EMPLOYMENT CONTRACT
THIS CONTRACT OF EMPLOYMENT (hereinafter "Contract") is
dated and effective as of the 15th day of May 2002, by and
between Emission Controls Corporation a Delaware corporation
(hereinafter the "Company"), and Xxx Xxxxx (hereinafter
"Executive").
Recitals
A. Executive has been instrumental in the organization of
the original Emission Controls Corporation (a Nevada
corporation), the Company and its business.
B. Executive is expected to continue to make a major
contribution to the profitability, growth and financial strength
of the Company.
C. The Company considers the continued services of the
Executive to be in the best interest of the Company and its
shareholders and desires to assure the continued services of the
Executive on behalf of the Company on an objective and impartial
basis and without distraction or conflict of interest in the
event of an attempt to obtain control of the Company.
D. Executive is willing to remain in the employ of the
Company under the terms and conditions hereof and upon the
understanding that the Company will provide him with the income
security herein if his employment is terminated by the Company
without cause or if he voluntarily terminates his employment for
good reason.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties to this Contract hereby agree as
follows:
Agreement
1. Employment. The Company hereby agrees to employ
Executive as Chief Executive Officer and President of the
Company. Executive accepts such employment and agrees to be
subject to the general supervision, orders, advice and direction
of the Board of Directors of the Company in a manner consistent
with the Articles of Incorporation and By-Laws of the Company.
2. Terms of Employment and Compensation. Executive's term
of employment (the "Employment Term") hereunder shall start on
the date first written above and continue until such employment
terminates pursuant to Section 7 hereof. In consideration for
providing services hereunder Executive shall be compensated
through the salary and bonus provisions of Section 3 and shall
also receive Six Hundred Seventy-Five Thousand (675,000) shares
of restricted stock in the company upon execution of this
Contract.
3. Salary and Bonus. Executive's salary for the first year
hereunder shall be $78,000 per year. Thereafter during the
Employment Term, Executive's salary shall be increased each year
by an amount equal to Executive's salary for the previous year
multiplied by the percent change of the Consumer Price Index for
all Urban Consumers (the "CPI") (published by the Bureau of Labor
Statistics, United States Department of Labor) during the
immediately preceding calendar year, provided such percent change
is not less than 8%. If such percent change in the CPI is less
than 8%, the factor by which Executive's salary hereunder shall
be increased shall be 8%. For example, if the percent change in
the CPI from January 1, 2003 to December 31, 2003 were 10%,
Executive's salary for the second year hereunder would be
$85,800. Then, if the percent change in the CPI from January 1,
2004 to December 31, 2004 were 3%, Executive's salary for the
third year hereunder would be $88,374 (85,800 x 3%). Executive's
salary shall be payable on the Company's regular salary payment
dates. In addition, within 90 days after the end of each fiscal
year during the Employment Term, Executive shall receive a bonus
which shall not be less than 10% of Executive's base salary
received during such fiscal year. In determining the amount of
the bonus to be awarded to Executive, the Board shall consider
the contributions made by Executive during the immediate fiscal
year toward improvement in the Company's financial condition,
operating results, business or prospects. For example, the Board
shall consider increases in the net or total sets, or gross or
net profits, of the Company as well as Executive's success in
recruiting competent and experienced management personnel,
consummating targeted acquisitions and similar matters. The
salary and bonus payments hereunder shall be subject to
withholding and any other applicable tax law.
4. Salary Guarantee. All salaries payable to the
Executive under the Agreement will be guaranteed ("the Guaranteed
Payments") as of the execution date of the Agreement for the full
Employment Term of the Agreement plus three (3) years following
the date of termination except for terminations for violations
found in Section 7(b) (ii) and (iii) relating to acts of fraud or
dishonesty for personal enrichment, or conviction of any felony
or material tort which is detrimental to the Company.
a. None of the Guaranteed Payments described in this
Section shall prevent the Executive from receiving the
Termination Benefits described in Section 13 of the
Agreement.
b. All guaranteed Payments described in this Section and
payable to the Executive shall be payable to the Estate of
Xxx Xxxxx in the event of death of the Executive.
