EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
November 1, 1996 by and between COMPREHENSIVE ENVIRONMENTAL SYSTEMS, INC., a
business corporation organized and existing under the laws of the State of
Delaware and having its executive offices at 00X Xxxxx Xxxxxx, Xxxx Xxxxxxx, Xxx
Xxxx 00000 ("Company"), and XXXXXXX X'XXXXXX, residing at 00 Xxxxxxx Xxxx, X,
Xxxxxxxx, X.X. 00000 ("Xx. X'Xxxxxx").
W I T N E S S E T H :
WHEREAS, Xx. X'Xxxxxx is currently serving as President and Chief Executive
Officer of the Company and as a member of the Company's Board of Directors
("Board"); and
WHEREAS, the Company desires to secure for itself the continued
availability of Xx. X'Xxxxxx'x services; and
WHEREAS, for purposes of securing for the Company Xx. X'Xxxxxx'x services,
the Board has approved and authorized the execution of this Agreement with Xx.
X'Xxxxxx on the terms and conditions set forth herein; and
WHEREAS, Xx. X'Xxxxxx 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 Xx. X'Xxxxxx hereby agree
as follows:
Section 1. Employment
The Company hereby agrees to continue the employment of Xx. X'Xxxxxx and
Xx. X'Xxxxxx hereby agrees to continue such employment during the period and
upon the terms and conditions set forth in this Agreement.
Section 2. Employment Period.
Except as otherwise provided 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 five (5) years commencing as of
November 1, 1996 and ending on October 31, 2001.
Section 3. Duties
Xx. X'Xxxxxx shall serve as President and Chief Executive Officer of the
Company. Xx. X'Xxxxxx'x responsibilities, duties and authority as President and
Chief Executive Officer of the Company shall, subject to the direction of the
Board and the By-laws of the Company and any applicable provisions of the
General Corporation Laws of the State of Delaware, 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. Xx. X'Xxxxxx 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.
Xx. X'Xxxxxx shall serve as President and Chief Executive Officer of the
Company's subsidiary, Trade Winds Environmental Restorations Inc. of Long Island
("Trade Winds"), without additional compensation therefor.
Section 4. Compensation
(a) In consideration for the services rendered by Xx. X'Xxxxxx under this
Agreement, the Company shall pay to Xx. X'Xxxxxx a salary at an annual rate
equal to Two Hundred Thousand Dollars ($200,000.00). 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) In addition to the salary provided under section 4(a), Xx. X'Xxxxxx
shall receive a bonus for each fiscal quarter of the Company during the term of
this Agreement in an amount equal to 2% of the "Adjusted Gross Revenues" (as
hereinafter defined) of the Company for such fiscal quarter; provided, however,
that in no event shall Xx. X'Xxxxxx'x aggregate bonus for any fiscal year during
the term of this Agreement exceed 25% of the "Pre-Tax Income" (as hereinafter
defined) of the Company and its subsidiaries for such fiscal year (the "Maximum
Bonus"). As used herein, "Adjusted Gross Revenues" shall mean gross revenues of
the Company and its subsidiaries less the sum of all write-offs taken, or
reserves created, for bad debts during such fiscal quarter ("Adjustments"); and
"Pre-Tax Income" shall mean the net income of the Company and its subsidiaries
before any charges for federal, state or other taxes relating to income. All
computations of Adjusted Gross Revenues and Pre-Tax Income hereunder shall be
made by the Company in accordance with generally accepted accounting principles.
Xx. X'Xxxxxx'x bonus shall be paid within thirty (30) days following the
end of each fiscal quarter (the "Bonus Payment Date") during the term of this
Agreement in the following manner: an amount equal to 50% of the bonus shall be
paid in cash; and the balance of the bonus ("Balance") shall be paid by the
issuance to Xx. X'Xxxxxx of such number of shares, of the Company's common
stock, which when multiplied by the "fair market value" per share (as herein
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defined), shall equal the Balance. For purposes of this paragraph 4(b), "fair
market value" per share shall be determined as follows:
(1) If the common stock is listed on a national securities exchange or
admitted to unlisted trading privileges on such exchange or listed for
trading on the Nasdaq Stock Market or other automated quotation system
which provides information as to the last sale price, the current value
shall be the average of the last sales price of one share of common stock
on such exchange or system for the ten (10) trading days preceding the
Bonus Payment Date; or
(2) If the common stock is not so listed or admitted to unlisted
trading privileges, the current value shall be the average of the reported
last bid and asked prices of one share of common stock as reported by
Nasdaq, the National Quotation Bureau, Inc. or other similar reporting
service, for the ten (10) trading days preceding the Bonus Payment Date; or
(3) If the common stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the fair
market value of one share of common stock shall be an amount, not less than
book value, determined in such reasonable manner as may be prescribed by
the Board of Directors of the Company.
