EMPLOYMENT AGREEMENT
This Agreement is entered into this 1st day of January, 1998 by and
b e tween METALCLAD CORPORATION, a Delaware corporation (hereinafter
referred to as the "Company"), and Xxxxx X. Xxxxxx (hereinafter referred
to as "Executive") under the following terms and conditions:
RECITALS:
WHEREAS, the Company and Executive desire to set forth the terms and
conditions on which (i) the Company shall employ Executive, (ii) Executive
shall render services to the Company, and (iii) the Company shall
compensate Executive for such services; and
WHEREAS, in connection with the employment of Executive by the
Company, the Company desires to restrict Executive s rights to compete
with the business of the Company;
NOW, THEREFORE, in consideration of the mutual promises, covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT.
The Company hereby employs Executive and Executive hereby accepts
employment with the Company upon the terms and conditions hereinafter set
forth.
2. TERM.
2.1 The term of this Agreement (the "Term") shall be for a three
year period commencing on the Effective Date (as defined in Subsection 2.3
below) of this Agreement, subject, however, to termination as provided
herein in Sections 6 and 7 below.
2.2 Each year, prior to the anniversary date, the company and
executive shall meet to determine any additional compensation, if any, for
the remaining contract term.
2.3 The effective date of this Agreement shall be January 1,
1998 (the "Effective Date").
3. COMPENSATION.
3.1 For all services rendered by Executive under this Agreement,
the Company shall pay or cause one or more of its subsidiaries to pay
Executive during the term hereof a salary at the rate of Two Hundred Fifty
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Thousand Dollars ($250,000.00) per year. The Company shall pay such
compensation to Executive semi-monthly in accordance with its standard
practice for payment of compensation to its employees.
3.2 Executive shall be entitled to periodic cash bonuses in
accordance with the Metalclad Corporation Stock Option and Incentive Plan,
any other incentive bonus plans or other forms of compensation, at the
discretion of the Company s Board of Directors, dependent upon Employee s
performance. Executive shall be entitled to participate in the Company s
401(k) plan.
3.3 Executive shall be entitled to a car allowance, housing
allowance and to health insurance for him and his dependents.
3.4 All compensation shall be subject to customary withholding
t a x and other employment taxes as are required with respect to
compensation paid by a corporation to an employee.
3.5 In order to provide proper incentives to those personnel
engaged in developing waste processing facilities in Mexico, the Company
recognizes that it must institute special bonus programs and incentive
bonus programs from time to time. For the calendar year 1998, the
Compensation Committee has approved both a special bonus program and an
incentive bonus program as follows:
3.5.1 Special Bonus Program. Because of the Company s
involvement in a NAFTA arbitration against the Federal Government of
Mexico, it requires an extraordinary effort on the part of key employees
to ensure the success of the litigation on the part of the Company. A
total of five percent (5%) of the award, or the value of the settlement,
is to be shared with three key executives. The Executive herein shall be
entitled to two and one-quarter percent (2.25%) of the total award, or the
total value of the settlement of the case, in the event there is a
settlement.
3.5.2 Incentive Bonus Program. For the calendar year 1998,
the Board of Directors has set three major objectives for the key
executives. The objectives include opening the Aguascalientes project for
commercial operations, keeping the Company properly capitalized for
growth, and respecting the public market participation in the Company to
ensure that gains made by the Company are recognized by its public
ownership and reflected in its share price. To the extent that these
objectives are met, the key participants in the incentive bonus program,
including the Executive herein, shall be entitled to a minimum of twenty
percent (20%) of his base salary to a maximum of one hundred fifty percent
(150%) of base salary, depending upon the extent to which the objectives
have been achieved.
It is expected that the foregoing bonuses will be earned in
1998, unless the settlement or conclusion of the NAFTA litigation takes
longer, in which case that particular special bonus will go beyond 1998
until there is a final resolution. It is expected that the Board of
Directors will provide additional bonus incentives for years subsequent to
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1998, provided that for the life of the contract there will always be at
least a minimum incentive bonus of twenty percent (20%) due in December of
each year.
