Exhibit 99.4
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amended Agreement")
effective the 1st day of May, 1997 between COMPOST AMERICA HOLDING COMPANY,
INC., a New Jersey corporation with offices at 000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxx
Xxxxxx 00000 (the "Company") and XXXXX X. XXXXXX, an individual residing at 0000
Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000 (the "Executive").
R E C I T A L S
A. The Company presently is engaged in the business of developing
composting facilities throughout the United States (the "Business").
B. The Executive has certain unique skills and business experience which
he wishes to devote to the Company.
C. The Company desires to employ the Executive and the Executive desires
to be so employed by the Company.
D. The Company and the Executive previously entered into an Employment
Agreement dated May 10, 1996 ("First Agreement"), and the Company and the
Executive, by mutual agreement, wish to amend this First Agreement. This Amended
Agreement supersedes all previous agreements, whether written or oral.
E. This Amended Agreement, after careful review and consideration, has
been approved by the Company's board of directors (the "Board").
NOW THEREFORE, in consideration of the premises together with other good
and valuable consideration, the receipt of which is hereby acknowledged, it is
agreed as follows:
1. Amendment of First Agreement, Recitals and Effective Date: The
foregoing recitals are true and correct, and are incorporated herein by
reference. The effective date of this Amended Agreement shall be August 1, 1997
(the "Effective Date"). The First Agreement is hereby amended in its entirety by
this Amended Agreement.
2. Employment of the Executive: Subject to the terms and conditions
contained herein, and unless sooner terminated as hereinafter provided, the
Company agrees to employ Executive, and Executive agrees to serve as an employee
of the Company, for a term of employment commencing on the Effective Date and
ending seven (7) years from the Effective Date (the "Term").
3. Duties of the Executive: During the Term, the Executive shall have the
following powers and duties:
3.1 Executive will have the powers and duties of the President and
Chief Executive Officer of the Company, as set forth in the Company's by-laws,
as amended (subject to the direction of the Board, which direction shall be
pursuant to reasonable policies adopted by the Board from time to time and
communicated by written notice to Executive).
3.2 During the Term, Executive shall devote his full business time,
attention, effort and skill to the business affairs and interests of the
Company. It is understood and agreed that Executive may serve or continue to
serve on the boards of directors of and hold any other offices or positions in
companies or organizations as Executive may desire, provided such position will
not present any significant conflict of interest with the Company or materially
affect the performance of Executive's duties pursuant to this Amended Agreement,
subject to Board approval. If any potential conflict of interest arises,
Executive shall present the position and circumstances to a meeting of the
Board, which shall determine if a conflict exists. Nothing contained herein
shall prohibit Executive from managing his personal, financial, and less active
business affairs to the extent such affairs do not contravene any of the
foregoing provisions.
Notwithstanding anything to the contrary contained herein, the
Executive shall have the right and the authority to delegate responsibility to
other personnel if he deems such delegation appropriate, and is hereby
authorized to hire, on behalf of Company, additional agents, employees and other
representatives who are in his opinion necessary to handle the Company's
affairs.
3.3 During the Term, the Company agrees to cause Executive to be
elected as a director on the Board of the Company, and to be selected as
Chairman of the Board and the Executive agrees to serve. Any additional
compensation paid to the Executive for serving as a director shall be determined
by the Board.
4. Compensation: During the Term, as compensation for the services to be
rendered by Executive, the Company shall pay Executive the following amounts:
4.1 Base Salary: Each twelve month fiscal period commencing May 1st
of one year, and ending April 30th of the next, is called herein a "Fiscal
Year". During the Fiscal Year already commenced, beginning on the Effective Date
and ending April 30, 1998, Executive shall be paid at the annual rate of
$350,000.00, payable in equal monthly installments (the "Base Salary"). Of this
Base Salary, the sum of $125,000 shall not be paid or accrued until the Company
has sufficient cash resources to make this payment. During the balance of the
Term, the Executive shall be entitled to and shall receive annual increases in
his Base Salary commensurate with the growth of the Company as shall be agreed
upon at an annual review of the Executive's performance and compensation by the
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Board, provided that such annual increases shall be no less than an amount equal
to the increase in the Consumer Price Index for all Urban Consumers and Urban
Wage Earners U.S. City Average issued by the United States Department of Labor
Bureau of Labor Statistics, or its successor index ("CPI") over the preceding
calendar year. Executive agrees to defer the commencement of actual receipt of
his Base Salary until the reasonable capitalization of the Company, during which
time this deferred Base Salary shall be accrued by the Company. At such time as
the Board determines that the Company is reasonably capitalized, then all
accrued Base Salary shall be paid to the Executive.
