EXECUTIVE EMPLOYMENT AGREEMENT
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This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into on June 8, 1999, by and between TEPUAL S.A., a corporation organized and
existing under the laws of Chile and having its executive offices at General
Xxxxxx 000, Xxxxxxxx, Xxxxx ("Company"), a subsidiary of Bio-Aqua Systems, Inc.,
and XXX XXXXXX, whose address is General Xxxxxx 000, Xxxxxxxx, Xxxxx (the
"Executive"), but shall be effective as of the effective date of the initial
public offering of Bio-Aqua Systems, Inc.'s securities ("Effective Date")
pursuant to a registration statement filed with the Securities and Exchange
Commission on Form SB-2 ("IPO").
W I T N E S S T H:
WHEREAS, Executive is currently serving as Chief Executive Officer of
the Company and as Chairman of the Company's Board of Directors (the "Board");
and
WHEREAS, the Company desires to secure for itself the continued
availability of Executive's services; and
WHEREAS, for purposes of securing for the Company Executive's
services, the Board has approved and authorized the execution of this Agreement
with Executive on the terms and conditions set forth herein; and
WHEREAS, Executive is willing to continue to make his services
available to the Company on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and obligations hereinafter set forth, the Company and Executive
hereby agree as follows:
Section 1. Employment
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The Company hereby agrees to continue the employment of Executive and
Executive hereby agrees to continue such employment during the period and upon
the terms and conditions set forth in this Agreement.
Section 2. Employment Period
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Except as otherwise pr ovided in this Agreement to the contrary, the
terms and conditions of this Agreement shall be and remain in effect during the
period of employment ("Employment Period") established under this Section 2. The
Employment Period shall be for a term of three (3) years commencing on the
Effective Date and shall automatically be extended for each successive year
thereafter unless (i) the parties mutually agree in writing to alter or amend
the terms of the Agreement; or (ii) one or both of the parties exercises their
right, pursuant to this Agreement, to terminate this employment relationship.
Section 3. Duties
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Executive shall serve as ^Chief Executive Officer of the Company.
Executive's responsibilities, duties and authority as ^Chief Executive Officer
of the Company shall, subject to the direction of the Board and the By-laws of
the Company and Chilean law or any applicable provisions of the Florida Business
Corporation Act ("Corporation Act"), be those commonly associated with such
position and shall include, but shall not be limited to, the employment, general
supervision and direction of all operating officers, the employment, general
supervision and direction of the Company's personnel and planning for the
Company's long-term needs and objectives. Executive shall be responsible for the
general supervision and management of the business affairs of the Company, and,
under authority given to him by the Board, shall execute documents in the name
of the Company and do such other official acts on behalf of the Company as are
appropriate and permitted by the By-laws of the Company. Executive shall serve
as ^Chief Executive Officer of any and all subsidiaries hereafter created by the
Company during the Employment Period without additional compensation therefor.
Section 4. Compensation
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(a) Base Salary. In consideration for the services rendered by
Executive under this Agreement, the Company shall pay to Executive a salary at
an annual rate equal to Two Hundred Thousand Dollars ($200,000). The annual
salary payable under this Section 4(a) shall be paid in approximately equal
installments in accordance with the Company's customary payroll practices.
(b) Bonuses. In addition to the salary provided under Section 4(a),
Executive shall be entitled to receive a bonus (initially for the first year of
this Agreement of up to $100,000), at the times and in the amounts and
determined in such reasonable manner as may be prescribed by the Board from time
to time.
(c) ISAPRE. In addition to the compensation described in Sections
4(a), (b) and (c) above, Executive shall also be entitled to receive social
security benefits pursuant to Chilean law including without limitation, to the
Institutions and Provisional Health (ISAPRE) and Administrators of Pension Funds
(AFP).
Section 5. Employee Benefit Plans and Programs
-----------------------------------
(a) Executive shall be entitled to a minimum of four (4) weeks of paid
vacation in each calendar year, all of which shall be deemed accrued, earned and
available for use on the first day of the year.
