or transfer can be effected without recognition of
income or other tax to Xxxxxx the parties agree to execute such other and
further documents as will effect such non-recognition.
ARTICLE 5. COMPENSATION OF XXXXXX
Annual Salary
Section 5.01. (a) As initial compensation for the services to be performed
hereunder, AFFS shall pay Xxxxxx a salary at the rate of One Hundred Fifty Six
Thousand dollars ($156,000.00) per annum, payable not less than twice monthly
during the employment term.
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(b) Xxxxxx shall receive such annual increases in salary as may be determined by
AFFS's Board of Directors in its reasonable discretion on an annual basis
commensurate with Xxxxxx'x performance and/or attainment of AFFS business
objectives and any cost of living increases. In no event, shall any such
increase be less than salary increases received by other persons similarly
employed by AFFS.
Deferred Compensation
Section 5.02. If Xxxxxx remains in the employ of AFFS until age 65 or on earlier
retirement on mutual written consent of both Xxxxxx and AFFS, AFFS agrees to pay
to Xxxxxx additional compensation, commencing with his first full month of
retirement at the annual rate of 80 percent of the annual salary which he is
receiving at age 65 payable in equal monthly installments on the last day of
each month during Xxxxxx'x entire lifetime.
Qualified Pension Programs
Section 5.03. Xxxxxx shall participate ratably in any qualified pension or
profit-sharing programs of ENTECH/AFFS or its successors.
Disability
Section 5.04. If Xxxxxx for any reason whatsoever becomes disabled so that he is
unable to perform the duties prescribed herein, AFFS agrees to pay Xxxxxx one
hundred percent (100%) of Xxxxxx'x annual salary reduced by the benefits of any
disability insurance policy, payable in the same manner as provided for the
payment of salary herein to the extent not covered by disability insurance
payments set forth in Section 7.06, for the remainder of the employment term
provided for herein.
ARTICLE 6. XXXXXX INCENTIVES
Incentive Payment Based on Performance
Section 6.01. (a) For each fiscal year of AFFS agrees to pay Xxxxxx, within
Ninety days (90) days after the end of AFFS's fiscal year, an annual incentive
payment based on the profits of AFFS.
(b) If the employment term is terminated by AFFS for cause, Xxxxxx shall not be
entitled to any portion of the annual profit-sharing payment for the fiscal year
in which that termination occurs. However, if this contract should expire or be
terminated for reasons other than cause, Xxxxxx shall be entitled to a
percentage of the annual profit-sharing payment equal to the percentage of the
fiscal year worked.
(c) In no event shall the payment of such a profit-sharing payment be less than
any profit sharing payment, performance incentive, or similar incentive, ratably
determined, paid to other persons similarly employed by AFFS or ENTECH
(including the members of its board, its employees, or the employees of its
subsidiaries).
Stock Option 6.01. (a) Xxxxxx shall be given the option to participate in any
Executive Stock Option Plan offered by ENTECH or AFFS during the term of this
employment and thereafter to the extent allowed by the Plan or applicable Law.
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(b) In no event shall the benefit of such a stock option be less than any stock
option or similar incentive, ratably determined, as to other persons similarly
employed by AFFS or ENTECH (including the members of its board, its employees,
or the employees of its subsidiaries).
ARTICLE 7. XXXXXX BENEFITS
Annual Vacation
Section 7.01. Xxxxxx shall be entitled to three (3) weeks vacation time each
year with full pay. If Xxxxxx is unable for any reason to take the total amount
of authorized vacation time during any year, he may accrue that time and add it
to vacation time for any following year or may receive a cash payment in an
amount equal to the amount of annual salary attributable to that period or will
not earn vacation time in any subsequent year until the earned vacation time is
used.
Illness
Section 7.02. Xxxxxx shall be entitled to ten days (10) per year as sick leave
with full pay.
Use of Automobile
Section 7.03. (a) AFFS shall provide Xxxxxx with a monthly vehicle allowance of
Eight Hundred fifty Dollars ($850.00).
(b) AFFS shall pay all operating expenses of the automobile.
Medical Insurance Coverage/Payment of Medical Premiums
Section 7.04. (a) AFFS agrees to provide Xxxxxx with or to include Xxxxxx in
full-coverage medical, major medical, hospital, dental, and eye care insurance.
AFFS further agrees to reimburse Xxxxxx for all medical and dental expenses
incurred by Xxxxxx, his spouse, and those of his children who qualify as his
dependents under Section 152 of the Internal Revenue Code of 1986 excepting
co-payments or deductibles under such policies .
(b) In no event shall the benefits under such policies of insurance be less than
any less than the coverage afforded to those employed by ENTECH (including the
members of its board, its employees, or the employees of its subsidiaries) or
AFFS.