4.2 Bonus: During each Fiscal Year of the Term, commencing with the
fiscal year May 1, 1997 through April 30, 1998, Executive shall be paid a bonus
(the "Bonus"). The Bonus shall equal five (5%) percent of the Company's
"Consolidated Net Income After Taxes" ("CNIAT") on the first Twenty-Five Million
($25,000,000) Dollars of such CNIAT and two (2%) percent on all CNIAT above
Twenty-Five Million ($25,000,000) Dollars. "Consolidated Net Income After Taxes"
as used herein shall be defined as income after income taxes as reflected in the
Company's consolidated statement of operations, as adjusted to eliminate the
effect of an extraordinary items.
4.3 Computation of Bonus: The Bonus shall be determined by
calculations made by Company's independent certified public accountants, which
determination shall be final and conclusive upon all parties, subject to the
accuracy and consistency of the calculations in accordance with the provisions
of this Amended Agreement. Payment of the Bonus shall be made by the Company as
soon as reasonably practicable, but in no event later than 120 days after the
last day of Company's Fiscal Year for which the Bonus is due to Executive from
Company. At the sole option of the Executive, in any given year, the Executive
may choose to receive his Bonus in cash or restricted shares of the Company's
common stock valued, per share, at eighty (80%) percent of the average closing
trading price of the Company's common stock for the thirty (30) trading days
prior to the payment of the bonus ("Bonus Stock") or a combination of cash and
Bonus Stock.
4.4 Compensation of Other Officers and Directors: Should the
compensation or bonus benefits to any other officer or director of the Company
be greater than that of the Executive, then the Executive shall receive such
compensation or bonus benefits equal to that paid to said other officer or
director.
4.5 Conversion of Accruals Into Shares: Company acknowledges that
certain monies are owed to Executive, in the amount as set forth in the
Company's Form 10-QSB for the fiscal quarter ended July 31, 1997 ("Debt To
Executive"). For a period of sixty (60) days after the execution of this
Agreement, the Executive shall have the right, but not the obligation, to
convert
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some or all of this Debt To Executive into unregistered shares of the Company's
common stock at $2.00 per share, such conversion to be effected by written
instructions from the Executive to the Company.
5. Fringe Benefits: During the Term, Executive shall be entitled to:
5.1 Business Expenses: Executive is authorized to incur reasonable
expenses to execute and/or promote the Business of the Company, including but
not limited to expenses for entertainment, travel and similar items. Company
will reimburse Executive for all such expenses incurred on behalf of Company.
5.2 Automobile: Company shall furnish the Executive with an
appropriate automobile satisfactory to Executive for his use in discharging his
duties hereunder, and the Company shall pay all costs and expenses relating
thereto, including, but not limited, to gasoline, tolls, maintenance, insurance
and car phone.
5.3 Performance Bonuses: At such time as the Company's common shares
have been listed on "The NASDAQ Small Cap Market" or on "The NASDAQ National
Market System" during the Term of this Amended Agreement, the Executive shall be
entitled to a one-time cash performance bonus in the amount of $500,000. Payment
of this cash performance bonus shall be made within thirty (30) days after
satisfaction of this condition, except that, this Performance Bonus payment
shall be deferred and accrued until such time as, in the opinion of the
Company's Board, the Company has sufficient cash flow to make this payment.
5.4 Health, Medical, and Dental Insurance: Executive shall be
provided with hospital, major medical, and dental insurance reasonably
satisfactory to the Executive and his family dependents with full medical and
dental coverage. Said policy shall be chosen by the Executive.
5.5 Life Insurance: Executive shall be provided with a term life
insurance policy issued by a company chosen by Executive for the benefit of the
Executive's family as Executive may designate, in the amount of $1,500,000.00.
The Company shall pay the premium during the Term of this Amended Agreement.
Upon the termination of this Amended Agreement, the Company shall assign such
policy to the Executive.
5.6 Disability Insurance: Executive shall be entitled to disability
insurance issued by a company chosen by Executive which provides to Executive
not less than 80% of Executive's Base Salary hereunder after an elimination
period not to exceed 30 days and proof of disability. Furthermore, the
disability policy shall provide for coverage in the event of disability through
the age of 67. Executive may request that Company satisfy this paragraph 5.6
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by reimbursing Executive for payments made by Executive under an existing plan
which presently covers Executive.
5.7 Vacation: The Executive shall be entitled to four weeks paid
vacation annually.
5.8 Company Benefit Plans: Executive shall be entitled to
participate in any and all plans, arrangements or distributions maintained by
the Company pertaining to or in connection with any pension, profit sharing,
stock options and/or similar benefits for its regular employees and/or for its
executives, as determined by the Board or committees thereof pursuant to the
governing instruments which establish and/or determine eligibility and other
rights of the participants and beneficiaries under such plans or other benefit
programs.
5.9 Officers and Directors Liability Insurance: The Company shall
purchase Officers and Directors Liability Insurance which shall cover the
Executive, all Directors and designated Officers in an amount and with coverage
mutually agreeable to the Company and the Executive.
5.10 Fringe Benefits of Other Officers and Directors: Should the
fringe benefits to any other officer or director of the Company be greater than
that of the Executive, then the Executive shall receive such fringe benefits
equal to that paid to said other officer or director.