The bonus payment made following the fourth quarter of any fiscal year shall be
adjusted, as necessary, if the aggregate bonus payments in respect of such year
exceed the Maximum Bonus or to reflect any Adjustments not theretofore taken
into account with respect to the previous four fiscal quarters.
Section 5. Employee Benefit Plans and Programs.
(a) Xx. X'Xxxxxx shall be entitled to a minimum of 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 purchase or lease for Xx. X'Xxxxxx'x exclusive use a
[new, domestic or imported luxury-class] automobile of his choice and shall
replace such automobile, at Xx. X'Xxxxxx'x request, not more frequently than
once in any period of two (2) years. The Company shall pay, or reimburse Xx.
X'Xxxxxx for his payment of, any and all expenses for the maintenance and
operation of such automobile, including, without limitation, fuel, oil,
maintenance and repairs, and the cost of liability and property damage
insurance.
(c) The Company shall also purchase or lease for Xx. X'Xxxxxx'x exclusive
use a beeper and cellular telephone of his choice and shall pay, or reimburse
Xx. X'Xxxxxx for his payment of, all charges relating thereto.
(d) In addition to any group-term life insurance coverage available
pursuant to section 5(e) of this Agreement, the Company shall, at its sole
expense, provide additional term or other
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life insurance coverage on Xx. X'Xxxxxx'x life providing a death benefit of not
less than 1 Million Dollars ( $1,000,000); provided, however, that such coverage
is available on commercially reasonable terms. If such coverage is provided, the
Company shall own and control (by split-dollar agreement, collateral assignment
or otherwise) the cash surrender value, if any, of the policy providing such
coverage and, for so long as it shall own and control such cash surrender value,
shall be entitled upon Xx. X'Xxxxxx'x death to receive a portion of the death
benefit proceeds equal to the greater of such cash surrender value immediately
prior to the time of death or the aggregate amount of its premiums paid. The
remainder of the death benefit shall be disposed of as determined by Xx.
X'Xxxxxx, in his discretion. To the extent permitted under the terms of such
policy, at any time during the Employment Period hereunder and for a period of
ninety (90) days thereafter, but in any event prior to his death, Xx. X'Xxxxxx
may purchase the Company's interest, if any, in such policy by agreeing to
assume the liability for future premium payments and paying the Company an
amount equal to the policy's cash surrender value, if any, at the time of
purchase.
(e) Except as otherwise provided in this Agreement, Xx. X'Xxxxxx shall,
during the Employment Period, be treated as an employee of the Company and 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 employees of, the Company, in accordance with the terms and
conditions of such employee benefit plans and programs and compensation plans
and programs and with the Company's customary practices.
Section 6. Investments and Other Business Interests.
Xx. X'Xxxxxx may engage in personal business and investment activities for
his own account; 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.
Xx. X'Xxxxxx'x 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 Xx. X'Xxxxxx may mutually agree upon. The Company shall
provide Xx. X'Xxxxxx 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 Xx. X'Xxxxxx for his ordinary and necessary business expenses,
including, without limitation, [fees for memberships in one business or social
club of his choice and in such other clubs and organizations as Xx. X'Xxxxxx and
the Company shall mutually agree are necessary and appropriate for business
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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 Xx. X'Xxxxxx'x employment with the Company shall
terminate during the Employment Period on account of:
(i) Xx. X'Xxxxxx'x voluntary resignation from employment with the
Company within ninety (90) days following:
(A) the failure of the Company's Board to appoint or re-appoint
or elect or re-elect Xx. X'Xxxxxx to the offices of President and
Chief Executive Officer (or a more senior office) of the Company and
Trade Winds;
(B) the failure of the stockholders of the Company to elect or
re-elect Xx. X'Xxxxxx as a Director of the Company;
(C) a material failure of the Company, whether by amendment of
the Company's Certificate of Incorporation or By-laws, action of the
Board or the Company's stockholders or otherwise, to vest in Xx.
