EMPLOYMENT AGREEMENT
Between
Conversion Technologies International, Inc. and
Xxxxxxx X. Xxxxxx
THIS AGREEMENT, is made as of the 2nd day of July, 1997 (the "Effective
Date"), between Conversion Technologies International, Inc., a Delaware
corporation (the "Company"), and Xxxxxxx X. Xxxxxx (the "Employee").
WHEREAS, the Company wishes to engage the services of Employee to render
services for and on its behalf in accordance with the following terms,
conditions and provisions; and
WHEREAS, the Employee wishes to perform such services for and on behalf of
the Company, in accordance with the following terms conditions and provisions;
and
WHEREAS, the Board of Directors of the Company (the "Board") has approved
and authorized the entry into this Agreement with the Employee;
NOW, THEREFORE, it is agreed as follows:
1. Employment. From the Effective Date, the Employee shall serve as the Vice
President - Sales and Marketing of the Company. The Employee's duties and
responsibilities shall be consistent with the duties of those performed by
a Vice President - Sales and Marketing in a contemporary public company of
a similar size and scale. The Employee shall report to the Executive Vice
President - Operations and Marketing and the President and Chief Executive
Officer of the Company. The Employee shall devote his best efforts to the
Company and his position, which shall include such additional duties as
the Board of Directors, the President and Chief Executive Officer or the
Executive Vice President - Operations and Marketing may from time to time
reasonably direct and that are reasonably consistent with the Employee's
education, experience and background. During the term of this Agreement,
there shall be no material increase or decrease in the duties and
responsibilities of the Employee other than as provided herein, unless the
parties agree otherwise in writing.
2. Compensation.
(a) Salary. The Company agrees to pay the Employee during the term of
this Agreement a salary at an annual rate equal to $90,000 per year
($7,500 per month payable at the Company's standard payroll
periods). The Employee shall not receive an annual bonus or an
incentive bonus, except as may be provided by the Board.
(b) Adjustment in Salary. The Employee's salary shall be increased at
the discretion of the Compensation Committee of the Board of
Directors of the Company. The
salary of the Employee shall not be decreased at any time during the
term of this Agreement unless the Employee agrees otherwise in
writing. Participation in deferred compensation, discretionary
bonuses, retirement and other employee benefit plans and fringe
benefits shall not reduce the salary payable to the Employee.
(c) Grant of Options. As of the Effective Date, the Employee will
receive incentive stock options to purchase 75,000 shares of the
Company's Common Stock at an exercise price equal to $1.625 per
share. Twenty percent (20%) of such options will be immediately
vested and twenty percent (20%) of such options will vest on each
anniversary of the date hereof, subject to the vesting and other
provisions to be set forth in an incentive stock option agreement to
be entered into by the parties.
3. Insurance, Retirement and Employee Benefit Plans: Fringe Benefits,
Business Expenses.
(a) Benefits and Perquisites. The Employee shall be entitled to
participate in any plan of the Company relating to stock options,
restricted stock, employee stock purchase or ownership, pension,
thrift, profit sharing, group life insurance, medical coverage,
education, or other retirement or employee benefit plans or
arrangements that the Company has adopted or may adopt for the
benefit of its employees or executive officers. The Employee shall
also be entitled to participate in, or enjoy the benefit of, any
other fringe benefits or perquisites that are now or may be or
become applicable to the Company's executive employees generally.
(b) Business Expenses. During the term of Employee's employment by the
Company, the Company shall promptly reimburse the Employee for all
reasonable and customary expenses incurred by the Employee in
performing services for the Company, including all expenses of
travel and living expenses while away from home on business or at
the request of and in the service of the Company, provided that such
expenses are incurred and accounted for in accordance with the
policies and procedures established by the Company.
(c) Stock Grant and Options. The Employee shall be entitled to
participate in a Board approved stock option incentive program that
is now or may become applicable to the Company's executive
employees.