6. Rights of Indemnification:
(a) Subject to the provisions of the Company's Certificate of
Incorporation and Bylaws, each as amended from time to time, the Company shall
indemnify the Executive to the fullest extent permitted by the General
Corporation Law of the State of New Jersey, as amended from time to time, for
all amounts (including without limitation, judgments, fines, settlement
payments, expenses and attorney's fees) incurred or paid by the Executive in
connection with any action, suit, investigation or proceeding arising out of or
relating to the performance by the Executive of services for, or the acting by
the Executive as a director, officer or employee of the Company, or any other
person or enterprise at the Company's request. Upon request of the Executive,
all costs and expenses of indemnification required hereunder shall be paid in
advance.
(b) The Company shall use its best efforts to obtain and maintain in
full force and effect during the Term directors' and officers' liability
insurance policies providing full and adequate protection to the Executive for
his capacities.
7. Stock Options: The Company hereby grants to the Executive options (the
"Stock Options") to purchase 1,000,000
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shares of the common stock of the Company (the "Options Shares") exercisable
over a seven-year period from the Effective Date regardless of whether the
Executive is working for, or employed by the Company. Said Stock Options shall
be assignable and transferrable without any limitations whatsoever. The Company
and Executive hereby agree that as of the date of this Amended Agreement, all
1,000,000 shares shall be and are hereby declared to be vested and immediately
exercisable. The exercise price (the "Option Price") for the Option Shares shall
be $2.50 per share. The Stock Options shall be exercisable from time to time in
whole or in part without affecting the remainder of the Stock Options during the
term of the exercisability and any renewal or extension thereof.
7.1 Exercise of Stock Options: Stock Options may be exercised by
written notice directed to the Company or such other person as may be designated
by the Company accompanied by a check payable to the Company in payment of the
option price for the option shares or, at the sole option of the Executive,
payment may be made by "cashless exercise", as herein defined, or a combination
thereof. Cashless exercise shall mean payment for the option shares by the
surrender to the Company by the Executive that number of shares of the Company's
common stock which is calculated by multiplying (i) the total number of common
shares being acquired by the exercise of the Stock Option by (ii) the exercise
price and (iii) dividing the product by the closing bid price of the Company's
common stock on the date of exercise. The Company shall make immediate delivery
of the purchased option shares, fully paid and nonassessable, registered in the
name of the Executive subject to a restrictive legend set forth on the purchased
Option Shares certificate as follows:
The shares of stock represented by this Certificate have not been
registered under the Securities Act of 1933, as amended ("Act"), or
the securities laws of any other jurisdiction and may not be sold,
transferred, pledged, hypothecated or otherwise disposed of in any
manner unless they are registered under such Act and the securities
laws of any applicable jurisdictions or unless pursuant to an
exemption therefrom.
7.2 Reclassification, Consolidation or Merger: If and to the extent
that the number of issued and outstanding shares of common stock of the Company
shall be increased or reduced by a change of par value, split-up,
reclassification, distribution of a dividend payable in stock, issuance of
convertible debentures, warrants or similar transactions, the number of shares
subject to the Stock Options and the Option Price per share shall be
proportionately adjusted to protect the Executive from dilution. If the Company
is reorganized or consolidated or merged with
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another corporation, the Executive shall be entitled to receive options covering
shares of such reorganized, consolidated, or merged company in the same
proportion, at an equivalent price, and subject to the same conditions. For
purposes of the preceding sentence, the excess of the aggregate fair market
value of the shares subject to the option immediately after the reorganization,
consolidation or merger over the aggregate option price of such shares shall not
be more than the excess of the aggregate fair market value of all shares subject
to the Stock Options immediately before such reorganization, consolidation or
merger over the aggregate option price of such shares, and the new option or
assumption of the old Stock Options shall not give Executive additional benefits
which he did not have under the old Stock Options, or deprive him of benefits
which he had under the old Stock Options. If there is a purchase of stock of the
Company by a party who is not an affiliate of the Company that causes a change
in control of the Company (as defined hereinafter), the Company or purchasing
entity shall purchase the Options Shares which have not been registered on the
same basis as all other shares.
7.3 Registration Rights:
a. Demand Registration. At anytime after October 1, 1997,
Executive shall have the right to make a request of the Company, in writing (any
such request hereinafter referred to as a "Registration Request"), to register
under the Securities Act of 1933 (the "Securities Act"), all or any part of the
Option Shares as to which the Stock Options were exercised and the Company shall
cause such shares to be registered for sale under the Securities Act as soon as
reasonably practicable so as to permit promptly the sale thereof, and, in
connection therewith, the Company shall prepare on such appropriate form as the
Company in its discretion shall determine, a registration statement under the
Securities Act to effect such registration and shall file such registration
statement with the Securities and Exchange Commission ("Commission") and
diligently pursue the declaration of such registration statement as effective.
