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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 5th day of August, 1996 by and
between 7-7, Inc., an Arkansas corporation (hereinafter referred to as the
"Company") and G. Xxxxxx Xxxxxxxxxxx (hereinafter referred to as the
"Employee").
WHEREAS, 7-7, Inc., is an Arkansas corporation, being the successor
corporation of the merger of 7-7, Inc., an Ohio corporation to 7-7 Merger,
Inc., an Arkansas corporation, and the resulting change of corporate name of 7-
7 Merger, Inc. to 7-7, Inc.; and
WHEREAS, the Company desires to employ the Employee to serve as an
officer and employee of the Company, serving in the capacity of the director of
coal chemical recycling of 7-7, Inc., to perform various functions and duties
related thereto; and
WHEREAS, the Employee desires to be employed by the Company as an
employee and officer of the Company.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the Company and the Employee agree as follows.
1. Employment. The Company agrees to employ the Employee for a
period of five (5) years beginning as of the date of the merger of 7-7, Inc.,
an Ohio corporation into 7-7 Merger, Inc., an Arkansas corporation. Employee
agrees to be employed by the Company for such time period upon the terms and
conditions stated herein. The Employee shall be an employee of the Company and
shall provide services to the Company or to Exsorbet Industries, Inc., an Idaho
corporation, or the successor of either, as the Company may direct. The
Employee will observe all Company policies and procedures as are applicable to
similarly situated executive employees and conduct himself in accordance with
directions from the Company. The Employee shall devote his reasonable efforts
to performance of the duties of this employment as designated by the Company
and shall, at all times, conduct himself so as to reflect favorably upon the
Company. The provisions of this paragraph shall not be construed as limiting
Employee from continuing the performance of part time businesses in existence
on the date of this Agreement. Employee shall be a salaried, management level
employee. As such, no additional compensation shall be provided for hours
worked in excess of forty per week or in excess of any maximum time period
established by the United States of America or any State thereof in which
Employee may provide services for the Company.
2. Identification of the Company. 7-7, Inc. is an Arkansas
corporation. It is a wholly-owned subsidiary of Exsorbet Industries, Inc., an
Idaho corporation (hereinafter referred to as "Exsorbet"). Exsorbet is a
publicly traded company, trading under the symbol "EXSO" on the NASDAQ Stock
Market.
3. Duties. Employee shall act as an officer of the Company, serving
as its director of coal chemical recycling. Employee's job duties include: (a)
those duties normally associated with
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the person serving in the capacity of the director of coal chemical recycling,
and as have been performed on behalf of 7-7, Inc., an Ohio corporation prior to
its merger with 7-7 Merger, Inc., an Arkansas corporation; and (b) any other
duties reasonably required by the president of Exsorbet Industries, Inc. The
duties of Employee include the supervision and direction of affairs of the
Company, subject to the Company's by-laws and Board of Directors approval. The
Company recognizes that the Employee is currently engaged in brokering and
consulting activities in the same and related industries as those of the
Company. The Company agrees that such activities may continue without
constraint except that Employee may not compete directly with the Company in
any activity that the Company is actively conducting on or before August 30,
1996. The Company further agrees that the Employee may serve on the Board of
Directors of any public or non-public company provided that the Company is not
in direct competition with the Company in the business of recycling.
4. Removal by Shareholder Action. Both parties understand and
acknowledge that Employee may be removed as an officer of the Company by
certain shareholder action. If Employee is removed as an officer of the
Company, he shall continue to serve the Company as an employee providing the
same type of sales, supervisory, and technical services as exist on the date of
execution of this agreement and thereafter. The remaining provisions of this
agreement concerning benefits and compensation due to Employee shall remain in
full force and effect despite removal of Employee as a Company officer unless
such removal is for cause, as defined herein, or is otherwise in compliance
with other provisions of this agreement.
