EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 15, 1999, between Industrial
Rubber Innovations, Inc., a Florida corporation (the "Company"), and
Xxxx Xxxxxx ("Executive").
WITNESSETH:
WHEREAS, the Company is desirous of employing Executive, and
Executive is desirous of being employed by the Company, on the terms
and subject to the conditions sets forth in this Agreement:
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are
hereby mutually acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. The following terms shall have the
indicated meanings when used in this Agreement, unless the context
requires otherwise:
(a) "Base Salary Amount" shall mean $60,000.00 during the
Initial Period and first Contract Year and $60,000.00 during the
second Contract Year.
(b) "Benefit Plan" shall mean each vacation pay, sick
pay, retirement, welfare, medical, dental, disability, life
insurance or other employee benefit plan, program or arrangement.
In addition, at the sole discretion of the Board of Directors,
benefit plan may also include one or more of the following:
incentive compensation, bonus, stock option and restricted stock
plan, program or arrangement.
(c) "Board of Directors" and " Board" shall mean the
board of directors of the Company.
(d) "Cause" shall mean (i) the conviction of Executive of
a felony which can reasonably be expected to have a material adverse
impact on the Company's business or reputation or (ii) the
commission by Executive of an act of fraud or embezzlement involving
assets of the Company or its customers, suppliers or affiliates.
Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been
delivered to Executive all of the following; (a) a copy of a
resolution, duly adopted by the affirmative vote of not less than a
majority of the entire non-interested membership of the Board of
Directors at a meeting which the Board of Directors called and held
for the purpose of determining whether Cause exists (after
reasonable notice to Executive and opportunity for him, together
with his counsel, to be heard before the Board of Directors),
finding that, in the good faith opinion of the Board of Directors,
Executive was guilty of the conduct set forth in this Section and
specifying the particulars thereof in detail, (b) an affidavit sworn
to by the President or Secretary of the Company stating that such
resolution was in fact adopted by the affirmative vote of not less
than a majority of the entire non-interested membership of the Board
and Directors.
(e) "Chairman of The Board" shall mean the Chairman of
the Board of Directors of the Company, as determined from time to
time by the Board of Directors.
(f) "Contract Year" shall mean each year during the term
hereof commencing on June 1 and ending on the immediately following
May 31.
(g) "Date of Termination" shall mean (A) if termination
of employment occurs by reason of death, the date of Executive's
death or (B) if termination of employment occurs for any other
reason, the date on which a Notice of Termination is delivered to
the other party; provided, however, that if, within 60 days after
any Notice of Termination is given, the party receiving such Notice
of Termination notifies the other party that a dispute exists
concerning the termination of employment, then the Date of
termination shall be the date of the Notice unless such dispute is
otherwise determined by mutual agreement or court order in favor of
Executive, in which case the Date of Termination shall be the date
on which the dispute is finally determined, either by mutual written
agreement of the parties or by a final judgment, order or decree of
a court of competent jurisdiction ( the time for appeal therefrom
having expired and no appeal having been perfected).
(h) "Good Reason" Shall mean (i) as to Executive (A) a
diminution in Executive's titles, responsibilities and/or duties,
(B) a change in the person or persons to whom Executive reports,
except as provided in Section 4(a), (C) a reassignment of Executive
to a location which increases Executive's commute from his existing
home by more than 50 miles on a daily round trip basis, (D) an
assignment of Executive to a location other than the principal
executive office of the Company, (E) the Company's failure to
continue or a substantial change in Executive's participation in any
Benefit Plans (subject to the Board's right to amend, modify or
terminate such plans), (F) the Company's failure to obtain the
agreement of any successor of the Company to assume this Agreement,
(G) any material breach of this Agreement by the Company which is
either not capable of correction or which in fact is not corrected
within (10) ten days after written notice by Executive specifying
such breach and (H) the failure to occur of any of the actions
discussed in Section 4(c); and (ii) as to the Company, the good
faith determination by a majority of the entire membership of the
Board of Directors that Executive has failed to perform his duties
as directed.