4. Term. The initial term of this Agreement shall be twelve (12) months from
the Effective Date. This Agreement may not be terminated by the Company
without cause during the first twelve (12) months of the term. Thereafter,
the Company must provide the Employee with not less than six (6) months
written notice of intent to terminate this Agreement without cause. This
Agreement shall be automatically renewed for each additional year on each
anniversary date of the Effective Date, unless either party gives contrary
written notice to the other party hereto not less than six (6) months
before such
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anniversary date. The initial term and all such renewal terms are
collectively referred to herein as the term of this Agreement.
5. Vacations. The Employee shall be entitled to an annual paid vacation of
four weeks per year or such longer period as the Board may approve. The
timing of vacations shall be scheduled in a reasonable manner by the
Employee. The Employee shall not be entitled to receive compensation in
lieu of vacation if he is unable to utilize the full amount of paid
vacation time available to him in any year.
6. Termination of Employment. The Employee's employment may be terminated
without any breach of this Agreement only under the following
circumstances:
(a) Death. The Employee's employment shall terminate upon his death.
(b) Disability. The Company may terminate the Employee's employment
because of Disability. For this purpose, "Disability" shall mean the
inability of the Employee to perform his duties under this Agreement
because of physical illness or incapacity for a continuous period of
six months during which the Employee shall have been absent from his
duties under this Agreement on a substantially full-time basis.
(c) Cause. The Company may terminate the Employee's employment for
Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate the Employee's employment only in the event of
(1) the willful and continued failure by the Employee to
substantially perform his duties hereunder (other than any such
failure resulting from the Employee's inability to perform such
duties as a result of physical illness or incapacity or any such
actual or anticipated failure after the delivery of a Notice of
Termination, as defined in Section 6(e), by the Employee for Good
Reason, as defined, in Section 6(d)), after delivery to the Employee
of a written demand for substantial performance that specifically
identifies the manner in which the Company believes that the
Employee has not substantially performed his duties and a reasonable
opportunity to cure; (2) willful misconduct by the Employee that
causes actual and substantial damage to the business and operations
of the Company, the continuation of which, in the reasonable
judgment of the Board, will continue to substantially and materially
damage the Company; or (3) conviction of the Employee of a felony.
The Employee shall not be deemed to have been terminated for Cause
unless the Employee shall have been provided with (i) not less than
60 days written notice setting forth the reasons that the Company
believes constitute Cause for the termination of his employment;
(ii) a reasonable opportunity to be heard by the Board, after not
less than 10 days following the Company's 60 day notice; and (iii) a
Notice of Termination, as defined in Section 6(e), from the Board
finding that, in the reasonable good faith opinion of the Board,
Cause for the termination exists and specifying the particulars
thereof in reasonable detail.
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(d) Termination by the Employee. The Employee may terminate his
employment (i) for Good Reason or (ii) for any other reason at any
time, in each case, by giving 60 days prior written notice to the
Company, unless the event giving rise to the Good Reason is cured
(if curable) within such 60-day period.
For this purpose, "Good Reason" shall mean:
(1) The assignment to the Employee of any duties inconsistent with
the Employee's status as stipulated in Section 1 of this
Agreement or any substantial adverse alteration in the nature
or status of the Employee's responsibilities;
(2) Any change in the Employee's reporting responsibility such
that the Employee is required to report other than to the
Executive Vice President - Operations and Marketing or the
President and Chief Executive Officer of the Company.
(3) Any purported termination of the Employee's employment by the
Company that is not effected pursuant to a Notice of
Termination satisfying the requirements of Sections 6(c) and
(e) hereof;
(4) Any other failure by the Company to comply with any material
provision of this Agreement which failure continues for more
than ten days after written notice of such noncompliance from
the Employee; or
(5) Any notice given by the Company to the Employee under Section
4 hereof that this Agreement will not be renewed on any
anniversary date.
