EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into effective the 1st. day of July,
1999, by and between RECYCLING INDUSTRIES, INC., a Colorado corporation having
its principal executive office at 0000 Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxxxxx, XX 00000 (hereinafter referred to as the "Company"), and XXXXX X.
XXXXXX (hereinafter referred to as the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Employee in an executive
capacity and the Employee desires to enter the Company's employ.
NOW, THEREFORE, for and in consideration of the mutual promises, covenants
and obligations contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and the
Employee hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms have
the meanings prescribed below:
AFFILIATE is used in this Agreement to define a relationship to a person or
entity and means a person or entity who, directly or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control
with, such person or entity.
ANNUAL BONUS shall have the meaning assigned thereto in Section 4.2 hereof.
BASE SALARY shall have the meaning assigned thereto in Section 4.1 hereof.
BOARD OF DIRECTORS means the board of directors of the Company.
BENEFICIAL OWNER shall have the meaning assigned thereto in Rule 13(d)-3
under the Exchange Act; provided, however, and without limitation, that any
individual, corporation, partnership, group, association or other person or
entity that has the right to acquire any Voting Stock at any time in the future,
whether such right is (i) contingent or absolute or (ii) exercisable presently
or at any time in the future, pursuant to any agreement or understanding or upon
the exercise or conversion of rights, options or warrants, or otherwise, shall
be the Beneficial Owner of such Voting Stock.
BUSINESS DAY shall mean every day the New York Stock Exchange is open for
business.
CAUSE shall have the meaning assigned thereto in Section 5.3 hereof.
CHANGE OF CONTROL of the Company shall mean any one of the following
events: (i) the acquisition by an entity, person or group (other than the
Company), either in a single transaction or in a series of transactions, of
30% or more of the Company's Voting Stock, including acquisitions of Voting
Stock through the exercise or conversion of warrants, options, convertible
securities, debt or any rights to acquire Voting Stock; (ii) a change in a
majority of the Company; Directors as of the date hereof (the "Incumbent
Board"), unless the new or additional Directors have been appointed or
nominated by a majority of the Board of Directors; PROVIDED HOWEVER, that
any change in the majority of the Incumbent Board in connection with an
actual or threatened proxy contest shall be a change of control; (iii) a
merger by the Company with or into another entity, following which the
Company's shareholders own less than 60% of the outstanding voting securities
of the surviving entity;(iv) the completion by the Company of a sale of all
or substantially all of its assets; and (v) the Company entering into or
completing any type of reorganization, whereby during the pendency or upon
completion of the reorganization, the Company's Chief Executive Officer,
Chief Operating Officer or Chief Financial Officer are replaced by persons
who are representatives of or nominated by any class of the Company's debt or
equity securities, other than the Common Stock.
COBRA shall have the meaning assigned thereto in Section 4.8.
CODE means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated by the Internal Revenue Service thereunder, all as
in effect from time to time during the Employment Period.
COMMON STOCK means the Company's common stock, par value $.001 per share.
COMPANY means Recycling Industries, Inc., a Colorado corporation, the
principal executive office of which is located at 0000 Xxxxx Xxxxxxxx Xxxx.,
Xxxxx 000, Xxxxxxxxx, XX 00000.
CONFIDENTIAL INFORMATION shall have the meaning assigned thereto in Section
8.2 hereof.
DATE OF TERMINATION means the earliest to occur of (i) the date of the
Employee's death, (ii) the date on which the Employee terminates this Agreement
for any reason other than Good Reason or (iii) the date of receipt of the Notice
of Termination, or such later date as may be prescribed in the Notice of
Termination in accordance with Section 5.6 hereof.
DISABILITY means an illness or other disability which prevents the Employee
from discharging his responsibilities under this Agreement for a period of 180
consecutive calendar days, or an aggregate of 180 calendar days in any calendar
year, during the Employment Period,
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all as determined in good faith by the Board of Directors of the Company (or
a committee thereof).
EFFECTIVE DATE means July 1, 1998.
EMPLOYEE means Xxxxx X. Xxxxxx, an individual residing at 0000 Xxxxx
Xxxxxxxxx Xxxxxx, Xxxxxxxxx Xxxxx, XX 00000.
EMPLOYMENT PERIOD shall have the meaning assigned thereto in Section 3
hereof.
EXCHANGE ACT means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the Securities and Exchange Commission
thereunder, all as in effect from time to time during the Employment Period.
EXCISE TAX shall have the meaning assigned thereto in Section 11.1.
GOOD REASON shall have the meaning assigned thereto in Section 5.5 hereof.
GROSS-UP PAYMENT shall have the meaning assigned thereto in Section 11.1
hereof.
IMPOSITION OF EXCISE TAX shall have the meaning assigned thereto in
Section 11.1.
INITIAL TERM shall have the meaning assigned thereto in Section 3 hereof.
NOTICE OF TERMINATION shall have the meaning assigned thereto in
Section 5.6 hereof.