(b) The Company shall also purchase or lease, for Executive's
exclusive use, a beeper and cellular telephone of his choice and shall pay, or
reimburse Executive for his payment of, all charges relating thereto.
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(c) Except as otherwise provided in this Agreement, Executive shall,
during the Employment Period, be entitled to participate in and receive benefits
under the Company's group life, health (including hospitalization, medical and
major medical), dental, accident and long term disability insurance plans, and
such other employee benefit plans and programs, including, but not limited to,
any pension plans, incentive compensation plans or programs (whether or not
employee benefit plans or programs), and any stock option and appreciation
rights plan, employee stock ownership plan and restricted stock plan, as may
from time to time be maintained by, or cover executive and/or employees of, the
Company, in accordance with the terms and conditions of such benefit plans and
programs and compensation plans and programs and with the Company's customary
practices.
Section 6. Investments and Other Business Interests
----------------------------------------
Executive may engage in personal business and investment activities
for his own account including, without limitation, serving on boards of
directors and engaging in charitable and community affairs; provided, however,
that such personal business and investment activities shall not materially
interfere with the performance of his duties under this Agreement and shall in
all events be subject to the provisions of Section 10 hereof.
Section 7. Working Facilities and Expenses
-------------------------------
Executive's principal place of employment shall be at the Company's
executive offices at the address first above written, or at such other location
as the Company and Executive may mutually agree upon. The Company shall provide
Executive at his principal place of employment with a private office,
secretarial services and other support services and facilities suitable to his
position with the Company and necessary or appropriate in connection with the
performance of his assigned duties under this Agreement. The Company shall
reimburse Executive for his ordinary and necessary business expenses, including,
without limitation, fees for memberships in one business or social club of his
choice (up to maximum cost of $_____ per year) and in such other clubs and
organizations as Executive and the Company shall mutually agree are necessary
and appropriate for business purposes, and his travel and entertainment expenses
incurred in connection with the performance of his duties under this Agreement
upon presentation to the Company of an itemized account of such expenses in such
form as the Company may reasonably require.
Section 8. Termination of Employment with Company Liability
------------------------------------------------
(a) In the event that Executive's employment with the Company shall
terminate during the Employment Period on account of:
(i) Executive's voluntary resignation from employment with the
Company within ninety (90) days after the occurrence, without the express
written consent of Executive, of any of the following:
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(A) the failure of the Company's Board to appoint or
re-appoint or elect or re-elect Executive to the office of Chief Executive
Officer (or a more senior office) of the Company;
(B) the failure of the stockholders of the Company to elect or
re-elect Executive as Chairman of the Board and a Director of the Company;
(C) a material failure of the Company, whether by amendment of
the Company's Articles of Incorporation or By-laws, action of the Board or the
Company's stockholders or otherwise, to vest in Executive the functions, duties,
or responsibilities prescribed in Section 3 of this Agreement or the By-Laws of
the Company or any significant change in any of the foregoing;
(D) a material breach of this Agreement by the Company;
(E) a "Change of Control" (as hereinafter defined) of the
Company; as used herein, a "Change of Control" shall mean:
(a) individuals who as of the date hereof constitute
the Board (the "Incumbent Board") cease for any reason to constitute a majority
of the Board other than through action by the Board in creating and filling
vacancies on the Board; or
(b) either
(i) the acquisition, after the completion of
the IPO, by any individual, entity or group (within the meaning of
Section 13 (d)(3) or 14 (d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") (a "Person"), of beneficial ownership
(within the meaning of Rule 1 3d-3 promulgated under the Exchange Act)
of voting securities of the Company where such acquisition causes such
Person to own 35% or more of the outstanding voting securities of the
Company ("Securities Acquisition"); or
(ii) the approval by the stockholders of the
Company of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company
("Business Combination"),
unless pursuant to such Securities Acquisition or Business Combination
(A) all or substantially all of the individuals and entities who were
the beneficial owners of the outstanding voting securities of the
Company prior to the Securities Acquisition or Business Combination
beneficially own more than 66-2/3 % of the then outstanding voting
