EXHIIBIT 10.23
EMPLOYMENT AGREEMENT
AGREEMENT entered into this 1st day of October 1997, by and between
FiberChem, Inc., a Delaware corporation, with its principal place of business
at 0000 Xxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000 (the "Company") and Xxxxxx X.
Xxxxxx, residing at 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxx 000000(xxx
"Executive").
WITNESSETH:
WHEREAS, the Company wishes to continue to employ the Executive in the
principal capacity of Chief Financial Officer upon the terms and conditions
contained herein;
WHEREAS, the Executive is desirous of continuing employment with the
Company and is willing to accept such employment for the inducements and upon
the terms and conditions contained herein; and
WHEREAS, the Company has bargained for a covenant by the Executive not to
compete with the Company's business.
NOW, THEREFORE, in consideration of the mutual premises and agreements
contained herein and for other good and valuable consideration by each of the
parties, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive and the
Executive hereby accepts employment upon the terms and conditions set forth
herein.
2. TERM. The term of this Agreement shall commence on the date hereof
and shall continue for an initial term of one (1) year; provided, however, that
the term of this Agreement shall be automatically continued and extended, on
the same terms and conditions as then in effect hereunder, for additional
consecutive twelve month periods commencing upon such termination date, unless
at least thirty (30) days before that date of termination of the initial term
of this Agreement or of any such extended term, the Company shall give the
Executive, or the Executive shall give the Company, notice in writing electing
to terminate this agreement as of such termination date.
3. DUTIES.
(a) During the term of this Agreement, the Executive shall serve
the Company in an executive capacity and shall perform such duties as are
determined from time to time by the Company's Board of Directors. Unless
prevented by death or disability, the Executive shall devote his full
business time, allowing for vacations and national holidays, as set forth in
Sections 5(a) and (e) hereof, and illnesses, exclusively to
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the business and affairs of the Company, and shall use his best efforts,
skill and abilities to promote its interests. Nothing herein contained shall
be construed as preventing the Executive from purchasing securities in any
publicly held entity, if such purchases shall not result in his owning
beneficially 2% or more of the equity securities of such company, provided
such investment is not made in a company in competition with the Company.
(b) It is hereby acknowledged that the Board of Directors of the
Company has elected the Executive to serve as Chief Financial Officer, and the
Company hereby agrees to use its best efforts to have the Executive continue to
serve as Chief Financial Officer during the term of this Agreement. The
precise services of the Executive may be extended or curtailed from time to
time at the direction of the Company's Board of Directors.
4. COMPENSATION. For the services rendered by the Executive hereunder,
the Company shall pay and the Executive shall accept the following
compensation:
(a) From the commencement of the term hereof through September 30,
1998, the Executive shall receive a base annual salary of one hundred thirty-
two thousand dollars ($132,000) ( the "Base Salary") which Base Salary shall be
earned and shall be payable at such intervals not less frequently than monthly,
in equal installments, and otherwise in such manner as is consistent with the
Company's normal practice for remuneration of executives;
(b) The Board of Directors shall review the Executive's base salary
on each of the anniversary dates of the execution of this Agreement in order to
determine whether the Executive's salary should receive an upward adjustment;
(c) The Executive shall be entitled to bonus compensation during the
term hereof, as determined at the discretion of the Board of Directors of the
Company;
(d) The Executive's salary shall be payable subject to such
deductions as are then required by law and such further deductions as may be
agreed to by the Executive, in accordance with the Company's prevailing salary
payroll practices.
5. BENEFITS AND EXPENSES. During the term of this Agreement, the
Executive shall be entitled to the following benefits and expense
reimbursement:
(a) The Executive shall be entitled to up to four (4) weeks of paid
vacation per calendar year, in accordance with the Company's policy from time
to time in effect as determined by the Board;
(b) The Executive shall be entitled to participate in and/or receive
all fringe benefits such as medical, disability, hospital and health insurance
plans, and profit
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sharing, pension plan, life insurance and other plans, if any, which the
Company may generally make available to its executives. The Executive shall
also be included in the Directors and Officers' indemnification insurance
policy, if obtained;
(c) The Company shall also issue to the Executive a corporate credit
card to be utilized by the Executive in connection with any additional out-of-
pocket expenses which he may incur in connection with the performance of his
duties. During the term of this Agreement, the Company shall, upon
presentation of proper vouchers, also reimburse the Executive for all
reasonable expenses incurred by him directly in connection with his performance
of services as an officer and Executive of the Company;
(d) The Corporation shall maintain on behalf of the Executive, a one
million dollar ($1,000,000) key man life insurance policy, which shall name the
Company as beneficiary;
(e) The Executive shall receive as paid days off all national
holidays that the Company, pursuant to established policy, recognizes and
observes.