PAYMENT shall have the meaning assigned thereto in Section 11 hereof.
UNEXPIRED TERM shall have the meaning assigned thereto in Section 6.3(c)
hereof.
VOTING STOCK means all outstanding shares of capital stock of the Company
entitled to vote generally in an election of directors; provided, however, that
if the Company has shares of Voting Stock entitled to more or less than one vote
per share, each reference to a proportion of the issued and outstanding shares
of Voting Stock shall be deemed to refer to the proportion of the aggregate
votes entitled to be cast by the issued and outstanding shares of Voting Stock.
WITHOUT CAUSE shall have the meaning assigned thereto in Section 5.4
hereof.
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2. GENERAL DUTIES OF COMPANY AND EMPLOYEE.
2.1 The Company agrees to employ the Employee, and the Employee agrees to
accept employment by the Company and to serve the Company as Senior Vice
President, Chief Financial Officer and Treasurer. The Employee shall report
directly to the Company's Chief Executive Officer. In addition, at all times
during the Employment Period, Employee shall be elected to serve as a member of
the Board of Directors. The authority, duties and responsibilities of the
Employee shall include those described in Schedule A to this Agreement, and such
other or additional duties as may from time to time be assigned to the Employee
by the Board of Directors (or a committee thereof) and agreed to by the
Employee. While employed hereunder, the Employee shall devote reasonable time
and attention during normal business hours to the affairs of the Company and use
his best efforts to perform faithfully and efficiently his duties and
responsibilities. The Employee may (a) serve on corporate, civic, religious or
charitable boards or committees, (b) deliver lectures, fulfill speaking
engagements or teach at educational institutions, (c) participate in political
and religious activities, including participation in a political campaign
provided the Employee will comply with all laws and regulations related to such
activities, and (d) manage and oversee personal investments and other business
activities which are not competitive with the Company, so long as such
activities do not significantly interfere with the performance of the Employee's
duties and responsibilities; provided that such activities, alone or on a
cumulative basis, do not interfere with the performance of the Employee's duties
hereunder.
2.2 The Employee agrees and acknowledges that he owes a fiduciary duty of
loyalty, fidelity and allegiance to act at all times in the best interests of
the Company and to do no act and to make no statement, oral or written, which
would injure Company's business, its interests or its reputation.
2.3 The Employee agrees to comply at all times during the Employment
Period with all applicable policies, rules and regulations of the Company,
including, without limitation, the Company's policy regarding trading in the
Common Stock, as each is in effect from time to time during the Employment
Period.
3. TERM.
Unless sooner terminated pursuant to other provisions hereof, the
Employee's period of employment under this Agreement shall be a period of four
years from the July 1, 1998 (the "Initial Term"). Prior to the expiration of
the Initial Term, the Company and the Employee may agree, in writing, to extend
the Initial Term. The Initial Term and any and all renewals thereof are
referred to herein collectively as the "Employment Period."
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4. COMPENSATION AND BENEFITS.
4.1 Base Salary. As compensation for services to the Company, the Company
shall pay to the Employee until the Date of Termination, an annual base salary
of $260,000 (the "Base Salary"). The Board of Directors (or a committee
thereof), in its discretion, may increase the Base Salary based upon relevant
circumstances. The Base Salary shall be payable in equal semi-monthly
installments or in accordance with the Company's established policy, subject
only to such payroll and withholding deductions as may be required by law and
other deductions applied generally to employees of the Company for insurance and
other employee benefit plans.
4.2 Bonus. In addition to the Base Salary, the Employee shall be awarded
for each fiscal year until the Date of Termination, an annual performance bonus
(either pursuant to a bonus or incentive plan or program of the Company or
otherwise) of not less than $40,000 after the end of fiscal 1998, 1998 and 2000
plus an additional amount, if any to be determined by the Board of Directors (or
a committee thereof), in its sole discretion (the "Annual Bonus").
4.3 Location of Office. The Employee's primary office will be located at
the Company's headquarters in Xxxxxxx County, Colorado. The Employee will
either be present at the Company's offices, traveling on Company business or
meeting with persons on behalf of the Company in accordance with his duties
hereunder commencing at 8:00 a.m. and ending at 5:00 p.m. every Business Day,
unless Employee is on paid vacation.
4.4 Vacation. Until the Date of Termination, the Employee shall accrue
and be entitled to take during each one year period of the Employment Agreement,
four weeks of paid vacation plus an additional one week of paid vacation for
each full year of employment with the Company, not to exceed five weeks.
4.5 Automobile. Until the Date of Termination, the Company shall provide
a sport utility vehicle or equivalent vehicle, subject to the approval of the
Compensation Committee, on behalf of the Employee.
4.6 Incentive, Savings and Retirement Plans. Until the Date of
Termination, the Employee shall be eligible to participate in and shall receive
all benefits under all executive incentive, savings and retirement plans and
programs currently maintained or hereinafter established by the Company for the
benefit of its executive officers and/or employees. The Employee and/or the
Employee's family, as the case may be, shall be eligible to participate in and
shall receive all benefits under the Company's welfare benefit plans. Such
welfare benefit plans may include, without limitation, medical, dental,
disability, group life, accidental death and travel accident insurance plans and
programs.
