Exhibit 10.5
ENVIROKARE TECH, INC.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, made this 18th day of December, 2000, between
Envirokare Tech, Inc., a Nevada corporation having an address of 0000 Xxxxxxxx
Xxxxxx, Xxxxx 0, Xxx Xxxxx, Xxxxxx 00000 (the "Company"), and Xxxxxxx X. Xxxxx,
having an address of 0000 Xxxx Xxxx Xxxxx, Xxxxx Xxxxxxx 00000 (the
"Executive").
WHEREAS, the Company desires to employ the Executive as Chairman of the
Board of Directors, President and Chief Executive Officer of the Company; and
WHEREAS, Executive desires to be employed by the Company, on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, the parties agree as follows:
1. Employment; Term.
(a) Employment and Duties. The Company hereby employs Executive and
Executive hereby accepts employment by the Company, subject to the terms of this
Agreement. Executive shall perform such duties and have such powers and
authority as the Board of Directors shall determine, commensurate with
Executive's position as the chief executive officer of the Company. Executive's
services for the Company shall be rendered at the Company's principal place of
business in Boca Raton, Florida, subject to reasonable travel requirements. The
Executive shall at all times be subject to and shall observe and carry out such
reasonable rules, regulations, policies, directions and restrictions as may be
established from time to time by the Company.
(b) Term. The term of the Executive's employment under this Agreement (the
"Term") shall commence on December 31, 2000 and shall end on December 31, 2005,
unless sooner terminated as herein provided. The Term may be extended upon the
mutual written agreement of the Company and the Executive.
2. Salary; Reimbursement of Expenses.
(a) Base Salary. The Executive shall receive a base salary (the "Base
Salary") of One Hundred Fifty Six Thousand Dollars ($156,000) per year, payable
in substantially equal installments consistent with the Company's normal payroll
schedule, but in no event less frequently than bi-weekly, subject to any
applicable withholding and other taxes. The Executive's Base Salary shall be
reviewed annually by the Board of Directors, on or before
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January 1 of each year, starting at January 1, 2002, and may be increased but
may not be decreased; provided, however, that, in addition to any salary
increase that may be approved by the Board of Directors, Executive's Base Salary
shall be increased (but not reduced) on January 1 of each year, starting January
1, 2002, by the percentage increase, if any, in the Consumer Price Index for the
Miami, Florida area over such index in effect on the previous December 31. If
the data is not available on such January 1, the salary increase shall not be
paid until it is determined, but at that time any unpaid increase from January 1
until the data is available shall be promptly paid in a lump sum.
(b) Reimbursement of Expenses. The Company shall reimburse the Executive
for all reasonable and appropriate or necessary out-of-pocket expenses incurred
in connection with his carrying out his duties under this Agreement, in
conformity with such procedures as the Company may establish from time to time.
(c) Automobile. The Executive shall be entitled to reasonable use of an
automobile and driver, at Company expense, for local business purposes, not to
exceed $400 per month.
3. Benefits.
(a) Benefit Plans. The Executive shall be entitled to participate in all
medical insurance, disability insurance and life insurance plans from time to
time in effect for employees of the Company, generally. All rights to
participate in any such plans, and the degree and amount of participation, shall
be subject to the terms of the applicable plan documents, generally applicable
Company policies, and the actions of any committee responsible for administering
such plan. If the Company does not have a medical insurance plan in which the
Executive is eligible to participate, the Company will pay the Executive Three
Hundred Dollars ($300) per month for medical insurance costs. Such amount will
be on a pre-tax basis, and will be in addition to the Executive's Base Salary.
(b) Vacation. The Executive shall be entitled to four (4) weeks' of
vacation each year and shall be entitled to paid holidays consistent with the
Company's practices.