Executive undertakes to provide all such information and materials and take all
such action as may be required in order to permit the Company to comply with all
applicable requirements of the Commission and to obtain any desired acceleration
of the effective date of such registration statement. Notwithstanding the
foregoing, the Company shall be entitled to postpone for a reasonable period of
time, but not in excess of 180 days, the filing of any registration statement
otherwise required to be prepared and filed by the Company pursuant to this
Amended Agreement if the Company is, at such time, conducting or about to
conduct an underwritten public offering of equity securities (or securities
convertible into equity securities) and is advised by its managing underwriter
or underwriters that such offering would in its or their reasonable opinion be
materially and adversely affected by the registration so requested.
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b. Piggyback Registrations. If, in the case of any offering of
equity securities (or securities convertible into equity securities), within ten
days after Executive has been made aware by the Company of its intention to
effect a registration of any of its securities (otherwise than pursuant to an
employee benefit plan or filing on Form S-8), the Executive may request and the
Company shall honor Executive's request that any equity securities in the
Company owned by Executive be included in the registration statement.
Notwithstanding the foregoing, if the underwriter consents to
the inclusion in the registration statement of less than all shares proposed to
be offered by selling shareholders, including the Executive, then the amount of
shares to be sold for the account of each selling shareholder shall be reduced
proportionately in the ratio by which the amount each selling shareholder
proposes to sell bears to the total amount of shares which the underwriter will
permit to be sold for the account of all selling shareholders.
c. Limitations: In connection with any offering of shares
registered pursuant to this Amended Agreement, the Company (i) shall furnish to
Executive such number of copies of any prospectus (including any preliminary
prospectus, or supplement) as he may reasonably request in order to effect the
offering and sale of the shares to be offered and sold, but only while the
Company shall be required under the provisions hereof to cause the registration
statement to remain current for not more than six months, and (ii) take such
action as shall be necessary to qualify the shares covered by such registration
statement under such blue sky or other state securities laws for offer and sale
as Executive shall request; provided, however, that the Company shall not be
obligated to qualify as a foreign corporation to do business under the laws of
any jurisdiction in which it shall not then be qualified or to file any general
consent to service of process in any jurisdiction in which such a consent has
not been previously filed. If requested by the Company, in connection with a
piggyback sale of the Option Shares covered hereunder, Executive shall enter
into an underwriting agreement with a managing underwriting or underwriters
selected by the Company and shall enter into an agreement with the Company
containing representations, warranties, indemnities and agreements then
customarily included by an issuer or selling shareholder in underwriting
agreements with respect to secondary distributions. In connection with any
offering of shares registered pursuant to this Amended Agreement, the Company
shall (y) furnish to the underwriters, at the Company's expense, unlegended
certificates representing ownership of the shares being sold in such
denominations as requested and (z) instruct any transfer agent and registrar of
the shares to release any stop transfer order with respect to shares included in
any registration becoming effective pursuant to this Amended Agreement. The
Company shall use its best efforts to keep such registration statement
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current for a period of six months.
d. Costs. The Company shall in all events pay all expenses,
fees, and disbursements of any counsel, accountants and other consultants
representing the Company in connection therewith, as well as all underwriting
discounts and commissions in connection with the sale of the shares of
Executive.
8. Death During Employment: If Executive dies during the Term of this
Amended Agreement, the Executive's surviving spouse or the Executive's estate,
if otherwise provided, shall obtain all rights in vested stock options plus the
right to exercise the stock options on 100% of the non-vested stock options,
together with the sales rights of such stocks and/or stock options that have
been granted to the Executive hereunder.
9. Disability: If Executive suffers from a disability as hereinafter
defined, his employment hereunder may, after notice is hereinafter provided, at
the option of the Company, be deemed terminated. In such event, the Company will
pay the Executive the Base Salary, Bonus, and all fringe benefits otherwise
payable to him for a period of three (3) years after the date upon which the
Board deems the Executive to be disabled hereunder, and, thereafter, one-half of
his Base Salary for the balance of the seven (7) year Term of this Amended
Agreement (the "Disability Wage"). The Company shall have the right, however, to
set off against the amount of the Disability Wage payable to the Executive all
amounts which may be received by Executive during such period pursuant to the
disability insurance provided by the Company under the provisions of this
Amended Agreement. The Company shall have no further wage obligations to the
Executive or to his estate except as otherwise provided in this Amended
Agreement. For this purpose, the terms "disability" and "disabled" are defined
as Executive's inability for a period of 180 days in a 360 day period to perform
his duties under this Amended Agreement. If there is a dispute as to the
existence of the Executive's disability, then said dispute shall be submitted to
binding arbitration as provided hereafter.
10. Termination of Employment:
10.1 Termination by the Executive: Executive may voluntarily resign
at any time after seven (7) years of full employment as President and Chief
Executive Officer of the Company, upon 60 days prior written notice to the
Company. In such event, and not including circumstances described in Paragraph
12 below, Executive shall be entitled solely to the amounts specified in Section
11.1 of this Amended Agreement.
