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Exhibit 99.5 EMPLOYMENT AGREEMENT
This employment agreement ("Agreement") is made and entered
into as of this date by and Exhaust Technologies, Inc., a
Washington corporation ("Corporation"), and Xxxxxx Xxxx.
("Executive").
WHEREAS, the Corporation and the Executive desire that the
term of this Agreement begin upon receipt of a minimum of
$1,000,000 in proceeds from HSBC Bank, after deduction of Castle
Securities compensation ("Effective Date"); and
WHEREAS, the Corporation desires to employ the Executive as
its President and Chief Executive Officer and Executive is willing
to accept such employment by the Corporation, on the terms and
subject to the conditions set forth in this Agreement.
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
Section 1. Duties.
During the term of this Agreement, the Executive agrees to be
employed by and to serve the Corporation as its President and Chief
Executive Officer and the Corporation agrees to employ and retain
the Executive in such capacities. In such capacity, the Executive
shall render such managerial, administrative and other services as
are customarily associated with or incident to such position and
shall perform such other duties and responsibilities for the
Corporation as the Corporation may reasonably require, consistent
with such position. The Executive shall devote a substantial
portion of her business time, energy, and skill to the affairs of
the Corporation as the Executive shall report to the Corporation's
board of directors.
The Corporation shall not appoint any individual to whom the
Executive shall report, or who shall have the right to supervise
the Executive, provided, however, that the Corporation's board of
directors may appoint one or more members of the board of directors
to coordinate the reporting from the Executive to the board of
directors. In the event that the Corporation changes the
Executive's title, working conditions or specifies duties so that
the Executive's powers and duties are diminished or reduced, or
include powers, duties or working conditions which are not
generally consistent with the title of President and Chief
Executive Officer, or if the Corporation changes the reporting
relationship so that the Executive reports to another officer or
employee, other than the Corporation's board of directors as a
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whole, then at any time thereafter, at the Executive's option and
upon thirty days notice, and provided that such changes shall not
have been rescinded or corrected to the reasonable satisfaction of
the Executive within said thirty day period, the Executive shall
have the right to terminate the employment relationship, and in
such event, the employment shall be deemed to have been terminated
by the Corporation without cause.
Section 2. Term of Employment.
2.1 Definitions. For the purposes of this Agreement the
following terms shall have the following meanings:
2.1.1 "Termination For Cause" shall mean termination by
the Corporation of the Executive's employment by the Corporation by
reason of the Executive's willful dishonesty towards, fraud upon,
or deliberate injury or attempted injury to the Corporation, or by
reason of the Executive's willful material breach of this Agreement
which has resulted in material injury to the Corporation.
2.1.2 "Termination Other Than For Cause" shall mean
termination by the Corporation of the Executive's employment by the
Corporation (other than in a Termination for Cause) and shall
include constructive termination of the Executive's employment by
reason of material breach of this Agreement by the Corporation,
such constructive termination to be effective upon notice from the
Executive to the Corporation of such constructive termination.
2.1.3 "Voluntary Termination" shall mean termination by
the Executive of the Executive's employment other than
(i) constructive termination as described herein, (ii) "Termination
Upon a Change in Control," and (iii) termination by reason of the
Executive's death or disability as described herein.
2.1.4 "Termination Upon a Change in Control" shall mean
a termination by the Executive of the Executive's employment with
the Corporation within 120 days following a "Change in Control."
2.1.5 "Change in Control" shall mean (i) the time that
the Corporation first determines that any person and all other
persons who constitute a group (within the meaning of subsection 13(d)(3) of
the Securities Exchange Act of 1934 ("Exchange Act")) have acquired
direct or indirect beneficial ownership (within the meaning of Rule
13d-3 under the Exchange Act) of twenty percent (20%) or more of
the Corporation's outstanding securities, unless a majority of the
"Continuing Directors" approves the acquisition not later than ten
(10) business days after the Corporation makes that determination,
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or (ii) the first day on which a majority of the members of the
Corporation's board of directors are not "Continuing Directors."
