Exhibit 10.48
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of October 16,
1998, by ENVIROSYSTEMS CORP., a Delaware corporation with its principal place of
business at 0 Xxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxx 00000 (the "Company"), and
XXXXXXXX X. XxXXXXX, residing at 0 Xxxxxx Xxx, Xxxxx Xxxxxx, Xxxxxxxxxxx 00000
(the "Executive").
WHEREAS, the Company desires to employ the Executive and the Executive
desires to be employed by the Company; and
WHEREAS, the parties wish to set forth the terms and conditions of the
employment;
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
1. Term of Employment.
The Company hereby employs the Executive, and the Executive hereby accepts
employment with the Company, upon the terms set forth in this Agreement. The
Executive's employment pursuant to this Agreement shall commence on October 16,
1998 and shall end at the expiration of the thirty-sixth (36th) month thereafter
("Expiration Date") unless terminated earlier as provided herein. The
Executive's employment may be extended beyond the Expiration Date for successive
twelve (12) month terms upon the written approval of the Executive and the
Company.
2. Title; Duties.
The Executive shall serve as the President and Chief Executive Officer of
the Company and of Environmental Systems Products, Inc. throughout the term of
his
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employment under this Agreement. The Executive shall report to the Board of
Directors of the Company, which shall have the authority to direct, control and
supervise the activities of the Executive. The Executive shall perform such
services consistent with his position as may be assigned to him from time to
time by the Board of Directors of the Company.
3. Extent of Services.
The Executive shall (a) devote substantially all of his time, attention
and skill to the performance of his duties under this Agreement; (b) faithfully
and diligently perform such duties and exercise such powers as xxx from time to
time be assigned to or vested in him; (c) accept such offices in the Company,
any holding company of the the Company, and any subsidiary of the Company or any
such holding company (any such entity, a "Group Company" and all Group Companies
collectively, the "Group") and accept appointments to the board of any Group
Company as may reasonably be required by the Board of Directors of the Company,
as the same may be constituted from time to time; and (d) use his best efforts
to promote the interest, reputation, business and welfare of the Group. The
Executive shall serve as a member of the Board of Directors of the Company and
of Environmental Systems Products, Inc. The Executive shall work at the
principal office of the Company located in the Granby, Connecticut area, subject
to ordinary travel consistent with his time commitment and scope of
responsibilities.
4. Base Salary.
The Company shall pay the Executive a base annual salary of $350,000.00.
The salary shall be payable as of the first day of each month in monthly
installments, less applicable deductions for taxes or otherwise. The Company
will review his base salary for upward adjustment no less often than annually in
conjunction with its regular
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review of executive salaries. The base salary of the Executive will not be
decreased during the term of this Agreement.
5. Incentive Compensation Program.
The Executive shall participate in an incentive compensation program (the
"Incentive Compensation Program"). There shall be no minimum or guaranteed
amount of compensation payable to the Executive under the Incentive Compensation
Program. Payments to the Executive pursuant to the Incentive Compensation
Program ("Incentive Compensation Payments") shall be based on business
performance objectives to be agreed between the Executive and the Company, and
the maximum amount of aggregate annual Incentive Compensation Payments shall be
fifty percent (50%) of the Executive's annual salary, as the same may be
adjusted from time to time. For exceptional performance by the Executive, the
Company may, in its sole discretion, grant to the Executive options with respect
to the Company's common stock, in addition to those granted pursuant to Section
6. The Incentive Compensation Payments for each year shall be paid to the
Executive no later than two and one-half months following the close of the
Company's fiscal year.