securities of the Company (if it is the surviving corporation) or the
surviving
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corporation (if it is other than the Company) in substantially the same
proportions as their ownership immediately prior to the Securities
Acquisition or Business Combination, and (B) at least a majority of the
members of the Board of the surviving corporation were members of the
Incumbent Board immediately prior to the Securities Acquisition or
Business Combination;
(F) a five percent (5%) reduction in Executive's compensation
below the salary in effect immediately prior to such reduction;
(G) a material reduction of Executive's benefits under any
employee benefit plan, program or arrangement (for Executive individually
or as part of a group) of the Company as then in effect or as in effect on
the effective date of the Agreement, which reduction shall not be
effectuated for similarly situation employees of the Company; or
(H) failure by a successor company to assume the obligations
under the Agreement; or
(ii) the discharge of Executive by the Company for any reason other
than for "cause" as provided in Section 9(a);
then the Company shall provide the benefits and pay to Executive the amounts
provided for under Section 8(b). Notwithstanding anything contained herein to
the contrary, the Company shall not be liable for the payments and benefits
under Section 8(b) in the case of (a) a resignation described in Section
8(a)(i)(C) or (1) for reasons other than failure to pay compensation due
hereunder unless Executive has given written notice to the Company of its breach
and the Company fails to cure such breach within thirty (30) days thereafter or
Executive has, within the twelve (12) month period ending on the date of his
resignation, given the Company written notice of a substantially similar breach
which was subsequently cured, or (b) Executive's employment with the Company
shall terminate under circumstances described in this Section 8(a) which
Executive has directly and willfully caused to occur.
(b) Upon the termination of Executive's employment with the Company
under circumstances described in Section 8(a) of this Agreement, the Company
shall pay and provide to Executive (or, in the event of his death, to his
estate):
(i) his earned but unpaid salary as of the date of the termination
of his employment with the Company, and his earned but unpaid bonus as
of the date of his termination, pro-rated for the fiscal quarter during
which his termination occurs (based on the number of days that he was
in the Company's employ during such fiscal quarter) if the termination
is other than on the last day of a fiscal quarter;
(ii) except as provided in Section 8(b)(iv), the benefits, if any,
to which he is entitled as a former employee under the employee benefit
plans and programs and
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compensation plans and programs maintained for the benefit of the
Company's officers and employees;
(iii) continued life, health (including hospitalization, medical
and major medical), dental, accident and long term disability insurance
benefits, in addition to that provided pursuant to Section 8(b)(ii),
and after taking into account the coverage provided by any subsequent
employer, if and to the extent necessary to provide for Executive for
the remaining unexpired Employment Period, coverage equivalent to the
coverage to which he would have been entitled if he had continued
working for the Company during the remaining unexpired Employment
Period at the highest annual rate of compensation achieved during that
portion of the Employment Period which is prior to Executive's
termination of employment with the Company;
(iv) within thirty (30) days following his termination of
employment with the Company and in lieu of any monetary payments to
which he may be entitled under any severance pay plan, program or
policy, a lump sum payment, in an amount equal to the present value of
the salary that Executive would have earned at the rate set forth in
Section 4(a) if he had continued working for the Company during the
remaining unexpired Employment Period, where such present value is to
be determined using a discount rate of six percent (6%) per annum,
compounded monthly (or the compounding period corresponding to the
Company's regular payroll periods with respect to its officers, if not
monthly), such lump sum to be paid in lieu of all other payments of
salary provided for under this Agreement in respect of the period
following any such termination (other than the additional severance
payment provided for in Section 8(c) as set forth therein);
(v) within thirty (30) days following his termination of employment
with the Company, a lump sum payment in an amount equal to the excess,
if any, of: (A) the present value of the benefits to which he would be
entitled under any benefit plans maintained by, or covering employees
of, the Company if he were 100% vested thereunder and had continued
working for the Company during the remaining unexpired employment
period at the highest annual rate of compensation achieved during that
portion of the Employment Period which is prior to Executive's
termination of employment with the Company, over (B) the present value
of the benefits to which he is actually entitled under any benefit