10.2 Termination by the Company: Executive's employment may be
terminated by the Company at any time, upon notice to Executive, for "Cause."
For this purpose, the term "Cause" is
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defined as:
a. Breach. A material violation by Executive of his duties as
an employee of the Company which are demonstrably willful and deliberate on his
part and which are not remedied in a reasonable period of time (not to exceed 30
days) after receipt of written notice from the Company;
b. Conviction. A conviction of Executive for a felony crime
involving baseness, vileness, depravity or moral turpitude that would negatively
impact on the Company and/or the Executive's performance hereunder;
c. Fraud. The commission or participation of Executive in an
act or acts of personal dishonesty intended to result in his material personal
enrichment at the expense of the Company which is not remedied in a reasonable
period of time after receipt of written notice from the Company; and
d. Chemical Dependency. Dependence by Executive upon an
illegal substance, including but not limited to, marijuana, cocaine, heroin, and
all other illegal substances and/or dependence by Executive upon the use of
alcohol, which, in any case, in the opinion of both Executive's family physician
and a physician chosen by the Company, materially impairs Executive's ability to
perform his duties hereunder, which dependence is not cured or rehabilitated
within six months of receipt of written notice from the Company to the
Executive.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of not less than three
quarters (3/4) of the entire membership of the Board (which Board must consist
of at least four members at such time, including the Executive), at a meeting of
the Board held for the purpose (after at least seven days prior written notice
to the Executive and an opportunity for him, together with his counsel, to be
heard before said Board), finding that in the good faith opinion of said Board
the Executive was guilty of conduct set forth above in subsections (a), (b), (c)
or (d) above and specifying the particulars thereof in detail. In the event that
the Board shall consist of less than four members, the affirmative vote of at
least two-thirds of the entire membership of the Board will be required for
purposes of this Section.
10.3 Notice of Termination: Any termination by the Company pursuant
to Section 9 (Disability) or Section 10.2 (Cause), or by the Executive pursuant
to Section 12 (Good Reason), shall be communicated by written Notice of
Termination to the other party or parties hereto. For purposes of this Amended
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Amended Agreement relied
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upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the employment of the Executive
under the provision so indicated.
10.4 Date of Termination: For purposes of this Amended Agreement,
"Date of Termination" shall mean:
(i) if this Amended Agreement is terminated under Section 9
(Disability), thirty (30) days after Notice of Termination is
given (provided that the Executive shall not have returned to
the performance of his duties on a full-time basis during such
thirty (30) day period);
(ii) if the Executive's employment is terminated under Section
12 (Good Reason) below, the date specified in the Notice of
Termination; and
(iii) if the Executive's employment is terminated under
Section 10.2 (Cause), the date of which a Notice of
Termination is given; provided that if within thirty (30) days
after any Notice of Termination is given the party or parties
receiving such Notice of Termination notifies the other party
or parties that a dispute exists concerning the termination,
the Date of Termination shall be the date on which the dispute
is finally determined by a binding and final arbitration award
or by a final judgment, order or decree of a court of
competent juris- diction (the time for appeal therefrom having
expired and no appeal having been perfected); provided,
however, that the Executive's action is finally adjudicated or
arbitrated in his favor and against the Company or that the
Executive's action is settled by written agreement of the
parties in the Executive's favor.
11. Payments Upon Termination:
11.1. Termination by the Company for Cause, Resignation or by Mutual
Amended Agreement. If Executive and the Company mutually agree to the
termination of this Amended Agreement, if Executive voluntarily resigns, except
as provided in Paragraph 12 below, or if Executive is terminated by the Company
for Cause (as defined in Section 10.2), then Executive shall be entitled only to
a pro rata portion of the Base Salary, a Bonus which has accrued through the
date of termination together with accrued vacation to such date, all Stock
Options available under this Amended Agreement, and all reimbursements from the
Company due under Paragraph 5 hereof.
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11.2. Termination for Reasons other than Termination by the Company
for Cause, Resignation, Mutual Amended Agreement, Death or Disability. For any
form of termination other than that described in the preceding section or in
sections 8 or 9, including if the Executive shall terminate his employment for
Good Reason, as herein defined, or if the Company shall terminate the Executive
without Cause, then the Company shall pay the Executive the following amounts:
(i) The Executive's full Base Salary (and any annual increases
and Bonus) through the full seven (7) year term of this
Amended Agreement.
(ii) A lump sum payment of Three Million ($3,000,000) Dollars.
(iii) All Option Shares shall be exercisable for a period of
five years from the Date of Termination.
(iv) The Company shall also pay all indemnity payments and all
legal fees and expenses incurred by the Executive as a result
of such termination (including all such fees and expenses, if
any, incurred in contesting or disputing any such termination
or in seeking to obtain or enforce any right or benefit
provided by this Amended Agreement).
(v) The provisions of Section 16 (Confidentiality), Section 17
(Non-Compete) and Section 18 (Termination), as they may have
been applicable to the Executive, shall terminate at the time
of said Termination.