(e) Notice of Termination. Any termination of the Employee's employment
by the Company or by the Employee hereto shall be communicated to
the other party by a written Notice of Termination. Any Notice of
Termination given by a party shall specify the particular
termination provision of this Agreement relied upon by such party
and shall set forth in reasonable detail the facts and circumstances
relied upon as providing a basis for the termination under the
provision so specified.
(f) Termination Date. Termination Date shall mean (1) if the Employee's
employment is terminated by his death, the date of his death; (2) if
the Employee's employment is terminated pursuant to Section 6(b)
hereof, the date specified in the Notice of Termination, which shall
be after the expiration of the six month period specified in that
subsection; (3) if the Employee's employment is terminated by the
Company for Cause, the date specified in the Notice of Termination
or the Board's determination confirming cause as specified in
Section 6(c), whichever is later, or (4) if the Employee's
employment is terminated for any other reason, sixty days following
the date on which the Notice of Termination is given.
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7. Compensation Upon Termination of Employment.
(a) Termination for Cause or Without Good Reason. If the Employee's
employment is terminated by the Company for Cause, or by the
Employee other than for Good Reason, the Company shall pay the
Employee his salary through the Termination Date and the Company
shall have no further obligation to the Employee hereunder, except
with regard to obligations owed under Section 2(b) hereof and any
other benefits to which Employee may be entitled, as specified in
Section 7(c)(3) below.
(b) Termination Because of Disability. If the Employee's employment is
terminated by the Company because of Disability under Section 6(b)
hereof, the Employee shall be entitled to the benefits of the then
current disability policies of the Company. The Company will review
the Company's disability policies with respect to its senior
executives in good faith with respect to expanded coverage
opportunities that may be available on satisfactory economic terms.
(c) Termination Because of Death, Without Cause or With Good Reason. If
(i) in breach of this Agreement, the Company shall terminate the
Employee's employment other than (A) for Cause or (B) because of
Disability or (ii) the Employee shall terminate his employment for
Good Reason (other than pursuant to Section 6(d)(5)) or because of
his death, then:
(1) The Company shall pay the Employee or his estate his salary
through the Termination Date and all other unpaid and pro rata
amounts to which the Employee is entitled as of the
Termination Date under any compensation plan or program of the
Company, including, without limitation, any incentive
performance bonus and all accrued vacation time. Such payments
are to be made in a lump sum on or before the Termination
Date.
(2) The Company shall pay as liquidated damages to the Employee,
and in lieu of any further salary payments hereunder for
periods after the Termination Date, an amount equal to the
Employee's annual salary, specified in Section 2(a) hereof,
which amount shall be paid in a lump sum no later than fifteen
(15) days subsequent to the Termination Date.
(3) In addition to the liquidated damages amounts that are payable
to the Employee, the following shall apply: (A) the Employee
shall continue to participate in, and accrue benefits under,
all retirement, pension, profit sharing, employee stock,
ownership, thrift, and other deferred compensation plans of
the Company for the remaining term of this Agreement as if the
termination of employment of the Employee had not occurred
(with Employee being deemed to receive annually for the
purposes of such plans the Employee's then current salary (at
the time of his termination) under Section 2(a) of this
Agreement), except to the
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extent that such continued participation and accrual is
expressly prohibited by law, or to the extent such plan
constitutes a "qualified plan" under Section 401 of the
Internal Revenue Code of 1986, as amended ("the Code"), by the
terms of the plan, in which case the Company shall provide the
Employee a substantially equivalent, unfunded, nonqualified
benefit; (B) the Employee shall be entitled to continue to
receive all other employee benefits and then existing fringe
benefits referred to in Section 3(a) and (b) hereof for the
remaining term of this Agreement as if the termination of
employment had not occurred; (C) the Company shall, on the
Termination Date, establish an irrevocable trust that meets
the guidelines set forth in Rev. Proc. 92-64 published by the
Internal Revenue Service (as the same may be modified or
supplemented from time to time) (the "Trust"), the assets of
which will be held, subject to the claims of creditors of the
Company, solely to provide for the benefits that the Employee
is entitled to under this Section 7(c)(3); and the Company
shall transfer to the Trust an amount sufficient to provide
for such benefits; and (D) all insurance or other provisions
for indemnification, defense or hold-harmless of officers or
directors of the Company that are in effect on the date the
Notice of Termination is sent to the Employee shall continue
for the benefit of the Employee with respect to all of his
acts and omissions while an officer or director as fully and
completely as if such termination had not occurred, and until
the final expiration or running of all periods of limitation
against action which may be applicable to such acts or
omissions; and
(4) The liquidation damages amount and other benefits provided for
in this Section 7(c) shall not be reduced by any compensation
or benefits that the Employee may receive for other employment
with the Company.