4. Stock Option. Subject to the approval of the shareholders of the Company
to be granted at its annual meeting in 2001 to increase the number of shares
available for grant under the Stock Plan or such increase thereto or replacement
therefor as the shareholders shall approve, as total and sole compensation for
services rendered to the Company for the year 2000, the Board of Directors of
the Company grants to the Executive at the strike price that number of qualified
stock options under the Company's 1999 Stock Plan (the "1999 Stock Plan") equal
to $100,000 divided by the average of the closing bid/asked price of the
Company's common stock (the "Strike Price") as reported on the NASD Bulletin
Board on December 22, 2000, the date upon which the Company agreed to employ the
Executive, the terms of which are reflected in this agreement. If for any reason
this grant does not qualify as a qualified stock option for the purposes of the
Internal Revenue Code, such grant shall be
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deemed to be the grant of the same number of non-qualified stock options under
the 1999 Stock Plan.
As partial compensation for services to be rendered for calendar year 2001
hereunder, the Board of Directors of the Company grants to the Executive, that
number of qualified stock options under the Company's 1999 Stock Plan (the "1999
Stock Plan") equal to $100,000 divided by the Strike Price in January 2001, at
an exercise price to be determined by the board of directors at the time of
grant, under the 1999 Stock Plan as set forth, described, and subject to the
same provisions as contained in the immediately preceding paragraph.
In addition, subject to the approval of the shareholders of the Company to
be granted at its annual meeting in 2001, the Board of Directors of the Company
grants to the Executive, at a Strike Price to be determined by the board of
directors at the time of grant in January 2001, non-qualified stock options
under the 2001 Stock Plan, or such increase thereto or replacement therefor as
the shareholders shall approve, such replacement to contain no terms more
onerous to the Executive (except as may be required by law or Internal Revenue
Service regulations) than the terms of the 1999 Stock Plan, equal to the
difference between Two Million (2,000,000) shares and the number of shares
granted the Executive under the preceding two paragraphs.
The Executive acknowledges having received a copy of the 1999 Stock Plan
and is aware that it contains limitations on the number of shares, which may be
disposed of by the Executive within certain time frames after exercise.
The Board of Directors will permit the Executive to transfer his stock
options, and to have such options exercised by, a trust of which the trustee and
the form and substance are acceptable to the Board of Directors, whose consent
to all of the foregoing shall not be unreasonably withheld.
5. Exclusivity of Services. The Executive agrees that, during his employment
with the Company, he will devote substantially his full business time and energy
to the business, affairs and interests of the Company and matters related
thereto and shall faithfully and diligently endeavor to promote such business,
affairs and interests. Without limiting the generality of the foregoing, the
Executive shall not engage in any other employment, occupation, consulting or
other business activity related to the business in which the Company is now
involved or becomes involved during such employment, nor will the Executive
engage in any other activities, including serving as a Director of other
companies, that conflict with his obligations to Company. The Company
acknowledges that the Executive currently serves on the Board of Directors of
New China Homes Ltd. and Advanced Card Technologies Inc.,
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6. Termination of Employment.
(a) Death of Executive. If the Executive dies during the Term, this
Agreement shall terminate; provided, however, that within thirty (30) days
following the later of his death or the final appointment of Executor's personal
representatives, the Company shall cause the Executive's heirs or personal
representatives to be paid the Executive's accrued but unpaid Base Salary, if
any, as of the date of death, as well as payment with respect to any accrued but
unused vacation days, if any, as of such date (determined on a prorated basis),
with any such payments to made less any applicable withholding and other taxes.
(b) Disability. If during the Term the Executive becomes physically or
mentally disabled, whether totally or partially, so that the Executive is unable
substantially to perform his services hereunder, even with reasonable
accommodation, for (i) a period of three consecutive months, or (ii) for shorter
periods aggregating three months during any six month period, the Company may at
any time after the last day of the three consecutive months of disability or the
day on which the shorter periods of disability equal an aggregate of three
months, by written notice to the Executive, terminate the Term of the
Executive's employment hereunder. Nothing in this Section 6(b) shall be deemed
to extend the Term. In the event the employment of the Executive is terminated
by the Board of Directors pursuant to this Section 6(b), the Executive shall be
(i) paid the then-applicable salary pursuant to Section 2(a) above, for
twenty-six (26) weeks after the effective date of such termination and (ii)
reimbursed for all expenses pursuant to Sections 2(b) and (c) as of such
effective date. Executive shall also be entitled to accrued but unpaid Base
Salary, if any, as of the effective date of such termination, as well as payment
with respect to any accrued but unused vacation days, if any, as of such date
(determined on a prorated basis), with any such payments to made less any
applicable withholding and other taxes.