(vi) The Company shall continue to fund the Executive's term
life insurance and disability insurance until the Executive
reaches the age of sixty-seven (67) years.
The Executive shall not be required to mitigate the amount of any payment
provided for in this Section 11.2 by seeking other employment or otherwise.
12. Good Reason: The Executive may terminate his employment for Good
Reason. For purposes of this Amended Agreement "Good Reason" shall mean:
(i) without the express written consent of Executive, the
assignment to him of any duties grossly inconsistent with his
positions, duties, responsibilities and status with the
Company, or a change in his reporting responsibilities,
titles,
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or offices, or any removal of him from or any failure to
re-elect him to any of such positions, except because of the
termination of his employment for Cause, Disability or Death;
(ii) a reduction by the Company in his Base Salary as in
effect on the date hereof, or as the same may be increased
from time to time; or the failure by the Company to increase
such Base Salary each year as provided for in this Amended
Agreement;
(iii) the failure by the Company to continue in effect any
Company-sponsored benefit or compensation plan, pension plan,
life insurance plan, medical and dental plan, personal
accident plan or disability plan in which the Executive is
participating (or plans providing him with substantially
similar benefits), the taking of any action by the Company
which would adversely affect his participation in or
materially reduce his benefits under any of such plans or
deprive him of any material fringe benefit enjoyed by him, or
the failure by the Company to make any of the payments called
for in Section 5 hereof;
(iv) the failure of the Company to obtain the assumption of an
agreement to perform this Amended Agreement by any successor
as contemplated in Section 18 below;
(v) a "Change in Control" of the Company as defined in Section
13 below; or
(vi) the purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements paragraph 10.3 above, and for
purposes of this Amended Agreement, no such purported
termination shall be effective.
13. Change in Control:
(a) For purposes of this Amended Agreement, a "change in control of
the Company" shall mean a change in control of the nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended ("Exchange
Act"); provided that, without limitation, such a change of control also shall be
deemed to have occurred:
(i) if, with the exception of the Executive, any "person" (as
such term is
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used in Sections 13(d) and 14(d)(2) of the Exchange Act) is or
becomes the beneficial owner, directly or indirectly by
acquisition, or otherwise, or securities of the Company
representing thirty (30%) percent or more of the combined
voting power of the Company's then outstanding securities; or
(ii) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board of
Directors of the Company cease for any reason to constitute at
least a majority thereof, unless the election or the
nomination for election by the Company's shareholders, of each
new director, was approved by a vote of at least three-fourths
(3/4) of the directors then still in office who were directors
at the beginning of the period.
(b) If any of the events described in this Section 13(a) hereof
constituting a change in control of the Company shall have occurred, the
Executive shall be entitled to the benefits provided in Section 11.2.
14. Reporting Obligation: The Company and the Executive hereby agree that
the Executive shall only be responsible to, and shall be required to report only
to, the Company's Board.
15. Future Inventions: The Executive shall assign and convey, to the
Company, and hereby does assign and convey to the Company, and the Company
hereby accepts, all of the Executive's right, title and interest in and to all
Future Inventions made or conceived during the Term of this Amended Agreement,
and the Executive hereby agrees that he shall, without the payment of royalty or
any other consideration to him therefor:
(a) Inform the Company promptly and fully of each such Future
Invention by a written report satisfactory to the Company;
(b) Apply, at the Company's request and expense, for United States
and foreign letters patent, copyright, trademark or service xxxx, as the case
may be, either in the Executive's name or otherwise as the Company shall direct;
(c) Assign and convey to the Company, and he hereby does assign and
convey to the Company, all of his right, title and interest in and to
applications for United States and foreign letters patent, copyrights,
trademarks and service marks and to any letters patent, copyrights, trademarks
and service marks which may
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be issued upon any such Future Invention;
(d) Deliver promptly to the Company, without charge to the Company
but at its expense, such written instruments, and do such other acts, as may be
reasonably necessary, in the opinion of the Company, to obtain and maintain
United States and foreign letters patent, copyrights, trademarks or service
marks on each such Future Invention and to vest the Executive's entire right,
title and interest thereto in the Company; and
(e) Grant to the Company, and he hereby does grant to the Company,
prior to any further assignment of the Executive's right, title and interest to
the Company in any Future Invention as required above, the royalty-free right to
use in its business, and to make, have made, use and sell products, processes,
services, writings and marks based upon or related to such Future Invention made
or conceived by the Executive.
As used herein, Future Invention shall mean all inventions, discoveries, ideas,
concepts, designs and improvements of any sort, whether patentable,
copyrightable or not, relating in any way to the business of the Company, which
the Executive may, during the term of this Amended Agreement, conceive or
invent, whether alone or jointly with others, and whether during business hours
or thereafter, and such term includes all "know-how" and Technical Data relating
to the foregoing, and all letters patent and copyrights of the United States or
any other country which may be issued in connection with the foregoing.