(d) Cost of Enforcement. In the event the employment of the Employee is
terminated by the Company because of Disability or without Cause or
by the Employee for Good Reason, and the Company fails to make
timely payment of the amounts owed to the Employee under this
Agreement, the Employee shall be entitled to reimbursement for all
reasonable costs, including attorney's fees, incurred by the
Employee in taking action to collect such amounts or otherwise to
enforce this Agreement, plus interest on such amounts at the rate of
one percent above the prime rate (defined as the base rate on
corporate loans at large U.S. money center commercial banks as
published by the Wall Street Journal), compounded monthly, for the
period from the date of employment termination until payment is made
to the Employee. Such reimbursement and interest shall be in
addition to all rights to which the Employee is otherwise entitled
under this Agreement.
(e) Parachute Payment Limitation. If any payment or benefit to the
Employee under this Agreement would be considered a "parachute
payment" within the meaning of Section 280G9(b)(2) of the Code and
if, after reduction for any applicable
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federal excise tax imposed by Section 4999 of the Code (the "Excise
Tax") and federal income tax imposed by the Code, the Employee's net
proceeds of the amounts payable and the benefits provided under this
Agreement would be less than the amount of the Employee's net
proceeds resulting from the payment of Reduced Amount described
below, after reduction for federal income taxes, then the amount
payable and the benefits provided under this Agreement shall be
limited to the Reduced Amount. The "Reduced Amount" shall be the
largest amount that could be received by the Employee under this
Agreement such that no amount paid to the Employee under this
Agreement and any other agreement, contract, or understanding
heretofore or hereafter entered into between the Employee and the
Company (the "Other Agreement") and any formal or informal plan or
other arrangement heretofore or hereafter adopted by the Company for
the direct or indirect provision of compensation to the Employee
(including groups or classes of participants of beneficiaries of
which the Employee is a member), whether or not such compensation is
deferred, is in cash, or is subject to the Excise Tax. In the event
that the amount payable to the Employee shall be limited to the
Reduced Amount, then the Employee shall have the right, in the
Employee's sole discretion, to designate those payments or benefits
under this Agreement, any Other Agreement, and/or any benefits plan,
that should be reduced or eliminated so as to avoid having the
payment to the Employee under this Agreement be subject to the
Excise Tax.
8. Confidentiality. In consideration of the willingness of the Company to
employ the Employee and the compensation to be paid and benefits to be
received therefor, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Employee agrees
as follows:
(a) The Company Owns All of Employee's Work Which is Performed for
Company. Each party acknowledges that the Employee is a full time
employee and that work performed by the Employee for himself or
other employees will be owned by the Company. All improvements,
discoveries, inventions, designs, documents, licenses and patents,
or other data devised, conceived, made, developed, obtained, filed,
perfected, acquired, or first reduced to practice, in whole or in
part, or in the regular course of employment by the Employee during
the term of this Agreement, and related in any way to the business,
including development and research, of the Company or any subsidiary
or affiliate engaged in business substantially similar to that of
the Company shall be promptly disclosed to the Company. The Employee
hereby assigns and transfers to the Company all his right, interest
and title thereto, and such improvements, discoveries, inventions,
designs, documents, licenses and patents, or other data shall become
the property of the Company. During the term of this Agreement, and
at anytime thereafter, upon request of the Company, the Employee
will join and render assistance in any proceedings and execute any
papers necessary to file and prosecute applications for, and to
acquire, maintain and enforce, letters patent, trademarks,
registrations and/or copyrights, both domestic and foreign, with
respect to such improvements,
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discoveries, inventions, designs, documents, licenses and patents,
or other data as required for vesting and maintaining title to same
in the Company.