(i) "Initial Period" shall mean that portion of the term
hereof from the date of this Agreement through May 31, 1999.
(j) "Notice of Termination" shall mean a written notice
which shall indicate the specific provision in this Agreement relied
upon in connection with a termination of employment and which shall
set forth in reasonable detail the facts and circumstances claimed
to provide a basis for such termination under the provision so
indicated.
(k) "Performance Bonus" shall have the meaning ascribed
to that term in Section 6(b).
(l) "Severance Payments" shall mean any severance
payments made or to be made to Executive pursuant to any provision
of Section 7 below.
2. EMPLOYMENT. The Company hereby employs Executive,
and Executive hereby accepts employment with the Company, on the
terms and subject to the conditions set forth herein.
3. TERM OF EMPLOYMENT. The term of employment hereunder
shall be for the Initial Period and thereafter for a period of two
(2) years, the term hereof therefore commencing on the date hereof
and ending on May 31, 2001, subject to earlier termination as herein
provided. During the Initial Period, Executive shall be employed by
Company upon the same terms, compensation and benefits as provided
hereunder, pro-rated to cover such period. During the 90-day period
immediately preceding the end of the second Contract Year, the
Company and Executive shall negotiate, in good faith, the terms and
conditions of a two year extension to this Agreement upon terms and
conditions no less favorable to Executive than the terms and
conditions applicable during the second Contract year; provided,
however, that the foregoing obligation to negotiate in good faith
shall not apply in the event that either the Company or Executive
gives written notice to the other during such 90-day period of its
or his desire to have this Agreement terminated at the end of the
initial two (2) year term. In no event shall this Agreement be
extended beyond the initial two-year term without the written
agreement of Company and Executive.
4. POSITION AND DUTIES.
(a) Executive shall serve as the President and Chief
Executive Officer of the Company, reporting only to the Board of
Directors. Subject to the authority of the Board of Directors,
Executive shall have supervision and control over, and
responsibility for, the general management and operation of the
Company and shall have such other powers and duties as may from time
to time be prescribed by the Board of Directors, provided that such
duties are reasonable and customary for a president and chief
executive officer. Executive shall devote his entire working time,
attention and energies to the business of the Company.
(b) Anything herein to the contrary notwithstanding,
nothing shall preclude the Executive from (i) serving the boards of
directors of a reasonable number of other corporations, or the
boards of a reasonable number of trade associations and/or
charitable organizations, (ii) engaging in charitable activities and
community affairs, and (iii) managing his personal, investments and
affairs, provided that such activities do not materially interfere
with the proper performance of his duties and responsibilities as
the Company's President and Chief Executive Officer.
(c) Executive shall serve on the Board of Directors
during the entire term hereof. If, at any time during the term of
his employment, the shareholders of the Company shall fail to elect
Executive to the Board of Directors, or the Board of Directors shall
fail to elect Executive to the office of President or Chief
Executive Officer of the Company, or shall remove him from either of
such offices, other than as provided for in this Agreement,
Executive shall have the right to terminate his services hereunder
for Good Reason pursuant to Section 7(d) and Executive shall have no
further Obligation under this Agreement.
(d) Executive agrees to serve without additional
compensation, if elected or appointed thereto, in one or more
offices or as a director of any of the Company's subsidiaries;
provided, however, that Executive shall not be required to serve as
an officer or director of any such subsidiary if such service would
expose him to potential adverse financial consequences.
5. PLACE OF PERFORMANCE.
In connection with his employment by the Company, Executive
shall be based at the Company's principal executive offices located
in Bakersfield, California. In the event that Executive consents to
any relocation requested by the Company, the Company will promptly
pay or reimburse Executive for all reasonable moving expenses
incurred by Executive relating to a change of his principal residence.