plans maintained by, or covering employees of, the Company as of the
date of his termination, where such present values are to be determined
using a discount rate of six percent (6%) per annum, compounded
monthly;
(vi) within thirty (30) days following his termination of
employment with the Company a lump sum cash payment in the amount of
the payments that would have been made to Executive (in cash and stock)
under Section 4(b) of this Agreement if he had continued working for
the Company during the remaining unexpired Employment Period and had
earned an annual bonus payment for each fiscal quarter equal to the
highest amount, if any, actually paid to Executive for any fiscal
quarter pursuant to Section 4(b);
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(vii) at the election of Executive made within thirty (30) days
following his termination of employment with the Company, upon the
surrender of options or appreciation rights issued to Executive under
any stock option and appreciation rights plan or program or restricted
stock plan maintained by, or covering employees of, the Company, a lump
sum payment in an amount equal to the product of:
(A) in the case of a stock option or
appreciation rights plan or program:
(I) the excess of (A) the fair market
value of a share of stock of the same class as the stock
subject to the option or appreciation right, determined as of
the date of termination of employment, over (B) the exercise
price per share for such option or appreciation right, as
specified in or under the relevant plan or program; multiplied
by
(II) the number of shares with respect to
which options or appreciation rights are being surrendered; and
(B) in the case of a restricted stock plan:
(I) the fair market value of a share of
stock of the same class of stock granted under such plan,
determined as of the date of Executive termination of employment;
multiplied by
(II) the number of shares which are being
surrendered.
For purposes of this Section 8(b)(vii) and for purposes of determining
Executive's right following his termination of employment with the Company to
exercise any options or appreciation rights not surrendered pursuant hereto,
Executive shall be deemed fully vested in all options and appreciation rights
under any stock option or appreciation rights plan or program maintained by, or
covering employees of, the Company, even if he is not vested under such plan or
program.
(c) In the event that a termination of employment occurs pursuant to
Section 8(a) on or after November 1, 1999, then in addition to all of the
payments and benefits which the Company shall pay or provide pursuant to Section
8(b), the Company shall also pay to Executive (or his estate, as applicable)
within thirty (30) days following his termination of employment, the following
severance payments:
(A) a lump sum cash payment in an amount equal to the difference
between the amounts actually paid relating to Executive's salary under
Section 8(b) and an amount equal to two (2) times Executive's annual
salary, based upon the greater of Executive's salary (i) immediately
prior to the effective date of termination or (ii) as of ninety (90)
days prior to the effective date of termination; plus
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(B) a lump sum cash payment in an amount equal to the highest
annual bonus payment, if any, that was actually paid to Executive (in
cash and stock) for any fiscal year pursuant to Section 4(b).
(d) The Company and Executive hereby stipulate that the damages which
may be incurred by Executive following any termination of employment pursuant to
Section 8(a) are not capable of accurate measurement as of the date first above
written and that the payments and benefits contemplated by Section 8(b) and 8(c)
constitute reasonable damages under the circumstances and shall be payable
without any requirement of proof of actual damage and without regard to
Executive's efforts, if any, to damages.
(e) In the event of the death of Executive during the Employment Period
of the Agreement, salary shall be paid to Executive's designated beneficiary,
or, in the absence of such designation, to the estate or other legal
representative of Executive for a period of up to the date of death. Other death
benefits will be determined in accordance with the terms of the Company's
benefit programs and plans.
(f) In the event of Executive's disability, as hereinafter defined,
Executive shall be entitled to compensation in accordance with the Company's
disability compensation practice for senior executives, including any separate
arrangement or policy covering Executive, but in all events Executive shall
continue to receive Executive's salary for a period, at the annual rate in
effect immediately prior to the commencement of disability, of not less than 180
days from the date on which the disability has been deemed to occur as
hereinafter provided below. "Disability" for the purposes of this Agreement,
shall be deemed to have occurred in the event (A) Executive is permanently
unable by reason of sickness or accident to perform Executive's duties under
this Agreement for a continuous period of 180 days. Termination due to
disability shall be deemed to have occurred upon the first day of the month
following the determination of disability as defined in the preceding sentence.