(c) For Cause. The Company shall have the right, upon written notice
thereof to the Executive, to terminate his employment hereunder if the Executive
(A) fails or refuses in any material respect to perform any duties consistent
with the terms thereof communicated to him in writing by the Board of Directors,
(B) is grossly negligent in the performance of his duties hereunder, (C) is
convicted of a felony or other violation which in the reasonable judgment of the
Board of Directors could materially impair the Company from substantially
meeting its business objectives, (D) is found to have committed any act of
fraud, misappropriation of funds or embezzlement with respect to the Company, or
(E) is found to have misappropriated a corporate opportunity, within the
reasonable judgment of the Board of Directors. Upon the termination of the
Executive's employment with the Company for cause, the Company shall be under no
further obligation to the Executive other than payment of the Executive's
accrued but unpaid Base Salary, if any, as of the effective date of such
termination, as well as payment with respect to any accrued but unused vacation
days, if any, as of such date (determined on a prorated basis), with any such
payments to made less any applicable withholding and other taxes.
In the event of termination of the Term for matters described in items (C),
(D) or (E) of the preceding paragraph, any stock options which the Executive has
failed to exercise by notification and payment which must be received by the
Company prior to the sending of
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notification of termination to the Executive by or on behalf of the Board of
Directors, shall be deemed non-exercisable and such grant shall be of no further
effect.
(d) Without Cause. In the event the employment of the Executive is
terminated by the Board of Directors for any reason other than as stated in
Section 6(b) or (c), any such termination deemed for the purposes hereof to be
"without cause", the Executive shall be (i) paid the then-applicable salary
pursuant to Section 2(a) above, for twenty-six (26) weeks after the effective
date of such termination and (ii) reimbursed for all expenses pursuant to
Section 2(b) as of such effective date. Executive shall also be entitled to
accrued but unpaid Base Salary, if any, as of the effective date of such
termination, as well as payment with respect to any accrued but unused vacation
days, if any, as of such date (determined on a prorated basis), with any such
payments to made less any applicable withholding and other taxes.
In the event of termination of employment under this subsection, the
Executive shall have the right to exercise any then unexercised stock options in
accordance with the provisions of the Stock Plan or any subsequent plan pursuant
to which options will have been granted to the Executive.
(e) Survival of Obligations. The obligations of the Executive set forth in
Section 7 (referring to confidentiality), Section 8 (referring to
non-solicitation), and Section 9 (referring to non-competition) will survive the
termination of Executive's employment hereunder, regardless of cause.
7. Confidential Information.
(a) Company Information. The Executive agrees at all times during the term
of his employment or other involvement with the Company and thereafter to hold
in strictest confidence, and not to use, except for the benefit of the Company,
or to disclose to, or permit the use by, any person, firm or corporation without
written authorization of its Board of Directors, any Confidential Information of
the Company. The Executive understands that "Confidential Information" means any
Company proprietary information, technical data, trade secrets or know-how or
other business information disclosed to the Executive by the Company, either
directly or indirectly in writing, orally or by drawings or inspection of parts
or equipment, including, but not limited to:
(i) formulas, research and development techniques, processes, trade
secrets, computer programs, software (including, without limitation, all
programs, specifications, applications, routines, subroutines, techniques and
ideas for formulae), electronic codes, mask works, inventions, machines,
innovations, ideas, designs, creations, writings, books and other works of
authorship, patents, patent applications, discoveries, methods, improvements,
data, formats, test results, projects and research projects;
(ii) information about costs, profits, markets, sales, contracts and lists
of customers, and distributors, business, marketing, and strategic plans;
forecasts, unpublished financial
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information, budgets, projections, and customer identities, characteristics and
agreements as well as all business opportunities, conceived, designed, devised,
developed, perfected or made by the Executive, whether alone or in conjunction
with others, and related in any manner to the actual or anticipated business of
the Company or to actual or anticipated areas of research and development; and
(iii) employee personnel files and compensation information.