2.1.6 "Continuing Directors" shall mean, as of any date
of determination, any member of the Corporation's board of directors
of the Corporation who (i) was a member of that board of directors
on January 31, 2001, (ii) has been a member of that board of
directors since inception of the Company, or (iii) was nominated
for election or elected to the Corporation's board of directors with
the affirmative vote of the greater of a majority of the Continuing
Directors who were members of the Corporation's board of directors
at the time of such nomination or election.
2.2 Initial Term. The term of employment of the Executive by
the Corporation shall be for a period of three years beginning with
Effective Date ("Initial Term"), unless terminated earlier pursuant
to this Agreement. At any time prior to the expiration of the
Initial Term, the Corporation and the Executive may by mutual
written agreement extend the Executive's employment under the terms
of this Agreement for such additional periods as they may agree.
2.3 Termination For Cause. Termination For Cause may be
effected by the Corporation at any time during the term of this
Agreement and shall be effected by written notification to the
Executive. Upon Termination For Cause, the Executive shall
promptly be paid all accrued salary, bonus compensation to the
extent earned, vested deferred compensation (other than pension
play or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans
of the Corporation in which the Executive is a participant to the
full extent of the Executive's rights under such plans, accrued
vacation pay and any appropriate business expenses incurred by the
Executive in connection with her duties hereunder, all to the date
of termination, but the Executive shall not be paid any other
compensation or reimbursement of any kind, including without
limitation, Severance Compensation.
2.4 Termination Other Than For Cause. Notwithstanding
anything else in this Agreement, the Corporation may effect a
Termination Other Than For Cause at any time upon giving written
notice to the Executive of such termination. Upon any Termination
Other Than For Cause, the Executive shall promptly be paid all
accrued salary, bonus compensation to the extent earned, vested
deferred compensation (other than pension plan or profit sharing
plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of the Corporation in which the
Executive is a participant to the full extent of the Executive's
rights under such plans (including accelerated vesting, if any, of
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awards granted to the Executive under the Corporation's stock option
plan), accrued vacation pay and any appropriate business expenses
incurred by the Executive in connection with her duties hereunder,
all to the date of termination, and all Severance Compensation
provided, but no other compensation or reimbursement of any kind.
2.5 Termination by Reason of Disability. If, during the term
of this Agreement, the Executive, in the reasonable judgment of the
Corporation's board of directors, has failed to perform her duties
under this Agreement on account of illness or physical or mental
incapacity, and such illness or incapacity continues for a period
of more than three consecutive months, the Corporation shall have
the right to terminate the Executive's employment hereunder by
written notification to the Executive and payment to the Executive
of all accrued salary, bonus compensation to the extent earned,
vested deferred compensation (other than pension plan or profit
sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of the Corporation
in which the Executive is a participant to the full extent of the
Executive's rights under such plans, accrued vacation pay and any
appropriate business expenses incurred by the Executive in
connection with her duties hereunder, all to the date of
termination, with the exception of medical and dental benefits
which shall continue through the expiration of this Agreement, but
the Executive shall not be paid any other compensation or
reimbursement of any kind, including without limitation, Severance
Compensation.
2.6 Death. In the event of the Executive's death during the
term of this Agreement, the Executive's employment shall be deemed
to have terminated as of the last day of the month during which her
death occurs and the Corporation shall promptly pay to her estate
or such beneficiaries as the Executive may from time to time
designate all accrued salary, bonus compensation to the extent
earned, vested deferred compensation (other than pension plan or
profit sharing plan benefits which will be paid in accordance with
the applicable plan), any benefits under any plans of the
Corporation in which the Executive is a participant to the full
extent of the Executive's rights under such plans, accrued vacation
pay and any appropriate business expenses incurred by the Executive
in connection with her duties hereunder, all to the date of
termination, but the Executive's estate shall not be paid any other
compensation or reimbursement of any kind, including without
limitation, Severance Compensation.
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2.7 Voluntary Termination. In the event of a Voluntary
Termination, the Corporation shall promptly pay all accrued salary,
bonus compensation to the extent earned, vested deferred
compensation (other than pension plan or profit sharing plan
benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of the Corporation in which the
Executive is a participant to the full extent of the Executive's
rights under such plans, accrued vacation pay and any appropriate
business expenses incurred by the Executive in connection with her
duties hereunder, all to the date of termination, but no other
compensation or reimbursement of any kind, including without
limitation, Severance Compensation.