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4.7 Reimbursement of Expenses. The Employee may from time to time until
the Date of Termination incur various business expenses customarily incurred by
persons holding positions of like responsibility, including, without limitation,
travel, long distance telephone charges, cellular phone charges, facsimile,
entertainment and similar expenses incurred for the benefit of the Company or
while traveling or commuting on Company business. Subject to the Company's
policy regarding the reimbursement of such expenses as in effect from time to
time during the Employment Period, the Company shall reimburse the Employee for
such expenses from time to time, at the Employee's request, and the Employee
shall account to the Company for all such expenses. In particular, the Company
shall reimburse the Employee for travel (including occasional and reasonable
first class upgrades), lodging and other out-of-pocket expenses associated with
Employee's travel and performance of services pursuant to this Agreement.
4.8 De-Minimis Expenses. The Employee shall be permitted to use
Company equipment, such as telephones, copy machines and facsimile machines,
for de-minimis personal matters.
5. TERMINATION.
5.1 Death. This Agreement shall terminate automatically upon the death of
the Employee.
5.2 Disability. The Company may terminate this Agreement, upon written
notice to the Employee delivered in accordance with Sections 5.6 and 13.1
hereof, upon the Disability of the Employee.
5.3 Cause. The Company may terminate this Agreement, upon written notice
to the Employee delivered in accordance with Sections 5.6 and 13.1 hereof, for
Cause. For purposes of this Agreement, "Cause" means (i) the Employee's willful
and continued refusal to perform substantially his duties and responsibilities
as contemplated in this Agreement (other than any such refusal based upon the
written advice received from the Employee's legal counsel that performance of
his duties would cause a breach of his duties to the Company or be a violation
of applicable law or regulation, or resulting from Disability or from the
Employee's termination for Good Reason); (ii) the Employee's willful engaging in
activities which would (a) constitute a breach of a material term of this
Agreement, or (b) result in a material injury to the Company or its Affiliates;
(iii) the Employee's non-appealable conviction of a felony; (iv) the Employee's
acknowledged or admitted commission of acts of fraud, embezzlement, theft or
other dishonest acts against the Company or the good faith determination by the
Board of Directors that the Employee has committed the foregoing acts; and (v)
the Employee's use of alcohol (except at Company sponsored parties or
receptions) or illegal drugs on the Company's premises. For the purposes
hereof, no act or failure or refusal to act on the Employee's part shall be
considered
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"willful" unless done, or omitted to be done, by the Employee not in good
faith and without belief that his action or omission was in the best interest
of the Company or any Affiliate.
5.4 Without Cause. The Company may terminate this Agreement Without
Cause, upon written notice to the Employee delivered in accordance with
Sections 5.6 and 13.1 hereof. For purposes of this Agreement, the Employee
will be deemed to have been terminated "Without Cause" if the Employee is
terminated by the Company for any reason other than Cause, Disability or
death.
5.5 Good Reason. The Employee may terminate this Agreement for Good
Reason, upon written notice to the Company delivered in accordance with Sections
5.6 and 13.1 hereof. For purposes of this Agreement, "Good Reason" means (i)
the assignment to the Employee of substantial duties inconsistent in any
material respect with the Employee's duties or responsibilities as contemplated
in this Agreement, provided, however, Employee acknowledges that, from time to
time, he may be required to fulfill various clerical and other tasks incidental
to his employment by the Company which are specifically considered within the
Employee's duties or responsibilities as contemplated in this Agreement, (ii)
any other action by the Company which results in a material diminishment in the
Employee's position (including titles and reporting requirements), authority,
duties or responsibilities, (iii) any material breach by the Company of any of
the provisions of this Agreement, (iv) upon a Change of Control, the failure of
any successor or surviving entity to adopt and assume all of the provisions of
this Agreement; including any obligations triggered by a Change of Control; (v)
the resignation or removal of Xxxxxx X. Xxxxx from the Company's Board of
Directors, as Chairman of the Board of Directors or as Chief executive Officer
of the Company during the term of this Agreement; or (vi) any reduction, or
attempted reduction, at any time during the Employment Period, of the Base
Salary of the Employee unless: (i) such reduction is part of an overall
proportional reduction in the compensation of the Company's executive officers
implemented by the Company's Board of Directors or, (ii) in his capacity as a
Director, the Employee recommends or approves the reduction. The determination
of the occurrence of any of the foregoing shall be based upon the good faith
determination by the Employee.
5.6 Notice of Termination.
(i) Any termination of this Agreement by the Company for Cause,
Without Cause or as a result of the Employee's Disability, or by the
Employee for Good Reason, shall be communicated by Notice of Termination to
the other party hereto given in accordance with this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for a termination of the
Employee's employment under the provisions so indicated and (iii) in the
case of termination of this Agreement by
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the Company for Cause, provides the Employee, and in the case of
termination of this Agreement by the Employee for Good Reason, provides
the Company, with a period of 30 days to cure the basis of such
termination, and (iv) specifies the termination date, if such date is
other than the date of receipt of such notice (which termination date
shall not be more than 30 days after the giving of such notice).
