EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into on
June 8, 1999, by and between TEPUAL S.A., a corporation organized and existing
under the laws of Chile and having its executive offices at General Xxxxxx 000,
Xxxxxxxx, Xxxxx ("Company"), a subsidiary of Bio-Aqua Systems, Inc. and
XXXXXXXXX XXXXXX, ("Xx. Xxxxxx") whose address is Xxxxxxx Xxxxxx 000, Xxxxxxxx,
Xxxxxx, but shall be effective as of the effective date of the initial public
offering of the Bio-Aqua Systems, Inc.'s securities ("Effective Date") pursuant
to a registration statement filed with the Securities and Exchange Commission on
Form SB-2 ("IPO").
W I T N E S S T H:
WHEREAS, Xx. Xxxxxx is currently serving as Chief Financial Officer and
President of Tepual S.A. and
WHEREAS, the Company desires to secure for itself the availability of
Xx. Xxxxxx'x services; and
WHEREAS, for purposes of securing for the Company Xx. Xxxxxx'x
services, the Board of Directors of the Company ("Board") has approved and
authorized the execution of this Agreement with Xx. Xxxxxx on the terms and
conditions set forth herein; and
WHEREAS, Xx. Xxxxxx upon the Effective Date is willing 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. Xxxxxx
hereby agree as follows:
Section 1. Employment
----------
The Company hereby agrees to the employment of Xx. Xxxxxx and Xx.
Xxxxxx hereby agrees to 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 two (2) years commencing on the
Effective Date and shall automatically be extended for each successive year
thereafter unless (i) the parties mutually agree in writing to alter or amend
the terms of the Agreement; or (ii) one or both of the parties exercises their
right, pursuant to this Agreement, to terminate this employment relationship.
Upon the Effective Date, any prior employment agreement
1
between the Company and Xx. Xxxxxx then in effect shall terminate and shall have
no further force or effect.
Section 3. Duties
------
Xx. Xxxxxx shall serve as Chief Financial Officer, President and as a
Director of the Company. Xx. Xxxxxx'x responsibilities, duties and authority as
Chief Financial Officer, President and a Director of the Company shall, subject
to the direction of the Board and the By-laws of the Company, Chilean law or any
applicable provision of the Florida Business Corporation Act ("Corporation
Act"), 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. 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. Xxxxxx shall serve as Chief Financial Officer
and a Director of any and all subsidiaries hereafter created by the Company
during the Employment Period without additional compensation therefor.
Section 4. Compensation
------------
(a) Base Salary. In consideration for the services rendered by Xx.
Xxxxxx under this Agreement, the Company shall pay to Xx. Xxxxxx a salary at an
annual rate equal to One Hundred Thousand Dollars ($100,000). 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) Bonuses. In addition to the salary provided under Section 4(a), Xx.
Xxxxxx shall be entitled to receive a bonus ^(initially for the first year of
this Agreement of up to $20,000), at the times and in the amounts and determined
in such reasonable manner as may be prescribed by the Board from time to time.
(c) Additional Annual Compensation. In addition to the salary provided
under Section 4(a) and the Bonuses provided under Section 4(b), Xx. Xxxxxx shall
be entitled to receive additional annual compensation of $7,500^ for automobile
expenses.
(d) ISAPRE. In addition to the compensation described in Sections 4(a),
(b) and (c) above, Xx. Xxxxxx shall also be entitled to receive social security
benefits pursuant to Chilean law including without limitation, to the
Institutions and Provisional Health (ISAPRE) and Administrators of Pension Funds
(AFP).
2
Section 5. Employee Benefit Plans and Programs
-----------------------------------
(a) Xx. Xxxxxx shall be entitled to a minimum of two (2) 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) Except as otherwise provided in this Agreement, Xx. Xxxxxx shall,
during the Employment Period, 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 executive and/or employees of, the
Company, in accordance with the terms and conditions of such benefit plans and
programs and compensation plans and programs and with the Company's customary
practices.
Section 6. Termination.
-----------
a. Termination Without Cause. Subject to the provisions of Section 6
and 7 of this Agreement, Xx. Xxxxxx'x employment with the Company may be
terminated by either party upon ninety (90) days prior written notice of the
terminating party's intent to terminate Xx. Xxxxxx'x employment with the
Company.
b. Termination by the Company for Cause.
------------------------------------
(1) Nothing herein shall prevent the Company from terminating
Xx. Xxxxxx'x employment immediately for "Cause," as hereinafter
defined. Any rights and benefits Xx. Xxxxxx may have in respect of any
compensation shall be determined in accordance with the terms of such
other compensation arrangements or such plans or programs.
(2) "Cause" shall mean and include those actions or events
specified below in subsections (A) through (G) to the extent the same
occur, or the events constituting the same take place, subsequent to
the date of execution of this Agreement: (A) Failing, neglecting or
refusing to perform in any material respect any of Xx. Xxxxxx'x duties
hereunder at the time; (B) Committing or participating in an injurious
act of fraud, gross neglect or embezzlement against the Company; (C)
committing or participating in any other injurious act or omission
wantonly, willfully, recklessly or in a manner which was grossly
negligent against the Company, monetarily or otherwise; (D) engaging in
a criminal enterprise involving moral turpitude; (E) conviction of an
act or acts constituting a felony under the laws of the United States
or Chile or any state or province thereof; (F) the death of Xx. Xxxxxx;
or (G) "disability" of Xx. Xxxxxx, as defined in Section 6(b)(4). No
actions,
3
events or circumstances occurring or taking place at any time prior to
the date of this Agreement shall in any event constitute or provide any
basis for any termination of this Agreement for Cause;
(3) Notwithstanding anything else contained in this Agreement,
this Agreement will not be deemed to have been terminated for Cause
unless and until there shall have been delivered to Xx. Xxxxxx a notice
of termination stating that Xx. Xxxxxx committed one of the types of
conduct set forth in Section 6(b)(2) of this Agreement and specifying
the particulars thereof.