c. In the event of any mental disability which renders the
Executive unable to fulfill his duties pursuant to Section 1
of this Agreement, all Guaranteed Payments shall be made to
Xxx Xxxxx, his attorney in fact, his personal
representative, his guardian, or any other such person
legally specifically listed, to whom is legally authorized
to receive monetary payments due and owing to Xxx Xxxxx.
d. In the event of any physical disability which renders
the Executive unable or unwilling to fulfill his duties
pursuant to Section 1 of this Agreement, all Guaranteed
Payments shall be made directly to the Executive.
e. Guaranteed Payments as provided in this Section shall
consist of the equivalent of two (2) full years of salary
and the balance of the year of termination, said guaranteed
payments shall begin the day after the date of termination
and continue on the regular payment schedule hereunder until
paid in full, also, said guaranteed payments shall also be
subject to the cost of living increases as provided for in
Section 2 hereof.
5. Reimbursement for Expenses. The Company shall, during
the Employment Term, reimburse Executive for all reasonable
travel, business entertainment and other business expenses
(including a $500.00 monthly allowance for car expenses) incurred
by Executive in rendering services under this Contract. Such
reimbursement shall be subject to compliance with the applicable
policies and procedures established by the Company.
6. Fringe Benefits. During the Employment Term, Executive
shall be entitled to participate in the Company's corporate,
medical and disability insurance plans. The Company shall also
provide Executive with 4 weeks vacation per year. Executive
shall be entitled to all other fringe benefit programs.
7. Termination. The Employment Term shall terminate on
the first to occur of the following events:
(a) the Company giving Executive written notice at least 90
days before the anniversary date of the Contract of its
intention not to renew; if such timely notice is not given,
the Contract will automatically be renewed for another year.
(b) termination by the Company for cause, upon written
notice (specifying the particulars) to Executive from the
Company's Board of Directors, which cause shall be limited
to.
(i) the persistent failure of or refusal by the
Executive to comply with the material orders, advice,
directions, policies, standard and regulations of the
Company and its Board of Directors, as promulgated from
time to time, or with the provisions of this Contract,
which failure or refusal is detrimental to the Company;
(ii) an act or acts of fraud or dishonesty by Executive
resulting in or tending to result in gain to or
personal enrichment of Executive at the Company's
expense;
(iii) any felony conviction of Executive or material
tort which is detrimental to the Company;
(iv) the persistent absence by Executive from his
employment without cause or explanation;
(c) the death of Executive;
(d) the 90th day after notice from the Company to Executive
that Executive is considered to be permanently disabled due
to his inability to perform his duties or fulfill his
responsibilities hereunder, which inability existed for a
period of 90 days or more before such notice; or
(e) termination by Executive, at his option, after 90 days
prior written notice to the Company.
Upon termination of Executive's employment pursuant to Subsection
7(b)(ii) and 7(b)(iii), Executive (or his estate) shall receive
(i) any unpaid salary payments with respect to period prior to
the date of termination, and (ii) any termination, disability or
death benefits to which he is entitled under any employee benefit
plan of the Company which is in effect at the time of the
termination of his employment.
In all other events of termination, Executive shall continue
to receive the Guaranteed Payments.
8. Agreement Not to Compete. Executive agrees that if his
employment is terminated (a) by the Company pursuant to
Subsection 7(b) hereof or (b) by Executive pursuant to Subsection
7(e) hereof, unless such termination is for "good reason" as
defined in Subsection 14(b) hereof, he shall not, for a period of
two years from the date his employment hereunder terminates, (x)
directly or indirectly sell or attempt to sell, within Indiana,
on behalf of himself or any other person, corporation or entity,
any type of product marketed by the Company at the time his
employment is terminated, (y) directly or indirectly sell or
attempt to sell any type of product marketed by the Company at
the time his employment is terminated to any person, corporation
or other entity that is a customer of the Company at the time his
employment is terminated, and (z) within Indiana, directly or
indirectly, own manage, operate, control, be employed by,
participate in, or be connected in any manner with the ownership,
management, operation, or control of any business similar to the
type of business conducted by the Company at the time of
termination of Executive's employment hereunder; provided,
however, that Executive may be a shareholder of less than 5% of
the outstanding shares of voting stock of any company listed on a
recognized stock exchange or traded in the NASD over-the-counter
market.