(g) In the event of termination as a result of Executive death or
disability, and in addition to the payments set forth in Sections 8(e) or 8(f),
as the case may be, Executive (or his estate) shall also be paid his earned but
unpaid bonus as of the date of his termination, pro-rated for the fiscal quarter
during which his termination occurs (based on the number of days he was in the
Company's employ during such fiscal quarter) if the date of termination is other
than on the last day of a fiscal quarter; and the provisions of such other
benefits, if any, to which he is entitled as a former employee under this
Agreement and the employee benefit plans and programs and compensation plans and
programs maintained by, or covering employees of, the Company.
Section 9. Termination without Additional Company Liability
------------------------------------------------
In the event that Executive's employment with the Company shall
terminate during the Employment Period on account of:
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(a) the discharge of Executive for "cause" which, for purposes of this
Agreement, shall mean his repeated and gross negligence in the fulfillment of,
or repeated failure of Executive to fulfill, his material obligation under this
Agreement, in either event after due written notice thereof (which notice
requirement shall be deemed satisfied if due written notice of a substantially
similar act or omission shall have been given within three (3) months prior to
such discharge), or willful misconduct by Executive in respect of his
obligations hereunder, or his conviction of a felony under the laws of the
United States or any State, but only if such gross negligence, repeated failure,
willful misconduct or conviction materially impairs his ability to effectively
perform his duties under this Agreement; provided, however, that cause shall not
include, without limitation:
(i) the refusal by Executive of an assignment not consistent
with the status, titles and reporting requirements set forth herein or
contemplated hereby; or
(ii) bad judgment or negligence of Executive; or
(iii) any act or omission (other than one constituting a
material breach of trust committed in willful and reckless disregard of
the interests of the Company and undertaken for personal gain) in
respect of which a determination could properly have been made by the
Board that Executive met the applicable standard of conduct prescribed
for indemnification or reimbursement under the By-Laws of the Company
or the laws of the State in which the Company is then chartered, in
each case in effect at the time of such act or omission; or
(iv) any act or omission with respect to which notice of
termination is given more than three (3) months after the earliest date
on which any non-employee director of the Company who was not a party
to such act or omission knew or should have known of such act or
omission; or
(b) Executive's voluntary resignation from employment with the Company
for reasons other than those specified in Section 8(a)(i); then the Company
shall have no further obligations under this Agreement, other than the payment
to Executive of his earned but unpaid salary as of the date of the termination
of his employment; his earned but unpaid bonus as of the date of his
termination, pro-rated for the fiscal quarter during which his termination
occurs (based on the number of days he was in the Company's employ during such
fiscal quarter) if the date of termination is other than on the last day of a
fiscal quarter; and the provisions of such other benefits, if any, to which he
is entitled as a former employee under this Agreement and the employee benefit
plans and programs and compensation plans and programs maintained by, or
covering employees of, the Company.
Section 9A. Severance at Expiration of Employment Period
--------------------------------------------
In the event that at the expiration of the Employment Period,
Executive's employment is not continued for any reason, then the Company shall
pay to Executive (or his estate, as applicable) his
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earned but unpaid salary as of the date of the termination of his employment and
his earned but unpaid bonus, if any, as of the date of his termination,
pro-rated for the fiscal quarter during which his termination occurs (based on
the number of days he was in the Company's employ during such fiscal quarter) if
the date of termination is other than on the last day of a fiscal quarter; shall
provide to Executive all of the benefits, if any, to which he is entitled as a
former employee under this Agreement and the employee benefit plans and programs
and compensation plans and programs maintained by, or covering employees of, the
Company; and, in addition, shall pay to Executive an amount equal to the
aggregate of the highest salary and bonus earned by Executive during any
calendar year during the Employment Period.