2.8 Termination Upon a Change in Control. In the event of a
Termination Upon a Change in Control, the Executive shall
immediately be paid all accrued salary, bonus compensation to the
extent earned, vested deferred compensation (other than pension
plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans
of the Corporation in which the Executive is a participant to the
full extent of the Executive's rights under such plans (including
accelerated vesting, if any, of any awards granted to the Executive
under the Corporation's Stock Option Plan), accrued vacation pay and
any appropriate business expenses incurred by the Executive in
connection with her duties hereunder, all to the date of
termination, and all Severance Compensation, but no other
compensation or reimbursement of any kind.
2.9 Notice of Termination. The Corporation may effect a
termination of this Agreement pursuant to the provisions of this
Section upon giving thirty (30) days' written notice to the
Executive of such termination. The Executive may effect a
termination of this Agreement pursuant to the provisions of this
Section upon giving thirty (30) days' written notice to the
Corporation of such termination.
Section 3. Salary, Benefits and Bonus Compensation.
3.1 Base Salary. As payment for the services to be rendered
by the Executive as provided in Section 1 and subject to the terms
and conditions of Section 2, the Corporation agrees to pay to the
Executive a "Base Salary" for the twelve (12) calendar months
beginning the Effective Date at the rate of $125,000 per annum
payable in 12 equal monthly installments.
3.2 Additional Compensation. The Executive shall not be
paid additional compensation during the term of this agreement.
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3.3 Additional Benefits. During the term of this Agreement,
the Executive shall be entitled to the following fringe benefits:
3.3.1 Executive Benefits. The Executive shall be
eligible to participate in such of the Corporation's benefits and
deferred compensation plans as are now generally available or later
made generally available to executive officers of the Corporation,
including, without limitation, the Corporation's Stock Option Plan,
profit sharing plans, annual physical examinations, dental and
medical plans, personal catastrophe and disability insurance,
financial planning, retirement plans and supplementary executive
retirement plans, if any. For purposes of establishing the length
of service under any benefit plans or programs of the Corporation,
the Executive's employment with the Corporation will be deemed to
have commenced on the Effective Date.
3.3.2 Vacation. The Executive shall be entitled to two
(2) weeks of vacation during each year during the term of this
Agreement and any extensions thereof, prorated for partial years.
3.3.3. Medical Insurance. For the term of this Agreement
and any extensions thereof, the Corporation shall at its expense
procure and keep in effect a Preferred Plan of medical insurance
through Medical Service Corporation of Washington/Premera Blue
Cross.
3.3.4 Life Insurance. For the term of this Agreement
and any extensions thereof, the Corporation shall at its expense
procure and keep in effect term life insurance on the life of the
Executive payable to the in the aggregate amount of $500,000 with
the Corporation being the beneficiary thereof. Further, the cost
of such insurance will be paid by the Corporation.
3.3.5 Automobile Allowance. For the term of this
Agreement and any extensions thereof the Corporation will reimburse
the Executive for mileage accumulated upon his motor vehicle while
being used for corporate matters.
3.3.6 Reimbursement for Expenses. During the term of
this Agreement, the Corporation shall reimburse the Executive for
reasonable and properly documented out-of-pocket business and/or
entertainment expenses incurred by the Executive in connection with
her duties under this Agreement.
Section 4. Severance Compensation.
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4.1 Severance Compensation in the Event of a Termination Upon
a Change in Control. In the event the Executive's employment is
terminated in a Termination Upon a Change in Control, the Executive
shall be paid as severance compensation ("Severance Compensation")
her Base Salary (at the rate payable at the time of such
termination), for a period of twelve (12) months from the date of
such termination. Said Severance Compensation shall be paid
regardless of Executive being employed by a new employer during
such period. Notwithstanding anything in this Section to the
contrary, the Executive may in the Executive's sole discretion, by
delivery of a notice to the Corporation within thirty (30) days
following a Termination Upon a Change in Control, elect to receive
from Compensation a lump sum Severance Compensation payment by bank
cashier's check equal to the present value of the flow of cash
payments that would otherwise be paid to the Executive pursuant to
this Section. The Executive shall also be entitled to an
accelerated vesting of any awards granted to the Executive under
the Corporation's Stock Option Plan to the extent provided in the
stock option agreement entered into at the time of grant. The
Executive shall continue to accrue retirement benefits and shall
continue to enjoy any benefits under any plans of the Corporation
in which the Executive is a participant to the full extent of the
Executive's rights under such plans, including any perquisites
provided under this Agreement, though the remaining term of this
Agreement.