(ii) If the Employee terminates this agreement other than for Good
Reason, the Employee shall give the Company 30 days' prior written notice.
The Board of Directors may elect to waive the period of notice, or any
portion thereof.
6. OBLIGATIONS OF COMPANY UPON TERMINATION.
6.1 Cause; Other Than Good Reason. If this Agreement shall be
terminated either by the Company for Cause or by the Employee for any reason
other than Good Reason, the Company shall pay to the Employee, in a lump sum
in cash within 30 days after the Date of Termination an amount equal to the
sum of: (i) the aggregate of the Employee's Base Salary (as in effect on the
Date of Termination) through the Date of Termination, if not theretofore
paid, and, in the case of compensation previously deferred by the Employee,
all amounts of such compensation previously deferred and not yet paid by the
Company, (ii) an amount equal to one year's Base Salary as in effect on the
Date of Termination, and (iii) the product of (a) the Annual Bonus paid to
the Employee for the last full fiscal year preceding the Date of Termination
and (b) the fraction obtained by dividing (x) the number of days between the
Date of Termination and the last day of the last full fiscal year preceding
the Date of Termination and (y) 365. All other obligations of the Company
and rights of the Employee hereunder shall terminate effective as of the Date
of Termination.
6.2 Death or Disability.
(i) Subject to the provisions of this Section 6.2, if this
Agreement is terminated as a result of the Employee's death or Disability,
the Company shall pay to the Employee or his estate, in a lump sum in cash
within 30 days of the Date of Termination an amount equal to three times
the Employee's Base Salary (as in effect on the Date of Termination) plus a
lump-sum payment of $84,000. The Company may purchase insurance to cover
all or any part of the obligation contemplated in the foregoing sentence,
and the Employee agrees to submit to a physical examination to facilitate
the procurement of such insurance.
(ii) Whenever compensation is payable to the Employee hereunder
during a period in which he is partially or totally disabled, and such
Disability would (except for the provisions hereof) entitle the Employee to
Disability income or salary continuation payments from the Company
according to the terms of any plan or program presently maintained
or hereafter established by the Company, the Disability income or salary
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continuation paid to the Employee pursuant to any such plan or program
shall be considered a portion of the payment to be made to the Employee
pursuant to this Section 6.2 and shall not be in addition hereto.
If Disability income is payable directly to the Employee by an insurance
company under the terms of an insurance policy paid for by the Company,
the amounts paid to the Employee by such insurance company shall be
considered a portion of the payment to be made to the Employee pursuant
to this Section 6.2 and shall not be in addition hereto.
6.3 Good Reason; Without Cause. If (i) this Agreement shall be terminated
either by the Employee for Good Reason or by the Company Without Cause and (ii)
a Change of Control of the Company has not occurred within the two year period
preceding the Date of Termination:
(a) the Company shall pay to the Employee, in a lump sum in
cash within 30 days after the Date of Termination, the aggregate of
the following amounts:
(1) an amount equal to three times the Employee's Base
Salary (as in effect on the Date of Termination) plus $84,000;
and
(2) in the case of compensation previously deferred by
the Employee, all amounts of such compensation previously
deferred and not yet paid by the Company;
(b) the Company shall promptly upon submission by the
Employee of supporting documentation, pay or reimburse to the Employee
any costs and expenses paid or incurred by the Employee which would
have been payable under Section 4.8 of this Agreement if the
Employee's employment had not terminated; and
(c) until the expiration of the Initial Term or any renewal
period pursuant to Section 3 hereof (such period is sometimes referred
to herein as the "Unexpired Term") or of the 12-month period
commencing on the Date of Termination, whichever is longer, the
Company shall continue benefits to the Employee and/or the Employee's
family at least equal to those which would have been provided to them
under Section 4.8 if the Employee's employment had not been
terminated.
(d) all stock options granted to the Employee shall
immediately vest and become exercisable either by payment of the
Exercise Price or upon a cashless exercise by the Employee and the
Company shall pay to the Employee (i) a lump
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sum equal to the amount of any federal, state and local taxes
payable by the Employee as a result of either the vesting or
exercise of any options held by the Employee, and (ii) a lump sum
equal to the amount of any federal, state and local taxes payable
by the Employee as a result of the preceding tax reimbursement
payment. The provisions of this Section 6.3(e) shall survive the
termination of this Agreement and until all options held by the
Employee have been exercised or expired and all resulting taxes
paid.
