Employment Agreement Water Chef, Inc.
Exhibit 99.2
Water Chef, Inc.
Agreement
made as of April 16, 2008, by and between Xxxxx X. Xxxxx of Jericho, New York
(“Employee”) and Water Chef, Inc. (the “Company”).
PREAMBLE
The Board
of Directors of the Company recognizes Employee’s previous and potential
contribution to the growth and success of the Company and desires to assure the
Company of Employee’s employment in an executive capacity as Chief Financial
Officer and to compensate him therefore. Employee wants to be employed by the
Company and to commit himself to serve the Company on the terms herein
provided.
NOW,
THEREFORE, in consideration of the foregoing and of the respective covenants and
agreements of the parties, the parties agree as follows:
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1.
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Definitions.
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“Benefits”
shall mean all the fringe benefits approved by the Board from time to time and
established by the Company for the benefit of employees generally and/or for key
employees of the Company as a class, including, but not limited to, regular
holidays, vacations, absences resulting from illness or accident, health
insurance, disability and medical plans (including dental and prescription
drug), group life insurance, and pension, profit-sharing and stock bonus plans
or their equivalent.
“Board”
shall mean the Board of Directors of the Company, together with an executive
committee thereof (if any), as same shall be constituted from time to
time.
“Cause”
for termination shall mean (i) Employee’s final conviction of a felony involving
a crime of moral turpitude, (ii) acts of Employee which, in the judgment of the
Board, constitute willful fraud on the part of Employee in connection with his
duties under this Agreement, including but not limited to misappropriation or
embezzlement in the performance of duties as an employee of the Company, or
willfully engaging in conduct materially injurious to the Company and in
violation of the covenants contained in this Agreement, or (iii) gross
misconduct, including but not limited to the willful failure of Employee either
to (a) continue to obey lawful written instruction of the Board after thirty
(30) days notice in writing of Employee’s failure to do so and the Board’s
intention to terminate Employee if such failure is not corrected, or (b) correct
any conduct of Employee which constitutes a material breach of this Agreement
after thirty (30) days notice in writing of Employee’s failure to do so and the
Board’s intention to terminate Employee if such failure is not
corrected.
“Chairman”
shall mean the individual designated by the Board from time to time as its
chairman.
“Change
of Control” shall mean the occurrence of one or more of the following three
events:
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(i)
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After
the effective date of this Agreement, any person becomes a beneficial
owner (as such term is defined in Rule 13d- 3 promulgated under the
Securities Exchange Act of 1934) directly or indirectly of securities
representing 33% or more of the total number of votes that may be cast for
the election of directors of the
Company;
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(ii)
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Within
two years after a merger, consolidation, liquidation or sale of assets
involving the Company, or a contested election of a Company director, or
any combination of the foregoing, the individuals who were directors of
the Company immediately prior thereto shall cease to constitute a majority
of the Board; or
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(iii)
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Within
two years after a tender offer or exchange offer for voting securities of
the Company, the individuals who were directors of the Company immediately
prior thereto shall cease to constitute a majority of the
Board.
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“Chief
Executive Officer” shall mean the individual having responsibility to the Board
for direction and management of the executive and operational affairs of the
Company and who reports and is accountable only to the Board.
“Disability”
shall mean a written determination by a physician mutually agreeable to the
Company and Employee (or, in the event of Employee’s total physical or mental
disability, Employee’s legal representative) that Employee is physically or
mentally unable to perform his duties of Chief Executive Officer under this
Agreement and that such disability can reasonably be expected to continue for a
period of six (6) consecutive months or for shorter periods aggregating one
hundred and eighty (180) days in any twelve (12)-month period.
“Employee”
shall mean Xxxxx X. Xxxxx and, if the context requires, his heirs, personal
representatives, and permitted successors and assigns.
“Person”
shall mean any natural person, incorporated entity, limited or general
partnership, business trust, association, agency (governmental or private),
division, political sovereign, or subdivision or instrumentality, including
those groups identified as “persons” in §§ 13(d)(3) and 14(d)(2) of the
Securities Exchange Act of 1934.
“Reorganization”
shall mean any transaction, or any series of transactions consummated in a
12-month period, pursuant to which any Person acquires (by merger, acquisition,
or otherwise) all or substantially all of the assets of the Company or the then
outstanding equity securities of the Company and the Company is not the
surviving entity, the Company being deemed surviving if and only if the majority
of the Board of Directors of the ultimate parent of the surviving entity were
directors of the Company prior to its organization.
“Territory”
shall mean any state of the United States and any equivalent section or area of
any country in which the Company has revenue-producing customers or
activities.
