EXHIBIT 3(XIII)
EMPLOYMENT AND STOCK INCENTIVE AGREEMENT
THIS AGREEMENT made as of the 1st day of August, 1997
BETWEEN:
TURBODYNE SYSTEMS, INC.,
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0000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxx X.X.X. 00000
("TSI")
OF THE FIRST PART
AND:
TURBODYNE TECHNOLOGIES INC.,
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Suite 510, 0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx
("Turbodyne")
OF THE SECOND PART
AND:
XXXXXX X. XXXXXX,
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000 Xxx Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx, X.X.X. 00000
("Halimi")
OF THE THIRD PART
WHEREAS:
A. Turbodyne and TSI wish to engage Halimi as the President and Chief
Executive Officer of each of Turbodyne and TSI.
X. Xxxxxx has agreed to accept such engagement upon the terms and
conditions hereinafter set forth.
NOW THIS AGREEMENT WITNESSES that in consideration of the mutual promises,
covenants and agreements herein contained, the parties hereto agree as follows:
1. ENGAGEMENT OF EMPLOYEE
1.1 Turbodyne and TSI hereby employ Halimi in the positions of President
and Chief Executive Officer of each of Turbodyne and TSI for the term of this
Agreement and Halimi hereby accepts such retainer.
1.2 During the term of this Agreement, Halimi shall perform all such acts
and do all such things as and when the same may be necessary to properly and
efficiently carry out the duties of President and Chief Executive Officer of
each of Turbodyne and TSI, and such duties shall include but shall not be
limited to:
(a) general responsibility for the supervision and management of day by
day operations of each of Turbodyne and TSI, subject to the policy
decisions made by the board of directors of Turbodyne;
(b) performing such other duties and observing such instructions as may be
reasonably assigned to him from time to time in his capacity of
President and Chief Executive Officer by the Board of Directors; and
(c) generally at all times abiding by all lawful directions given to him
by the Board of Directors of the Company.
1.3 Xx. Xxxxxx agrees to devote his business time and efforts to carrying
out his duties under this Agreement up to approximately 40 business hours a
week. Turbodyne and TSI acknowledge and consent to Halimi devoting a portion of
his non-business time to Halimi's business interests which are not related to or
competitive with the business of Turbodyne or TSI, provided that such activities
are not in derogation to Halimi carrying out his duties under this Agreement.
1.4 With regard to the services to be performed by Halimi pursuant to
the terms of this Agreement, Halimi shall not be liable to TSI, Turbodyne, or
any subsidiary, or to any third party, for any acts or omissions in the
performance of the services on the part of Halimi, as long as said acts or
omissions of Halimi are provided or undertaken in good faith or do not
constitute willful misconduct. Halimi shall be entitled to rely on the items
set forth in Corporations Code Section 309(b). Turbodyne and TSI shall
defend, indemnify (to the maximum extent permitted by California law) and
hold Halimi and his agents and successors free and harmless from any and all
obligations, costs, claims, judgments, attorney's fees, attachments or any
other liability arising from or growing out of the services rendered to TSI,
Turbodyne, or any subsidiary, pursuant to the terms of this Agreement or in
any way connected with the rendering of the services specified in this such
services are provided or undertaken in good faith or do not constitute
willful misconduct. In addition, Halimi shall be entitled to the benefit of
the indemnity provisions of the By-laws of Turbodyne and TSI and where
applicable, the provisions of the CANADA BUSINESS CORPORATIONS ACT with
respect to Turbodyne and any provision of the Nevada Corporations Act General
Corporation Law with respect to TSI.
1.5 Turbodyne and TSI agree to indemnify and save harmless Halimi from any
liability incurred by Halimi as a result of a personal guarantee granted by
Halimi in favour of Turbodyne or TSI, provided that the granting of the
guarantee by Halimi has been approved by the board of directors of either
Turbodyne or TSI. Turbodyne and TSI agree that Halimi will be given
consideration for the granting of such personal guarantees in amounts not to
exceed industry standard customary fees for the granting of such guarantees. In
determining the consideration, the parties will consider the magnitude of the
guarantee and the risk associated with the guarantee.
2. REMUNERATION
2.1 Turbodyne agrees to pay Halimi during the term of this Agreement the
following salary and bonus amounts:
(a) A base salary of $15,000 US per month, payable in accordance with the
normal payroll schedule of TSI or Turbodyne; and
(b) an annual cash bonus based on the consolidated net operating income
(before taxes) of Turbodyne, TSI or Pacific Baja Light Metals Corp.
