EXHIBIT 10.42
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement"), dated as of February 20, 1998,
between HESCO SALES, INC., a Florida corporation (the "Employer"), and XXXXXX
XXXXXX (the "Employee").
W I T N E S S E T H:
WHEREAS, Employer desires to retain the services of Employee, and
Employee desires to be employed by Employer, upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the agreements herein
contained, the parties hereto agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee, and Employee hereby
agrees to serve, as an employee of the Employer during the Term of Employment
(as defined below), with such duties and responsibilities as shall from
time-to-time be assigned to Employee by Employer. During the Term of Employment
employee shall use, during his working hours, his best efforts to promote the
interests of Employer and devote his time and energies with Employer to the
business and affairs of Employer. Employee shall be required to work no more
than eighty hours per month hereunder during the Term of Employment. Employer's
offices from which Employee shall be required to perform such services shall be
within a 20-mile radius of the Employer's existing offices located in Miami,
Florida; PROVIDED, HOWEVER, that Employee may be required to engage in a
reasonable amount of travel, as reasonably determined by Employer and Employee,
in the performance of his duties and responsibilities hereunder. Such duties
shall be consistent with those reasonably expected of a manager of Employer.
2. TERM OF EMPLOYMENT. Employee's employment hereunder shall be for the
period commencing on the date hereof and ending on the earliest to occur of the
fifth anniversary hereof or such time as Employee's employment may be terminated
in accordance with Section 4 hereof (the "Term of Employment").
3. COMPENSATION.
(a) BASE SALARY; COST OF LIVING ADJUSTMENTS. As compensation for
Employee's services hereunder and in consideration of his other agreements
contained herein (including without limitation his agreements contained in
Section 6 hereof), during the Term of Employment Employer shall pay Employee a
base salary at the rate of $75,000 per annum (the "Base Salary"), which shall be
payable in approximately equal installments in accordance with the normal
payroll practices of Employer as from time-to-time in effect (less payroll taxes
and other applicable payroll deductions, if any). Employee shall also be
entitled to annual cost of living adjustments in his Base Salary during the Term
of Employment in such amounts as shall be reasonably determined by Employer's
Board of Directors, which adjustments shall not be less
than the percentage increase in the Consumer Price Index for the southern region
of the United States.
(b) OPTIONS. In addition to the Base Salary, during each year of
the Term of Employment Employee shall, to the extent provided below, be granted
options to purchase a number of shares of the common stock, par value $.01 per
share (the "Hi-Rise Common Stock"), of Hi-Rise Recycling Systems, Inc., a
Florida corporation and parent of Employer ("Hi-Rise"), having a fair market
value equal to but not exceeding the Employee's Base Salary (the "Target
Options"). Specifically, Target Options shall be granted to Employee during each
year of the Term of Employment in accordance with the following criteria: (A)
Employee shall be entitled to receive 50% of the Target Options if the
Employer's net profit before taxes, interest, depreciation, amortization of
goodwill, amortization of other assets the cost of which has been written off,
affiliated party transactions with Employer or its affiliates (other than Xxxxxx
Xxxxxx) which are not on an arms-length basis, and overhead of Employer's
shareholder increases by at least one percent (1%) as compared to the average of
the Employer's net profit before taxes, interest, depreciation, amortization of
goodwill, amortization of other assets the cost of which has been written off,
affiliated party transactions with Employer or its affiliates (other than Xxxxxx
Xxxxxx) which are not on an arms-length basis, and overhead of Employer's
shareholder during the three previous years; and (B) Employee shall be entitled
to receive 50% of the Target Options if Employer's revenue projections for such
calendar year are achieved or exceeded. Such target revenues for the first year
shall be an increase from $12 million to $18 million, and shall be adjusted
annually thereafter. In the event the target revenue is not achieved, the
percentage of the Target Options attributable to revenue increases will be
adjusted pro-rata based on actual revenues achieved. By way of example, if the
revenue achieved for the first calendar year is $14 million (as opposed to the
target of $18 million), Employee would receive one-third of the Target Options
attributable to revenue projections (i.e., 16 2/3% of the total Target Options).