X'Xxxxxx the functions, duties, or responsibilities prescribed in
section 3 of this Agreement or the By-Laws of the Company;
(D) a material breach of this Agreement by the Company; or
(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 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 13d-3 promulgated under the Exchange Act) of
voting securities of the Company where such acquisition
causes such Person to own 20% or more of the outstanding
voting securities of the Company ("Securities Acquisition");
or
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(ii) the approval by the shareholders 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 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; or
(ii) the discharge of Xx. X'Xxxxxx 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 Xx. X'Xxxxxx 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 resignation described in section 8(a)(i)(C)
or (D) for reasons other than failure to pay compensation due hereunder unless
Xx. X'Xxxxxx has given written notice to the Company of its breach and the
Company fails to cure such breach within thirty (30) days thereafter or Xx.
X'Xxxxxx 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.
(b) Upon the termination of Xx. X'Xxxxxx'x employment with the Company
under circumstances described in section 8(a) of this Agreement, the Company
shall pay and provide to Xx. X'Xxxxxx (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 compensation plans and programs maintained for the benefit
of the Company's officers and employees;
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(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 Xx. X'Xxxxxx 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 Xx. X'Xxxxxx'x 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 Xx.
X'Xxxxxx 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 Xx. X'Xxxxxx'x 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 Xx. X'Xxxxxx (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 actually paid
to Xx. X'Xxxxxx for any fiscal quarter pursuant to section 4(b); provided,
however, that at Xx. X'Xxxxxx'x option, he may elect by notice to the
Company given within twenty (20) days following his termination of
employment, in lieu of the payments set forth in the preceding sentence of
this clause (vi) to receive cash payments
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on the Bonus Payment Dates (as defined in Section 4(b) hereof) during the
remaining unexpired Employment Period in an amount equal to the higher of
(x) the bonus that Xx. X'Xxxxxx would have received (in cash and stock)
pursuant to Section 4(b) for each fiscal quarter if he had continued
working for the Company throughout the remaining unexpired Employment
Period, or (y) the highest amount actually paid to Xx. X'Xxxxxx (in cash
and stock) for any fiscal quarter pursuant to Section 4(b);
(vii) at the election of Xx. X'Xxxxxx made within thirty (30) days
following his termination of employment with the Company, upon the
surrender of options or appreciation rights issued to Xx. X'Xxxxxx 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 Xx. X'Xxxxxx'x 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 Xx.
X'Xxxxxx'x right following his termination of employment with the Company to
exercise any options or appreciation rights not surrendered pursuant hereto, Xx.
X'Xxxxxx 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 and prior to October 31, 2001, 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
8
also pay to Xx. X'Xxxxxx (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 one year of Xx.
X'Xxxxxx'x salary as set forth in section 4(a); plus
(B) a lump sum cash payment in an amount equal to the highest annual
bonus payment that was actually paid to Xx. X'Xxxxxx (in cash and stock)
for any fiscal year pursuant to section 4(b).
(d) The Company and Xx. X'Xxxxxx hereby stipulate that the damages which
may be incurred by Xx. X'Xxxxxx 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
Xx. X'Xxxxxx'x efforts, if any, to mitigate damages.
Section 9. Termination without Additional Company Liability.
In the event that Xx. X'Xxxxxx'x employment with the Company shall
terminate during the Employment Period on account of:
(a) the discharge of Xx. X'Xxxxxx for "cause" which, for purposes of this
Agreement, shall mean his repeated and gross negligence in the fulfillment of,
or repeated failure of Xx. X'Xxxxxx 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 twelve (12) months prior to
such discharge), or serious willful misconduct by Xx. X'Xxxxxx 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 neglicence, 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 Xx. X'Xxxxxx 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 Xx. X'Xxxxxx; 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 Xx.
X'Xxxxxx met the applicable standard of conduct prescribed for
indemnification or reimbursement under the By-Laws of the Company or
9
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 twelve (12) 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) Xx. X'Xxxxxx'x voluntary resignation from employment with the Company
for reasons other than those specified in section 8(a)(i);
(c) Xx. X'Xxxxxx'x death; or
(d) a determination by the Company that Xx. X'Xxxxxx is totally and
permanently disabled and as a result thereof is unable to perform his material
duties hereunder for a continuous period of [365] days;
then the Company shall have no further obligations under this Agreement, other
than the payment to Xx. X'Xxxxxx (or, in the event of his death, to his estate)
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, Xx.