("Pacific Baja"), whichever is greater. In determining the
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consolidated net operating income of TSI or Pacific Baja, no expenses
shall be considered in the determination of net operating income that
are not direct expenses of Pacific Baja or TSI, and no non-arms length
charges will be applied against the net operating income. Any
contracts with Turbodyne or any Turbodyne affiliate will be at arm's
length rates for this calculation. Such consolidated net incomes
shall be calculated on a calendar year basis during the term of this
agreement based on the annual audited financial statements of
Turbodyne. The cash bonus shall be determined based on the
consolidated net operating income (before taxes) of Turbodyne, TSI or
Pacific Baja Light Metals Corp., whichever is greater, in accordance
with the following schedule:
CONSOLIDATED PERCENTAGE
NET PROFIT BASE SALARY
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$0 or less 0%
$1 - $500,000 25%
$500,001 - $1,000,000 50%
$1,000,001 - $2,500,000 80%
$2,500,001 - $5,500,000 100%
$5,500,001 + 150%
The cash bonus shall be paid on a quarterly basis within 30 days of
the end of each quarter, based on management prepared financial
statements, provided that each payment of the quarterly cash bonus
will not exceed eighty percent of the estimated annual cash bonus,
pro-rated for the respective quarter. The cash bonus shall be
adjusted at the end of each year, within five (5) days following the
issue by Turbodyne of its annual audited financial statements. In the
event the cash bonus to be paid exceeds the amounts advanced to Halimi
on a quarterly basis, the excess cash bonus will be paid to Halimi in
full within ten (10) days following the date of such determination.
In the event the quarterly advances of the cash bonus paid during the
year exceeds the cash bonus to be paid based on annual audited
financial statements, Halimi will pay the excess within ten (10) days
following such determination.
The Compensation payable pursuant to this Section 2.1 shall be retroactive to
January 1, 1997, notwithstanding the date of execution of this Agreement, in
view of the performance by Halimi of the duties described in this Agreement
since January 1, 1997.
3. STOCK OPTIONS
3.1 In addition to the compensation payable pursuant to Section 2.1,
Turbodyne shall grant to Halimi options to acquire 200,000 shares of stock in
Turbodyne in each year of the term of this agreement. The option price and the
terms and conditions of the options shall be determined in accordance with the
Turbodyne stock option plan in effect at the time of granting of the options.
The options shall be in effect for a five year term following the granting of
the options. It is understood that these stock options are intended to give Xx.
Xxxxxx in incentive to manage Turbodyne and its subsidiary to the benefit of
Turbodyne. To the extent Turbodyne registers any stock in the United States or
Canada under any registration statement during the term of this agreement,
Turbodyne agrees to register sufficient shares to cover the options herein
described. The options are granted in consideration of the execution of this
contract and will survive Xx. Xxxxxx'x termination. Turbodyne represents that
any shares referred to above will be issued to Xx. Xxxxxx free and clear of any
liens and encumbrances.
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4. OTHER BENEFITS
4.1 Halimi, and Halimi's spouse and children, shall be entitled to
participate in any life and disability insurance, pension, dental, medical,
pharmaceutical, hospitalization, health insurance and such other employee
benefit programs as may be provided from time to time by Turbodyne and TSI.
Halimi will be entitled to participate in any pension plan approved by the
board of directors of Turbodyne or TSI from time to time and available to the
officers and directors of Turbodyne and TSI.
4.2 Turbodyne and TSI shall promptly reimburse Halimi for all
reasonable travelling, promotional and other expenses actually and properly
incurred in connection with Halimi's duties hereunder, provided that Halimi
furnishes receipts to Turbodyne and TSI in respect of such expenses and
Turbodyne and TSI may review such expenses on a monthly basis.
4.3 Halimi shall be entitled to a reasonable period of paid annual
vacation, but such periods shall not be less than four (4) weeks per year
provided that all such vacations shall be taken at such times as Turbodyne
and TSI and Halimi may mutually agree upon.
4.4 TSI will provide Xx. Xxxxxx with the use of a new automobile and
reimburse him for any reasonable related automobile expenses incurred on
behalf of the business of Turbodyne and TSI.
4.5 Turbodyne and TSI will reimburse Halimi for all reasonable
relocation expenses actually and properly incurred as a result of Halimi
being required by Turbodyne or TSI to relocate from the Santa Xxxxxxx region
in order to continue to perform his duties hereunder.
4.6 Halimi will be entitled to receive an employee housing loan in an
amount equal to 25 percent of the purchase price of a principal residence
selected by Halimi, provided that the purchase price of the principal
residence will not exceed $1,000,000. The employee housing loan will be
repayable on the earlier of the sale of the principal residence or the
termination of this Agreement, provided that if Halimi sells his principal
residence, he will be entitled to a similar employee housing loan on a
replacement principal residence. Interest will be calculated and paid
annually by Halimi at interest rates prevailing in the housing mortgage
market for secured housing loans. In the event of termination of this
Agreement, Halimi may elect to set off any amount of the employee loan due
against any amounts owing by Turbodyne or TSI pursuant to the terms and
conditions of this Agreement.