“Company”
shall mean Water Chef, Inc., a Delaware corporation, together with such
subsidiaries of the Company as may from time to time exist.
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2.
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Positions,
Responsibilities, and Terms of
Employment.
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2.01 Position. Employee shall
serve as Chief Financial Officer and in such additional management position(s)
as the Board shall designate. In this capacity Employee shall, subject to the
bylaws of the Company, and to the direction of the Board and the Chief Executive
Officer, serve the Company by performing such duties and carrying out such
responsibilities as are normally related to the position of Chief Financial
Officer in accordance with the standards of the industry. The Board shall either
vote, or recommend to the shareholders of the Company, as appropriate, that
during the term of employment pursuant to this Agreement: (i) Employee be
nominated for election as a director at each meeting of shareholders held
for
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the
election of directors; (ii) Employee be elected to and continued in the office
of Chief Financial Officer of the Company and such of its subsidiaries as he may
select; (iii) Employee be elected to and continued on the Board of each
subsidiary of the Company, (iv) if the Board of the Company or any of its
subsidiaries shall appoint an executive committee (or similar committee
authorized to exercise the general powers of the Board), Employee be elected to
and continued on such committee; and (v) neither the Company nor any of its
subsidiaries shall confer on any other officer or employee other than the Chief
Executive Officer authority, responsibility, powers or prerogatives superior or
equal to the authority, responsibility, prerogatives and powers vested in
Employee hereunder.
2.02 Best Efforts Covenant.
Employee will, to the best of his ability, devote a substantial portion
of his professional and business time and best efforts to the performance of his
duties for the Company and its subsidiaries and affiliates. However, this will
not prevent Employee from engaging in other business entities that do not
interfere with his responsibilities as Chief Financial Officer.
2.03 Non-Exclusivity; No Adverse
Participation. During this Agreement’s term, Employee will be free to
engage in any other employment, occupation or business enterprise so long as
they do not interfere with his ability to perform his duties under this
Agreement. However, Employee agrees not to acquire, assume, or
participate in, directly or indirectly, any position, investment, or interest in
the Territory adverse or antagonistic to the Company, its business or prospects,
financial or otherwise, or take any action towards any of the foregoing. The
provisions of this Section shall not prevent Employee from owning shares of any
competitor of the Company so long as such shares (i) do not constitute more than
5% of the outstanding equity of such competitor, and (ii) are regularly traded
on a recognized exchange or listed for trading by NASDAQ in the over-the-counter
market.
2.04 Post-Employment
Non-competition/Non-Solicitation Covenant. Except with the prior written
consent of the Board, Employee shall not engage in activities in the Territory
either on Employee’s own behalf or that of any other business organization,
which are in direct or indirect competition with the Company for a period of one
(1) year subsequent to Employee’s voluntary withdrawal from employment with the
Company (except for a termination pursuant to a Change in Control), or the
Company’s termination of Employee’s employment for Cause. Employee and the
Company expressly declare that the territorial and time limitations contained in
this Section and the definition of “Territory” are entirely reasonable at this
time and are properly and necessarily required for the adequate protection of
the business and intellectual property of the Company. If such territorial or
time limitations, or any portions thereof, are deemed to be unreasonable by a
court of competent jurisdiction, whether due to passage of time, change of
circumstances or otherwise, Employee and the Company agree to a reduction of
said territorial and/or- time limitations to such areas and/or periods of time
as said court shall deem reasonable.
For a
period of one year subsequent to Employee’s voluntary withdrawal from employment
with the Company (except for a termination pursuant to a Change in Control), or
the Company’s termination of Employee’s employment for Cause, Employee will not
without the express prior written approval of the Board (i) directly or
indirectly, in one or a series of transactions, 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 or had a business relationship with the Company
within the twenty-four (24) month period preceding the date of the incident in
question, to discontinue, reduce, or modify such employment, agency or business
relationship with the Company, or (ii) employ or seek to employ or cause any
business organization in direct or indirect competition with the Company to
employ or seek to employ any person or agent who is then (or was at any time
within six months prior to the date Employee or the competitive business employs
or seeks to employ such person) employed or retained by the Company.
Notwithstanding the foregoing, nothing herein shall prevent Employee from
providing a letter of recommendation to an employee with respect to a future
employment opportunity.
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2.05 Confidential Information.