4.2 Severance Compensation in the Event of a Termination
Other Than for Cause. In the event the Executive's employment is
terminated in a Termination Other Than for Cause, the Executive
shall be paid as Severance Compensation her Base Salary (at the
rate payable at the time of such termination), for a period of
twelve (12) months from the date of such termination, on the dates
specified in Section 3.1. Said Severance Compensation will be paid
regardless of Executive being employed by a new employer during
such period. Notwithstanding anything in this Section to the
contrary, the Executive may in the Executive's sole discretion, by
delivery of a notice to the Corporation within thirty (30) days
following a Termination Upon a Change in Control, elect to receive
from Compensation a lump sum Severance Compensation payment by bank
cashier's check equal to the present value of the flow of cash
payments that would otherwise be paid to the Executive pursuant to
this Section. The Executive shall also be entitled to an
accelerated vesting of any awards granted to the Executive under
the Corporation's Stock Option Plan to the extent provided in the
stock option agreement entered into at the time of grant. The
Executive shall continue to accrue retirement benefits and shall
continue to enjoy any benefits under any plans of the Corporation
in which the Executive is a participant to the full extent of the
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Executive's rights under such plans, including any perquisites
provided under this Agreement, though the remaining term of this
Agreement.
4.3 No Severance Compensation Upon Other Termination. In the
event of a Voluntary Termination, Termination For Cause,
termination by reason of the Executive's death or disability as
described herein, the Executive or her estate shall not be paid any
Severance Compensation.
4.4 Limit on Aggregate Compensation Upon a Change in Control.
Notwithstanding anything else in this Agreement, solely in the
event of a Termination Upon a Change in Control, the amount of
Severance Compensation paid to the Executive, but exclusive of any
payments to the Executive in respect of any stock options then held
by the Executive (or any compensation deemed to be received by the
Executive in connection with the exercise of any stock options at
any time) or by virtue of the Executive's exercise of a Limited
Right under the Option Plan upon a Change in Control, shall not
include any amount that the Corporation is prohibited from
deducting for federal income tax purposes by virtue of subsection 280G of
the Internal Revenue Code or any successor provision.
Section 5. Outside Activities of Executive.
The Corporation acknowledges that the Executive has
commitments and business activities not related to the Corporation.
There shall be no restriction on the Executive's ability to fulfill
such commitments or engage in such business activities, provided
that during the term of the Executive's employment under this
Agreement, the Executive devotes at lease 80% of his time to
corporate matters.
Nothing in this Agreement shall preclude the Executive from
devoting time during reasonable periods required for investing
personal assets and/or those of family members in such form or
manner that will not violate this Agreement and these activities
will be permitted so long as they do not materially adversely
affect the performance of the Executive's duties and obligations to
the Corporation.
Section 6. Payment Obligations.
The Corporation's obligation to pay the Executive the
compensation and to make the arrangements provided herein shall be
unconditional, and the Executive shall have no obligation
whatsoever to mitigate damages hereunder. If litigation after a
Change in Control shall be brought to enforce or interpret any
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provision contained herein, the Corporation, to the extent
permitted by applicable law and the Corporations' articles of
incorporation and bylaws, hereby indemnifies and will pay the
Executive for the Executive's reasonable attorneys' fees and
disbursements incurred in such litigation.
Section 7. Confidentiality.
The Executive agrees that all confidential and proprietary
information relating to the Corporation's business shall be kept and
treated as confidential both during and after the term of this
Agreement, except as may be permitted in writing by the
Corporation's board of directors or as such information is within
the public domain or comes within the public domain without any
breach of this Agreement.