4.7 Turbodyne and TSI will obtain and maintain appropriate directors'
and officers' insurance at amounts appropriate for the risk involved in
acting as a director and officer of Turbodyne and TSI, provided that the
coverage will be in amounts and on terms no less favourable than currently in
place as of the date of this Agreement.
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5. CONFIDENTIALITY AND NON-COMPETITION
5.1 Halimi shall not, either during the course of his employment
hereunder or at any time there-after, disclose to any person, any
confidential information concerning the business or affairs of Turbodyne and
TSI which Halimi may have acquired in the course of or incidental to his
employment hereunder or otherwise, and Halimi shall not directly or
indirectly use (whether for his own benefit or the detriment or intended
detriment of Turbodyne and TSI) any confidential information he may acquire
with respect to the business and affairs of Turbodyne and TSI.
5.2 Halimi agrees with Turbodyne and TSI that he will not, either alone
or in conjunction with any individual, firm, corporation, association or
other entity, whether as principal, agent, director, officer, employee,
shareholder or in any other capacity whatsoever:
(a) during the term of this Agreement and for a one year period from the
termination of this Agreement, carry on, or be engaged in, concerned
with or interested in, directly or indirectly, any business which is
in whole or in part competitive with the business of Turbodyne and
TSI;
(b) during the term of this Agreement and for a two year period from the
termination of this Agreement, attempt to solicit any suppliers,
customers or employees of the business of Turbodyne and TSI away from
Turbodyne and TSI;
(c) during the term of this Agreement and for a two year period from the
termination of this Agreement, knowingly take any act as a result of
which the relations between Turbodyne and TSI and the suppliers or
customers of the business of Turbodyne and TSI may be impaired or
which may otherwise be detrimental to the business of Turbodyne and
TSI.
5.3 Subject to Section 5.5, any and all inventions and improvements on
which Halimi may conceive or make, during the period of his employment,
relating, or in any way, pertaining to or connected with any of the matters
which have been, are or may become the subject of Turbodyne and TSI's
investigations, or in which Turbodyne and TSI has been, is, or may become
interested, shall be the sole and exclusive property of Turbodyne and TSI,
and Halimi will, whenever requested by Turbodyne and TSI, execute any and all
applications, assignments and other instruments which Turbodyne and TSI shall
deem necessary in order to apply for and obtain letters of patent for U.S. or
foreign countries for the inventions or improvements and in order to assign
and convey to Turbodyne and TSI the sole and exclusive right, title and
interest in and to the inventions or improvements, all expenses in connection
with them to be borne by Turbodyne and TSI. Halimi's obligations to execute
the papers referred to in this paragraph shall continue beyond the
termination of the period of his employment with respect to any and all
inventions or improvements conceived or made by him during the period of the
employment, and the obligations shall be binding on the assigns, executors,
administrators or other legal representatives of Halimi.
5.4 Subject to section 5.5, all inventions and discoveries relating to
the business of Turbodyne and TSI and all knowledge and information which
Halimi may acquire during his employment, shall be held by Halimi in trust
for the benefit of Turbodyne and TSI, and Halimi agrees that he will not
divulge, or authorize anyone else to divulge, either during the times he is
so employed or afterwards, knowledge of the inventions or discoveries, or any
information acquired in the course of his employment under this agreement, or
any confidential information concerning Turbodyne and TSI's business that he
may acquire otherwise.
5.5 Halimi will be entitled to receive royalties in accordance with the
Company's policy of granting royalties for inventions in the event of any
invention made or conceived by Halimi which becomes property of the Company
pursuant to the times and conditions of this Agreement.
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6. TERM
6.1 This Agreement shall be in effect for a period of five (5) years from
the effective date of this Agreement, as first above written, unless sooner
terminated by the parties pursuant to the terms herein contained. The term of
this Agreement shall be automatically extended by successive one year terms upon
the expiry of each one year anniversary of this Agreement, commencing with the
initial year of the term of this Agreement, without any action of the parties,
unless notice is given in writing by either party to this Agreement prior to 30
days prior to the expiry of each one year anniversary of the party's election
not to extend the term of the Agreement.
