Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of January 2, 2007,
by and between AquaCell Technologies, Inc., a Delaware corporation ("Employer"),
and Xxxxx Xxxxxx ("Executive").
WITNESSETH:
WHEREAS, Employer desires to obtain the benefit of
service by Executive, and Executive desires to render services to Employer;
WHEREAS, the Board of Directors of Employer (the
"Board") has determined that because of Executive's substantial
experience and business relationships in connection with the
business of Employer, it is in the Employer's best interest and that
of its stockholders to secure services of Executive and to provide
Executive certain additional benefits; and
WHEREAS, Employer and Executive desire to set forth in
this Agreement the terms and conditions of Executive's
employment with Employer.
NOW, THEREFORE, in consideration of the mutual
promises and covenants herein contained, the parties agree as
follows:
AGREEMENT
SECTION 1. TERM. Employer hereby employs
Executive and Executive hereby accepts such employment, in
accordance with the terms of this Agreement, commencing on the
date hereof and terminating on December 31, 2011 (the "Term"),
unless (a) terminated as provided herein in Section 5, or
(b) renewed pursuant to the terms of Section 9 hereof.
SECTION 2. SERVICES. So long as this Agreement
shall continue in effect, Executive shall use his commercially
reasonable efforts and abilities to promote Employer's business,
affairs and interests, and shall perform the services contemplated
by this Agreement in accordance with policies established by
Employer.
SECTION 3. SPECIFIC POSITION; DUTIES AND
RESPONSIBILITIES. Executive shall serve as President and
Chief Financial Officer with the powers and duties consistent with
such positions. Executive agrees to devote his full business time to
rendering the services as President and Chief Financial Officer.
Executive agrees to observe and comply with the rules and
regulations of Employer as adopted by the Board respecting the
performance of Executive's duties and agrees to carry out and
perform the directions and policies of Employer and its Board as
they may be, from time to time, stated either orally or in writing.
Employer agrees that the duties which may be assigned to
Executive shall be the usual and customary duties of the job
position as set forth in this Section 3, and shall not be inconsistent
with the provisions of the charter documents of Employer or
applicable law. Executive shall have such corporate power and
authority as shall reasonably be required to enable the discharge of
duties in any office that may be held.
SECTION 4. COMPENSATION.
(a) Base Salary and Bonus.
(i) Base Salary. During the term of this
Agreement, Employer agrees to pay Executive a base salary of at
least $165,000 per year in semi-monthly installments on the same
dates the other senior officers of Employer are paid ("Base
Salary") The Board (or its Compensation Committee) shall review
the Base Salary annually and may in its discretion increase the
Base Salary each calendar year beginning January 2, 2008;
provided however, that the Base Salary shall be increased by an
amount equal to 50% of the amount of any bonus paid to Executive
during the prior year..
(ii) Signing Bonus. Executive shall receive one (1) million
shares of AquaCell Technologies common stock as a signing bonus.
(iii) Bonus. Executive shall receive 40% of the
Executive Bonus Pool to be determined on the basis of the three
phase criteria set forth on Exhibit A attached hereto.
(iv) Stock Options; Executive shall receive an
initial grant of 500,000 stock options, which shall vest over a three
year period.
(b) Expense Reimbursement. Employer shall
reimburse Executive promptly for reasonable and necessary
business and entertainment expenses incurred in pursuit and
furtherance of Employer's business and goodwill. Employer shall
reimburse Executive for all such expenses upon presentation by the
Executive, from time to time, of an itemized written accounting of
such expenditures.
(c) Benefits. Employer shall provide Executive with
the following benefits during the Term and any renewals thereof:
(i) Participation in Benefit Plans and Policies.
Executive shall be entitled to participate in all insurance and other
benefit plans and policies maintained for senior executives of
Employer, including, but not limited to, all group health, life
disability and retirement plans (the "Plans").