The Executive further understands that Confidential Information does not include
any of the foregoing items which (i) has become publicly known or made generally
available to the public through no wrongful act of the Executive, (ii) has been
disclosed to the Executive by a third party having no duty to keep Company
matters confidential, (iii) has been developed by the Executive independently of
his employment by the Company, (iv) has been disclosed by the Company to a third
party without restrictions on disclosure, or (v) has been disclosed with the
Company's consent. The Executive further agrees that all Confidential
Information shall at all times remain the property of the Company.
(b) Mandated Disclosure. In the event that Executive is ordered to disclose
the Company's Confidential Information pursuant to a judicial or governmental
request, requirement or order, the Executive shall promptly notify the Company
and take reasonable steps to assist the Company in contesting such request,
requirement or order or in otherwise in protecting the Company 's rights prior
to disclosure.
8. Non-Solicitation. The Executive agrees that he shall not during his
employment or other involvement with the Company and for a period of twelve (12)
months immediately following the termination of his employment or such other
involvement with the Company, for any reason, whether with or without cause, (i)
either directly or indirectly solicit or take away, or attempt to solicit or
take away employees of the Company, either for his own business or for any other
person or entity, or (ii) either directly or indirectly recruit, solicit or
otherwise induce or influence any proprietor, partner, stockholder, lender,
director, officer, employee, sales agent, joint venturer, investor, lessor,
supplier, customer, agent, representative or any other person which has a
business relationship with the Company to discontinue, reduce or modify such
employment, agency or business relationship with the Company.
9. Covenants Against Competition.
(a) Definitions. For the purposes of this Section:
(i) "Competing Product" means any product, process, or service of any
person or organization other than the Company, in existence or under development
(A) which is identical to, substantially the same as, or an adequate substitute
for any product, process, or service of the Company, in existence or under
development, on which the Executive works during the time of his employment with
the Company or about which the Executive acquires
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Confidential Information, and (B) which is (or could reasonably be anticipated
to be) marketed or distributed in such a manner and in such a geographic area as
to actually compete with such product, process or service of the Company.
(ii) "Competing Organization" means any person or organization,
including the Executive, engaged in, or about to become engaged in, research on
or the acquisition, development, production, distribution, marketing, or
providing of a Competing Product.
(b) Non-Competition. As a material inducement to the Company to employ or
continue the employment of the Executive, and in order to protect the Company's
Confidential Information and good will, the Executive agrees to the following
stipulations:
(i) For a period of twelve (12) months after termination of his
employment with the Company or its affiliates for any reason, whether with or
without cause, the Executive will not directly or indirectly solicit or divert
or accept business relating in any manner to Competing Products or to products,
processes or services of the Company, from any of the customers or accounts of
the Company with which the Executive had any contact as a result of his
employment.
(ii) For a period of twelve (12) months after termination of his
employment with the Company for any reason, whether with or without cause, the
Executive will not (A) render services directly or indirectly, as an employee,
consultant or otherwise, to any Competing Organization in connection with
research on or the acquisition, development, production, distribution, marketing
or providing of any Competing Product, or (B) own or finance, directly or
indirectly, any interest in any Competing Organization.
(c) Modification of Restrictions. The Executive agrees that the
restrictions set forth in this Section are fair and reasonable and are
reasonably required for the protection of the interests of the Company. However,
should an arbitrator or court nonetheless determine at a later date that such
restrictions are unreasonable in light of the circumstances as they then exist,
then the Executive agrees that this Section shall be construed in such a manner
as to impose on the Executive such restrictions as may then be reasonable and
sufficient to assure Company of the intended benefits of this Section.
10. Equitable Remedies. The Executive agrees that it would be impossible or
inadequate to measure and calculate the Company's damages from any breach of the
covenants set forth in Sections 7, 8 and 9 herein. Accordingly, at the sole
discretion of the Company, the Executive agrees that if he breaches any of such
Sections, the Company will have, in addition to any other right or remedy
available, the right to obtain an injunction from a court of competent
jurisdiction restraining such breach or threatened breach and to specific
performance of any such provision of this Agreement and, if it prevails in such
a proceeding, the right to recover from the Executive the costs and expenses
thereof, including reasonable attorneys' fees.