9. Technical Information. Executive covenants and agrees
that during the Employment Term and for a period of six months
after termination of the Employment Term (regardless of whether
Executive is terminated or defaults under any other provision of
this Contract) he will assign to the Company or its nominees all
of his right, title and interest in and to all "Technical
Information" (as hereinafter defined) which he makes, develops or
conceives, either alone or in conjunction with others; he will
disclose promptly to the Company all such Technical Information;
and he will cooperate with the Company in its efforts to protect
its rights of ownership in such Technical Information. For
purposes of this Contract, "Technical Information" shall mean and
include, but not be limited to, all software, processes, devices,
trademarks, trade names, copyrights, marketing plans,
improvement, and ideas relating to the business of the Company,
and all goodwill associated with any such time.
10. Covenant Against Disclosure of Technical and
Confidential Information. Executive agrees that while he is
employed by the Company and thereafter he shall not, directly or
indirectly, disclose or use to the detriment of the Company or
for the benefit of any other person, corporation or other entity,
any confidential information or trade secret (including, but not
limited to, the identity and needs of any customer of the
Company, the method and techniques of any of the business of the
Company, the marketing, sales, costs and pricing plans and
objectives of the Company, the problems, developments, research
records, and Technical Information), of the Company or of any of
the affiliates of the Company. Furthermore, Executive shall
deliver promptly to the Company upon termination of his
employment, or at any time the Company may so request, all
memoranda, notes, records, reports, manuals, software, models,
designs, and other documents and computer records (and all copies
thereof) relating to the business of the Company, and all
property associated therewith, which he may then possess or have
under his control. This Contract supplements and does not
supersede Executive's obligations under statute or the common law
to protect the Company's trade secrets and confidential
information.
11. Remedy. Executive acknowledges that the
restrictions contained in Sections 7 through 10 of this Contract
are reasonable and that the legal remedies for breach of the
covenants which are contained in Sections 7 through 9 of this
Contract may be inadequate and, therefore, agrees that, in the
event of any actual or threatened breach of any such covenant, in
addition to any other right or remedy which the Company may have,
the Company may: (a) seek specific enforcement of any such
covenant through injunction or other equitable relief, and (b)
recover from Executive an amount equal to (i) all sums paid by
the Company to him after commencement of the breach, plus (ii)
all costs and expenses (including attorneys' fees) incurred by
the Company in enforcement of the covenant, plus (iii) all other
damages to which the Company may be legally entitled.
12. Undertaking To Pay Termination Benefits. In
addition to the payments Executive shall receive under Section 4
hereof in the event of the termination of his employment, the
Company agrees to pay to the Executive the Termination Benefits
specified in Section 13 hereof if (a) control of the Company is
acquired (as defined in paragraph 14(a) hereof and (b) within
three years after the acquisition of control occurs (i) the
Company terminates the employment of Executive for any reason
other than cause (as defined in Subsection 7(b)(ii) and 7(b)(iii)
or 7(c) hereof, and permanent and total disability, or (ii)
Executive voluntarily terminates his employment for good reason
(as defined in Section 14(b) hereof).
13. Termination Benefits. If Executive is entitled to
termination benefits pursuant to paragraph 12 hereof, the Company
agrees to pay to Executive as termination compensation in a lump-
sum payment within five calendar days of the termination of
Executive's employment an amount to be computed by multiplying
(a) Executive's average annual compensation payable by the
Company which was includable in the gross income of Executive for
the most recent five calendar years ending coincident with or
immediately before the date on which control of the Company is
acquired (or such portion of such period during which Executive
was an employee of the Company), by (b) 299%. For purposes of
this Contract, employment and compensation paid by any direct or
indirect subsidiary of the Company, if any will be deemed to be
employment and compensation paid by the Company.
The Termination Benefits described in this section are
payable to the Executive regardless of any determination by the
Company's independent public accountants that payments made
pursuant to this section are or would be non-deductible by the
Company for federal income tax purposes because of Section 280G
of the Internal Revenue Code of 1986 or any subsequent revisions
in the Internal Revenue Code.