X'Xxxxxx'x employment is not continued for any reason, then the Company shall
pay to Xx. X'Xxxxxx (or his estate, as applicable) his earned but unpaid salary
as of the date of the termination of his employment 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 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 Xx. X'Xxxxxx 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 Xx. X'Xxxxxx the severance payments set forth in section 8(c)
hereof.
Section 10. Covenant Not To Compete.
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Xx. X'Xxxxxx 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 any
market area in which it is active; provided, however, that this section 10 shall
not apply if Xx. X'Xxxxxx'x employment is terminated for the reasons set forth
in section 8(a), and provided, further, that if Xx. X'Xxxxxx'x employment shall
be terminated on account of disability as provided in section 9(d) of this
Agreement, this section 10 shall not prevent Xx. X'Xxxxxx 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), Xx. X'Xxxxxx 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 Xx. X'Xxxxxx, 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.
(b) Xx. X'Xxxxxx 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 Xx. X'Xxxxxx'x termination of employment.
Section 12. Solicitation.
Xx. X'Xxxxxx 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
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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
Xx. X'Xxxxxx'x 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 Xx. X'Xxxxxx'x
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 Xx. X'Xxxxxx 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 Xx. X'Xxxxxx 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 Xx. X'Xxxxxx'x
employment is terminated for any of the reasons set forth in section 8(a).
Nothing in this section 12 shall prevent Xx. X'Xxxxxx from directly or
indirectly advertising employment opportunities or disseminating marketing
materials through newspapers of general circulation or other mass media.
Section 13. No Effect on Employee Benefit Plans or Programs.
The termination of Xx. X'Xxxxxx'x employment during the term of this
Agreement or thereafter, whether by the Company or by Xx. X'Xxxxxx, shall have
no effect on the rights and obligations of the parties hereto 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.
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Section 14. Indemnification and Attorneys' Fees.
The Company shall provide Xx. X'Xxxxxx with payment of legal fees and
indemnification to the maximum extent permitted by the Delaware General
Corporation Law. The Company shall indemnify and hold harmless Xx. X'Xxxxxx
against reasonable costs, including 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 Xx. X'Xxxxxx is the prevailing party in such action, suit or proceeding.
Section 15. Excise Tax.
(a) If, in connection with the termination of Xx. X'Xxxxxx'x employment,
Xx. X'Xxxxxx 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 Xx. X'Xxxxxx an amount to indemnify Xx.
X'Xxxxxx 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 Xx. X'Xxxxxx under the terms of this Agreement in the
year of his termination of employment and on 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 Xx. X'Xxxxxx 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 Xx. X'Xxxxxx not later than December 31st of the year in which the
payment on which such excise tax will be assessed is made to Xx. X'Xxxxxx 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 15(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 Xx. X'Xxxxxx'x 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), Xx.
X'Xxxxxx 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 Xx. X'Xxxxxx 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 Xx. X'Xxxxxx, equals the amount finally
determined to have been properly payable to Xx. X'Xxxxxx 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 Xx. X'Xxxxxx under this section 15, Xx. X'Xxxxxx
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
Xx. X'Xxxxxx
13
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 Xx. X'Xxxxxx 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 Xx.
X'Xxxxxx, 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 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 Xx. X'Xxxxxx:
000 Xxxxxxxxxxx Xxxxxx
Xxx Xxxxx, Xxx Xxxx 00000
----------------------
with copy to:
Esanu Katsky Xxxxxx & Siger
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxx, Esq.
14
If to the Company:
Comprehensive Environmental Systems, Inc.
00X Xxxxx Xxxxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000
Attention: Corporate Secretary
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.
Section 21. Governing Law.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York, 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 Xx. X'Xxxxxx 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 Xx. X'Xxxxxx 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.
15
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 rep-representations relating to the subject matter
hereof, provided however, that the terms of this Agreement do not supersede the
terms of any grant or award to Xx. X'Xxxxxx of any non-qualified stock options
or any similar or successor benefit, plan or program. 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 Xx. X'Xxxxxx has hereunto set his hand, all as of the day and year first
above written.
/s/ Xxxxxxx X'Xxxxxx
--------------------
XXXXXXX X'XXXXXX
ATTEST: COMPREHENSIVE ENVIRONMENTAL
SYSTEMS, INC.
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
----------------- -----------------
Anthjony X. Xxxxxx, Secretary Xxxxxxx X. Xxxxxx, Director
/s/ Xxxxxx Xxxxxx
-----------------
Xxxxxx Xxxxxx, Director
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