6. DISABILITY AND DEATH.
(a) DISABILITY - If, during the term of this Agreement, the
Executive becomes so disabled or incapacitated by reason of any physical or
mental illness so as to be unable to perform the services required of him
pursuant to this Agreement for a continuous period of four (4) months, or for
an aggregate of six (6) months during any consecutive twelve (12) month period,
then the Company may, upon 30 days' written notice to the Executive, terminate
this Agreement. Notwithstanding the termination of the Agreement hereunder by
reason of disability, the Company shall pay the Executive his Base Salary then
in effect along with all other fringe benefits (including, without limitation,
family medical benefits) for a period of one (1) year following the date of
such termination, such payment to be made in one lump sum, no later than 3
months following the date of termination. The Company shall purchase temporary
and permanent disability insurance on the Executive. Payments made hereunder
shall not affect any other payments made to the Executive.
(b) DEATH - This Agreement shall automatically terminate upon and as
of the date of death of the Executive at any time during the term of this
Agreement. Notwithstanding the termination of this Agreement by reason of the
Executive's death, the Company will pay to the Executive's estate his Base
Salary, and shall continue family medical benefits coverage for the Executive's
family, then in effect for a period of one (1) year following the date of such
termination, such payment to be made in one lump sum no later than 3 months
following the date of death.
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7. COVENANTS AND RESTRICTIONS.
(a) For a period of one (1) year following the termination of this
Agreement (the "Non-Compete Period"), the Executive shall not, directly or
indirectly, engage in, own, manage, operate, assist, join or control, or
participate in the ownership, management, operation or control of any
Restricted Enterprise (other than the Company or its affiliates), which
engages or plans to engage in a Restricted Enterprise anywhere in the United
States, whether as a director, officer, executive, agent, consultant,
shareholder, partner, owner, independent contractor or otherwise.
Notwithstanding the foregoing, these restrictions shall not prevent the
Executive from earning his livelihood during the Non-Compete Period. As used
herein, a "Restricted Enterprise" shall be any activity that competes with
the business of the Company as constituted or as realistically contemplated
to be conducted by the Company during the term of this Agreement in the
Southwest United States. Notwithstanding the foregoing, the provisions of
this Section 7(a) shall not apply if Executive's employment is terminated
pursuant to Section 11(b) or Section 12 of this Agreement.
(b) The Executive agrees that he shall not divulge to others, nor
shall he use to the detriment of the Company or in any business competitive
with or similar to any business engaged in by the Company or any of its
subsidiary or affiliated companies, at any time during his employment with the
Company or thereafter, any Confidential Information obtained by him during the
course of his employment with the Company. For the purpose of this Agreement,
"Confidential Information" means any and all information developed by or for or
processed by the Company or its affiliates of which the Executive has knowledge
during the term of his employment that is (1) not generally known in any
industry in which the Company or its affiliates does business during the Non-
Compete Period or (2) not publicly available and treated as confidential.
(c) During the Non-Compete Period, the Executive will neither
solicit, hire or seek to solicit or hire any of the Company's personnel in any
capacity whatsoever nor shall Executive induce or attempt to induce any of the
Company's personnel to leave the employ of the Company to work for Executive or
otherwise.
8. REMEDIES. The Executive acknowledges that his breach of any of the
restrictive covenants contained in Section 7 herein may cause irreparable
damage to the Company for which remedies at law would be inadequate.