7. TERMINATION
7.1 Turbodyne and TSI may terminate this Agreement:
(a) at any time in the event of any fraudulent activity or conduct, or in
the event of any intentional misconduct adversely and materially
affecting the business of Turbodyne and TSI;
(b) upon the death of Halimi;
(c) if Halimi shall suffer any permanent disability. For purposes of this
agreement "permanent disability" shall be defined as Halimi's
inability, by reason of physical or mental illness or other cause, to
perform the majority of this usual duties for a period of greater than
six months. Turbodyne and TSI's option shall be exercised in writing
and delivered to Xx. Xxxxxx and shall be effective upon delivery;
(d) in the event of any assignment or attempted assignment of this
Agreement by Halimi, except as expressly permitted by this Agreement;
provided that those obligations of Halimi in this Agreement expressly stated to
continue on termination shall continue upon termination and shall not terminate
upon termination of this Agreement. Upon any such termination, Halimi shall be
entitled to receive the compensation accrued by unpaid as of the date of his
termination including a pro rata cash bonus, and shall not be entitled to any
additional compensation, except as expressly provided in this Agreement.
7.2 Halimi may terminate this Agreement at any time upon 3 months written
notice to Turbodyne and TSI, provided that those obligations of Halimi in this
Agreement expressly stated to continue on termination shall continue upon
termination and shall not terminate upon termination of this Agreement.
7.3 Turbodyne and TSI agree that the following circumstances will be
deemed to be termination of Halimi without cause:
(a) the assignment to Halimi of any duties materially and substantially
inconsistent with Halimi's present position, duties, responsibility or
status with Turbodyne or TSI as of the date of this Agreement;
(b) the removal of Halimi from or any failure to appoint Halimi to any
such position;
(c) the termination or material reduction in Halimi's facilities, or staff
reporting and available to Halimi;
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(d) a change in Halimi's site of employment for a total period of more
than two (2) months during any period of twelve (12) months, provided
that the relocation of Halimi to Los Angeles, California (or adjacent
areas), will not be considered to be a breach of this Agreement.
In the event of termination of this Agreement without cause, Halimi will be
entitled to receive the compensation to be paid to Halimi from the date of
termination to the date of expiry of the then current term of this Agreement,
provided that those obligations of Halimi in this Agreement expressly stated to
continue on termination shall continue upon termination and shall not terminate
upon termination of this Agreement.
8. ARBITRATION
8.1 The parties shall use all reasonable efforts to resolve amicably any
controversy or claim arising out of, relating to this Agreement, or the breach
thereof. However, in the event such controversy or claim cannot be resolved by
agreement of the parties, it shall be settled by arbitration in Los Angeles
County, California, in accordance with the then existing rules of the American
Arbitration Association, except that the parties shall be entitled to all
discovery to which they would normally be entitled in civil litigation in the
California Superior Court. California law shall govern. Any judgment upon the
award of the arbitrator may be rendered and enforced in any court having
jurisdiction thereof.
9. NOTICES
9.1 Any notice required or permitted to be given under this Agreement
shall be in writing and may be delivered personally or by telecopier, or by
pre-paid registered post addressed to the parties at the above-mentioned
addresses or at such address of which notice may be given by either of such
parties. Any notice shall be deemed to have been received if personally
delivered or by telex or telecopier, on the date of delivery and, if mailed
as aforesaid, then on the fourth business day after and excluding the day of
mailing.
10. ASSIGNMENT
10.1 This Agreement is a personal service contract and may not be
assigned in whole or in part by Halimi, provided that Halimi may assign the
benefit of this Agreement to a company, all of the voting shares are owned by
Halimi. In the event of such an assignment Halimi will continue to be bound
by the terms and conditions of this Agreement and will agree not to dispose
of any interest or shares of the company to which the benefit of this
agreement has been assigned. Any sale of any interest or shares in such a
company will be deemed to be an assignment of this Agreement.
11. INTERPRETATION
11.1 This Agreement shall be governed by and construed in accordance with
the laws of the State of California.
11.2 All headings used in this Agreement are for convenience of reference
only and are not to be used as an aid in the interpretation of this Agreement.
11.3 This Agreement replaces and supercedes all other consulting agreements
and employment agreements, between Halimi and TSI and between Halimi and
Turbodyne Technologies Inc.
11.4 If there is a dispute as to the terms and conditions of this
Agreement, the prevailing party shall be entitled to reasonable attorneys fees
and costs incurred in connection with such dispute.
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11.5 No amendment of this agreement shall be valid unless made in writing
and signed by all parties hereto.
IN WITNESS WHEREOF the parties have executed this Agreement as of the day and
year first above written.
TURBODYNE SYSTEMS, INC.
by its authorized signatory:
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Authorized Signatory
The common seal of
TURBODYNE TECHNOLOGIES INC.
is hereby affixed in the presence of
its authorized signatory: c/s
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Authorized Signatory
SIGNED, SEALED AND DELIVERED )
BY XXXXXX X. XXXXXX in )
the presence of: )
)
)
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Signature ) XXXXXX X. XXXXXX
)
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Name )
)
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Address )