14. Definitions.
(a) As used in this Contract, the "acquisition of control":
means (i) attaining ownership of 25% or more of the shares
of voting stock of the Company by any person or group (other
than a person or group including Executive or with whom or
which Executive is affiliated), or (ii) the occurrence of a
"change of control" required to be described under the proxy
disclosure rules of the Securities and Exchange Commission.
(b) As used in this Contract, the term "good reason" means,
without Executive's written consent, (i) a change in
Executive's status, position or responsibilities which, in
his reasonable judgment, does not represent a promotion from
his status, position or responsibilities as in effect
immediately prior to the change in control; the assignment
to Executive of any duties or responsibilities which, in his
reasonable judgment, are inconsistent with such status,
position or responsibilities; or any removal of Executive
from or failure to reappoint or reelect him to any of such
positions, except in connection with the termination of his
employment for total and permanent disability, death or
pursuant to Subsection 7(ii) or 7(iii) herein or by him
other than for good reason; (ii) a breach by the Company of
its covenants under this Contract after a change in control;
(iii) the relocation of the Company's principal executive
offices to a location outside the Indianapolis, Indiana
metropolitan area or the Company's requiring him to be based
at any place other than the location at which he performed
his duties prior to a change in control except for required
travel on the Company's business to an extent substantially
consistent with his business travel obligations at the time
of a change in control; (iv) the failure by the Company to
continue to provide Executive with benefits substantially
similar to those enjoyed by him or to which he was entitled
under any of the Company's pension, profit sharing, life
insurance, medical, dental, health and accident, or
disability plans in which he was participating at the time
of a change in control, the taking of any action by the
Company which would directly or indirectly materially reduce
any of such benefits or deprive him of any material fringe
benefit enjoyed by him or to which he was entitled at the
time of the change in control, or the failure by the Company
to provide him with the number of paid vacation and sick
leave days to which he is entitled on the basis of years of
service with the Company in accordance with the Company's
normal vacation and sick leave policies and consistent with
Section 6 of this Contract, (v) the failure of the Company
to obtain a satisfactory agreement from any successor or
assign of the Company to assume and agree to perform this
Contract; (vi) any purported termination of Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Subsection 15(c)
hereof (and, if applicable, Subsection 7(b) hereof); and for
purposes of this Contract, no such purported termination
shall be effective; or (vii) any request by the Company that
Executive participate in an unlawful act or take any action
constituting a breach of Executive's professional standard
of conduct.
Notwithstanding anything in this paragraph 14(b) to the contrary,
Executive's right to terminate his employment pursuant to
paragraph 12 herein shall not be affected by his incapacity due
to physical or mental illness.
15. Additional Provisions Relating to Termination.
(a) The Company is aware that upon the occurrence of a
change in control the Board of Directors or a shareholder of
the Company may then cause or attempt to cause the Company
to refuse to comply with its obligations under this
Contract, or may cause or attempt to cause the Company to
institute, or may institute litigation seeking to have this
Contract declared unenforceable, or may take or attempt to
take action to deny Executive the benefits intended under
this Contract. In these circumstances, the purpose of this
Contract could be frustrated. It is the intent of the
Company that Executive not be required to incur the expenses
associated with the enforcement of his rights under this
Contract by litigation or other legal action, nor be bound
to negotiate any settlement of his rights hereunder, because
the cost and expense of such legal action or settlement
would substantially detract from the benefits intended to be
extended to Executive hereunder. Accordingly, if following
a change in control it should appear to Executive that the
Company has failed to comply with any of its obligations
under this Contract or in the event that the Company or any
other person takes any action to declare this Contract void
or unenforceable, or institutes any litigation or other
legal action designed to deny, diminish or to recover from
Executive the benefits entitled to be provided to Executive
hereunder, and that Executive has complied with all of his
obligations under this Contract, the Company irrevocably
authorizes Executive from time to time to retain counsel of
his choice, at the expense of the Company as provided in
this Subsection 15(a), to represent Executive in connection
with the initiation or defense of any litigation or other
legal action, whether such action is by or against the
Company or any director, officer, shareholder, or other
person affiliated with the Company, in any jurisdiction.
Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the
Company irrevocably consents to Executive entering into an
attorney-client relationship with such counsel, and in that
connection the Company and Executive agree that a
confidential relationship shall exist between Executive and
such counsel. The reasonable fees and expenses of counsel
selected from time to time by Executive as hereinabove
provided shall be paid or reimbursed to Executive by the
Company on a regular, periodic basis upon presentation by
Executive of a statement or statements prepared by such
counsel in accordance with its customary practices, up to a
maximum aggregate amount of $500,000.00. Any legal expenses
incurred by the Company by reason of any dispute between the
parties as to enforceability of or the terms contained in
this Contract, notwithstanding the outcome of any such
dispute, shall be the sole responsibility of the Company,
and the Company shall not take any action to seek
reimbursement from Executive for such expenses.
(b) The Company shall not be entitled to set off against the
amounts payable to Executive of any amounts earned by
Executive in other employment after termination o f his
employment with the Company, or any amounts which might have
been earned by Executive in other employment had he sought
such other employment. Executive shall have no duty or
obligation to mitigate the compensation due to him under
this Contract.
(c) Any purported termination by the Company or by Executive
shall be communicated by written Notice of Termination to
the other party hereto in accordance with Section 22 hereof.
For purposes of this Contract, a "Notice of Termination"
shall mean a notice which shall indicate the specific
termination provision in this Contract relied upon and shall
set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of his employment
under the provision so indicated. For purposes of this
Contract, no such purported termination shall be effective
without such Notice of Termination.
16. Entire Agreement. This Contract contains the
entire agreement of the parties relating to the employment of
Executive by the Company, superseding any and all prior such
agreements, and cannot be amended, modified, or supplemented in
any respect by subsequent written agreement entered into by the
parties.
17. Benefit. Executive acknowledges that the services
to be rendered by him are unique and personal; accordingly,
Executive may not assign any of his rights or delegate any of his
duties or obligations under this Contract. The rights and
obligations of the Company shall inure to the benefit of, and be
binding upon, the legal representatives, successors and assigns
of the Company.
18. No Waiver. No failure on the part of either party
at any time to require the performance by the other party of any
term of this Contract shall be taken or held to be a waiver of
such term or in any way affect such party's right to enforce such
term, and no waiver on the part of either party of any term in
this Contract shall be taken or held to be a waiver of any other
term hereof or the breach thereof.
19. Severability. The provisions of Sections 8
through 11 hereof are severable, and the invalidity or
unenforceability of any particular provision of Sections 8
through 11 shall not affect or limit the enforceability of the
other provisions. If any provision in Sections 78 through 11
hereof is held unenforceable for any reason, including the time
period, geographic area, or scope of activity covered, then such
provision shall be enforced to whatever extent is reasonable and
enforceable.
20. Governing Law. This Contract shall be governed
and construed in accordance with the law of the State of Indiana
(other than the provisions relating to choice of law). The
parties hereto agree that any legal action arising from this
Contract may be brought in any state or federal court of record
in Indianapolis, Indiana and the parties hereto waive any right
to question the jurisdiction of such court over their person or
the propriety of such venue.
21. Captions. The captions in this Contract are for
convenience and identification purposes only, and not an integral
part of this Contract, and are not to be considered in the
interpretation of any part hereof.
22. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been
duly given if in writing and personally delivered to the party to
whom notice should be given or if sent by registered or certified
mail, postage prepaid, addressed to the addresses set forth
below, or to such other addresses as shall be furnished in
writing by either party to the other:
The Company: Emission Controls Corporation
X.X. Xxx 000
Xx. Xxxxxx, XX 00000
Executive: Xxx Xxxxx
0000 Xxxxxxxx Xxx., #000
Xxxx Xxxxx, XX 00000
IN WITNESS WHEREOF, the Company has caused this Contract to
be executed on its behalf by its duly authorized officer and
Executive has hereunto set his hand as of the date and year first
above written.
Emission Controls Corporation
By: Xxx Xxxxxxxx
Xxxxx X. Xxxxxxxx, Secretary
Executive
Xxx Xxxxx
Xxx Xxxxx