(ii) Vacation. Executive shall be entitled to four (4) weeks paid
vacation time each year during the term of this
Agreement. Vacation shall not be taken more than one week at a
time, and only when it will not interfere with the operation of the
company. Any vacation not taken will be accrued and paid, and
there shall be no limit on the accrual.
(iii) Automobile Expenses. Executive shall be
entitled to an automobile allowance of up to $750 per month, or as
may be determined by the Compensation Committee. The
Employer will pay gas and maintenance for the vehicle.
(iv) Country Club. Upon the Company reaching
$200 million in revenues, Employer will provide Executive with a
country club membership, and pay all monthly fees and expenses
during the term of employment.
SECTION 5. TERMINATION. The compensation and
other benefits provided to Executive pursuant to this Agreement,
and the employment of Executive by Employer, shall be
terminated prior to expiration of the term of this Agreement only
as provided in this Section 5:
(a) Disability. In the event that Executive shall fail,
because of illness, incapacity or injury which is determined to be
total ("Disability") by a physician selected by Employer or its
insurers and acceptable to Executive or Executive's legal
representative (such agreement as to acceptability not to be
withheld unreasonably), to render, for three consecutive months or
for shorter periods aggregating ninety (90) or more business days
in any twelve (12) month period, the services contemplated by this
Agreement, Executive's employment hereunder may be terminated
by sixty (60) days' prior written notice of termination from
Employer to Executive. Thereafter, Employer shall continue to (i)
pay the Base Salary to Executive for a period of twelve (12)
months after the date of termination, and (ii) provide medical
insurance as in effect prior to such termination for a period of
twelve (12) months following the date of termination. Thereafter,
no further salary shall be paid or medical insurance be provided.
This Agreement in all other respects will terminate upon the
termination of employment pursuant to this paragraph.
(b) Death. In the event of Executive's death during the
term of this Agreement, Executive's Base Salary shall continue for
a period of six (6) months payable to the estate of the Executive
and Employer shall pay to the estate of Executive the Base Salary
accrued to the date of Executive's death to the extent not
theretofore paid. If Executive's death occurs while receiving
payments under Section 5(a) above, such payments shall continue
for a period of six (6) months payable to the Estate of the
Executive. Executive's rights under the Plans subsequent to his/her
death shall be determined under the applicable provisions of the
respective Plans; provided that, notwithstanding any provisions to
the contrary therein, Employer shall continue to provide medical
insurance to the dependents of Executive for a period of six (6)
months following the death of Executive. This Agreement in all
other respects will terminate upon the death of Executive.
(c) For Cause. The employment of Executive
hereunder shall be terminable by Employer in the event that
Executive (i) is convicted of, or pleads nolo contandere to a felony;
(ii) has engaged in habitual misconduct in the performance of
his/her duties under this Agreement, (iii) has committed an act of
dishonesty, gross negligence or misconduct, which has a direct,
substantial and adverse effect on Employer, its business or
reputation.
Notwithstanding the foregoing, no termination of Executive
by Employer pursuant to clauses (ii) (iii) or (iv) above shall be
valid unless and until the following procedures have been
complied with by Employer: (a) no more than thirty (30) days
after the chairperson of the Board has obtained knowledge of
"cause" to terminate Executive pursuant to any of clauses (ii) or
(iii) above, he/she shall provide Executive with written notice of
Employer's intent to terminate this Agreement pursuant to this
Section 5(c), including in reasonable detail the reasons therefor
(the "Termination Notice"); (b) at a mutually agreed upon time and
place, but in any event no more than ten (10) days following
receipt by Executive of the Termination Notice, the Board shall
provide Executive the opportunity to participate in a meeting of the
Board regarding the Termination Notice; (c) if the matter cannot be
resolved by mutual agreement of Employer and Executive at such
meeting, Executive shall thereafter be given thirty (30) days to
cure such "cause" as detailed in the Termination Notice (the "Cure
Period"); and (d) if Executive does not cure such "cause" within
the Cure Period, Employer shall thereafter terminate Executive's
employment hereunder in writing within thirty (30) days of the end
of the Cure Period. Any determination of "cause" as used in this
Section 5(c) shall be made only in good faith by an affirmative
majority vote of the Board (not counting Executive).