4. DUTIES AND RESPONSIBILITIES
4.1 Executive shall, during the Term of this Agreement unless
otherwise agreed by management, devote his full attention and expend his
best efforts, energies, and skills on a full-time basis, to the business
of the Company and any corporation controlled by the Company (each, a
"Subsidiary"). The Company acknowledges that Executive is engaged in
other business activities separate from and outside the scope of the
business of the Company. The Company agrees that the devotion of
reasonable amounts of time to such other business activities will not
violate the terms of this Agreement on the conditions that (i) such
activities are not corporate opportunities of the Company; and (ii) such
activities do not interfere with the performance of Executive's duties
hereunder. For purposes of this Agreement, the term the "Company" shall
mean the Company and all Subsidiaries.
4.2 During the Term of this Agreement, Executive shall serve as
the President and Chief Executive Officer of the Company or in such other
capacities as determined by the Board of Directors or its Executive
Committee except as provided for under Subsection 7.1. In the performance
of all of his responsibilities hereunder, Executive shall be subject to
all of the Company s policies, rules, and regulations applicable to its
executive of comparable status and shall report directly to, and shall be
subject to, the direction and control of the Executive Committee of the
Company and shall perform such duties as shall be assigned to him by the
Board of Directors or the Executive Committee. In performing such duties,
Executive will be subject to and abide by, and will use his best efforts
to cause other employees of the Company to be subject to and abide by, all
policies and procedures developed by the Executive Committee or senior
management of the Company.
4.3 Without first obtaining the written permission of the Board
of Directors of the Company, or its Executive Committee, in each instance,
Executive will not authorize or permit the Company to engage the services
of, or engage in any business activity with, or provide any financial or
other benefit to, any affiliate of Executive. The phrase "affiliate of
Executive" as used in this Subsection 4.3 shall mean and include
Executive s family by blood or marriage (including, without limitation,
parents, spouse, siblings, children and in-laws), and any business or
business entity which is directly or indirectly owned or controlled by
Executive or any member of Executive s family or in which Executive or any
member of Executive s family has a direct or indirect financial interest
whatsoever.
4.4 To induce the Company to enter into this Agreement,
Executive represents and warrants to the Company that (i) Executive is not
a party or subject to any employment agreement or arrangement with other
person, firm, company, corporation or other business entity, (ii)
Executive is subject to no restraint, limitation or restriction by virtue
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of any law or rule of law or otherwise which would impair Executive s
right or ability (a) to enter the employ of the Company, or (b) to perform
fully his duties and obligations pursuant to this Agreement.
5. RESTRICTIVE COVENANTS
5.1 Executive acknowledges that (i) he has a major
responsibility for the operation, administration, development and growth
of the Company s business, (ii) the Company s business has become
international in scope, (iii) his work for the Company has brought him and
w i ll continue to bring him into close contact with confidential
information of the Company and its customers, and (iv) the agreements and
covenants contained in this Subsection 5.1 are essential to protect the
business interests of the Company and that the Company will not enter into
this Agreement but for such agreements and covenants. Accordingly,
Executive covenants and agrees as follows:
5.1.1 Except as otherwise provided for in this Agreement,
during the Term of this Agreement Executive shall not, directly or
indirectly, compete with respect to any services or products of the
Company which are either offered or are being developed by the Company as
of the date of termination; or, without limiting the generality of the
foregoing, by or become, or agree to be or become, interested in or
associated with, in any capacity (whether as a partner, shareholder,
owner, officer, director, Executive, principal, agent, creditor, trustee,
consultant, co-venturer or otherwise) any individual, corporation, firm,
association, partnership, joint venture or other business entity, which
competes with respect to any services or products of the Company which are
either offered or are being developed by the Company as of the date of
termination; provided, however, that Executive may own, solely as an
investment, not more than one percent (1%) of any class of securities of
any publicly held corporation in competition with the Company whose
securities are traded on any national securities exchange in the United
States of America.
5.1.2 During the Term of this Agreement and, for one year
thereafter ("Termination Period"), Executive shall not, directly or
indirectly, (i) induce or attempt to influence any Executive of the
Company to leave its employ, (ii) aid or agree to aid any competitor,
customer or supplier of the Company in any attempt to hire any person who
shall have been employed by the Company within the one (1) year period
preceding such requested aid, or (iii) induce or attempt to influence any
person or business entity who was a customer or supplier of the Company
during any portion of said period to transact business with a competitor
of the Company in Company s business.