(b) Non-Disclosure of Confidential Information. The Employee agrees and
acknowledges that the term "Confidential and Proprietary
Information" shall mean any and all information not in the public
domain, in any form, emanating from or relating to the Company or
its subsidiaries and affiliates, including, but not limited to,
trade secrets, technical information, costs, designs, drawings,
processes, systems, methods of operation and procedures, formulae,
test data, know-how, improvements, price lists, financial data, code
books, invoices and other financial statements, computer programs,
discs and printouts, sketches, and plans (engineering, architectural
or otherwise), customer lists, telephone numbers, names, addresses,
information about equipment and processes (including specifications
and operating manuals), or any other compilation of information
written or unwritten that is used in the business of the Company or
any subsidiary or affiliate and that gives the Company or any
subsidiary or affiliate any opportunity to obtain an advantage over
competitors of the Company who do not know or use such information.
The Employee agrees and acknowledges that all Confidential and
Proprietary Information, in any form, and all copies and extracts
thereof, is and are and shall remain the sole and exclusive property
of the Company and, upon termination of his employment with the
Company hereby agrees to return to the Company the originals and all
copies of any Confidential and Proprietary Information provided to
or acquired by the Employee during the period of his employment.
Except as ordered by a court of competent jurisdiction, the Employee
expressly agrees never to disclose to any person (except to other
Company employees, and then only on a "need to know" basis) or
entity any Confidential or Proprietary Information either during the
term of this Agreement or at any time after the termination of his
employment, except with the express written authorization and
consent of the Company.
(c) Customers' Information. The Employee understands and acknowledges
that each customer of the Company or its subsidiaries or affiliates
will disclose information that will be within the Company's control
in connection with the Company's furnishing of services to its
customer. The Employee covenants and agrees to hold such information
in the strictest confidence and shall treat such information in the
same manner as if such information were "Confidential and
Proprietary Information", as defined herein.
9. Other Contracts. Each party acknowledges that the Employee is employed on
a full time basis. The Employee may not accept employment with a third
party or undertake other activities for compensation at anytime during the
term of this Agreement which prevent the Employee from discharging his
duties hereunder.
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10. Restrictive Covenant.
(a) The Employee acknowledges and recognizes that during the term hereof
he will be privy to trade secrets and confidential proprietary
information critical to the business of the Company and its
subsidiaries and affiliates and further acknowledges and recognizes
that the Company would find it extremely difficult to replace the
Employee. Accordingly, if the Employee terminates his employment
without a Good Reason, or the Company terminates the Employee for
Cause, the Employee shall not, during the term hereof and for the
one-year period following termination, (i) directly or indirectly
engage in, represent in any way, or be connected with, any business
(such business being referred to herein as a "Competing Business")
competing with the business of the Company or any of its
subsidiaries or affiliates within any state or country in which the
Company or any such subsidiary or affiliate transacts business,
whether such engagement shall be as an officer, director, owner,
employee, partner, affiliate or other participant in any Competing
Business, (ii) assist others in engaging in any Competing Business
in the manner described in clause (i) above, (iii) induce any
employees of the Company or any of its subsidiaries or affiliates to
terminate their employment with the Company or any such subsidiary
or affiliate, or to engage in any Competing Business, or (iv) induce
any entity or person with which the Company or any of its
subsidiaries or affiliates has a business relationship to terminate
or alter such business relationship; provided, however, that nothing
contained in this Section 10(a) shall prevent, restrain or otherwise
restrict the Employee from owning 5% or less of any class of
securities of any competitor of the Company so long as such
securities are listed for trade by NASDAQ in the over-the-counter
market or are traded on an organized securities exchange.