6. COMPENSATION AND OTHER BENEFITS.
(a) BASE SALARY. During each Contract Year of the term
hereof, the Company shall pay to Executive the Base Salary Amount.
The Company shall compensate Executive for the Initial Period as
provided herein in Section 3 hereof. The Base Salary Amount shall
be paid to Executive in accordance with the Company's regular
payroll practices with respect to senior management compensation.
(b) ANNUAL PERFORMANCE BONUSES. During each Contract
Year, the Company shall pay to Executive such discretionary bonuses
as may be granted by the Board of Directors, in its discretion.
(c) EXPENSES. Executive shall be entitled to receive
(i) prompt reimbursement for all documented business expenses
incurred by him in the performance of his duties hereunder, provided
that Executive properly accounts therefor in accordance with the
Company's reimbursement policy and practices of the Company as of
the date hereof, and (ii) up to $500 per month in nonaccountable
automobile expenses.
(d) FRINGE BENEFITS. Executive shall be entitled to
participate in and receive benefits under all of the Company's
Benefit Plans or programs generally available to senior management
of the Company, including, but not limited to any retirement, stock
option plans, disability insurance plans and all other plans or
programs. Nothing paid to Executive under any Benefit Plan
presently in effect or made available in the future shall be deemed
to be in lieu of compensation payable to Executive hereunder.
Further the Company reserves the right to amend, modify or terminate
any and all such plans.
(e) VACATIONS. During the term hereof, Executive shall
be entitled to sick leave and paid holidays consistent with the
Company's sick leave and holiday policy for senior management and up
to two (2) weeks paid vacation during each Contract Year as
Executive deems reasonable. Any vacation time that is not taken in
a given Contract Year shall be carried forward to the following
Contract Year or Contract Years, as the case may be but in no event
more than four (4) weeks, on a cumulative basis.
7. TERMINATION OF SERVICE.
(a) TERMINATION UPON DEATH. Executive's employment
hereunder shall terminate upon his death, in which event the Company
shall pay to such person as the Executive shall have designated in a
written notice filed with the Company, or if no such person shall
have been designated to his estate, as a lump sum death benefit an
amount equal to the Base Salary Amount for the one-year period
immediately following the Date of Termination plus an amount equal
to Performance Bonuses accrued through the Date of Termination and
all Base Salary Amounts, amounts due under Benefit Plans and
perquisites through the Date of Termination.
(b) TERMINATION UPON DISABILITY. If, as a result of a
permanent mental or physical disability, Executive shall have been
absent from his duties hereunder on a full-time basis for six (6)
consecutive months, ("Disability") and, within 30 days after the
Company notifies Executive in writing that it intends to replace
him, (which notice can be given at the end of the fifth month during
such six month period), Executive shall not have returned to the
performance of his duties on a full-time basis, the Company shall be
entitled to terminate Executive's employment. In addition,
executive shall, upon his Disability, have the right to terminate
his employment with Company. If such employment if terminated (
whether by the Company or by Executive) as a result of Executive's
Disability, the following shall apply:
(i) the Company shall continue to pay Executive
the Base Salary Amount to which he would otherwise be entitled
during the one-year period immediately following the Date of
Termination (offset by any disability insurance payments received by
Executive on policies provided by the Company);
(ii) the Company shall pay Executive an amount
equal to Performance Bonuses and Base Salary Amount accrued through
the Date of Termination;
(iii) the Company shall maintain in full force and
effect, for the continued benefit of Executive during the one-year
period immediately following the Date of Termination, all Benefit
Plans in which Executive was entitled to participate immediately
prior to the Date of Termination to the extent that Executive's
continued participation is possible under the general terms and
conditions of such Benefit Plans. In the event that Executive's
participation in any such Benefit Plan is barred as a result of his
Disability, Executive shall be entitled to receive an amount equal
to the annual contributions, payments, credit or allocations which
would have been made by the Company to him, to his account or on his
behalf under such Benefit Plan from which his continued
participation is barred;
(iv) the Company shall maintain a full force and
effect, for the continued benefit of Executive's estate or
dependents during the one-year period immediately following the Date
of Termination, any life, accident, disability or health and dental
insurance plans, vision care plans and any other similar welfare
plans of the Company in effect immediately prior to the Date of
Termination, or the Company shall provide equivalent benefits at no
cost to Executive's estate or his dependents;
(c) TERMINATION FOR CAUSE. The Company shall be entitled
to terminate Executive's employment for Cause, in which event
Executive shall be entitled to all Base Salary amounts, amounts
under Benefit Plans and perquisites through the Date of Termination
plus an amount equal to Performance Bonuses accrued through the Date
of Termination.