6.4 Change of Control. If this Agreement shall be (i) terminated by the
employee for any reason or no reason during a twelve month period following a
Change of Control, or (ii) terminated either by the Employee for Good Reason or
by the Company Without Cause within a 24 month period following a Change of
Control:
(i) the Company shall pay to the Employee, in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the following
amounts:
(a) an amount equal to three times the Employee's Base
Salary (as then in effect) plus $132,000;
(b) in the case of compensation previously deferred by
the Employee, all amounts of such compensation previously deferred and not
yet paid by the Company;
(c) the amount of all accrued but unused vacation as
provided in Section 6.7, below; and
(d) the amount of any federal, state and local taxes
payable by the Employee as a result of the foregoing payments made pursuant
to this Section 6.4(i) plus the amount of any federal, state and local
taxes payable by the Employee as a result of the preceding tax
reimbursement payment.
(ii) The Company shall promptly upon submission by the Employee of
supporting documentation, pay or reimburse to the Employee any costs and
expenses paid or incurred by the Employee which would have been payable under
Section 4.10 of this Agreement if the Employee's employment had not terminated.
(iii) Until the expiration of the longer of the Unexpired Term or 12
month period commencing on the Date of Termination, whichever is longer, the
Company shall continue benefits to the Employee and/or the Employee's family at
least equal to those which would have been provided to them under Section 4.9 if
the Employee's employment had not been terminated.
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(iv) All legal fees and other expenses incurred by the Employee to
enforce the terms of this Agreement, plus the Company shall pay to the Employee
an amount equal to (1) any federal, state or local taxes payable by the Employee
as a result of the foregoing payments, and (2) any federal, state and local
taxes payable by the Employee as a result of the preceding tax payment.
6.5 Stock Options. Upon a Change of Control, all stock options granted to
the Employee shall immediately vest and become exercisable either by payment of
the exercise price or upon a cashless exercise by the Employee and the Company
shall pay to the Employee (1) a lump sum equal to the amount of any federal,
state and local taxes payable by the Employee as a result of either the vesting
or exercise of any options held by the Employee, and (2) a lump sum equal to the
amount of any federal, state and local taxes payable by the Employee as a result
of the preceding tax reimbursement payment. The provisions of this Section 6.5
shall survive the termination or expiration of this Agreement and until all
options held by the Employee have been exercised or expired and all resulting
taxes paid.
6.6 No Mitigation Obligation. The Employee shall not be required to
mitigate damages or the amount of any payment provided for under this Section 6
by seeking other employment or otherwise, nor shall the amount of any payment
provided for under this Section 6 be reduced by any compensation earned by the
Employee as the result of employment by another employer after the termination
of the Employee's employment, or otherwise.
6.7 Vacation Time. Notwithstanding anything herein to the contrary, upon
termination of this Agreement for any reason, the Company shall pay the Employee
for any accrued but not taken Vacation Time which was not expired as of the Date
of Termination on a per diem basis based on the Base Salary then in effect,
provided, however, upon termination in the event of a Change of Control the
amount of accrued vacation shall not be subject to the annual limitation and all
forfeited accrued vacation from July 1, 1998 through the date of termination
shall be deemed to be due and owing to the Employee.
7. EMPLOYEE'S OBLIGATION TO AVOID CONFLICTS OF INTEREST.
In keeping with the Employee's fiduciary duties to the Company, the
Employee agrees that he shall not knowingly become involved in a conflict of
interest with the Company, or upon discovery thereof, allow such conflict to
continue. The Employee further agrees to disclose to the Company, promptly
after discovery, any facts or circumstances which might involve a conflict of
interest with the Company.
8. EMPLOYEE'S CONFIDENTIALITY OBLIGATION.
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8.1 The Employee hereby acknowledges, understands and agrees that all
Confidential Information is the exclusive and confidential property of the
Company and its Affiliates which shall at all times be regarded, treated and
protected as such in accordance with this Section 8. The Employee acknowledges
that all such Confidential Information is in the nature of a trade secret.
8.2 For purposes of this Agreement, "Confidential Information" means
information, which is used in the business of the Company or its Affiliates and
(i) is proprietary to, about or created by the Company or its Affiliates,(ii)
gives the Company or its Affiliates a competitive business advantage or the
opportunity of obtaining such advantage or the disclosure of which would be
detrimental to the interests of the Company or its Affiliates, (iii)is
designated as Confidential Information by the Company or its Affiliates, is
known by the Employee to be considered confidential by the Company or its
Affiliates, or from all the relevant circumstances should reasonably be assumed
by the Employee to be confidential and proprietary to the Company or its
Affiliates,(iv) was not or does not become generally available to the public
other than as a result of the disclosure by the Employee or (v) was not
available or did not become available to the Employee on a non-confidential
basis prior to its disclosure to the Employee by the Company. Such Confidential
Information includes, without limitation, the following types of information and
other information of a similar nature (whether or not reduced to writing or
designated as confidential):
(a) Internal personnel and financial information of the
Company or its Affiliates, purchasing and internal cost information,
internal service and operational manuals and the manner and methods of
conducting the business of the Company or its Affiliates;
(b) Marketing and development plans, price and cost data,
price and fee amounts, pricing and billing policies, quoting
procedures, marketing techniques, forecasts and forecast assumptions
and volumes, and future plans and potential strategies (including,
without limitation, all information relating to any acquisition
prospect and the identity of any key contact within the organization
of any acquisition prospect) of the Company or its Affiliates which
have been or are being discussed;
(c) Customer services and the type, quantity,
specifications and content of products and services purchased, leased,
licensed or received by customers of the Company or its Affiliates;
and
(d) Confidential and proprietary information provided to
the Company or its Affiliates by any actual or potential customer,
government agency or other third party (including businesses,
consultants and other entities and individuals).