In the event of Executive's termination pursuant to this
subsection 5(c), Executive's rights to receive Base Salary shall
immediately terminate and Employer shall pay to Executive his
Base Salary and vacation accrued to the date of such termination to
the extent not theretofore paid. Executive's rights under the Plans
subsequent to termination shall be determined under the applicable
provisions of the respective plans. This Agreement in all other
respects will terminate upon such termination.
(d) Without Cause. Notwithstanding any other
provision of this Section 5, the Board shall have the right to
terminate Executive's employment with Employer without cause at
any time upon at least thirty (30) days' prior written notice to
Executive. The following conditions shall thereupon become
applicable:
(i) Severance Pay. Employer shall continue to
pay Executive the Base Salary on a semi-monthly basis for the
remainder of the Term or any extension thereof.
(ii) Medical Insurance Continuation. Employer
shall continue to provide (under COBRA) medical insurance as in
effect prior to such termination for the greater of the remainder of
the Term or twelve (12) months following such termination, and
Employer shall bear all costs for such insurance.
(iii) Bonus Payment. If Executive is terminated
without cause, Executive shall also be paid for any earned bonuses
under this Agreement (the "Bonus Severance"). The amount of
any such Bonus Severance shall be equal to the full amount of any
unpaid target bonus payment(s) set forth on Exhibit A, 50% of
which amount shall be added to the Base Salary to be paid during
the remainder of the Term, or any extensions thereof.
(e) Voluntary Termination. At any time during the
term of this Agreement, Executive shall have the right, upon thirty
(30) days' prior written notice to Employer, to terminate his
employment with Employer. Upon termination of Executive's
employment pursuant to this subsection 5(e), (i) Executive's right
to receive Base Salary shall immediately terminate and Employer
shall pay to Executive his Base Salary accrued to the date of such
termination to the extent not theretofore paid, and (ii) Executive's
rights under the Plans subsequent to such termination shall be
determined under the applicable provisions of the respective Plans.
This Agreement in all other respects with the exception of Section 7
will terminate upon such termination.
(f) Termination by Executive for "Good Reason".
Notwithstanding any other provisions of this Agreement, Employer
shall provide Executive with the payments and benefits set forth in
Section 5(d) in the event Executive terminates employment for
"Good Reason." For purposes of this Agreement, "Good Reason"
for Executive to terminate employment shall mean voluntary
termination following a Change of Control of Employer as defined
in Exhibit B attached hereto as a result of (1) the assignment of the
Executive of duties inconsistent wit the position as status of
Executive as set forth in the Agreement without Executive's prior
written consent, (ii) a substantial alteration in the nature, status or
prestige or Executive's responsibilities as set forth in the
Agreement or a change in Executive's title or reporting level from
that se forth in this Agreement, (iii) the relocation of Employer's
executive offices or principal business location to a point more
than twenty-five (25) miles from the location of such offices or
business at the time of the Change of Control, (iv) reduction by
Employer of Executive's Base Salary in effect on the date hereof
or as the same may be increased from time- to time, (v) any action
by Employer (including the elimination of benefit plans without
providing substitutes therefore or the reduction of Executive's
benefits thereunder) that would substantially diminish the
aggregate value of Executive's incentive awards and other fringe
benefits, (vi) a failure by Employer to obtain from any successor,
before the succession takes place, an agreement to assume and
perform this Agreement.
SECTION 6. JOINING EMPLOYER'S EMPLOYEES.