5.1. During the Term of this Agreement, the Termination
Period and any time thereafter, Executive shall not disclose to anyone any
information about the confidential or proprietary affairs of the Company,
i n c l u ding, without limitation, trade secrets, trade "know-how",
inventions, customer lists, business plans, operational methods, pricing
p o licies, marketing plans, sales plans, identity of suppliers or
customers, sales, profits or other financial information, which is
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confidential to the Company or is not generally known in the relevant
trade, nor shall Executive make use of any such information for his own
benefit.
5.2 If Executive breaches Subsection 5.1 (the "Restrictive
Covenants"), the Company shall have the following rights and remedies,
each of which shall be enforceable, and each of which is in addition to,
and not in lieu of, any other rights and remedies available to the Company
at law or in equity:
5.2.1 Executive acknowledges and agrees that in the event
of a violation or threatened violation of any of the provisions of
Subsection 5.1.1, the Company shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunctive or mandatory relief obtained in any court of
competent jurisdiction without the necessity or proving damages, posting
any bond or other security, and without prejudice to any other rights and
remedies which may be available at law or in equity.
5.3 If any of the Restrictive Covenants, or any part thereof, is
held to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants, which shall be given full effect,
without regard to the invalid or unenforceable portions. Without limiting
the generality of the foregoing, if any of the Restrictive Covenants, or
any part thereof, is held to be unenforceable because of the duration of
such provision or the area covered thereby, the parties hereto agree that
the court making such determination shall have the power to reduce the
duration and/or area of such provision and, in its reduced form, such
provision shall then be enforceable.
5.4 The parties hereto intend to and hereby confer jurisdiction
to enforce the Restrictive Covenants upon the courts of any jurisdiction
within the geographical scope of such Restrictive Covenants. In the event
that the courts of any one or more of such jurisdictions shall hold such
Restrictive Covenants wholly unenforceable by reason of the breadth of
such scope or otherwise, it is the intention of the parties hereto that
such determination not bar or in any way affect the Company s right of the
relief provided above in the courts of any other jurisdictions within the
geographical scope of such Restrictive Covenants, as to breaches of such
covenants in such other respective jurisdictions, the above covenants as
they relate to each jurisdiction being, for this purpose, severable into
diverse and independent covenants.
6. TERMINATION.
6.1 The basic three-year term shall automatically be renewed
each year on the anniversary date of this Agreement, unless the Company
elects to terminate the Agreement. Upon election to terminate the
Agreement, the Company may exercise two options.
(i) It may elect to require the Executive to remain working
as per his duties and responsibilities outlined in Section 4.
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(ii) It may ask Executive to leave the day-to-day employ of
the Company and (a) remain as a consultant or (b) sever all relationships
with the Company whatsoever.
In either case, the Executive shall be entitled to his
annual compensation, including bonus and benefits during the remainder of
the three-year term.
6.2 The Company also may terminate Executive s employment under
this Agreement at any time for Cause. "Cause" shall exist for such
termination if Executive (i) is adjudicated guilty of illegal activities
by a court of competent jurisdiction, (ii) commits any act of fraud or
intentional misrepresentation, (iii) has engaged in serious misconduct,
which conduct has, or would, if generally known, materially adversely
affect the good will or reputation of the Company and which conduct
Executive has not cured or altered within ten (10) days following written
notice by the Board to Executive regarding such conduct, (iv) is in
material breach under this Agreement, or (v) Executive habitually fails to
perform the duties and responsibilities of his employment as set forth in
Section 4 of this Agreement or as may be assigned or delegated to him from
time to time by the Company, the Board, or the Executive Committee of the
Board, and, with regard to grounds (iv) and (v) the Board has given
Executive thirty (30) days written notice of the grounds for the
termination and the conduct required by Executive to cure such failure,
with such conduct outlined with reasonable specificity, and Executive has
not cured such failure, within the thirty (30) day period provided in the
written notice to Executive.