6. Stock Options.
The Executive shall be entitled to receive nonqualified stock options for
420 shares of the common stock of the Company with an exercise price equal to
$4761.12 per share, the fair market value of the common stock of the Company on
the date of grant. The stock option agreement shall provide that the option
shall vest at the rate of thirty-three and one-third percent (33 1/3%) on each
anniversary date of the Executive's employment, such that the option is fully
vested on the third anniversary date of the Executive's employment under this
Agreement, provided, however, that the option shall become fully vested on the
date on which the registration statement for initial public offering of the
common stock of the Company is declared effective by the
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Securities and Exchange Commission. The stock option shall provide that it may
be exercised for ten (10) years from the date of grant, unless earlier
terminated. The unvested portion of the option shall expire upon the Executive's
termination of employment. The stock option also shall provide that the option
shall become fully vested and exercisable in the event of the Executive's death,
disability, involuntary termination by the Company without cause, or in the
event of a Change of Control. For purposes of this Agreement and the related
option, a "Change of Control" shall mean any of the following events:
(a) The acquisition by any "person" 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") who is not a shareholder (directly or indirectly)
of the Company as of the date of this Agreement of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act of 50% or more of
the shares of Newmall Limited or of the Company generally entitled to vote for
the election of directors ("Voting Stock");
(b) The consummation of a reorganization, merger or consolidation or
sale or other disposition of substantially all of the assets of Newmall Limited
or the Company, other than a reorganization that does not affect the beneficial
ownership of Newmall or the Company; and
(c) Approval by the shareholders of the Company of a complete
liquidation or dissolution.
The sale of fifty percent (50%) or more of the common stock of the Company
in an initial public offering shall not constitute a Change in Control. The
stock option shall be set forth in a written agreement and shall be subject to
such additional terms as may be contained in such agreement that are not
inconsistent with this Section 7. The
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Company has advised the Executive that it intends to file a registration
statement on Form S-8 with respect to the plan and the underlying stock
following the initial public offering of the Company's common stock.
7. Fringe Benefits.
The Executive shall be entitled to receive health and dental coverage for
the Executive and his family in accordance with the terms of the health and
dental plans of Environmental Systems Products, Inc. In addition, the Company
shall provide a term life insurance policy insuring the life of the Executive
and shall pay an annual premium for such policy of $5,000.00. The Executive
shall be entitled to participate in any other employee plans offered by the
Company or Environmental Systems Products, Inc., including, but not limited to
any qualified retirement plan sponsored or maintained by the Company, if he
meets the eligibility requirements for such participation under the terms of the
applicable executive benefit plan or policy.
The Executive shall be entitled to four (4) weeks of vacation during each
year of employment. Such vacation shall be taken at such times as the Executive
and the Chairman of the Board of Directors mutually agree. The Executive shall
be entitled to sick leave and holidays in accordance with the policy of the
Company as to its executive employees.
The Company shall reimburse the Executive for the reasonable legal fees
the Executive incurs in connection with the negotiation and preparation of this
Agreement and the agreement dated October 8, 1998 by and among the Executive,
Newmall Limited, Environmental Systems Products, Inc., and Xxxxxxx X. Xxxxxxxx,
in an amount not to exceed $10,000.00.
8. Reimbursement of Business Expenses.
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The Company shall reimburse the Executive for all reasonable out-of-pocket
costs incurred or paid by the Executive in connection with, or related to, the
performance of his duties, responsibilities or services under this Agreement,
upon presentation by the Executive of documentation, expense statements,
vouchers, and/or such other supporting information as the Company may reasonably
request; provided, however, that the amount available for such out-of-pocket
costs may be fixed in advance by the Company. Such reimbursable costs shall
include, but not be limited to, travel, food, and lodging while away from home;
telephone and mailing expenses; the cost of attendance at professional meetings
related to the performance of the Executive's duties under this Agreement; and
reasonable amounts of dues for membership in a country club of the Executive's
choice (with the prior written approval of the Company). The Company shall pay
the reasonable expenses, not to exceed $1,218.00 per month, to lease an
automobile of the Executive's choice, such automobile to be used primarily for
business purposes, plus the costs of insuring and maintaining the automobile.