During Executive's employment hereunder, and for one (1) year
following termination of employment, Executive shall not, directly
or indirectly, induce any employee of Employer or any subsidiary
or affiliate of Employer to leave such employment for employment
with Executive or any other entity outside of Employer. Executive
shall not be in breach of this covenant if, following his
employment hereunder, he is contacted on an unsolicited basis by
an employee of Employer who desires to leave Employer.
SECTION 7. CONFIDENTIALITY; NON COMPETITION
(a) Proprietary Information. For purposes of this
Agreement, the term "Proprietary Information" means and
includes: all written, oral and visual information about Employer's
customers, clients, employees, consultants, designs, products,
inventions, business practices, programs, processes, techniques,
know-how, data, management programs, and methodologies,
subject to the final sentence of this subparagraph. Proprietary
Information includes but is not limited to all of the following
insofar as it pertains to Employer: financial information, trade
secrets, designs, customer lists, pricing and fee information,
agreements and arrangements with affiliated companies, employee
files, personnel records, internal corporate records,
correspondence, and memoranda, contacts and relationships,
opportunities, telephone logs and messages, video or audio tapes
and/or disks, photographs, film and slides, computer disks and
files, software, information stored on Employer's computers,
addresses and telephone numbers, contracts, releases, other
writings of any kind, and any and all other materials and
information pertaining to Employer or its business to which
Executive is exposed or has access solely as a consequence of his
employment by Employer. For purposes hereof, the term
"Proprietary Information" shall not include any information (i) that
was known by the public or outside of this Agreement generally on
or prior to the date hereof, (ii) which becomes known by the public
or outside of this Agreement generally after the date hereof
through no fault of Executive, (iii) that was developed by or with
the participation of Executive on or prior to the date hereof, or (iv)
that is independently developed by or with the participation of
Executive following Executive's employment with Employer.
(b) Rights to Proprietary Information. All Proprietary
Information, regardless of whether it is in intangible or tangible
form, is and shall be the sole property of Employer, its successors
and assigns, and Employer, its successors and assigns shall be the
sole owner of all patents, trademarks, service marks and
copyrights, and other rights (collectively referred to herein as
"Rights") pertaining to the Proprietary Information. Executive
hereby assigns and/or agrees to assign to Employer any rights
Executive may have or acquire in Proprietary Information or
Rights pertaining to the Proprietary Information. Executive further
agrees as to all Proprietary Information to assist Employer or any
person designated by it in every necessary or appropriate manner
to obtain, and from time to time enforce, Rights relating to said
Proprietary Information. Executive will execute all documents for
use in applying for, obtaining, and enforcing such Rights on such
Proprietary Information as Employer may desire, together with any
assumptions thereof to Employer or persons designated by it.
(c) Confidentiality of Proprietary Information. As a
material condition of employment, at all times both during and for
five (5) years after the cessation of his employment with Employer
for any reason, Executive will keep in strictest confidence all
Proprietary Information, and Executive will not disclose, use, or
induce or assist in the use or disclosure of any such Proprietary
Information or Rights pertaining thereto, without the prior, express
written consent of Employer, except as may be necessary in the
ordinary course of performing his duties as an employee at
Employer, or as may be required by law.
(d) Work for Hire/Assignment of Inventions.
Executive agrees that all designs, products, inventions, materials or
other original works written, created, developed, or acquired by
Executive during the term of and in connection with his
employment hereunder (whether alone or in conjunction with any
other person), and all rights of any and every kind whatsoever in
and to the results and proceeds of Executive's services rendered
hereunder, whether or not such rights are now known, recognized
or contemplated, and the complete, unconditional and
unencumbered ownership in and to such materials, results and
proceeds for all purposes whatsoever shall be "works for hire," as
that term is defined in the United States Copyright Act (17 U.S.C.