Section 10. Covenant Not To Compete
-----------------------
Executive hereby covenants and agrees that, during the Employment
Period and in the event of his termination of employment with the Company prior
to the expiration of the Employment Period, for a period of one (1) year
following the date of his termination of employment with the Company (or, if
less, for the remaining unexpired Employment Period), he shall not, without the
written consent of the Company, become an officer, employee, consultant,
director or trustee of any entity, or any direct or indirect subsidiary or
affiliate of any such entity, that directly or indirectly competes with this
Company in providing services to the gay community in any market area in which
it is active; provided, however, that this Section 10 shall not apply if
Executive's employment is terminated for the reasons set forth in Section 8(a);
and, provided, further, that if Executive's employment shall be terminated on
account of disability as provided in Section 9(d) of this Agreement, this
Section 10 shall not prevent Executive from accepting any position or performing
any services if (a) he first offers, by written notice, to accept a similar
position with, or perform similar services for, the Company on substantially the
same terms and conditions and (b) the Company declines to accept such offer
within ten (10) days after such notice is given.
Section 11. Confidentiality Proprietary Information
---------------------------------------
(a) Unless he obtains the prior written consent of the Company (which
consent shall not be unreasonably withheld), Executive shall keep confidential
and shall refrain from using for the benefit of any person or entity other than
the Company or any entity which is a subsidiary of the Company or of which the
Company is a subsidiary, any material document or information obtained from the
Company, or from its parent or subsidiaries, in the course of his employment
with any of them concerning their properties, operations or business (unless
such document or information is readily ascertainable from public or published
information or trade sources or has otherwise been made available to the public
through no fault of his own) until the same ceases to be material (or becomes so
ascertainable or available); provided, however, that nothing in this Section 11
shall prevent Executive, with or without the Company's consent, from
participating in or disclosing documents or information in connection with any
judicial or administrative investigation, inquiry or proceeding to the extent
that such participation or disclosure is required under applicable law.
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(b) Executive acknowledges that during the course of his employment
with the Company he may develop or otherwise acquire papers, files or other
records involving or relating to confidential or secret processes, formulas,
discoveries, inventions, machinery, plans, design information of any kind,
devices, material, research, new product development, customers or customer
lists. All such papers, files and other records shall be the exclusive property
of the Company and shall, together with any and all copies thereof, be returned
to the Company upon Executive's termination of employment.
Section 12. Solicitation
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Executive hereby covenants and agrees that in the event of his
termination of employment with the Company prior to the expiration of the
Employment Period, for a period of one (1) year following his termination of
employment with the Company (or, if less, the remaining unexpired Employment
Period), he shall not, without the written consent of the Company, either
directly or indirectly:
(a) solicit, offer employment to, or take any other action intended, or
that a reasonable person acting in like circumstances would expect, to have the
effect of causing any officer or employee of the Company (other than a member of
Executive's family) or any subsidiary of the Company to terminate his or her
employment and accept employment or become affiliated with, or provide services
for compensation in any capacity whatsoever to, any entity that directly or
indirectly competes with this Company in any market area in which it is then
active;
(b) provide any information, advice or recommendation with respect to
any officer or employee of the Company (other than a member of Executive's
Family) or any subsidiary of the Company to any entity engaged or to be engaged
in the same or competing business with the Company that is intended, or that a
reasonable person acting in like circumstances would expect, to have the effect
of causing any such officer or employee to terminate his or her employment and
accept employment or become affiliated with, or provide services for
compensation in any capacity whatsoever to, any entity that directly or
indirectly competes with the Company in any market area in which it is then
active; provided, however, that nothing in this Section 12(b) shall be construed
as prohibiting Executive from serving as a reference if so requested by an
officer or employee of the Company or subsidiary of the Company;
(c) solicit, provide any information, advice or recommendation or take
any other action intended, or that a reasonable person acting in like
circumstances would expect, to have the effect of causing any customer of the
Company with which Executive has had substantial contact to terminate an
existing business or commercial relationship with the Company; provided,
however, that this Section 12 shall not apply if Executive's employment is
terminated for any of the reasons set forth in Section 8(a). Nothing in this
Section 12 shall prevent Executive from directly or indirectly advertising
employment opportunities or disseminating marketing materials through newspapers
of general circulation or other mass media.