Employee recognizes and acknowledges that the Company’s trade secrets and
proprietary information and know-how, as they may exist from time to time
(“Confidential Information”), are valuable, special and unique assets of the
Company’s business, access to and knowledge of which are essential to the
performance of Employee’s duties hereunder. Employee will not, during or after
the term of his employment by the Company, in whole or in part, disclose such
secrets, information or know-how to any Person for any reason or purpose
whatsoever, nor shall Employee make use of any such property for his own
purposes or for the benefit of any Person (except the Company) under any
circumstances during or after the term of his employment, provided that after
the term of his employment these restrictions shall not apply to such secrets,
information and know-how which are then in the public domain (provided that
Employee was not responsible, directly or indirectly, for such secrets,
information or processes entering the public domain without the Company’s
consent). Employee shall have no obligation hereunder to keep confidential any
Confidential Information if and to the extent disclosure of any thereof is
specifically required by law; provided, however, that in the
event disclosure is required by applicable law, Employee shall provide the
Company with prompt notice of such requirement, prior to making any disclosure,
so that the Company may seek an appropriate protective order. Employee agrees to
hold as the Company’s property all memoranda, books, papers, letters, customer
lists, processes, computer software, records, financial information, policy and
procedure manuals, training and recruiting procedures and other data, and all
copies thereof and therefrom, in any way relating to the Company’s business and
affairs, whether made by him or otherwise coming into his possession, and on
termination of his employment, or on demand of the Company at any time, to
deliver the same to the Company. Employee agrees that he will not use or
disclose to other employees of the Company, during the term of this Agreement,
confidential information belonging to his former employers.
Employee
shall use his best efforts to prevent the removal of any Confidential
Information from the premises of the Company, except as required in his normal
course of employment by the Company. Employee shall use his best efforts to
cause all persons or entities to whom any Confidential Information shall be
disclosed by him hereunder to observe the terms and conditions set forth herein
as though each such person or entity was bound hereby.
2.06 Records, Files. All
records, files, drawings, documents, equipment and the like relating to the
business of the Company which are prepared or used by Employee during the term
of his employment under this Agreement shall be and shall remain the sole
property of the Company.
2.07 Hired to Invent. Employee
agrees that every improvement, invention, process, apparatus, method, design.,
and any other creation that Employee may invent, discover, conceive, or
originate by himself or in conjunction. with any other Person during the term of
Employee’s employment under this Agreement that relates to the business carried
on by the Company during the term of Employee’s employment under this Agreement
shall be the exclusive property of the Company. Employee agrees to disclose to
the Company every patent application, notice of copyright, or other action taken
by Employee or any affiliate or assignee to protect intellectual property during
the 12 months following Employee’s termination of employment at the Company, for
whatever reason, so that the Company may determine whether to assert a claim
under this Section or any other provision of this Agreement.
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2.08 Equitable Relief.
Employee acknowledges that his services to the Company are of a unique
character which give them a special value to the Company. Employee further
recognizes that violations by Employee of any one or more of the provisions of
this Section 2 may give rise to losses or damages for which the Company cannot
be reasonably or adequately compensated in an action at law and that such
violations may result in irreparable and continuing harm to the Company.
Employee agrees that, therefore, in addition to any other remedy which the
Company may have at law and equity, including the right to withhold any payment
of compensation under Section 4 of this Agreement, the Company shall be entitled
to injunctive relief to restrain any violation, actual or threatened, by
Employee of the provisions of this Agreement.
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3.
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Compensation.
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3.01 Minimal Annual Compensation.
The Company shall pay to Employee for the services to be rendered
hereunder a base salary at an annual rate of sixty thousand dollars ($60,000)
(the “Minimum Annual Compensation”). There shall be an annual review for merit
by the Board and an increase as deemed appropriate to reflect the value of
services by Employee. At no time during the term of this Agreement shall
Employee’s annual base salary fall below the Minimum Annual Compensation. In
addition, if the Board increases the Minimum Annual Compensation at any time
during the term of this Agreement, such increased Minimum Annual Compensation
shall become a floor below which Employee’s compensation shall not fall at any
future time during the term of this Agreement and shall become Minimum Annual
Compensation.
Employee’s
salary shall be payable in periodic installments in accordance with the
Company’s usual practice for employees of the Company.
3.02 Incentive Compensation.
In addition to the Minimum Annual Compensation, Employee shall be entitled to
receive payments under the Company’s incentive compensation and/or bonus
program(s) (as in effect from time to time), if any, in such amounts as are
determined by the Company to be appropriate for employees of the Company. Any
incentive compensation which is not deductible in the opinion of the Company’s
counsel, under § 162(m) of the Internal Revenue Code shall be deferred and paid,
without interest, in the first year or years when and to the extent such payment
may be deducted, Employee’s right to such payment being absolute, subject only
to the provisions of Section 2.08.