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8.3 As a consequence of the Employee's acquisition or anticipated
acquisition of Confidential Information, the Employee shall occupy a position of
trust and confidence with respect to the affairs and business of the Company and
its Affiliates. In view of the foregoing and of the consideration to be
provided to the Employee, the Employee agrees that it is reasonable and
necessary that the Employee make each of the following covenants:
(i) At any time during the Employment Period and thereafter,
except as required by law, the Employee shall not disclose Confidential
Information to any person or entity, either inside or outside of the
Company, other than as necessary in carrying out his duties and
responsibilities as set forth in Section 2 hereof, without first obtaining
the Company's prior written consent (unless such disclosure is compelled
pursuant to court orders or subpoena, and at which time the Employee shall
give notice of such proceedings to the Company).
(ii) At any time during the Employment Period and thereafter, the
Employee shall not use, copy or transfer Confidential Information other
than as necessary in carrying out his duties and responsibilities as set
forth in Section 2 hereof, without first obtaining the Company's prior
written consent.
(iii) On the Date of Termination, upon the Company's written
request, the Employee shall promptly deliver to the Company (or its
designee) all written materials, records and documents made by the Employee
or which came into his possession prior to or during the Employment Period
concerning the business or affairs of the Company or its Affiliates,
including, without limitation, all materials containing Confidential
Information.
9. DISCLOSURE OF INFORMATION, IDEAS, CONCEPTS, IMPROVEMENTS, DISCOVERIES AND
INVENTIONS.
As part of the Employee's fiduciary duties to the Company, the Employee
agrees that during his employment by the Company, the Employee shall promptly
disclose in writing to the Company all information, ideas, concepts,
improvements, discoveries and inventions, whether patentable or not, and whether
or not reduced to practice, which are conceived, developed, made or acquired by
the Employee, either individually or jointly with others, and which relate to
the business, products or services of the Company or its Affiliates,
irrespective of whether the Employee used the Company's time or facilities and
irrespective of whether such information, idea, concept, improvement, discovery
or invention was conceived, developed, discovered or acquired by the Employee on
the job, at home, or elsewhere. This obligation extends to all types of
information, ideas and concepts, including information, ideas and concepts
relating to new types of services, corporate opportunities, acquisition
prospects, the identify of key representatives
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within acquisition prospect organizations, prospective names or service marks
for the Company's business activities, and the like.
10. OWNERSHIP OF INFORMATION, IDEAS, CONCEPTS, IMPROVEMENTS, DISCOVERIES AND
INVENTIONS AND ALL ORIGINAL WORKS OF AUTHORSHIP.
10.1 All information, ideas, concepts, improvements, discoveries and
inventions, whether patentable or not, which are conceived, made, developed or
acquired by the Employee or which are disclosed or made known to the Employee,
individually or in conjunction with others, during the Employee's employment by
the Company and which relate to the business, products or services of the
Company or its Affiliates (including, without limitation, all such information
relating to corporate opportunities, research, financial and sales data, pricing
and trading terms, evaluations, opinions, interpretations, acquisition
prospects, the identity of customers or their requirements, the identity of key
contacts within the customers' organizations or within the organization of
acquisition prospects, marketing and merchandising techniques, and prospective
names and service marks) are and shall be the sole and exclusive property of the
Company. Furthermore, all drawings, memoranda, notes, records, files,
correspondence, manuals, models, specifications, computer programs, maps and all
other writings or materials of any type embodying any of such information,
ideas, concepts, improvements, discoveries and inventions are and shall be the
sole and exclusive property of the Company.
10.2 In particular, the Employee hereby specifically sells, assigns,
transfers and conveys to the Company all of his worldwide right, title and
interest in and to all such information, ideas, concepts, improvements,
discoveries or inventions, and any United States or foreign applications for
patents, inventor's certificates or other industrial rights which may be filed
in respect thereof, including divisions, continuations, continuations-in-part,
reissues and/or extensions thereof, and applications for registration of such
names and service marks. The Employee shall assist the Company and its nominee
at all times, during the Employment Period and thereafter, in the protection of
such information, ideas, concepts, improvements, discoveries or inventions, both
in the United States and all foreign countries, which assistance shall include,
but shall not be limited to, the execution of all lawful oaths and all
assignment documents requested by the Company or its nominee in connection with
the preparation, prosecution, issuance or enforcement of any application for
United States or foreign letters patent, including divisions, continuations,
continuations-in-part, reissues and/or extensions thereof, and any application
for the registration of such names and service marks.