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Section 13. No Effect on Employee Benefit Plans or Programs
-----------------------------------------------
The termination of Executive's employment during the term of this
Agreement or thereafter, whether by the Company or by Executive shall have no
effect on the rights and obligations of the parties hereto, which shall continue
for a period of two (2) years after Executive's termination under the Company's
pension plan, group life, health (including hospitalization, medical and major
medical), dental, accident and long term disability insurance plans or such
other employee benefit plans or programs, or compensation plans or programs
(whether or not employee benefit plans or programs) and any stock option and
appreciation rights plan, employee stock ownership plan and restricted stock
plan, as may be maintained by, or cover employees of, the Company from time to
time.
Section 14. Indemnification and Attorneys' Fees
-----------------------------------
The Company shall provide Executive with payment of legal fees and
indemnification to the maximum extent permitted from time to time by the
Corporation Act or other applicable laws or regulations. Executive shall
continue to be covered by the Articles of Incorporation and/or the Bylaws of the
Company with respect to matters occurring on or prior to the date of termination
of Executive's employment with the Company, subject to all the provisions of
Florida and Federal law and the Articles of Incorporation and Bylaws of the
Company then in effect. The Company shall indemnify and hold harmless Executive
against reasonable costs, including, without limitation, legal fees and
expenses, incurred by him in connection with or arising out of any action, suit
or proceeding in which he may be involved to defend or enforce the terms of this
Agreement, without regard to whether Executive is the prevailing party in such
action, suit or proceeding. Such reasonable expenses, including attorneys' fees
that may be covered by the Articles of Incorporation and/or Bylaws of the
Company shall be paid by the Company on a current basis in accordance with such
provision, the Company's Articles of Incorporation and applicable law. To the
extent that any such payments by the Company pursuant to the Company's Articles
of Incorporation and/or Bylaws may be subject to repayment by Executive pursuant
to the provisions of the Company's Articles of Incorporation or Bylaws, or
pursuant to applicable law, such repayment shall be due and payable by Executive
to the Company within twelve (12) months after the termination of all
proceedings, if any, which relate to such repayment and to the Company's affairs
for the period prior to the date of termination of Executive's employment with
the Company and as to which Executive has been covered by such applicable
provisions.
Section 15. Excise Tax
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(a) If, in connection with the termination of Executive's employment,
Executive shall be liable for the payment of an excise tax under Section 4999 of
the Code with respect to any payment of money or property made by the Company,
the Company shall pay to Executive an amount to indemnify Executive against such
excise tax and against any additional income and excise taxes imposed on him as
a result of such indemnification. With respect to any payment that is made to
Executive under the terms of this Agreement in the year of his termination of
employment and on
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which an excise tax under Section 4999 of the Code will be assessed, the payment
determined under this Section 15(a) shall be made to Executive not later than
thirty (30) days following his termination of employment. With respect to any
payment made under the terms of this Agreement in any other year and on which an
excise tax under Section 4999 of the Code will be assessed, the payment under
this Section 15(a) shall be made to Executive not later than December 31st of
the year in which the payment on which such excise tax will be assessed is made
to Executive or, if earlier, the date on which such tax is required to be
remitted to the Internal Revenue Service The payments made by the Company under
this Section 1 5(a) shall be determined by the Company on the basis of advice
from the firm of independent certified public accountants regularly retained by
the Company to audit its books and shall be subject to subsequent adjustment as
provided in Section 15(b).