Accordingly, if Executive breaches or threatens to breach any of the provisions
of Section 7, the Company shall be entitled to appropriate injunctive relief,
including, without limitation, preliminary or permanent injunctions, in any
court of competent jurisdiction, restraining Executive from taking any action
prohibited hereby. This remedy shall be in addition to all other remedies
available to the Company at law or equity. If any portion of Section 7 is
adjudicated to be invalid or unenforceable, Section 7 shall be deemed amended
to delete therefrom the
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points so adjudicated, such deletion to apply only with respect to the
operation of Section 7 in the jurisdiction in which the adjudication is made.
9. INDEMNIFICATION. The Company hereby indemnifies and holds the
Executive harmless from any and all expenses (including legal fees) or losses
incurred by him in connection with the performance of his duties under this
Agreement.
10. PRIOR AGREEMENTS. The Executive represents that he is not now under
any written agreement, nor has he previously, at any time, entered into any
written agreement with any person, firm or corporation, which would or could in
any manner preclude or prevent him from giving freely and the Company receiving
the exclusive benefit of his services.
11. TERMINATION PROVISIONS.
(a) In addition to, and not in lieu of, the termination provisions
set forth in Section 6 herein, the employment of the Executive hereunder may be
terminated by the Company prior to the termination date of the initial term or
any renewal term thereafter (as set forth in Section 2 hereof) for sufficient
"cause," which cause is defined specifically in the event that the Executive is
guilty of (i) a willful and reckless disregard to perform his duties as set
forth in Section 3 herein, or (ii) willful misfeasance for which the Company is
directly and adversely affected, or (iii) any act of dishonesty by the
Executive bearing directly upon the Company. Termination of the Executive's
employment by the Company for reckless disregard of his duties to the Company,
willful misfeasance or any act of dishonesty with respect to the Company
hereunder shall constitute, and is referred to elsewhere herein, as termination
for "Cause." Such termination of the Executive's employment hereunder for
Cause shall be effective upon delivery of written notice to the Executive which
notice shall be sworn affidavit from at least two non-interested parties,
setting forth with specificity the exact nature of the "cause" for which the
Executive is being terminated. Upon the termination of this Agreement for
"cause" as set forth in this subparagraph, the Company shall not be obligated
to make any further payments hereunder to the Executive.
(b) Notwithstanding any provisions in this Agreement to the
contrary, the Company may terminate the employment of the Executive without
Cause, but in such event the Company shall be obligated to pay the Executive
any and all amounts payable to the Executive pursuant to Section 4 above for
the greater of (i) the remainder of the initial term or the extended term, as
the case may be, of the Agreement in effect immediately prior to such
termination, or (ii) one (1) year (the "Remainder Term"), and the Company shall
also continue for the Remainder Term to permit the Executive to receive or
participate in all fringe benefits available to him pursuant to Section 5
above; provided, however, that during the Remainder Term any amounts payable to
the Executive pursuant to this Section 11(b), and any fringe benefits which he
receives or in which he participates pursuant to this Section 11(b), shall be
reduced by any payments or fringe benefits the
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Executive shall receive during the Remainder Term from any other source of
employment which is unaffiliated with the Company.
12. CHANGE OF CONTROL.
(a) A "change of control" shall be deemed to occur when
(i) the Executive is not elected as an officer of the Company
(or one of its subsidiaries or affiliates);
(ii) the Company's shareholders approve (x) a merger or
consolidation in which the Company is not the surviving corporation and/or
which results in any reclassification or reorganization of the then outstanding
Common Stock, (y) a sale of all or substantially all of the Company's assets or
capital stock or (z) a plan of liquidation or dissolution of the Company;
(iii) the Common Stock is first purchased pursuant to a
tender or exchange offer (other than a tender or exchange offer made by the
Company) affecting at least 25% of the Common Stock or any other sale of at
least 25% of the Common Stock to a person or group of persons who are not
officers, directors or 5% shareholders of the Company on the date hereof; or
(iv) there is any other material change in ownership or
management of the Company after which (x) the Executive is terminated or (y) in
the sole determination of the Executive, there is a significant change in the
Executive's duties, responsibilities, principal location of employment, or
compensation.