(4) For the purposes of this Agreement, Xx. Xxxxxx shall be
deemed to have become disabled if, because of ill health, physical or
mental disability or for other causes beyond Xx. Xxxxxx'x control, Xx.
Xxxxxx shall have been unable or shall have failed to perform his
duties hereunder for a cumulative total of 180 days in any twelve-month
period, or if he shall have been unable or shall have failed to perform
his/her duties for sixty (60) or more consecutive days.
Section 7. Confidentiality Proprietary Information
---------------------------------------
(a) Unless he obtains the prior written consent of the Company (which
consent shall not be unreasonably withheld), Xx. 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 7
shall prevent Xx. 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. 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 Xxxxxx'x termination of employment.
Section 8. Solicitation
------------
4
Xx. 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 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. 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. 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 8(b) shall be construed
as prohibiting Xx. 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. Xxxxxx has had substantial contact to terminate an
existing business or commercial relationship with the Company.
Section 9. Indemnification and Attorneys' Fees
-----------------------------------
The Company shall provide Xx. Xxxxxx with payment of legal fees and
indemnification to the maximum extent permitted from time to time by the
Corporation Act or other applicable laws or regulations. Xx. Xxxxxx shall
continue to be covered by the Articles of Incorporation and/or the Bylaws of the
Company with respect to matters occurring on or prior to the date of termination
of Xx. Xxxxxx'x employment with the Company, subject to Chilean law, any
applicable provision of Florida and Federal law and the Articles of
Incorporation and Bylaws of the Company then in effect. The Company shall
indemnify and hold harmless Xx. Xxxxxx against reasonable costs, including,
without limitation, 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.
Xxxxxx is the prevailing party in such action, suit or proceeding. Such
reasonable expenses, including attorneys' fees that may be covered by the
Articles of Incorporation and/or Bylaws of the Company shall be paid by the
Company on a current basis in
5
accordance with such provision, the Company's Articles of Incorporation and
applicable law. To the extent that any such payments by the Company pursuant to
the Company's Articles of Incorporation and/or Bylaws may be subject to
repayment by Xx. Xxxxxx pursuant to the provisions of the Company's Articles of
Incorporation or Bylaws, or pursuant to applicable law, such repayment shall be
due and payable by Xx. Xxxxxx to the Company within twelve (12) months after the
termination of all proceedings, if any, which relate to such repayment and to
the Company's affairs for the period prior to the date of termination of Xx.
Xxxxxx'x employment with the Company and as to which Xx. Xxxxxx has been covered
by such applicable provisions
Section 10. Excise Tax
----------
(a) If, in connection with the termination of Xx. Xxxxxx'x employment,
Xx. 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. Xxxxxx an amount to indemnify Xx. 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. 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 10(a) shall be
made to Xx. 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 10(a) shall be made to Xx. 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. 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 10(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 10(b).
(b) In the event that Xx. 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 10(a), Xx.
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 10(a), when
increased by the amount of the payment made to Xx. Xxxxxx under this Section
10(b) by the Company, or when reduced by the amount of the payment made to the
Company under this Section 10(b) by Xx. Xxxxxx, equals the amount finally
determined to have been properly payable to Xx. Xxxxxx under Section 10(a). The
interest paid under this Section 10(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. Xxxxxx under this Section 15, Xx. 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. Xxxxxx fails to
furnish any such return by the prescribed
6
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. Xxxxxx against any
excess tax payment which the Company reasonably believes to have been made in
error.
Section 11. Successors and Assigns; Survivorship
------------------------------------
This Agreement will inure to the benefit of and be binding upon Xx.
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 12. 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 13. 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. Xxxxxx:
Tepual S.A.
General Xxxxxx 000
Xxxxxxxx, Xxxxx
If to the Company:
General Ekdhal 000
xxxxxxxxxxxxxxxxxx
Xxxxxxxx, Xxxxx
===============
Attention: Xxxxxxxx Xxxx
=============
7
with copy to:
Atlas, Xxxxxxxx, Trop & Borkson, P.A.
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Section 14. 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 15. 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 16. Governing Law
-------------
This Agreement shall be governed by and construed and enforced in
accordance with the laws of Chile, without reference to conflicts of law
principles.
Section 17. 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 18. Survival
--------
The rights and obligations of the Company and Xx. Xxxxxx under Sections
7, 8, 9 and 10 of this Agreement shall survive the termination or expiration of
this Agreement, notwithstanding anything contained herein to the contrary.
Section 19. Equitable Remedies
------------------
The Company and Xx. Xxxxxx hereby stipulate that monetary damages shall
be an inadequate remedy for violations of Sections 7, 8, 9 and 10 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 20. Entire Agreement, Modifications
-------------------------------
8
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 representations relating to the subject matter
hereof. 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. Xxxxxx has hereunto set his hand, all as of the day and year
first above written.
/s/ Xxxxxxxxx Xxxxxx
---------------------------
Xxxxxxxxx Xxxxxx
ATTEST: TEPUAL S.A.
By: /s/ Xxxxxxxx Xxxx By: /s/ Xxx Xxxxxx
---------------------------- -----------------------
Xxxxxxxx Xxxx Name: Xxx Xxxxxx
---------------------
Title: CEO
--------------------
9