3.03 Participating in Benefits.
Employee shall be entitled to all Benefits for as long as such Benefits
may remain in effect and/or any substitute or additional Benefits made available
in the future to employees of the Company, subject to and on a basis consistent
with the terms, conditions and overall administration of such Benefits adopted
by the Company. Benefits paid to Employee shall not be deemed to be in lieu of
other compensation to Employee hereunder as described in this Section
3.
3.04 Specific Benefits. During
the term of this Agreement (and thereafter to the extent this Agreement shall
require):
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A.
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Employee
shall be entitled to five (5) weeks of paid vacation time per year, to be
taken at times mutually acceptable to the Company and
Employee.
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B.
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The
Company shall provide fully paid accident and health insurance for
Employee and his family unless waived by
Employee.
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C.
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In
recognition of the necessity of the use of an automobile to the efficient
and expeditious performance of Employee’s services, duties and obligations
to and on behalf of the Company, the Company shall provide to Employee, at
the Company’s sole cost and expense, a car to be chosen by Employee with
an aggregate leasing cost to the Company of not more than one thousand
dollars ($1,000) per month. In addition thereto, the Company shall bear
the expense of insurance, fuel and
maintenance.
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D.
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In
addition to the vacation provided pursuant to Section 3.04(a) hereof,
Employee shall be entitled to not less than ten (10) paid holidays (other
than weekends) per year, generally on such days on which the New York
Stock Exchange is closed to
trading.
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E.
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Employee
shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by him (in accordance with the policies and procedures
established by the Company or the Board for the similarly situated
employees of the Company) in performing services
hereunder.
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F.
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Upon
submission of travel and expense reports accompanied by proper vouchers,
the Company will pay or reimburse Employee for all transportation, hotel,
living and related expenses incurred by Employee on business trips away
from the Company’s principal office, and for all other business and
entertainment expenses reasonably incurred by him in connection with the
business of the Company and its subsidiaries during the term of this
Agreement.
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G.
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Employee
shall be eligible to participate during the Employment Period in Benefits
not inconsistent or duplicative of those set forth in this Section 3.04 as
the Company shall establish or maintain for its employees or executives
generally.
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4.
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Termination.
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4.01 Termination by Company for Other
Than Cause. If during the term of this Agreement the Company terminates
the employment of Employee and such termination is not for Cause, then, subject
to the provisions of Section 2.08, the Company shall pay to Employee the Company
shall pay to Employee, in one lump sum as soon as practicable, but in no event
later than sixty (60) days after the date of such termination, the Minimum
Annual Compensation times the number of years, or portions thereof, remaining in
the term of this Agreement. Upon a termination pursuant to this Section 4.01,
all Employee’s stock, options and warrants will become fully vested and any
restricted stock will no longer be restricted to the extent permitted by law. To
the extent that Employee is not fully vested in retirement Benefits from any
pension, profit sharing or any other retirement plan or program (whether tax
qualified or not) maintained by the Company, the Company shall pay directly to
Employee the difference between the amounts which would have been paid to
Employee had he been fully vested on the date that his employment terminated and
the amounts actually paid or payable to Employee pursuant to such plans or
programs.
4.02 Constructive Discharge.
If the Company fails to reappoint Employee to (or rejects Employee for)
the position or positions listed in Section 2.01, fails to comply with the
provisions of Section 3, or engages in any other material breach of the terms of
this Agreement, Employee may at his option terminate his employment and such
termination shall be considered to be a termination of Employee’s employment by
the Company for reasons other than Cause pursuant to Section 4.01.
4.03 Termination by the Company for
Cause. The Company shall have the right to terminate the employment of
Employee for Cause. Effective as of the date that the employment of Employee
terminates by reason of Cause, this Agreement, except for Sections 2.04 through
2.08, shall terminate and no further payments of the Compensation described in
Section 3 (except for such remaining payments of Minimum Annual Compensation
under Section 3.01 relating to periods during which Employee was employed by the
Company, Benefits which are required by applicable law to be continued, and
reimbursement of prior expenses under Section 3.04) shall be made.
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4.04 Change in Control. If any
time during the term of this Agreement there is a Change of Control and
Employee’s employment is terminated by the Company for reasons other than Cause
within the greater of one (1) year following the Change in Control or the
remaining term of this Agreement, the Company shall pay to Employee an amount
equal to the monthly portion of the Minimum Annual Compensation multiplied by
the greater of twelve (12) or the number of months remaining in the term of this
Agreement. This amount shall be paid to Employee in one lump sum as soon as
practicable, but in no event later than sixty (60) days, after the date that
Employee’s employment terminated. Upon a change of control all Employee’s stock,
options and warrants will become fully vested and any restricted stock will no
longer be restricted to the extent permitted by law. To the extent that Employee
is not fully vested in retirement Benefits from any pension, profit sharing or
any other retirement plan or program (whether tax qualified or not) maintained
by the Company, the Company shall pay directly to Employee the difference
between the amounts which would have been paid to Employee had he been fully
vested on the date that his employment terminated and the amounts actually paid
or payable to Employee pursuant to such plans or programs.