10.3 If the Employee creates, during the Employment Period, any original
work of authorship fixed in any tangible medium of expression which is the
subject matter of copyright (such as, videotapes, written presentations on
acquisitions, computer programs, drawings, maps, architectural renditions,
models, manuals, brochures or the like) relating to the Company's business,
products or services, other than an autobiographical work concerning the
Employee or
14
others, whether such work is created solely by the Employee or jointly with
others, the Company shall be deemed the author of such work if the work is
prepared by the Employee in the scope of his employment; or, if the work is
not prepared by the Employee within the scope of his employment but is
specially ordered by the Company as a contribution to a collective work, as a
part of a motion picture or other audiovisual work, as a translation, as a
supplementary work, as a compilation or as an instructional text, then the
work shall be considered to be work made for hire, and the Company shall be
the author of such work. If such work is neither prepared by the Employee
within the scope of his employment nor a work specially ordered and deemed to
be a work made for hire, then the Employee hereby agrees to sell, transfer,
assign and convey, and by these presents, does sell, transfer, assign and
convey, to the Company all of the Employee's worldwide right, title and
interest in and to such work and all rights of copyright therein. The
Employee agrees to assist the Company and its Affiliates, at all times,
during the Employment Period and thereafter, in the protection of the
Company's worldwide right, title and interest in and to such work and all
rights of copyright therein, which assistance shall include, but shall not be
limited to, the execution of all documents requested by the Company or its
nominee and the execution of all lawful oaths and applications for
registration of copyright in the United States and foreign countries.
11. CERTAIN TAXES.
11.1 Gross-Up Payments. If all or any portion of the payments and benefits
which the Employee is entitled to receive pursuant to the terms of this
Agreement or any other plan, arrangement or agreement in respect of the Company
or its affiliates (the "Payments") constitutes "excess parachute payments"
within the meaning of Section 280G of the Code, that are subject to the excise
tax (the "Excise Tax") imposed by Section 4999 of the Code (or similar tax
and/or assessment), the Company (or its successors or assigns) shall pay to the
Employee an additional amount ("Gross-Up Payment") such that the net amount
retained by the Employee, after deduction of (i) any Excise Tax on Payments,
(ii) any federal, state and local income tax and Excise Tax upon the payment
provided for by this Section 11.1, and (iii) any interest and penalties imposed
in respect of the Excise Tax shall be equal to the full amount of the Payments.
For purposes of determining the amount of the Gross-Up Payment, the Employee
shall be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up Payment is to
be made, and state and local income taxes at the highest marginal rates of
taxation in the state and locality of the Employee's residence on the date the
Gross-Up Payment is to be made, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and local taxes. The
Gross-Up Payment for any Payment shall be paid to Employee within ten (10) days
after the Imposition of Excise Tax, unless the Company undertakes to indemnify
him as provided in Section 11.2. The "Imposition of Excise Tax" shall mean the
earliest of: (a) the issuance by the Internal Revenue Service of a notice
stating in effect that an Excise Tax is due with respect to the Payment; (b)
Employee's delivery to the Company of an opinion of tax counsel selected by
Employee that all or a portion of the Payment
15
is subject to the Excise Tax and the amount of the Excise Tax on the Payment;
or (c) the Company's delivery to Employee of an opinion of tax counsel
selected by the Company and acceptable to Employee that all or a portion of
the Payment is subject to the Excise Tax and the amount of the Excise Tax on
the Payment.
11.2 Defense and Settlement Option. In lieu of paying the Gross-Up Payment
for any Payment, the Company may elect to undertake, at its sole expense, the
defense and settlement of any assessment by the Internal Revenue Service of the
Excise Tax on any Payment. If the Company so elects to undertake the defense or
settlement of any assessment by the Internal Revenue Service of the Excise Tax
on any Payment, the Company shall protect, defend, indemnify and hold Employee
forever harmless from and against the Excise Tax on such Payment and any and all
liabilities, demands, claims, actions, causes of action, assessments, losses,
costs, damages or expenses, including attorney's fees and accountant's fees in
connection with any thereof, and any interest and penalties sustained by
Employee as a result of or arising out of or by virtue of the Company's
undertaking.
11.3 Adjustments. If the Excise Tax is determined to be less than the
amount taken into account in determining the Gross-Up Payment paid pursuant to
Section 11.1, Employee shall repay to the Company, within ten days after receipt
of a refund by the Employee from the Internal Revenue Service of such
overpayment, the portion of the Gross-Up Payment attributable to such reduction
plus interest on the amount of such repayment at the rate provided in Section
1273(b)(2)(B) of the Code for debt instruments with a maturity after issuance
equal to the period beginning on the date the Gross-Up Payment was made and
ending on the date of repayment required by this sentence. If the Excise Tax is
determined to exceed the amount taken into account in determining the Gross-Up
Payment paid pursuant to Section 11.1, the Company within 10 days after the time
that the amount of such excess Excise Tax is determined shall make an additional
payment to the Employee of an amount equal to such excess plus an amount equal
to any interest and penalties payable to the Internal Revenue Service with
respect to such excess and any Excise Tax on payment pursuant to this sentence
upon payments made pursuant to this sentence.