(d) TERMINATION FOR GOOD REASON. Executive shall be
entitled to terminate Executive's employment for Good Reason at any
time and the Company shall be entitled to terminate Executive's
Employment for Good Reason at any time after the end of the first
Contract Year. Upon the termination of Executive's employment by
Company for Good Reason after completion of the first Contract Year,
Executive shall be entitled to receive from the Company a lump sum
payment in an amount equal to his Base Salary Amount and amounts
under Benefit Plans for the one-year period immediately following
the Date of Termination plus an amount equal to Performance Bonuses
accrued through the Date of Termination and all Base Salary Amounts,
amounts under the Benefit Plans and perquisites through the Date of
Termination, all of which shall be payable by Company within ten
(10) days after termination. Upon the termination of Executive's
employment by Executive for Good Reason all of the aforesaid
compensation, bonuses and benefits shall be paid to Executive by the
Company over the one-year period following the date of termination.
(e) NOTICE OF TERMINATION. any termination of
Executive's employment by the Company or Executive pursuant to
Sections 7(b), 7(c), or 7(d) shall be communicated by a Notice of
Termination to the other party.
(f) NO MITIGATION. Executive shall not be required to
mitigate the amount of any payment provided for in this Section 7 by
seeking other employment or otherwise, nor will the amount of
damages or severance benefits payable to Executive under this
Section 7 be reduced by reason of his securing other employment or
for any reason.
8. INDEMNIFICATION. The Company shall indemnify and
defend Executive to the fullest extent permitted under California
Law. This includes, but is not limited to, a duty to indemnify
Executive if he is made, or threatened to be made, a party to an
action or proceeding, to the fullest extent permitted by applicable
law, including an action by or in the right of the Company to
procure a judgment in its favor, by reason of the fact that Employee
is or was an officer, director or employee of the Company (or any of
its subsidiaries), against all costs and expenses resulting from or
related to such action or proceeding, or any appeal thereof, if
Executive acted in good faith for a purpose which he reasonably
believed to be in the best interests of the Company. The
termination of any such action or proceeding by judgment,
settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not in itself create the presumption that
Executive did not act in good faith for a purpose which he
reasonably believed to be in the best interest of the Company. As
used in this Section, (i) "cost and expenses" means any and all
costs, expenses and liabilities incurred by Executive, including but
not limited to (A) attorneys' fees, (B) amounts paid in settlement
of, or in the satisfaction of any order or judgment in, any action
or proceeding and (C) fines, penalties and assessment asserted or
adjudged in any action or proceeding, and (ii) "action or
proceeding" means any and all suits, claims, actions, investigations
or proceedings whether civil, criminal or administrative, heretofore
or hereafter instituted or asserted.
9. GENERAL PROVISIONS.
(a) NOTICES. All notices, demands and other
communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon
receipt) by delivery in person, by overnight courier service, by
telecopy or by registered or certified mail to the respective
parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with in
Section):
a. If to the Company:
Industrial Rubber Innovations, Inc.