5. Company Benefits. The Employee will be the beneficiary of and
permitted to participate in all of the Company s standard benefit plans and
perquisites which are from time to time made available to employees similarly
situated. The Employee understands, however, that all such standard benefit
plans of the Company are subject to change from time to time and can also be
eliminated completely. Employee may elect to purchase disability insurance
equal to two-thirds of the base salary of Employee, through an insurance
company and agent determined by Employee. Such expense shall be paid by
Employee. However, the Company agrees to cause such amount to be withheld from
compensation due to Employee on a pre-tax basis, to the extent permissible
under the Internal Revenue Code and applicable state statutes and regulations.
6. Compensation. The Company shall pay the Employee an annual
salary equal to One Hundred Three Thousand Dollars ($103,000.00) for the period
beginning on the merger of 7-7, Inc. with 7-7 Merger, Inc., an Arkansas
corporation. Such amount shall be adjusted annually in accordance with the
cost of living index, to be paid bi-weekly or upon such other basis as is
reasonably determined by Exsorbet Industries, Inc. In no event shall Employee
be provided with a compensation check less frequently than one time per month.
The compensation due to Employee may, at the option of the Company, be
increased based upon the contributions of Employee. The increase in
compensation described above in this paragraph shall not, however, place a
mandatory obligation upon the Company. In addition to the compensation
provided for by this paragraph, the Employee shall be provided with a bonus
plan in accordance with the following specification:
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(a) Employee shall submit a business plan on an annual basis to the
president of the Company which outlines the projected performance of the
coal chemical recycling facilities that Employee is responsible for
managing. The Company and Employee shall, in good faith, agree on the
goals and forecasts of the plan. In the event that the goals and
forecasts are met or succeeded through Employee's efforts, Employee
shall receive the bonus identified in the next paragraph.
(b) Upon successful attainment of the goals and forecasts through the
efforts of Employee, as indicated in the preceding paragraph, Employee
shall receive a bonus equal to two and one- half (2.5) percent of the
net goal and forecast amount. If Employee's efforts result in exceeding
the goals and forecasted amounts, Employee shall receive the additional
sum equal to five (5) percent of the difference between the net goal and
forecast amount and the amount actually attained. On all amounts
exceeding the net goal and forecast amounts, Employee's bonus shall be
equal to five (5) percent of the amount by which the goal and forecast
amounts are exceeded.
7. Additional Compensation. Employee shall receive 1.89875
percent of the "pre-tax income," of Exsorbet Industries, Inc. which is solely
attributable to the operation of 7-7, Inc. or its successor and which exceeds
the "base amount" specified below for the time periods indicated. "Pre-tax
income" shall be calculated in accordance with generally accepted accounting
principles, and the following guidelines shall apply in calculating such "pre-
tax income:"
(a) 7-7, Inc. or its successor will operate as a subsidiary or separate
division of Exsorbet Industries, Inc.;
(b) only expenses incurred by 7-7, Inc. will be used in determining
"pre-tax income;"
(c) expenses of Exsorbet Administration, Inc. in the operation of 7-7,
Inc. will not be used in calculating "pre-tax income" unless agreed to
by and between the parties; and
(d) if Exsorbet Industries, Inc. or one of its subsidiaries other than
7-7, Inc. causes additional capital to be placed into the operation of
7-7, Inc. for working capital, equipment, or other capital expenditures,
an interest charge equivalent to the prime interest rate may be taken as
a deduction to "pre-tax income," and management of 7-7, Inc. will have
reasonable input regarding the revenues and expenses of 7-7; and
(e) any corporate charges from Exsorbet Industries, Inc. to the
"pre-tax income" must be mutually agreed.
The "base amount" and time period for pay-out is as follows:
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Time Period Base Amount
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7-1-1996 to 12-31-1996 $0.00
1-1-97 xx 00-00-00 $2,000,000.00
1-1-98 xx 00-00-00 $2,300,000.00
1-1-99 xx 00-00-00 $2,645,000.00
1-1-2000 to 12-31-2000 3,041,750.00
1-1-2001 to 12-31-2001 3,498,013.00.