6.3 If the Company terminates Executive s employment under this
Agreement pursuant to the provisions of Subsections 6.2, Executive shall
be entitled to receive only six months severance pay unless the arbitrator
finds the he has been properly terminated pursuant to grounds (i) or (ii).
6.4 If Executive s employment with the Company is terminated due
to the death or permanent disability of Executive, the spouse of the
Executive, the estate of Executive or the Executive, as the case may be,
shall continue to receive compensation as determined in Section 7 below.
6.5 If Executive s employment with the Company is terminated as
the result of Executive s purely voluntary resignation for reasons other
than those set forth in Section 7 below, Executive shall not be entitled
to compensation after the effective date of such resignation.
7. TERMINATION COMPENSATION.
7.1 Compensation as defined in Section 3 above shall continue
for a period of three (3) years following the date of termination in the
event: (i) Executive is requested to resign pursuant to Section 6.1; (ii)
the death of Executive, said amount being paid to his spouse or estate as
the case may be; (iii) inability to discharge his responsibilities due to
health or a disability in which case, after six months of such a
condition, the Board may cancel the contract pursuant to paragraph 6.1; or
(iv) the Executive resigns due to a substantial change in ownership or
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Board membership as defined below.
7.2 A substantial change in ownership shall mean: (i) the sale
of over 50% of the corporation's assets, or (ii) a change in ownership of
over 50% of the outstanding stock of the Company; or (iii) the replacement
or change of over 65% of the Board in one fiscal year.
7.3 In the event Executive is requested to resign, employment is
terminated for any reason by the Company, including termination under
Sections 5 or 6 or in the event Executive voluntarily resigns as a result
of any of the events set forth in Section 7.1 above, then, and in any of
such events, all of the Executive s rights under the Company s Stock
Option and Incentive Plan and all other incentive bonus plans shall fully
and completely vest upon the date of such termination.
8. EXPENSES.
8.1 Executive shall be entitled to reimbursement of all
reasonable expenses actually incurred in the course of his employment.
Executive shall submit to the Company a standardized expense report form,
provided by the Company, and shall attach thereto receipts for all
expenditures. Expenses shall include housing, automobile expenses, and
travel.
8.2 The Company shall reimburse Executive within fifteen (15)
days after submission by Executive of his expense report.
9. THE COMPANY S AUTHORITY.
Executive agrees to observe and comply with the reasonable rules
and regulations of the Company as adopted by the Company s Board of
Directors, either orally or in writing, respecting performances of his
duties and to carry out and perform orders, directions, and policies
stated by the Board of Directors, to him from time to time, either orally
or in writing. Executive understands Company is a subsidiary of Metalclad
Corporation, a Delaware Corporation that operates with both a Board and an
Executive Committee. Direction by such Board or Executive Committee shall
constitute action by the Company s Board and be given the same respect and
weight.
10. PAID VACATION; SICK LEAVE; INSURANCE.
10.1 Executive shall be entitled to a paid vacation each year
equal to not less than three (3) weeks per year in addition to the paid
holidays on which the Company s offices are closed pursuant to Company
policy relating to paid holidays.
10.2 Executive shall be entitled to reasonable periods of paid
sick leave during the Term of the Agreement in accordance with the
Company s policy regarding such sick leave.
10.3 The Company shall provide Executive, at the Company s
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expense, participation in group medical, accident and health insurance,
and life insurance plans of the Company as may be provided by the Company
from time to time to Company executives of comparable status, subject to,
and to the extent that, Executive is eligible under such benefit plans in
accordance with their respective terms.
11. LEGAL DEFENSE.
The Company acknowledges that the environmental services
industry is a highly litigious industry whereby many regulatory fines,
penalties and third-party suits are directed at the individuals involved
in ownership and operations. The Company agrees to pay all legal fees,
judgments, awards, bonds, fines, penalties and costs related to the
defense and outcome whereby Executive was acting in his corporate
capacity.
12. MISCELLANEOUS.
12.1 The Company may, from time to time, apply for and take
out, in its own name and at its own expense, life, health, accident,
disability or other insurance upon Executive in any sum or sums that it
may deem necessary to protect its interests, and Executive agrees to aid
and cooperate in all reasonable respects with the Company in procuring any
and all such insurance, including without limitation, submitting to the
usual and customary medical examinations, and by filling out, executing
and delivering such applications and other instruments in writing as may
be reasonably required by an insurance company or companies to which an
application or applications for such insurance may be made by or for the
Company.