Disability Insurance
Section 7.05. To the extent that ENTECH (including the members of its board, its
employees, or the employees of its subsidiaries) or AFFS provide Disability
Insurance to any of their employees or directors, similarly employed, AFFS
agrees to obtain a policy of disability insurance for the benefit of Xxxxxx in
such an amount as will compensate Xxxxxx as provided in this agreement in full
in the event of his partial or full disability.
ARTICLE 8. BUSINESS EXPENSES
Payment of Expenses
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Section 8.01. (a) It is understood and agreed by the parties that the services
required by AFFS will require Xxxxxx to incur entertainment expenses on behalf
of AFFS. AFFS hereby agrees to and shall make available to, and/or reimburse
Xxxxxx for, such amounts as are reasonably incurred in connection with the
business of AFFS.
(b) Xxxxxx shall, however, furnish to AFFS adequate records and other
documentary evidence required by federal and state statutes and regulations for
the substantiation of each such expenditure as an income tax deduction.
Section 8.02. (a) AFFS shall promptly reimburse Xxxxxx for all other reasonable
business expenses incurred by Xxxxxx in connection with the business of AFFS.
(b) Each such expenditure shall be reimbursable only if it is of a nature
qualifying it as a proper deduction on the federal and state income tax return
of AFFS.
(c) Each such expenditure shall be reimbursable only if Xxxxxx furnishes to AFFS
adequate records and other documentary evidence required by federal and state
statutes and regulations for the substantiation of each such expenditure as an
income tax deduction.
ARTICLE 9. TERMINATION OF EMPLOYMENT
Termination for Cause
Section 9.01. (a) AFFS may terminate this agreement only if Xxxxxx willfully
breaches or habitually neglects the duties which he is required to perform under
the terms of this agreement or incurably commits the act set for in Section (d)
hereof which would prevent the effective performance of his duties.
(b) AFFS may at its option terminate this agreement for the reasons stated in
this Section by giving written notice of termination to Xxxxxx without prejudice
to any other remedy to which AFFS may be entitled either at law, in equity, or
under this agreement.
(c) The notice of termination required by this section shall specify the ground
for the termination and shall be supported by a statement of all relevant facts
in justification for the termination.
(d) Termination under this section shall be considered for cause" for the
purposes of this agreement.
1. Permanent Disability;
2. The customers, suppliers or financial institutions with which the
AFFS has agreements refuse to accept such Shareholder's continued involvement in
the operation of the AFFS's business;
3. Habitual drunkenness;
4. Conviction of a crime involving defalcation, dishonesty or theft.
5. Commingling of the AFFS's assets with his assets; 1.
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6. Acquisition of an interest adverse to that of the AFFS;
7. Mismanagement of the assets of the AFFS;
8. Taking of unauthorized compensation or perquisites;
9. Failure to act as directed by the AFFS unless reasonable cause
exists therefor;
10. Misappropriation or misuse of assets, trade secrets, proprietary
customer, supplier or process information of the AFFS; or
11. Failure to obey a court order regarding the AFFS and/or its
business affairs.
(e) In the event that AFFS desires to terminate Xxxxxx for cause and the breach
is curable, Xxxxxx shall be given written notice of the intention of AFFS to
terminate Xxxxxx'x employment under this agreement and Xxxxxx shall be given a
ninety day (90) period of time to cure the breach as reasonably required, in
which latter case, no termination for cause shall occur.
Termination Without Cause
Section 9.02. (a) This agreement shall be terminated upon the death of Xxxxxx.
(b) AFFS reserves the right to terminate this agreement not less than twelve
months (12) after Xxxxxx suffers any physical or mental disability that would
prevent the performance of his essential job duties under this agreement, unless
reasonable accommodation can be made to allow Xxxxxx to continue working. Such a
termination shall be effected by giving Thirty days (30) written notice of
termination to Xxxxxx Termination pursuant to this provision shall not prejudice
Xxxxxx'x rights to continued compensation pursuant to Section 5.03 or 9.0.5. of
this agreement.
(c) Termination under this section shall not be considered "for cause" for the
purposes of this agreement.
Effect of Merger, Transfer of Assets, or Dissolution
Section 9.03. (a) This agreement shall not be terminated by any merger,
consolidation, reorganization, voluntary or involuntary dissolution of AFFS in
which AFFS is not the consolidated or surviving corporation, or a transfer of
all, or substantially all, of the assets of AFFS.
(b) in the event of any such merger or consolidation or transfer of assets,
AFFS's rights, benefits, and obligations hereunder shall be assigned to the
surviving or resulting corporation or the transferee of AFFS's assets. The
obligations of AFFS shall become the obligations of the surviving or resulting
corporation.