All Target Options granted to Employee hereunder shall (A) be granted under the
Hi-Rise Recycling Systems, Inc. 1996 Stock Option Plan, as amended from time to
time, or such other employee stock option plan adopted by Hi-Rise (each, a
"Plan"); (B) be exercisable at a price per share equal to the Fair Market Value
(as defined in the Plan) of the Hi-Rise Common Stock on the date of grant; (C)
vest equally over a five-year period; (D) be subject to such termination and
other provisions as are customarily included in option grants under the Plan
(including the requirement that the Employee enter into a customary form of
stock option agreement); (E) be subject to all of the provisions of the Plan;
(F) be granted within 60 days of the end of each calendar year during the Term
of Employment, commencing with the calendar year ended December 31, 1998; and
(G) be subject to an appropriate and equitable adjustment in the event that the
fifth year of Employee's employment hereunder is not a full calendar year.
Notwithstanding the foregoing, in the event that Employee's employment hereunder
does not continue following the expiration of the Term of Employment, all Target
Options then granted to the Employee which have not vested as of such date,
shall immediately vest and become exercisable by the Employee in accordance with
the terms of the Plan or any applicable stock option agreement(s).
(c) BENEFITS. Employee shall also be entitled to the following
during the Term of Employment: (i) the use of the two automobiles (the
"Vehicles") owned by Employer and heretofore used by Employee (which Vehicles
are more particularly described on Exhibit A
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hereto); (ii) payment of usual and routine maintenance, repairs and insurance
for the Vehicles; (iii) the right to participate in Employer's regular health
insurance plan for its employees as from time-to-time in effect (upon and
subject to the provisions of Employer's policies generally applicable to such
plan); and (iv) payment of the net annual premiums of that certain life
insurance policy on Employee's life which is payable to and held by Employee and
is more particularly described on Exhibit B hereto.
4. EARLY TERMINATION
(a) Employer may terminate Employee's employment for Cause (as
defined below) effective upon written notice by Employer to Employee of such
termination. The Employee shall be considered to have been terminated for
"Cause" if he is discharged by the Employer on account of one or more of the
following events: (i) Employee's repeated failure or refusal to perform specific
directives of Employer (after notice and a reasonable opportunity to cure), when
such directives are consistent with the scope and nature of Employee's duties
and responsibilities as set forth in Section 1 hereof, which failure is
determined by the Board of Directors of Employer to be material; (ii) dishonesty
of Employee in financial dealings with or financial dealings related to
Employer; (iii) Employee's conviction of a felony or of any crime involving
moral turpitude, fraud or misrepresentation; (iv) gross negligence or willful
misconduct of Employee resulting in substantial loss to Employer, substantial
damage to Employer's reputation or theft from Employer; or (v) Employee violates
Section 6 hereof.
(b) Employee's employment with Employer shall terminate
automatically upon the death of Employee, without any requirement of notice by
Employer.
(c) Employee may terminate his employment with Employer hereunder
upon not less than sixty (60) days prior written notice to Employer.
(d) Employer may terminate Employee's employment upon the
Disability (as defined below) of Employee, effective upon written notice by
Employer to Employee of such termination. For purposes of this Agreement,
"Disability" shall mean the absence of Employee from Employee's duties with
Employer for (i) three (3) consecutive months, or (ii) four (4) months (whether
or not consecutive) within any consecutive 12-month period, as a result of
incapacity due to mental or physical illness.
5. COMPENSATION UPON EARLY TERMINATION.
(a) If Employee's employment is terminated by Employer for Cause,
Employer shall pay Employee his accrued and unpaid Base Salary through the
termination date specified in Employer's notice of termination. Employee's
rights under any unexercised options to purchase Hi-Rise Common Stock granted to
Employee hereunder shall terminate on such termination date and Employee shall
have no further rights under or by virtue of this Agreement.
(b) If Employee's employment is terminated by Employer on account
of the Disability of Employee, Employer shall pay Employee his accrued and
unpaid Base Salary through the termination date specified in Employer's notice
of termination. Thereafter,
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Employee shall have no further rights under or by virtue of this Agreement;
PROVIDED, HOWEVER, that such termination shall not terminate Employee's rights,
if any, under (i) any unexercised options to purchase Hi-Rise Common Stock
granted to Employee hereunder (except to the extent otherwise contemplated by
such options, stock option agreement(s) related to the grant of such options and
the provisions of the Plan) or (ii) any employee benefit plan of Employer in
which Employee is then a participant if and to the extent that the terms of such
plan and Employer's policies related thereto contemplate continued participation
in the event of disability.