12.2 This Agreement is a personal contract, and the rights and
interests of Executive hereunder may not be sold, transferred, assigned,
pledged or hypothecated except as otherwise expressly permitted by the
provisions of this Agreement. Executive shall not under any circumstances
have any option or right to require payment hereunder otherwise than in
accordance with the terms hereof. Except as otherwise expressly provided
herein, Executive shall not have any power of anticipation, alienation or
assignment of payments contemplated hereunder, and all rights and benefits
of Executive shall be for the sole personal benefit of Executive, and no
other person shall acquire any right, title or interest hereunder by
reason of any sale, assignment, transfer, claim or judgment or bankruptcy
proceedings against Executive; provided, however, that in the event of
E x e c utive s death, Executive s estate, legal representative or
beneficiaries (as the case may be) shall have the right to receive all of
the benefit that accrued to Executive pursuant to, and in accordance with,
the terms of this Agreement.
12.3 The Company shall have the right to assign this Agreement
to any successor of substantially all of its business or assets, and any
such successor and Executive shall be bound by all of the provisions
hereof.
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13. NOTICES.
All notices, requests, demands and other communications provided
for by this Agreement shall be in writing and (unless otherwise
specifically provided herein) shall be deemed to have been given three (3)
days after having been mailed in any general or branch United States Post
Office, enclosed in a registered or certified postpaid envelope, addressed
to the parties stated below or to such changed address as such party may
have fixed by notice:
TO THE COMPANY: METALCLAD CORPORATION
0 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
COPY TO: Xxxxx X. Xxxxxxx, Esq.
Xxxxxx & Xxxxxxx
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
EXECUTIVE: Xxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxx Xxxxx
Xxxx Xxxx Xxxx, XX 00000
14. ENTIRE AGREEMENT.
This Agreement supersedes any and all Agreements, whether oral or
written, between the parties hereto, with respect to the employment of
Executive by the Company and contains all of the covenants and Agreements
between the parties with respect to the rendering of such services in any
manner whatsoever. Each party to this Agreement acknowledges that no
representations, 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 with respect to such employment not contained in this Agreement
shall be valid or binding. Any modification of this Agreement will be
effective only if it is writing and signed by the parties hereto.
15. PARTIAL INVALIDITY.
If any provision in this Agreement is held by a court of competent
jurisdiction to be invalid, void, or unenforceable, the remaining
provisions shall nevertheless continue in full force and effect without
being impaired or invalidated in any way.
16. ATTORNEYS FEES.
Except with respect to paragraphs 5.3 and 5.4 which issues are
reserved for the court, any dispute regarding the negotiations leading up
to the execution of this Release and/or the interpretation or application
of this Agreement or the alleged breach hereof, or any act which allegedly
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has, or would, violate any provision of this Agreement must be submitted
to arbitration before a neutral arbitrator. The arbitration shall be
conducted in accordance with the rules of Judicial Arbitration and
Mediation Services, Inc. of Orange County. A written demand for
arbitration pursuant to Section 638 of the Code of Civil Procedure must be
made within sixty (60) days of the alleged breach. The results of
arbitration will be the exclusive, final and binding remedy for such claim
or dispute.
17. GOVERNING LAW.
This Agreement will be governed by and construed in accordance with
the laws of the State of California.
18. BINDING NATURE.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective representatives, heirs, successors and
assigns.
19. WAIVER.
No waiver of any of the provisions of this Agreement shall be deemed,
or shall constitute a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing by the party making the
waiver.
20. CORPORATE APPROVALS.
The Company represents and warrants that the execution of this
Agreement by its corporate officer named below has been duly authorized by
the Board of Directors of the Company, is not in conflict with any Bylaw
or other agreement and will be a binding obligation of the Company,
enforceable in accordance with its terms.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date above written.
THE COMPANY:
METALCLAD CORPORATION
By: /s/Xxxxxxx X. Xxxxxxx
------------------------------------
Its Authorized Office
EXECUTIVE: /s/Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx
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