4.05 Termination on Account of
Employee’s Death. In the event of Employee’s death during the term of
this Agreement:
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1.
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This
Agreement shall terminate except as provided in this Section;
and
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2.
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The
Company shall pay to Employee’s beneficiary or beneficiaries (or to his
estate if he fails to make such designation) an amount equal to the
Minimum Annual Compensation times the number of years, or portions
thereof, remaining in the term of this Agreement. This amount shall be
paid in one lump sum as soon as practicable after the date of his
death.
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3.
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Employee
may designate one or more beneficiaries for the purposes of this Section
by making a written designation and delivering such designation to an
officer of the Company. If Employee makes more than one such written
designation, the designation last received before Employee’s death shall
control.
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4.06 Termination on Account of
Employee’s Disability. If Employee shall sustain a Disability and be
unable to perform his duties and responsibilities during the term of this
Agreement, the Company shall continue to pay Employee an amount equal to
two-thirds (2/3) of the Minimum Annual Compensation as in effect on the date of
Employee’s cessation of services by reason of Disability less any amounts paid
to Employee as Workers Compensation, Social Security Disability benefits (or any
other disability benefits paid to Employee as federal, state, or local
disability benefits) and any amounts paid to Employee as disability payments
under any disability plan or program for a period ending on the earlier of (a)
the end of the term of this Agreement (as in effect on the date of such
Disability, (b) the date that Employee again becomes employed in a significant
manner and on a substantially full-time basis; (c) the date that Employee
attains normal retirement age, as such age is defined in a retirement plan
maintained by the Company, or (d) Employee begins to receive retirement benefits
from a retirement plan maintained by the Company.
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5.
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Miscellaneous.
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5.01 Assignment. This
Agreement and the rights and obligations of the parties hereto shall bind and
inure to the benefit of each of the parties hereto and shall also bind and inure
to the benefit of any successor or successors of the Company in a
reorganization, merger or consolidation and any assignee of all or substantially
all of the Company’s business and properties, but, except as to any such
successor of the Company, neither this Agreement nor any rights or benefits
hereunder may be assigned by the Company or Employee.
5.02 Initial Term and
Extensions. Except as otherwise provided, the term of this Agreement
shall be five (5) years commencing with the effective date hereof. On the fifth
(5th)
anniversary of the effective date, and on each subsequent annual anniversary of
the effective date thereafter, this Agreement shall be automatically extended
for an additional year unless either party notifies the other in writing more
than 90 days prior to the relevant anniversary date that this Agreement is no
longer to be extended.
5.03 Governing Law. This
Agreement shall be construed in accordance with and governed for all purposes by
the laws of the State of New York, without giving effect to any principles of
conflicts of law thereunder.
5.04 Interpretation. In case
any one or more of the provisions contained in this Agreement shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Agreement, but this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.
5.05 Notice. Any notice
required or permitted to be given hereunder shall be effective when received and
shall be sufficient if in writing and if personally delivered or sent by prepaid
cable, telex or registered air mail, return receipt requested, to the party to
receive such notice at its address set forth at the end of this Agreement or at
such other address as a party may by notice specify to the other.
5.06 Amendment and Waiver.
This Agreement may not be amended, supplemented or waived except by a
writing signed by the party against which such amendment or waiver is to be
enforced. The waiver by any party of a breach of any provision, of this
Agreement shall not operate to, or be construed as a waiver of, any other breach
of that provision nor as a waiver of any breach of another
provision.
5.07 Binding Effect. Subject
to the provisions of Section 4 hereof, this Agreement shall be binding on, and
inure to the benefit of, the successors and assigns of the parties
hereto.
5.08 Survival of Rights and
Obligations. All rights and obligations of Employee or the Company
arising during the term of this Agreement shall continue to have full force and
effect after the termination of this Agreement unless otherwise provided
herein.
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IN
WITNESS WHEREOF, the parties hereto have caused this Employment Agreement to be
duly executed as of the day and year first above written.
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WATER
CHEF, INC.
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By:
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/s/ Xxxxxx X. Xxxxxxx | ||
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Name:
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Xxxxxx
X. Xxxxxxx
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Title:
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Chief
Executive Officer
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| /s/ Xxxxx X. Xxxxx | |
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XXXXX
X. XXXXX
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