Section 101), and shall be the sole and absolute property of
Employer, its successors and assigns, and Executive agrees that he
shall and does not have and will not claim to have, either under this
Agreement or otherwise, any right, title or interest of any kind or
nature whatsoever in or to said property. Executive hereby assigns
and/or agrees to assign to Employer any and all inventions,
designs, programs, or products that Executive may create during
his employment with Employer; provided, however, that Executive
is hereby notified that the foregoing does not apply to an invention
that Executive creates entirely on his own time, without the use of
any equipment, supplies, facilities, Proprietary Information or
copyright of Employer, and that does not relate to Employer's
business, research or development or result from any work
performed by Executive for Employer.
(e) Trade Secrets of Others. To the best of Executive's
knowledge, Executive's performance of his duties will not violate
any agreements with or trade secrets of any other person or entity.
SECTION 8. RENEWAL. If this Agreement has not
terminated pursuant to the provisions of Section 5, the Term shall
be automatically renewed for successive one-year periods
commencing on each anniversary date of the original Term, unless
either party provides the other with written notice of its intent to
terminate the Agreement given not less than one hundred twenty
(120) days prior to the end of the Term, or any renewals thereof as
provided for herein.
SECTION 9. MISCELLANEOUS.
(a) Succession; Survival. This Agreement shall inure
to the benefit of and shall be binding upon Employer, its
successors and assigns. Absent the prior written consent of
Executive, this Agreement may not be assigned by Employer other
than in connection with a merger or sale of all or substantially all
the assets of Employer or a similar transaction in which the
successor or assignee assumes (whether by operation of law or
express assumption) all obligations of Employer hereunder. The
obligations and duties of Executive hereunder are personal and
otherwise not assignable. Executive's obligations and
representations under this Agreement will survive the termination
of Executive's employment, regardless of the manner of such
termination.
(b) Notices. Any notice or other communication
provided for in this Agreement shall be in writing and sent if to
Employer to its office at:
Aquacell Technologies, Inc.
00000 Xxxxxxxxx Xxxxxx
Xxxxxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Board of Directors
or at such other address as Employer may from time to time in
writing designate, and if to Executive at such address as Executive
may from time to time in writing designate (or Executive's
business address of record in the absence of such designation).
Each such notice or other communication shall be effective (i) if
given by telecommunication, when transmitted to the applicable
number so specified in (or pursuant to) this Section 7 and an
appropriate answer back is received, (ii) if given by mail, three
days after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid or (iii) if given by
any other means, when actually delivered at such address.
(c) Entire Agreement; Amendments. This Agreement
contains the entire agreement of the parties relating to the subject
matter hereof and it supersedes any prior agreements,
undertakings, commitments and practices relating to Executive's
employment by Employer. No amendment or modification of the
terms of this Agreement shall be valid unless made in writing and
signed by Executive and, on behalf of Employer, by an officer
expressly so authorized by the Board.
(d) Waiver. No failure on the part of any party to
exercise or delay in exercising any right hereunder shall be deemed
a waiver thereof or of any other right, nor shall any single or partial
exercise preclude any further or other exercise of such right or any
other right.
(e) Choice of Law. This Agreement, the legal relations
between the parties and any action, whether contractual or non-
contractual, instituted by any party with respect to matters arising
under or growing out of or in connection with or in respect of this
Agreement, the relationship of the parties or the subject matter
hereof shall be governed by and construed in accordance with the
laws of the State of California, applicable to contracts made and
performed in such State and without regard to conflicts of law
doctrines, to the extent permitted by law.
(f) Binding Arbitration. Any controversy involving a
claim by either of the parties against the other party arising out of
or in connection with this Agreement shall be finally settled by
arbitration in San Bernardino County, California, in accordance
with the then-current rules for arbitration as established by JAMS,
LLC ("JAMS"), and judgment upon the award rendered by such
arbitration may be entered in any court having jurisdiction thereof.
Such arbitration shall be conducted by one (1) arbitrator mutually
agreed to by Employer and Executive from the JAMS panel of
retired judges, or an arbitrator appointed by JAMS in the event that
no such mutual agreement is reached.