(c) In the event Employee terminates his employment hereunder
prior to the expiration of the Term of Employment, Employer shall pay Employee
his accrued and unpaid Base Salary through the termination date specified in the
notice set forth in Section 4(c) above. Thereafter, Employee shall have no
further rights under or by virtue of this Agreement; PROVIDED, HOWEVER, such
termination shall not terminate Employee's rights under any vested and
unexercised options to purchase Hi-Rise Common Stock granted to Employee
hereunder (except to the extent otherwise contemplated by such options, stock
option agreement(s) related to the grant of such options and the provisions of
the Plan).
(d) Upon Employee's death, Employer shall pay to the person
designated by Employee in a notice filed by Employee with Employer for such
purpose (or, if no such person is designated, to the personal representative or
executor of his estate) his (i) accrued and unpaid Base Salary through
Employee's date of death, and (ii) when, as and if received by Employer, any
payments Employee's spouse, beneficiaries or estate may be entitled to receive
upon the death of Employee pursuant to any employee benefit plan then maintained
by Employer in which Employee is then a participant. Thereafter, Employee shall
have no further rights under or by virtue of this Agreement; PROVIDED, HOWEVER,
that such termination shall not terminate Employee's rights under any
unexercised options to purchase Hi-Rise Common Stock granted to Employee
hereunder (except to the extent otherwise contemplated by such options, stock
option agreement(s) related to the grant of such options and the provisions of
the Plan).
6. COVENANT NOT TO COMPETE; INTELLECTUAL PROPERTY; CONFIDENTIALITY
(a) COVENANT NOT TO COMPETE. During the Term of Employment and for
a period of two (2) years thereafter, Employee will not, within any jurisdiction
in the United States in which Employer or any affiliated corporation conducts
its business operations, directly or indirectly own, manage, operate, control,
be employed by or participate in the ownership, management, operation or control
of, or be connected in any manner with, any business of the type and character
engaged in and competitive with that conducted by Employer or any affiliated
corporation as of the date hereof. The decision of Employer's Board of Directors
as to what constitutes a competing business shall be final and binding upon
Employee. For these purposes, Employee's ownership of securities of a public
company not in excess of 1% of any class of such securities shall not be
considered to be competition with Employer.
During the Term of Employment and for a period of two (2) years
thereafter, Employee further agrees to refrain from (i) interfering with the
employment relationship between Employer
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or any affiliated corporation and its or such affiliated corporation's other
employees by soliciting any of such individuals to participate in independent
business ventures, and (ii) soliciting competitive business from any client or
prospective client of Employer or any affiliated corporation.
It is the desire and intent of the parties that if the provisions of
this Section 6(a) shall be adjudicated to be invalid or unenforceable, this
Section 6(a) shall be deemed amended to delete therefrom such provision or
portion adjudicated to be invalid or unenforceable, such amendment to apply only
with respect to the operation of this Section 6(a) in the particular
jurisdiction in which such adjudication is made. The provisions of this Section
6(a) shall survive the termination of this Agreement except to the extent as
provided in Section 9 hereof.
(b) INTELLECTUAL PROPERTY. During the Term of Employment, Employee
will disclose to Employer all ideas, inventions and business plans developed by
Employee during such period which relate directly or indirectly to the business
of Employer or any affiliated corporation, including without limitation any
process, operation, product or improvement which may be patentable or
copyrightable. Employee agrees that such will be the property of Employer and
that Employee will, at Employer's request and expense, do whatever is necessary
to secure the rights thereto by patent, copyright or otherwise to Employer.
(c) CONFIDENTIALITY. Employee agrees that Employee will not
divulge to anyone (other than Employer or any persons employed or designated by
Employer) any knowledge or information of any type whatsoever of a confidential
nature relating to the business of Employer or any affiliated corporation,
including without limitation all types of trade secrets (unless readily
ascertainable from public or published information or trade sources), unless
disclosure is required by law. Employee further agrees not to disclose, publish
or make use of any such knowledge or information of a confidential nature
without the prior written consent of Employer (unless readily ascertainable from
public or published information or trade sources), unless disclosure or use is
required by law. The provisions of this Section 6(c) shall survive the
termination of this Agreement.
7. REIMBURSEMENT OF EXPENSES. Employee shall be entitled to be
reimbursed for reasonable travel and other expenses incurred in connection with
Employee's services to Employer pursuant to and during the Term of Employment
under this Agreement in a manner consistent with the normal policies of Employer
from time-to-time in effect.