Technical Data shall mean all written, printed and other tangible materials
embodying or containing Know-how, and includes, without limiting the generality
of the foregoing, all correspondence, designs, processes, source codes, object
codes, engineering sketches, drawings and tracings, specifications and
engineering data, reporting formats, memoranda, notebooks, and all copies
thereof, together with all models and prototypes of every description.
16. Confidentiality:
(a) During the Term of this Amended Agreement and at all times
thereafter, the Executive will not use Secret or Confidential Information for
his own benefit or for the benefit of any person or legal entity other than the
Company, nor will he disclose the same to any other person or legal entity,
except as required to conduct the business of the Company in the ordinary
course.
(b) Except with the prior written approval of the Company, or except
as required to conduct the business of the Company in the ordinary course, the
Executive will not, at any time, directly or indirectly, use, disseminate,
disclose, lecture upon, or publish articles concerning, any Secret or
Confidential Information.
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(c) Upon the termination of his employment with the Company, all
documents, records, notebooks and similar repositories of, or containing, Secret
or Confidential Information, including any copies thereof, then in the
Executive's possession, or under his control, whether prepared by him or others,
will be left with or immediately returned to the Company by the Executive.
As sued herein, Secret or Confidential Information shall mean any ideas or any
compilations of information kept or which shall hereafter be kept confidential
by the Company in the operation of its business or the conduct of its research
and which are not in the public domain, and which give or can give to the
Company an advantage over its competitors, including, by way of illustration but
not limitation: source codes, object codes, engineering and other sketches,
drawings and tracings, specifications, engineering data, memoranda, designs,
sources of supplies and materials, cost and financial data, processes,
production machines and equipment, procedures, customer lists, marketing plans
and business forecasts, together with all Know-how and Technical Data relating
thereto.
17. Non-Compete: The Executive agrees that, during the Term of this
Amended Agreement and during the period of three (3) years following the
termination of his employment with the Company, he will not, without the written
approval of the Company, directly or indirectly, under any circumstances
whatsoever, own, manage, operate, engage in, control or participate in the
ownership, management, operation or control of, or be connected in any manner,
whether as in individual, partner, stockholder, director, officer, principal,
agent, employee or consultant, or in any other relation or capacity whatsoever,
with any Competing Organization, and will not in any such manner, compete with
or solicit or call on any Customer of the Company, wherever located, who was a
Customer of the Company at any time during the period one year prior to the
termination of the Executive's employment with the Company, for the purpose Of
inducing such Customer to purchase or lease a Competing Product. Notwithstanding
the foregoing, nothing contained in this paragraph shall restrict the Executive
from making any investment in any company, so long as such investment consists
of no more than five percent (5%) of any class of equity securities of a company
whose securities are traded on a national securities exchange or in the
over-the-counter market.
As used herein Competing Organization shall mean, to the best of the Executive's
knowledge, any person or legal entity engaged in, about to engage in, or
intending to engage in, research on, or development, use, production, marketing
or selling of, a Competing Product in or outside of the United States of
America; Competing Product shall mean any process, service or product of any
person or legal entity other than the Company, or a parent, subsidiary or
affiliate of the Company, in existence or under development, which during the
Term of this Amended Agreement, competes with or is an alternative to any
present or planned future process, service or
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product of the Company, whether or not actively marketed by the Company; and
Customer shall mean any individual, firm, partnership, corporation, company,
joint venture or governmental or military unit or any other entity or any
parent, subsidiary or affiliate of any of them which is negotiating or has a
contract with the Company for the purchase, sale or lease of the Company's
equipment, products or services or which has been solicited by the Company with
respect to such purchase or lease during the Executive's employment with the
Company.
18. Non-Interference: The Executive will not, for a period of two (2)
years following the termination of the Executive's employment, directly or
indirectly, employ, hire; solicit or, in any manner, encourage any employee of
the Company to leave the employ of the Company.
19. Injunctive Relief: In addition to any other rights or remedies
available to the Company as a result of any breach by the Executive of his
obligations under this Amended Agreement, the Company shall be entitled to
enforcement of such obligations by an injunction or a decree of specific
performance from a court with appropriate jurisdiction, and in the event that
the Company is successful in any suit or proceeding brought or instituted by the
Company to enforce any of the provisions of this Amended Agreement, or on
account of any damages sustained by the Company by reason of the violation by
the Executive of any of the terms of this Amended Agreement to be performed by
the Executive, the Executive agrees to pay to the Company all attorneys' fees
reasonably incurred by the Company.
20. Notices: Any notice, request, demand, offer, payment or communication
required or permitted to be given by any provision of this Amended Agreement
shall be deemed to have been delivered and given for all purposes if written,
and (1) if delivered personally or by courier or delivery service to the address
set forth below at the time of such delivery, (b) if sent by registered or
certified United States mail, postage and charges prepaid, addressed to the
intended recipient, at the address specified above, effective upon receipt or
refusal. Any party may change the address to which notices are to be mailed by
giving five (5) days prior notice as provided herein to all other parties.