0000 Xxx Xxxxxxx Xxxxxxxxx, Xxxxx 0
Xxxxxxxxxxx, XX 00000
Attn: President and Secretary
Facsimile (000) 000-0000
with a copy to:
Law Offices of M. Xxxxxxx Xxxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Facsimile (000) 000-0000
b. If to Executive:
Xxxx Xxxxxx
0000 Xxx Xxxxxxx Xxxxxxxxx, Xxxxx 0
Xxxxxxxxxxx, XX 00000
Facsimile (000) 000-0000
(c) HEADINGS. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement.
(d) SUCCESSORS; BINDING AGREEMENT.
(i) The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets
of the Company, by agreement in form and substance satisfactory to
Executive, to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Executive to compensation from the
Company in the same amount and on the same terms as he would be
entitled to hereunder if the Company terminated his employment in
the manner contemplated in Section 7(d), except that for purposes of
implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
(ii) This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heir,
devisees, legatees, executors, administrators, successors and
personal or legal representatives. If Executive should die while
any amounts would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided
herein shall be paid in accordance with the terms of this Agreement
to Executive's designee or, if there be no terms of this Agreement
to the Executive's heir, devisees, legatees or executors or
administrators of Executive's estate, as appropriate.
(e) SEVERABILITY. If any provision of this Agreement in
held to be illegal, invalid or unenforceable under existing or
future laws effective during the term of this Agreement, such
provisions shall be fully severable, the Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part of this Agreement, and the
remaining provisions of this Agreement shall remain in full force
and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement.
Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this
Agreement a provision as similar in terms to such illegal, invalid
or unenforceable provision as may be possible and be legal, valid
and enforceable.
(f) ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject
matter hereof and thereof and supersedes all prior agreements and
understandings both written and oral, between the Company and the
Executive with respect to the subject matter hereof and thereof.
(g) ASSIGNMENT. This Agreement and the rights and duties
hereunder may not be assigned or assumed by operation of law of
otherwise without the express written consent of the Company and the
Executive (which consent may be granted or withheld in the sole
discretion of the Company or the Executive, as applicable).
(h) AMENDMENT; WAIVER. This Agreement may not be amended
or modified except by an instrument in writing signed by, or on
behalf of, the Company and Executive. Either party to this
Agreement may (a) extend the time for the performance of any of the
obligations or other acts of the other party or (b) waive compliance
with any of the agreements or conditions of the other party
contained herein. Any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent
waiver or the same term or condition, or a waiver of any other term
or condition, of this Agreement. The failure of any party to assert
any of its rights hereunder shall not constitute a waiver of any
such rights.
(i) GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of
California, applicable to contracts executed in and to be performed
entirely within the state.
(j) JURISDICTION AND VENUE. The parties agree that all
actions or proceedings initiated by any party hereto and arising
directly or indirectly out of this Agreements which are brought
pursuant to judicial proceedings shall be litigated in the Superior
Court of Xxxx, California. The parties hereto expressly submit and
consent in advance to such jurisdiction and agree that service of
summons and complaint or other process or paper may be made by
registered or certified mail addressed to the relevant party at the
address to which notices are to be sent pursuant to Section 9(a).
(k) ATTORNEYS' FEES. If any legal action or other
proceeding is brought for the enforcement of this Agreement, the
prevailing party shall be entitled to recover reasonable attorney's
fees and other costs incurred in that action or proceeding, in
addition to any other relief to which he or it may be entitled.
(l) COUNTERPARTS. This Agreement may be executed in one
or more counterparts, and by the parties hereto in separate
counterparts, each of which when executed shall be deemed to be an
original while all of which taken together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the Company and Executive have executed
this Agreement as of the date and year first written above.
Industrial Rubber Innovations, Inc.
a Florida corporation
/s/ Xxxxx X. Xxxxx /s/ Xxxx Xxxxxx
By: Xxxxx X. Xxxxx Xxxx Xxxxxx
Its: Secretary and Chief Financial Officer