(g) Attorney's Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to recover reasonable attorney's
fees, costs and necessary disbursements from the non-prevailing
party in addition to any other relief to which such party may be
entitled.
(h) Confidentiality; Proprietary Information. Executive
agrees to not make use of, divulge or otherwise disclose, directly
or indirectly, any trade secret or other confidential or proprietary
information concerning the business (including but not limited to
its products, employees, services, practices or policies) of
Employer or any of its affiliates of which Executive may learn or
be aware as a result of Executive's employment during the term of
the Agreement or prior thereto as stockholder, employee, officer or
director of, or consultant to, Employer, except to the extent such
use or disclosure is (i) necessary to the performance of this
Agreement and in furtherance of Employer's best interests, (ii)
required by applicable law, (iii) lawfully obtainable from other
public sources, or (iv) authorized in writing by or pursuant to a
written agreement with Employer. The provisions of this
subsection (g) shall survive the expiration, suspension or
termination, for any reason, of this Agreement.
(i) Severability. If any provision of this Agreement is
held invalid or unenforceable, the remainder of this Agreement
shall nevertheless remain in full force and effect, and if any
provision is held invalid or unenforceable with respect to particular
circumstances, it shall nevertheless remain in full force and effect
in all other circumstances, to the fullest extent permitted by law.
(j) Withholding; Deductions. All compensation
payable hereunder, including salary and other benefits, shall be
subject to applicable taxes, withholding and other required, normal
or elected employee deductions.
(k) Section Headings. Section and other headings
contained in this Agreement are for convenience of reference only
and shall not affect in any way the meaning or interpretation of this
Agreement.
(l) Counterparts. This Agreement and any amendment
hereto may be executed in one or more counterparts. All of such
counterparts shall constitute one and the same agreement and shall
become effective when a copy signed by each party has been
delivered to the other party.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
"EMPLOYER"
AquaCell Technologies, Inc.
By_________________________________
Name: Xxxxx X. Xxxxxx
Title: Chief Executive Officer
"EXECUTIVE"
___________________________________
Xxxxx Xxxxxx
Exhibit A
Executive Bonus Plan Pool
Phase I - 2% of net sales increases over the prior year
Phase II - 2% of the net income after taxes and after deduction of the
Phase I Bonus
Phase III - 1% of the increase in market cap of the company over the prior year
Exhibit B
Change of Control
A "Change of Control" as used in the
Agreement of which this Exhibit is a part shall
mean any of the following:
(1) any "person," as such term is
used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934,
as amended (the "Exchange Act")
(other than Employer or its
Affiliate), is or becomes the
"beneficial owner" (as defined in
Rule 1 3d-3 under the Exchange
Act), directly or indirectly, of
securities of Employer (not including
in the securities beneficially owned
by such person any securities
acquired directly from Employer or
Executive) representing fifty percent
(50%) or more of the combined
voting power of Employer's then
outstanding securities; or
(2) in the event that the
individuals who at the beginning of
the Term constitute the Board of
Directors, and any new director
whose election by the Board or
nomination for election by
Employer's stockholders was
approved by a vote of at least a
majority of the Board then still in
office who either were members of
the Board at the beginning of the
Term or whose election or
nomination for election was
previously so approved, cease for
any reason to constitute at least a
majority thereof; or
(3) the stockholders of Employer
approve a merger or consolidation of
Employer with or the sale of
Employer to any other entity and, in
connection with such merger,
consolidation or sale; individuals
who constitute the Board
immediately prior to the time any
agreement to effect such merger or
consolidation is entered into fail for
any reason to constitute at least a
majority of the board of directors of
the surviving corporation following
the consummation of such merger or
consolidation; or
(4) the stockholders of Employer
approve a plan of complete
liquidation of Employer or an
agreement for the sale or disposition
by Employer of all or substantially
all of Employer's assets to an entity
not controlled by Employer.