9. Non-Competition Agreement.
While employed by the Company, and, (a) if the Executive voluntarily
terminates his employment following a Change of Control pursuant to Section 12.4
or the Company terminates the Executive without cause, for a period equal to the
greater of (i) one year, or (ii) the unexpired term of this Agreement, or (b) if
the Executive voluntarily terminates employment prior to the Expiration Date
(other than upon a Change of Control pursuant to Section 12.4) or the Executive
is involuntarily terminated by the Company with cause, for a period equal to six
(6) months following the Executive's termination of employment, the Executive
shall not, without the prior written consent of the Company, provide services,
whether as a consultant or
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executive, to any business or enterprise in the United States with respect to
environmental or emissions testing.
10. Review of Prospectus.
The Executive shall review the prospectus and amendments to such
prospectus filed by the Company with the Securities and Exchange Commission for
its initial public offering as they relate to any description of the Executive
and this Agreement. The Executive shall provide comments to the Company or its
counsel regarding the prospectus.
11. Confidentiality Agreement.
During the term of this Agreement and thereafter, the Executive shall keep
secret and retain in strictest confidence, and shall not use for his benefit or
the benefit of others, except in connection with the business and affairs of the
Group, all confidential matters relating to the business of the Group and shall
not disclose them to anyone except with the written consent of the Company. This
Section 11 shall not apply to confidential information which (a) at the time of
receipt or thereafter becomes publicly known, through no breach of this Section
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under an obligation to keep such information confidential. The provisions of
this Section 11 shall survive the termination of this Agreement.
12. Termination.
12.1. Termination by the Company for Cause. The Company may at any
time terminate the Executive's employment under this Agreement for cause, upon
written notice by the Company to the Executive. For the purpose of this Section
12.1, "cause" for termination shall mean (a) the conviction of the Executive of,
or the entry of a guilty (or nolo contendere) plea by the Executive to, any
felony; (b) fraud,
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misappropriation or embezzlement by the Executive; (c) the Executive's willful
failure or gross negligence in the performance of his assigned duties for the
Company which failure continues for ten (10) days following the Executive's
receipt of written notice specifying the manner in which the Executive is in
default of his duties; or (d) the Executive's breach of fiduciary duty which
breach continues for ten (10) days following the Executive's written notice
specifying the manner in which the Executive is in default of his duties.
12.2. Termination by the Company or the Executive Without Cause.
Either party may terminate this Agreement at any time without cause, upon giving
the other party sixty (60) days written notice.
12.3. Executive's Death or Disability. The Executive's employment
shall terminate immediately upon his death or disability. As used in this
Agreement, the term "disability" shall mean the inability of the Executive, due
to a physical or mental disability, to perform the services contemplated under
this Agreement for a period of one hundred eighty (180) days in any consecutive
twelve-month period.
12.4. Termination by Executive Following Change of Control. In the
event of a Change of Control, the Executive may terminate his employment by
giving the Company (or any successor entity) sixty (60) days written notice
commencing within three (3) months following a Change of Control. In that event,
the Executive shall be entitled to receive his salary, bonus, and benefits in
accordance with Sections 4, 5, and 7 of this Agreement as if the Company had
terminated his employment without cause as provided in Section 13.2. In
addition, he shall become fully vested in all stock options granted to the
Executive prior to the date of the Change of Control.
13. Effect of Termination.
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13.1. Termination by the Company for Cause or by the Executive
Without Cause. If the Company terminates this Agreement for cause pursuant to
Section 12.1, or the Executive terminates this Agreement without cause pursuant
to Section 12.2, the Company shall pay to the Executive only the salary, bonus,
and benefits otherwise payable to him under Sections 4, 5, and 7 through the
last day of his employment by the Company. The Executive shall not be entitled
to receive any Incentive Compensation Payment that had not accrued prior to the
Executive's termination for cause by the Company or without cause by the
Executive. The Executive shall be entitled to receive any Incentive Compensation
Payment that accrued prior to the date on which the Executive's employment
terminates as specified in Section 5.