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11. Representations and Warranties of Executive. The Executive represents and
warrants as follows: (i) that he has no obligations, legal or otherwise,
inconsistent with the terms of this Agreement or with his undertaking a
relationship with the Company; and (ii) that he has not entered into, nor will
he enter into, any agreement (whether oral or written) in conflict with this
Agreement.
12. Settlement by Arbitration. Any claim or controversy that arises out of or
relates to this Agreement, or the breach of it, will be settled by arbitration
in accordance with the rules of the American Arbitration Association. In such
cases, the parties will submit their differences to three arbitrators: one to be
selected by the Company, one to be selected by the Executive, and the third to
be selected by the arbitrators named by the parties hereto. Should the two
arbitrators not be able to agree on the choice of the third, then the third
arbitrator shall be chosen by the American Arbitration Association. Arbitration
shall take place in Miami, Florida. In the event of disagreement among the
arbitrators, the decision will rest with the majority. The decision of the
majority of the arbitrators shall be binding upon the parties hereto without
appeal and may be entered as a judgment in any court of competent jurisdiction.
Unless otherwise ordered by the arbitrators, (a) the Company and the Executive
each shall pay its own expenses in connection with the arbitration and (b) the
expenses of the arbitrators shall be shared equally between the Company, on the
one hand, and the Executive, on the other. The arbitrators may order the payment
of costs and expenses of the arbitration against either party. The parties shall
be entitled to the same rights of discovery in the proceedings as would be
available to them were there to be an action brought in the federal court of the
State of Florida.
13. Miscellaneous.
(a) Entire Agreement. This Agreement, together with the Stock Plan,
contains the entire understanding of the parties with respect to the subject
matter. It may not be changed orally but only by an agreement in writing signed
by the party against whom enforcement of any waiver, change, modification,
extension or discharge is sought.
(b) No Waiver. The failure of either party to insist on strict compliance
with the terms of this agreement in any instance or instances will not be deemed
a waiver of any such term of this Agreement or of that party's right to require
strict compliance with the terms of this Agreement in any other instance.
(c) Captions and Headings. The captions and Section headings used in this
Agreement are for convenience of reference only, and shall not affect the
construction or interpretation of this Agreement or any of the provisions
hereof.
(d) Successors and Assigns. This Agreement shall be binding on and inure to
the benefit of the successors in interest of the parties, including, in the case
of the Executive, his heirs, executors and estate. The Executive may not assign
his obligations under this Agreement. Any attempt to do so shall entitle the
Company to terminate this Agreement,
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under the provisions of Section 6(c) hereof, for cause. The Company may not
assign its obligations under this Agreement, except with the prior written
consent of the Executive.
(e) Notices. Any notices or other communications provided for hereunder
shall be given by certified or express mail or express courier services provided
that the same are addressed to the party required to be notified at its address
first written above, or such other address as may hereafter be established for
notices, and any such notices or other communications shall be deemed received
on the earlier of (i) actual receipt, (ii) three (3) business days after
mailing, or (iii) the first business day after pick-up by the delivery service.
The parties' telecopier numbers are as follows: Company - (000) 000-0000;
Executive - (____) ____-_____.
(f) Severability. If any term or condition of this Agreement shall be
invalid or unenforceable to any extent or in any application, then the remainder
of this Agreement, and such term or condition except to such extent or in such
application, shall not be affected thereby, and each and every term and
condition of this Agreement shall be valid and enforceable to the fullest extent
and in the broadest application permitted by law.
(g) Principal Office. The principal office of the Company is currently in
Nevada. To the extent the change to Boca Raton, Florida, requires a change in
the "by-laws" of the Company, the Board of Directors hereby amends the by-laws
accordingly.
(h) Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Florida without giving effect to its
principles on conflict of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date and year first above written.
ENVIROKARE TECH, INC.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
duly authorized
EXECUTIVE
/s/ Xxxxxxx X. Xxxxx
------------------------------------
Xxxxxxx X. Xxxxx
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