It is specifically noted that should Employee voluntarily terminate this
Agreement, the right to receive the proceeds specified in this paragraph shall
immediately cease. If Employee is terminated without cause, however, such
proceeds will be distributed to Employee.
The Company acknowledges that sales commissions are due to the Employee
upon the completion of previously agreed upon jobs.
8. Expenses. The Company shall reimburse Employee for all
authorized, ordinary, and necessary expenses incurred by Employee in connection
with the duties of Employee. Employee shall submit all reasonably requested
receipts and documentation evidencing the nature and incurring of such expenses
to the accounting department of Exsorbet Industries, Inc. Reimbursement will
occur during the next pay period.
9. Noncompetition and Nondisclosure.
(a) The Employee acknowledges that the Company has or will provide
substantial training and will impart to the Employee confidential
information and trade secrets about its business, sales policies, and
manufacturing methods. The Employee also understands that the nature of
the business is such that the relationship between the Company and its
customers is maintained through close personal contact with the Company
Employees. Therefore, the Employee agrees that during the period of his
employment and for a period of two years immediately following
termination of such employment, the Employee will not, directly or
indirectly, for himself or on behalf of others, as an individual on his
own account or as an employee, agent, or employee for any person,
partnership, firm, or corporation:
(1) solicit or provide services to any individual or entity
which had been a customer or client of the Company or of
Exsorbet Industries, Inc., or any of its subsidiaries, within
the one year period immediately prior to Employee's termination
with the Company; or
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(2) solicit or provide services to any individual or entity
which had negotiated with the Company, Exsorbet Industries,
Inc., or any of its subsidiaries for services to be provided by
any such entity within the one year period immediately prior to
Employee's termination with the Company.
As used in this entire paragraph, the term "solicit or provide
services" shall refer to soliciting work or employment of the same type
as is performed by the Company, Exsorbet Industries, Inc., or any of its
subsidiaries. The provisions of this agreement shall be limited to
North America.
(b) Employee agrees that the trade secrets, customer lists, price
lists, operating manuals, policy manuals, confidential corporate
documents, or other specialized information learned while with the
Company is proprietary and the product of the Company. Employee agrees
that he will not, after the termination of his employment with the
Company, whether during the initial term of this agreement, at the end
of the initial term, or thereafter, use or divulge such information,
directly or indirectly, without the express written consent of the
Company. In the event that the provisions of this paragraph are
construed as being overly broad, such provisions shall be limited to a
two year time period following the termination of Employee's employment
relationship with the Company. The Company excludes from the definition
of Confidential Information, information which the Employee has brought
to the Company, information which the Employee obtains from sources
outside of the Company, and information which is generally available in
the marketplace.
(c) The Employee also agrees that during the period of his employment
and for two years thereafter he will not, directly or indirectly, induce
or attempt to induce any employee to terminate employment with the
Company or interfere with or disrupt Company's relationship with other
employees, unless such action is taken as a part of the duties of
Employee under this agreement and in consideration of the fiduciary duty
owed by Employee to the Company. Employee further agrees that for the
same time period, he will not solicit, entice, take away, or employ any
person employed with the Company.
10. Termination. This employment agreement may be terminated at any
time:
(a) by the Employee's death or disability which renders Employee
unable to perform services required by Employee under this Agreement;
(b) by the Company for good cause as hereinafter defined;
(c) upon thirty (30) days written notice by the Employee; or
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(d) at the election of the Company without good cause, provided that
the Employee shall receive a separation pay in an amount equal to all the
direct compensation that would otherwise have been due had this
employment agreement been carried out to its full term.
The term "good cause" means (a) intentional or reckless misrepresentation
by the Employee to the Company s customers or potential customers concerning
the Company' s ability to provide its products or services; (b) a criminal act
[or acts] by the Employee which results in a financial loss to the Company; (c)
intentional and repeated refusal by the Employee to perform the duties assigned
to him under this Agreement; (d) conviction of the Employee of a felony crime
or a crime involving moral turpitude; or (e) intentional misconduct by Employee
which is probable to result in a material financial harm to the Company unless
termination of Employee occurs. The provisions of subparts (c) and (e) of this
paragraph shall not be "good cause" unless Employee is given written notice of
the specific event(s) or act(s) in question. Thereafter, "good cause" shall
only exist if either Employee engages in such event(s) or act(s) or Employee
fails to provide assurances that he will no longer engage in such event(s) or
act(s).