(b) The Company and the Employee expressly acknowledge and agree that no
restrictive covenants will be imposed upon the Employee if the
Employee terminates his employment for Good Reason or the Company
terminates the Employee without Cause. If the Company allegedly
terminates the Employee for Cause and the Employee does not agree
with such allegation, no restrictive covenants shall be imposed upon
the Employee unless and until a judicial decision finds that the
Company was justified in terminating the Employee for Cause.
(c) The Employee understands that the foregoing restrictions may limit
his ability to earn a livelihood in a business similar to the
business of the Company and its subsidiaries or affiliates, but he
nevertheless believes that he has received and will receive
sufficient consideration and other benefits as an employee of the
Company as provided hereunder, to justify clearly such restrictions.
The Company reserves the right to provide additional compensation to
Employee to the extent necessary to enforce this restrictive
covenant.
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11. Amendments or Additions; Action by the Board. No amendments or additions
to the Agreement shall be binding unless in writing and signed by all
parties hereto. The prior approval by a two-thirds affirmative vote of the
full Board shall be required in order for the Company to authorize any
amendments or additions to this Agreement, to give any consents or waivers
of provisions of this Agreement, or to take any other action under this
Agreement including any Notice of Termination.
12. Miscellaneous.
(a) Notices. Any notice required or permitted hereunder shall be given
in writing and shall be personally delivered or mailed by first
class registered or certified mail, postage prepaid, return receipt
requested, or transmitted by facsimile, telegram or telex addressed
to the Company or the Employee at the addresses set forth on the
signature page of this Agreement, or at such other address as such
party may designate by ten days advance written notice to the other
party.
Each notice or communication that shall have been transmitted in the
manner described above, or that shall have been delivered to a
telegraph company, shall be deemed sufficiently given, served, sent
or received for all purposes at such time as it is sent to the
addressee (with return receipt, delivery receipt or (with respect to
a telex) the answer back being deemed (conclusive, but not
exclusive, evidence of such sending) or at such time as delivery is
refused by the addressee upon presentation.
(b) Severability. Nothing in this Agreement shall be construed so as to
require the commission of any act contrary to law and wherever this
is a conflict between any provision of this Agreement and any law,
statute, ordinance, order or regulation, the latter shall prevail,
but in such event any provision of this Agreement shall be curtailed
and limited only to the extent necessary to bring it within
applicable legal requirements. If any provision of this Agreement
should be held invalid or unenforceable, the remaining provisions
shall be unaffected by such a holding.
(c) Complete Agreement. This Agreement contains the entire agreement and
understanding between the parties relating to the subject matter
hereof, and supersedes any prior understandings, agreements, or
representations by or between the parties, written or oral, relating
to the subject matter hereof.
(d) Successors and Assigns. This Agreement and the rights and
obligations of the parties hereto shall bind and inure to the
benefit of any successor or successors of the Company by way of
reorganization, merger or consolidation and any assignee of all or
substantially all of its business and assets, but except as to any
such successor or assignee of the Company, neither this Agreement
nor any rights or benefits hereunder may be assigned by the Company
or the Employee. However, in the event of death of the Employee, all
rights to receive payments hereunder shall become the rights of the
Employee's estate.
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(e) Section Headings. The Section headings used in this Agreement are
included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State as such laws are applied to
contracts entered into and to be performed entirely within the State
of Delaware.
* * * * * * *
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
on the day and year first above written.
CONVERSION TECHNOLOGIES INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxx
-------------------
Xxxxxxx X. Xxxx
Chairman
XXXXXXX X. XXXXXX
/s/ Xxxxxxx X. Xxxxxx
---------------------
Xxxxxxx X. Xxxxxx
Address:
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