(c) It is anticipated that ENTECH will acquire either the outstanding stock of
or business assets of AFFS. To that extent, ENTECH agrees to assume and
guarantee the obligations under this agreement.
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Payment On Termination
Section 9.04. Notwithstanding any provision of this agreement, if AFFS
terminates this agreement, it shall pay Xxxxxx an amount equal to his annual
salary at the then current rate of compensation beginning upon the effective
date of termination for a period of Three (3) years thereafter. AFFS further
agrees, for three (3) years following any such termination, to reimburse Xxxxxx
for all medical and dental expenses incurred by Xxxxxx, his spouse, and those of
his children.
Termination by Xxxxxx
Section 9.05. (a) Xxxxxx may terminate his employment under this agreement for
cause, without affecting the obligations of AFFS to pay termination benefits by
giving AFFS at least three (3) months notice in advance.
(b) Termination under this section shall be considered for cause" for the
purposes of this agreement.
1. Bankruptcy of AFFS;
2. The appointment of a receiver or assignment for the benefit of
creditors of AFFS;
3. Request by AFFS of Xxxxxx reasonably deemed to be illegal or
unethical;
4. Conviction of AFFS of any misdemeanor which involves dishonesty or
moral turpitude or conviction of a felony;
5. Commingling of the AFFS assets with other assets;
6. The making of conflicting or unreasonable demands on Xxxxxx;
7. Mismanagement of the assets of the AFFS;
ARTICLE 10. GENERAL PROVISIONS
Notices
Section 10.01. Any notices to be given hereunder by either party to the other
shall be in writing and may be transmitted by personal delivery or by mail,
registered or certified, postage prepaid with return receipt requested. Mailed
notices shall be addressed to the parties at the addresses appearing in the
introductory paragraph of this agreement, but each party may change that address
by written notice in accordance with this section. Notices delivered personally
shall be deemed communicated as of the date of actual receipt; mailed notices
shall be deemed communicated as of the date of mailing.
Mediation
Section 10.02. Any controversy between ENTECH or AFFS and Xxxxxx involving the
construction or application of any of the terms, provisions, or conditions of
this agreement shall on the written request of either party served on the other,
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first be submitted to mediation by a neutral third party upon whom the parties
shall promptly agree. In the event that the parties are unable to agree or
resolve the controversy or dispute through mediation, the parties agree to
submit the matter directly to the Court.
Attorneys' Fees and Costs
Section 10.03. If any legal action is instituted to enforce or interpret the
terms of this agreement, the prevailing party shall be entitled to reasonable
attorneys' fees, costs, and necessary disbursements in addition to any other
relief to which that party may be entitled, provided that such party first
submitted the issue or controversy to mediation or made written demand therefore
and the other party or parties refuses or fails to submit to mediation within
thirty (30) days after such notice. in determining who is the prevailing party
for purposes of this agreement the Court or arbitrator may, in addition to legal
principals, consider any written offer of compromise made and rejected by a
party, during mediation.
Entire Agreement
Section 10.04. This agreement supersedes any and all other agreements, either
oral or in writing, between the parties hereto with respect to the employment of
Xxxxxx by ENTECH and AFFS and contains all of the covenants and agreements
between the parties with respect to that employment in any manner whatsoever.
Each party to this agreement acknowledges that no representation, inducements,
promises, or agreements, orally or otherwise, have been made by any party, or
anyone acting on behalf of any party, which are not embodied herein, and that no
other agreement, statement, or promise not contained in this agreement shall be
valid or binding on either party.
Modifications
Section 10.05. Any modification of this agreement will be effective only if it
is in writing and signed by the party to be charged.
Effect of Waiver
Section 10.06. The failure of either party to insist on strict compliance with
any of the terms, covenants, or conditions of this agreement by the other party
shall not be deemed a waiver of that term, covenant, or condition, nor shall any
waiver or relinquishment of any right or power at any one time or times be
deemed a waiver or relinquishment of that right or power for all or any other
times.
Partial Invalidity
Section 10.07. If any provision in this agreement is held by a court or
arbitrator of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
Law Governing Agreement
Section 10.08. This agreement shall be governed by and construed in accordance
with the laws of the State of California.
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Section 10.09. If Xxxxxx dies prior to the expiration of the term of his
employment, any sums that may be due him from ENTECH or AFFS under this
agreement as of the date of death shall be paid to Xxxxxx'x executors,
administrators, heirs, personal representatives, successors, and assigns.
Executed on December 31, 2003 at Corona. California.
Advanced Fuel Filtration Systems, Inc.
By: /s/ signature unreadable
------------------------------
Environmental Technologies, Inc.
By: /s/ signature unreadable
------------------------------
/s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
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