13.2. Termination by the Company Without Cause. If the Company
terminates the Executive's employment without cause pursuant to Section 12.2 or
if the Executive terminates his employment following a Change in Control, the
Executive shall be entitled to receive his salary, Incentive Compensation
Payment, and benefits in accordance with Sections 4, 5, and 7 of this Agreement
through the last date of his employment and a lump sum severance payment in an
amount equal to the greater of (a) the base salary due for the balance of the
unexpired term of this Agreement, or (b) one year's base salary, based upon the
Executive's base salary at the time of the termination of his employment. These
amounts shall be paid within ten (10) days following the Executive's termination
without cause. In addition, the Executive shall be entitled to receive any
Incentive Compensation Payments accrued prior to the Executive's termination
without cause. All stock options previously granted to the Executive by the
Company shall become fully vested and exercisable in the event the Executive is
terminated without cause by the Company. Except as provided in this Section
13.2, the Company shall have no other obligation to make any additional
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payment or, except as may be provided by the terms of any employee benefit plan,
to provide additional benefits in the event of the Executive's termination
without cause.
13.3. Termination for Death or Disability. If the Executive's
employment is terminated by the Executive's death or disability pursuant to
Section 12.3, the Company shall pay to the estate of the Executive or to the
Executive, as the case may be, the salary and benefits which would otherwise be
payable to the Executive up to the end of the month in which his employment is
terminated because of death or disability.
14. Miscellaneous.
14.1. Notices. All notices required or permitted under this
Agreement shall be in writing and shall be deemed effective upon personal
delivery or upon deposit with the United States Postal Service, by registered or
certified mail, postage prepaid, addressed to the other party at the address
shown above, or at such other address or addresses as either party shall
designate to the other in writing from time to time.
14.2. Pronouns. Whenever the context may require, any pronouns used
in this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular forms of nouns and pronouns shall include the plural,
and vice versa.
14.3. Entire Agreement. This Agreement constitutes the entire
agreement between the parties and supersedes all prior agreements and
understandings, whether written or oral, relating to the subject matter of this
Agreement.
14.4. Amendment. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Executive.
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14.5. Governing Law. This Agreement shall be construed, interpreted
and enforced in accordance with the laws of the State of Delaware, without
regard to its conflicts of laws principles.
14.6. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of both parties and their respective successors and
assigns, including any entity with which or into which the Company may be merged
or which may succeed to its assets or business or any entity to which the
Company may assign its rights and obligations under this Agreement; provided,
however, that the obligations of the Executive are personal and shall not be
assigned or delegated by him.
14.7. Waiver. No delays or omission by the Company or the Executive
in exercising any right under this Agreement shall operate as a waiver of that
or any other right. A waiver or consent given by the Company or the Executive on
any one occasion shall be effective only in that instance and shall not be
construed as a bar or waiver of any right on any other occasion.
14.8. Captions. The captions appearing in this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
14.9. Severability. In case any provision of this Agreement shall be
held by a court with jurisdiction over the parties to this Agreement to be
invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
14.10. Arbitration. Any disputes between the Company and the
Executive in any way concerning the Executive's employment, the termination of
employment, this Agreement or its enforcement, shall be submitted at the
initiative of either party to
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mandatory arbitration before a single arbitrator who is familiar with the
environmental testing industry and conducted pursuant to the Commercial
Arbitration Rules of the American Arbitration Association, or its successor,
then in effect. The decision of the arbitrator shall be final and may be entered
as a judgment in any court of the State of Connecticut or State of Delaware.
14.11. Counterparts. This Agreement may be executed in counterparts,
which together shall constitute a valid and enforceable original agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
ENVIROSYSTEMS CORP. XXXXXXXX X. XxXXXXX
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxxxx X. XxXxxxx
------------------------- ------------------------
Executive Vice President
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