8. BREACH BY EMPLOYEE. Both parties recognize that the services to be
rendered under this Agreement by Employee are special, unique and extraordinary
in character, and that in the event of the breach by Employee of the terms and
conditions of this Agreement to be performed by Employee, or in the event
Employee performs services for any person, firm, corporation or other entity
engaged in a competing line of business with Employer or any affiliated
corporation, Employer shall be entitled, if it so elects, to institute and
prosecute proceedings in any court of competent jurisdiction, either in law or
in equity, to obtain damages for any breach of this Agreement, or to enforce the
specific performance thereof by Employee, or
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to enjoin Employee from performing services for any such other person, firm,
corporation or other entity.
9. CROSS-DEFAULT. In the event that Employer defaults under any of the
following lease agreements:
(a) Lease between Xxxxxx Xxxxxx and Xxxxxx Xxxxxx and Hesco Sales,
Inc. dated February 20, 1998 as to property located in Hialeah,
Florida;
(b) Lease between Xxxxxx Xxxxxx and Xxxxxx Xxxxxx and Hesco Sales,
Inc. dated February 20, 1998 as to property located in Okahumpka,
Florida; or
(c) Lease between Xxxxxx Family Limited Partnership and Hesco
Sales, Inc. dated February 20, 1998 as to property located in Miami,
Florida;
then Employee's obligations under Section 6(a) of this Agreement
shall terminate.
10. TRANSFER OF VEHICLES. In the event that Employee's employment
hereunder is not terminated pursuant to the provisions of Sections 4 of this
Agreement prior to the fifth anniversary hereof, Employer will transfer and
deliver title to the Vehicles to Employee as promptly as is reasonably
practicable following the expiration of the Term of Employment.
11. ASSIGNMENT. This Agreement is a personal contract and, except as
specifically set forth herein, Employee's rights and obligations hereunder may
not be sold, transferred, assigned, pledged or hypothecated by Employee. The
rights and obligations of Employer hereunder may, in whole or in part, be sold,
transferred or assigned by Employer to any affiliated or successor corporation;
PROVIDED, HOWEVER, that any such transfer will not relieve Employer of its
obligations hereunder.
12. GOVERNING LAW; CAPTIONS. This Agreement contains the entire
agreement between the parties and shall be governed by the laws of the State of
Florida. It may not be changed orally, but only by agreement in writing signed
by the party against whom enforcement of any waiver, change, modification or
discharge is sought. Caption headings are for convenience of reference only and
shall not be considered a part of this Agreement.
13. PRIOR AGREEMENTS. This Agreement supersedes and terminates all
prior agreements between Employer and Employee relating to the subject matter
hereof.
14. NOTICES. Any notice or other communication required or permitted
hereunder shall be sufficiently given if delivered in person or sent by telecopy
or by registered or certified mail, postage prepaid, (i) in Employer's case,
addressed to Employer in care of the Chairman of the Board of its parent
corporation, as follows: Hi-Rise Recycling Systems, Inc., 00000 X.X. 00xx
Xxxxxx, Xxxxx, Xxxxxxx 00000; or (ii) in Employee's case, addressed as follows:
c/o Xxxxxxx X. Xxxxx, Xxxxxxxxx & Xxxxx, P.A., One Biscayne Tower, Suite 0000,
Xxx Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx, Xxxxxxx 00000; or to such other address or
number as shall be furnished in
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writing by either party to the other in the fashion indicated above. Any such
notice or other communication shall be deemed to have been given as of the date
so delivered in person, sent by telecopier or sent by mail.
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IN WITNESS WHEREOF, Employer has by its appropriate officer signed this
Agreement and Employee has signed this Agreement, on and as of the date and year
first above written.
HESCO SALES, INC.
By:/s/ J. XXXX XXXXXXX
----------------------------
Name: J. XXXX XXXXXXX
Title: _CHIEF OPERATING OFFICER
/s/ XXXXXX XXXXXX
-------------------------------
XXXXXX XXXXXX
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EXHIBIT A
1. DESCRIPTION OF VEHICLES:
VEHICLE ID STATE WHERE LICENSE PLATE
MAKE MOD COLOR YEAR NO. REGISTERED NO.
---- ----- ----- ---- ------------ ---------- ---------------
(a) Automobile Mercedes X000X Xxxxx 00 XXXXX00 Xxxxxxx XXX00X
X00X000000
(b) Automobile Mercedes X000X Xxxxx 00 XXXXX00X0 Xxxxxxx QNV77B
SC15755
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EXHIBIT B
2. DESCRIPTION OF INSURANCE (AND RELATED PREMIUMS):
None
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