(b) In the event that Executive's liability for the excise tax under
Section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount paid for such year pursuant to Section 15(a),
Executive or the Company, as the case may be, shall pay to the other party at
the time that the amount of such excise tax is finally determined, an
appropriate amount, plus interest, such that the payment made under Section
15(a), when increased by the amount of the payment made to Executive under this
Section 15(b) by the Company, or when reduced by the amount of the payment made
to the Company under this Section 15(b) by Executive, equals the amount finally
determined to have been properly payable to Executive under Section 15(a). The
interest paid under this Section 15(b) shall be determined at the rate provided
under Section 1274(b)(2)(B) of the Code. To confirm that the proper amount, if
any, was paid to Executive under this Section 15, Executive shall furnish to the
Company a copy of each tax return which reflects a liability for an excise tax
payment under Section 4999 of the Code with respect to a payment made by the
Company, at least twenty (20) days before the date on which such return is
required to be filed with the Internal Revenue Service. If Executive fails to
furnish any such return by the prescribed date, then (i) the Company's payment
obligation hereunder shall be deferred until twenty (20) days after the date on
which such return is actually furnished and (ii) the Company shall have no
liability to indemnify Executive against any excess tax payment which the
Company reasonably believes to have been made in error.
Section 16. Successors and Assigns; Survivorship
------------------------------------
This Agreement will inure to the benefit of and be binding upon
Executive, his legal representatives, heirs and assigns, and the Company, its
respective successors and assigns, including any successor by merger or
consolidation or a statutory receiver or any other person or firm or corporation
to which all or substantially all of the respective assets and business of the
Company may be sold or otherwise transferred.
Section 17. Waiver
------
Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition. A waiver of any provision of this Agreement must be made
in writing, designated as a waiver, and signed by the party against whom
13
its enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
Section 18. Notices
-------
Any communication required or permitted to be given under this
Agreement, including any notice, direction, designation, consent, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is delivered personally, or five (5) days after mailing if
mailed, postage prepaid, by registered or certified mail, return receipt
requested, addressed to such party at the address listed below or at such other
address as one such party may by written notice specify to the other party:
If to Executive:
Tepual S.A.
===========
General Ekdhal 000
xxxxxxxxxxxxxxxxxx
Xxxxxxxx, Xxxxx
===============
If to the Company:
Tepual S.A.
General Xxxxxx 000
Xxxxxxxx, Xxxxx
Attention: Xxxxxxxx Xxxx
with copy to:
Atlas, Xxxxxxxx, Trop & Borkson, P.A.
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Section 19. Severability
------------
A determination that any provision of this Agreement is invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.
Section 20. Counterparts
------------
This Agreement may be executed in two (2) or more counterparts, each of
which shall be deemed an original, and all of which shall constitute one and the
same Agreement.
14
Section 21. Governing Law
-------------
This Agreement shall be governed by and construed and enforced in
accordance with the laws of Chile and any applicable laws of the State of
Florida, without reference to conflicts of law principles.
Section 22. Headings and Construction
-------------------------
The headings of Sections in this Agreement are for convenience of
reference only and are not intended to qualify the meaning of any Section. Any
reference to a Section number shall refer to a Section of this Agreement, unless
otherwise stated.
Section 23. Survival
--------
The rights and obligations of the Company and Executive under Sections
10, 11, 12, 14 and 15 of this Agreement shall survive the termination or
expiration of this Agreement, notwithstanding anything contained herein to the
contrary.
Section 24. Equitable Remedies
------------------
The Company and Executive hereby stipulate that monetary damages shall
be an inadequate remedy for violations of Sections 10, 11 and 12, of this
Agreement and agree that equitable remedies, including, without limitation, the
remedies of specific performance and injunctive relief, shall be available with
respect to the enforcement of such provisions.
Section 25. Entire Agreement, Modifications
-------------------------------
This instrument contains the entire agreement of the parties relating
to the subject matter hereof, and supersedes in its entirety any and all prior
agreements, understandings or representations relating to the subject matter
hereof. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and Executive has hereunto set his hand, all as of the day and year
first above written.
/s/ Xxx Xxxxxx
-------------------
Xxx Xxxxxx
ATTEST: TEPUAL S.A.
15
By: /s/ Xxxxxxxx Xxxx By: /s/ Xxxxxxxxx Xxxxxx
---------------------- ----------------------------
Name: Xxxxxxxx Xxxx Name: Xxxxxxxxx Xxxxxx
--------------------- -------------------------
Title: Chief Financial Officer
--------------------
and President
--------------------
16