Section 8. Withholdings.
All compensation and benefits to the Executive hereunder shall
be reduced by all federal, state, local and other withholdings and
similar taxes and payments required by applicable law.
Section 9. Indemnification.
In addition to any rights to indemnification to which the
Executive is entitled to under the Corporation's articles of
incorporation and bylaws, the Corporation shall indemnify the
Executive at all times during and after the term of this Agreement
to the maximum extent permitted under Washington Business
Corporation Act or any successor provision thereof and any other
applicable state law, and shall pay the Executive's expenses in
defending any civil or criminal action, suit, or proceeding in
advance of the final disposition of such action, suit or
proceeding, to the maximum extent permitted under such applicable
state laws.
Section 10. Notices.
Notice under this Agreement shall be in writing and shall be
effective when actually delivered. If mailed, notice shall be
deemed effective 48 hours after mailing as registered or certified
mail, postage prepaid, directed to the other party at the address
set forth below or such other address as the party may indicate by
written notice to the other:
_______________________ ___________________
_______________________ ___________________
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Section 11. Time.
Time is of the essence of this Agreement.
Section 12. No Release.
Both parties agree that the termination of this Agreement or
the expiration of the term of this Agreement shall not release
either party from any obligations under Sections this Agreement.
Section 13. Survival.
Any of the terms and covenants contained in this Agreement
which require the performance of either party after Termination
shall survive such Termination.
Section 14. Waiver.
Failure of either party at any time to require performance of
any provision of this Agreement shall not limit the party's right
to enforce the provision, nor shall any waiver of any breach of any
provision be a waiver of any succeeding breach of any provision or
a waiver of the provision itself for any other provision.
Section 15. Assignment.
Except as otherwise provided within this Agreement, neither
party hereto may transfer or assign this Agreement without prior
written consent of the other party.
Section 16 Law Governing.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington.
Section 17. Attorney Fees.
In the event a suit or action is brought by any party under
this Agreement to enforce any of its terms, or in any appeal
therefrom, it is agreed that the prevailing party shall be entitled
to reasonable attorneys fees to be fixed by the trial court and/or
appellate court.
Section 18. Presumption.
This Agreement or any section thereof shall not be construed
against any party due to the fact that said Agreement or any
section thereof was drafted by said party.
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Section 19. Computation of Time.
In computing any period of time pursuant to this Agreement,
the day of the act, event or default from which the designated
period of time begins to run shall be included, unless it is a
Saturday, Sunday or a legal holiday, in which event the period
shall begin to run on the next day which is not a Saturday, Sunday
or a legal holiday, in which event the period shall run until the
end of the next day thereafter which is not a Saturday, Sunday or
legal holiday.
Section 20. Titles and Captions.
All article, section and paragraph titles or captions
contained in this Agreement are for convenience only and shall not
be deemed part of the context nor affect the interpretation of this
Agreement.
Section 21. Pronouns and Plurals.
All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine, neuter, singular or plural as the
identity of the Person or Persons may require.
Section 22. Entire Agreement.
This Agreement contains the entire understanding between and
among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this
Agreement.
Section 23. Prior Agreements.
This document is the entire, final and complete agreement of
the parties and supersedes and replaces all prior or existing
written and oral agreements.
Section 24. Agreement Binding.
This Agreement shall be binding upon the heirs, executors,
administrators, successors and assigns of the parties hereto.
Section 25. Savings Clause.
If any provision of this Agreement, or the application of such
provision to any person or circumstance, shall be held invalid, the
remainder of this Agreement, or the application of such provision
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to persons or circumstances other than those as to which it is held
invalid, shall not be affected thereby.
Section 26. Separate Counsel.
The parties acknowledge that Executive has not been
represented in this transaction by counsel and the Company has been
represented by Xxxxxx X. Xxxxxx, Attorney and Counselor at Law.
IN WITNESS WHEREOF, the parties have executed this
Agreement, the _____ day of ___________________, 2000.
Corporation
EXHAUST TECHNOLOGIES, INC..
BY: __________________________
Title:____________________
Attest:
[Seal]
___________________________
Executive
___________________________
Xxxxxx Xxxx