(b) In the event a change of control occurs at any time during the
term of this Agreement:
(i) the Executive may, by written notice to the Company within
sixty (60) days after the date of such change of control, elect to terminate
his employment with the Company within sixty (60) days after such notice (the
"Termination Date"). If the Executive elects to terminate his employment
pursuant to Section 12, the Company shall pay the Executive, in addition to the
remainder of his annual compensation, a "parachute payment," as said term is
defined in Section 280G of the Internal Revenue Code of 1986, as amended, (the
"Code") in an amount equal to 2.99 times the Executive's annual compensation
(or such other amount then permitted by the Code), including the Base Salary,
bonus compensation or other remuneration and fringe benefits, if any. This
amount shall be payable by the Company to the Executive in one lump sum payment
within sixty (60) days of the Termination Date. The Executive shall be
responsible for payment of all income or excise taxes which may become due as a
result of the company's
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payment to him of any "excess parachute payments," as such phrase is defined
in Section 280G of the Code, and
(ii) any options beneficially owned by the Executive at the time
of such change in control shall immediately vest in full and shall be
exercisable by the Executive at any time prior to the expiration date of the
respective options.
13. ARBITRATION OF DISPUTES. All controversies, claims and disputes
arising out of or relating to this Agreement, or the breach thereof, shall be
settled by arbitration conducted by the American Arbitration Association, in
accordance with the commercial Arbitration Rules of said Association in effect
at the time of the controversy, claim or dispute. Judgment upon the award
rendered by the Arbitrator (or Arbitrators) may be entered in any court having
jurisdiction thereof.
14. SUCCESSORS AND ASSIGN. This Agreement shall inure to the benefit of
and be binding upon the Company, its successors and assigns, and upon the
Executive, his heirs, executors, administrators, legatees and legal
representatives.
15. NOTICE. Any notice, statement, report, request or demand required or
permitted to be given by this Agreement shall be in writing, and shall be
sufficient if delivered in person or if addressed and sent by certified mail,
return receipt requested, to the parties at the addresses set forth above, or
at such other place that either party may designate by notice in the foregoing
manner to the other.
16. WAIVER. The failure of either party to insist upon the strict
performance of any of the terms, conditions and provisions of this Agreement
shall not be construed as a waiver or relinquishment of future compliance
therewith, and said terms, conditions and provisions shall remain in full force
and effect. No waiver of any term or any condition of this Agreement on the
part of either party shall be effective for any purpose whatsoever unless such
waiver is in writing and signed by such party.
17. MISCELLANEOUS.
(a) Should any part of this Agreement, for any reason whatsoever, be
declared invalid, illegal, or incapable of being enforced in whole or in part,
such decision shall not affect the validity of any remaining portion, which
remaining portion shall remain in full force and effect as if this Agreement
had been executed with the invalid portion thereof eliminated, and it is hereby
declared the intention of the parties hereto that they would have executed the
remaining portion of this Agreement without including therein any portion which
may for any reason be declared invalid.
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(b) This Agreement shall be construed and enforced in accordance with
the laws of the State of Nevada applicable to agreements made and performed in
such State without application to the principles or conflicts of laws.
(c) This Agreement and all rights hereunder are personal to the
Executive and shall not be assignable, and any purported assignment in
violation thereof shall be null and void. Any person, firm or corporation
succeeding to the business of the Company by merger, consolidation, purchase of
assets or otherwise, shall assume by contract or operation of law the
obligations of the Company hereunder; provided, however, that the Company
shall, notwithstanding such assumption and/or assignment, remain liable and
responsible for the fulfillment of the terms and conditions of the Agreement on
the part of the Company.
(d) This Agreement constitutes the entire agreement between the
parties hereto with respect to the terms and conditions of the Executive's
employment by the Company, as distinguished from any other contractual
arrangements between the parties pertaining to or arising out of their
relationship, and this Agreement supersedes and renders null and void any and
all other prior oral or written agreements, understandings, or commitments
pertaining to the Executive's employment by the Company. No variation hereof
shall be deemed valid unless in writing and signed by the parties hereto. No
waiver by either party of any provision or condition of this Agreement by him
or it to be performed shall be deemed a waiver of similar or dissimilar
provisions and conditions at the same time or any prior or subsequent time.
(e) The heading of the paragraphs herein are inserted for
convenience and shall not affect any interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first written above.
"EXECUTIVE" "COMPANY"
FIBERCHEM, INC.
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
-------------------------- --------------------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: Chairman of the Board
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