12. EMPLOYEE'S NON-COMPETITION OBLIGATION.
12.1 Until the Date of Termination, the Employee shall not, acting alone or
in conjunction with others, directly or indirectly, in any of the business
territories in which the Company or any of its Affiliates is presently or from
time to time during the Employment Period conducting business, invest or engage,
directly or indirectly, in any business which is competitive with that of the
Company or accept employment with or render services to such a competitor as a
director, officer, agent, employee or consultant, or take action inconsistent
with the fiduciary relationship of an employee to his employer; provided,
however, that the beneficial ownership by
16
the Employee of up to three percent of the Voting Stock of any corporation
subject to the periodic reporting requirements of the Exchange Act shall not
violate this Section 12.1.
12.2 In addition to the other obligations agreed to by the Employee in this
Agreement, the Employee agrees that until the Date of Termination, he shall not
at any time, directly or indirectly, (a) solicit any employee of the Company to
leave his employment, (b) solicit any customer or acquisition prospect of the
Company, derived from any customer list, customer lead, mail, printed matter or
other information secured from the Company or its present or past employees or
(c) in any other manner use any customer lists or customer leads, mail,
telephone numbers, printed material or other information of the Company relating
thereto.
12.3 In addition to the other obligations agreed to by the Employee in this
Agreement, the Employee agrees that if this Agreement is terminated either by
the Company for Cause or by the Employee for any reason other than Good Reason
or during the 24 month period following a change of control, then for a period
of one year following the Date of Termination, he shall not at any time,
directly or indirectly, (i) solicit any employee of the Company to leave his
employment, (ii) solicit any customer or acquisition prospect of the Company
derived from any customer list, customer lead, mail, printed matter or other
information secured from the Company or its present or past employees or (iii)
in any other manner use any customer lists or customer leads, mail, telephone
numbers, printed material or other information of the Company relating thereto.
Notwithstanding the foregoing, the Employee shall not be precluded at any time
after the Date of Termination from being employed by a firm or other entity
which engages in any of the activities described in the preceding sentence;
provided that Employee himself does not participate or assist his employer in
any manner in such activities.
13. MISCELLANEOUS.
13.1 Notices. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be deemed to have been given when delivered by hand or mailed by
registered or certified mail, return receipt requested, as follows (provided
that notice of change of address shall be deemed given only when received):
If to the Company to:
0000 X. Xxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Board of Directors
If to the Employee to:
17
Xxxxx X. Xxxxxx
0000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxxx Xxxxx, XX 00000
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section 13.1.
13.2 Waiver of Breach. The waiver by any party hereto of a breach of any
provision of this Agreement shall neither operate nor be construed as a waiver
of any subsequent breach by any party.
13.3 Assignment. This Agreement shall be binding upon and inure to the
benefit of the Company, its successors, legal representatives and assigns, and
upon the Employee, his heirs, executors, administrators, representatives and
assigns; provided that in case of the sale of all or substantially all of the
assets and/or business of the Company, whether by merger, consolidation,
purchase or otherwise, the Company will require the purchaser or acquiror to
assume all of the Company's obligations and liabilities hereunder.
13.4 Entire Agreement; No Oral Amendments. This Agreement, together with
any exhibit attached hereto and any document, policy, rule or regulation
referred to herein, replaces and merges all previous agreements and discussions
relating to the same or similar subject matter between the Employee and the
Company and constitutes the entire agreement between the Employee and the
Company with respect to the subject matter of this Agreement. This Agreement
may not be modified in any respect by any verbal statement, representation or
agreement made by any employee, officer or representative of the Company or by
any written agreement unless signed by an officer of the Company who is
expressly authorized by the Company to execute such document.
13.5 Enforceability. If any provision of this Agreement or application
thereof to anyone or under any circumstances shall be determined to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application.
13.6 Governing Law. The laws of the State of Colorado shall govern the
interpretation, validity and effect of this Agreement without regard to the
place of execution or the place for performance thereof.
13.7 Injunctive Relief. The Company and the Employee agree that a breach
of any term of this Agreement by the Employee would cause irreparable damage to
the Company and that, in the event of such breach, the Company shall have, in
addition to any and all remedies of
18
law, the right to any injunction, specific performance and other equitable
relief to prevent or to redress the violation of the Employee's duties or
responsibilities hereunder.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement to be effective July 1, 1999.
RECYCLING INDUSTRIES, INC.
By:
---------------------------
Xxxxxx X. Xxxxx
Chairman of the Board and
Chief Executive Officer
EMPLOYEE:
By:
---------------------------
Xxxxx X. Xxxxxx
19
SCHEDULE A
SENIOR VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND TREASURER
Summary
Primary Responsibilities:
A-1