Commencing on the day after the receipt or refusal of such notice, such newly
designated address shall be such person's address for purposes of all notices or
other communications required or permitted to be given pursuant to this Amended
Agreement.
21. Successors:
(a) 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
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satisfactory to the Executive, to expressly assume and agree to perform this
Amended 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
to obtain such agreement prior to the effectiveness of any such succession shall
be a breach of this Amended Agreement and shall entitle the Executive to
compensation from the Company in the same amount and on the same terms as he
would be entitled hereunder if the Executive had terminated his employment for
Good Reason, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this section, "Company" shall mean the Company as
hereinbefore defined, and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this Section
18 or which otherwise becomes bound by all the terms and provisions of the
Amended Agreement by operation of law.
22. Construction of Amended Agreement:
22.1. New Jersey Law. This Amended Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of New
Jersey, and all of its provisions shall be administered according to and it
validity shall be determined under the laws of the State of New Jersey without
reference to Florida law provisions regarding conflicts of law.
22.2. Gender and Number. Whenever appropriate, references in this
Amended Agreement in any gender shall be construed to include all other genders,
references in the singular shall be construed to include the plural, and
references in the plural shall be construed to include the singular, unless the
context clearly indicates to the contrary.
22.3. Certain Words. The words "hereof", "herein", "hereunder", and
other similar compounds of the word "here" shall mean and refer to the entire
Amended Agreement and not to any particular article, provision or paragraph
unless so required by this Amended Agreement.
22.4. Captions. Section and paragraph headings, titles or captions
contained in this Amended Agreement are inserted only as a matter of convenience
and/or reference, and they shall in no way be construed as limiting, extending,
defining or describing either the scope or intent of this Amended Agreement or
any provision hereof.
22.5. Counterparts. This Amended Agreement may be executed in one or
more counterparts, and any such counterpart shall, for all purposes, be deemed
an original, but all such counterparts together shall constitute but one and the
same instrument.
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22.6. Severability. The invalidity or unenforceability of any
provision hereunder (or any portion of such a provision) shall not affect the
validity or enforceability of the remaining provisions (or remaining portions of
such provisions) of this Amended Agreement.
23. Miscellaneous:
23.1. Entire Amended Agreement. This Amended Agreement constitutes
the entire agreement among the parties pertaining to the subject matter hereof,
and supersedes and revokes any and all prior or existing agreements, written or
oral, relating to the subject matter hereof, and this Amended Agreement shall be
solely determinative of the matters addressed herein.
23.2. Waiver. Either the Company or Executive may, at any time or
times, waive (in whole or in part) any rights or privileges to which he or it
may be entitled hereunder. However, no waiver by any party of any condition or
of the breach of any term, covenant, representation or warranty contained in
this Amended Agreement, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such condition or breach in
other instances, or as a waiver of any other condition or of any breach of any
other terms, covenants, representations of warranties contained in this Amended
Agreement, and no waiver shall be effective unless it is in writing and signed
by the waiving party.
23.3. Attorney's Fees. If either party shall be required to retain
the services of an attorney to enforce any of his or its rights hereunder, the
prevailing party shall be entitled to receive from the other party all costs and
expenses including (but not limited to) court costs and attorney's fees (whether
in a court of original jurisdiction or one or more courts of appellate
jurisdiction), incurred by him or it in connection therewith.
23.4. Venue. Any litigation arising hereunder shall be instituted
only in Bergen County, New Jersey, the place where this Amended Agreement was
executed, and all parties hereto agree that venue shall be proper in said county
for all such legal or equitable proceedings.
23.5. Assignment. The rights and obligations of the parties under
this Amended Agreement shall inure to the benefit of and shall be binding upon
their successors, assigns, and/or other legal representatives. This Amended
Agreement shall not be assignable by the Company, except as provided herein by
Executive. The services of Executive are personal and his obligations may not be
delegated by him except as otherwise provided herein.
23.6. Amendment. This Amended Agreement may not be amended,
modified, superseded or canceled, and any of the matters,
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covenants, representations, warranties or conditions hereof may not be waived,
except by a written instrument executed by the Company and the Executive or, in
the case of a waiver, by the party to be charged with such waiver.
23.7. Arbitration. Any controversy or claim arising out of or
relating to this Amended Agreement, or the breach thereof, shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association with the American Arbitration Association, Bergen
County, New Jersey, and judgment upon the award rendered by the arbitrators may
be entered in any court having jurisdiction over the parties. The dispute will
be resolved by a panel of three arbitrators if the dollar amount in question
that is being arbitrated exceeds $100,000.
IN WITNESS WHEREOF, the Company and Executive have caused this Amended
Agreement to be effective on the day and year first above written.
WITNESSES: "Company"
COMPOST AMERICA HOLDING COMPANY
INC.,
a New Jersey corporation
By:
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Xxxxxx X. Xxxxxxxx, Secretary
-------------------------
-------------------------
-------------------------
"Executive"
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XXXXX X. XXXXXX
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