Any post-employment restraints apply only if the Employee voluntarily
leaves the employ of the Company and such leave is not due to a breach by the
Company.
11. Waiver. Failure of the Company to exercise any rights under
this Agreement, or to insist on full performance of all obligations hereunder
shall not be construed as waiving any such rights.
12. Assignment. This agreement shall not be assignable by either
party without the written consent of the other. However, any payments due
hereunder shall, in the event of the death of Employee, be payable to
Employee's beneficiary or estate, as designated by Employee's last will and
testament or in accordance with applicable law.
13. Vesting. No title to any payments due herein shall vest in
Employee until actual payment is made by the Company in accordance with the
provisions of this agreement. Neither party shall have the right or power to
assign, anticipate, transfer, mortgage, or encumber any payment prior to its
actual receipt.
14. Miscellaneous Matters.
(a) Entire Agreement. This Agreement is the entire agreement between the
parties. The Employee agrees that no other promises or inducements have
been made to him unless contained in writing, attached hereto or
incorporated herein by reference.
(b) Binding Effect. This Agreement shall be binding upon the parties,
their heirs, personal representatives, successors, and permitted assigns.
It is specifically understood and agreed that the compensation specified
in paragraph 7, above, shall become due and payable even in the event of
the death or disability of the Employee. In the event of the
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death of the Employee, such amount shall be paid as directed in the Last
Will and Testament (including any codicils, changes, alterations, or
modifications in compliance with applicable laws) of the Employee, or in
the event that the Employee fails to make provision for such amount in
his Last Will and Testament (including any codicils, changes,
alterations, or modifications in compliance with applicable laws), such
amount shall be paid in accordance with the laws of descent and
distribution in the State where the estate of the Employee is probated.
(c) Modification. This Agreement may not be modified unless such
modification is made in writing and signed by all parties.
15. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any one or more of the
provisions of this Agreement shall not affect the validity or enforceability of
the other provisions.
16. Governing Law. This agreement and any amendments or addendums
thereto shall be governed by and construed in accordance with the laws of the
State of Arkansas.
17. Headings. Titles of the paragraphs are placed herein for
convenient reference only and shall not to any extent have the effect of
modifying, amending or changing the express terms and provisions of this
Agreement.
18. No Third Party Rights. None of the provisions contained in this
Agreement shall be for the benefit of or enforceable by any third parties,
except as is specified in paragraph 14(b), above.
19. Counterparts. This Agreement may be executed in several
counterparts, all of which together shall constitute one agreement binding on
all parties hereto, notwithstanding that all the parties have not signed the
same counterpart.
20. Applicable Law. This Agreement shall be construed in accordance
with the laws and statutes of the State of Arkansas.
21. Dispute Resolution. In the event of any dispute arising under
this agreement or between the parties whatsoever, resolution of such disputes
shall be submitted to arbitration in accordance with the rules of the American
Arbitration Association. Any such arbitration proceeding shall consist of an
arbitrator chosen by each party. The two arbitrators chosen shall select a
neutral arbitrator. The decision of the arbitration panel shall be
conclusively binding upon both parties unless there has been a clear error in
applicable of law to the facts determined by such arbitration panel. All fees
shall be paid by the losing party including all reasonable attorneys' fees,
expenses, and other costs directly related to dispute resolution.
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IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement on the date first written.
7-7, INC., an Arkansas corporation
By: /s/ Xxxxxx X. Xxxxxxxx
Authorized Officer of the Company
EMPLOYEE
/s/ G. Xxxxxx Xxxxxxxxxxx
G. Xxxxxx Xxxxxxxxxxx
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