EXHIBIT 10.15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated June 30, 2005, by and between WINDSWEPT
ENVIRONMENTAL GROUP, INC., a Delaware corporation (the "Company"), and XXXXXXX
X'XXXXXX (the "Executive").
WITNESSETH:
WHEREAS, the Executive currently serves as the President and Chief
Executive Officer of the Company and as a member of the Board of Directors of
the Company (the "Board of Directors"); and
WHEREAS, the Board of Directors believes it to be in the best interest of
the Company to enter into this Agreement to ensure the Executive's continued
employment by the Company in the capacity and under the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants set forth herein, the Company and the Executive agree as follows:
SECTION I
EMPLOYMENT
1.1 Employment. The Company will employ the Executive and the Executive
accepts employment on the terms and conditions set forth in this
Agreement.
1.2 Titles and Duties.
(a) The Executive shall be employed by the Company as its President and
Chief Executive Officer.
(b) The Executive shall continue to operate the Company on a day-to-day
basis as its President and Chief Executive Officer, and the Executive shall have
all duties and authority customarily accorded the President and Chief Executive
Officer of the Company. The Executive shall comply in all material respects with
all codes of ethics, codes of conduct and other rules, regulations and
guidelines of the Company.
(c) The Executive shall report to the Board of Directors of the Company.
(d) Executive may engage in personal business and investment activities for
his own account; provided, however, that such personal business and investment
activities do not in the reasonable opinion of the Board of Directors,
materially interfere with the performance of his duties under this Agreement.
(e) Executive agrees to serve as director of the Company, and as an officer
or director of any affiliate of the Company without any additional compensation
therefor other than as provided in this Agreement.
1.3 Term of Employment. The term of the Executive's employment hereunder
(the "Term of Employment") shall be for a five year period (the "Initial Term")
beginning on July 1, 2005 and ending on July 1, 2010 and shall automatically be
renewed for successive periods of one (1) year (each, a "Renewal Period")
commencing on July 1, 2010 unless either party notifies the other at least six
months prior to the end of the Initial Term or the current Renewal Period, as
the case may be, that it does not wish to renew the term of the Executive's
employment hereunder .
1.4 Location of Employment. The Executive may be required to move his
office to any location on Long Island, New York, but shall not otherwise be
required to move his office without the Executive's prior written consent.
1.5 Compensation.
(a) As compensation for the Executive's services during the Term of
Employment, the Company shall pay to the Executive a salary at the annual rate
of $285,000, payable in periodic installments in accordance with payroll
practices of the Company as in effect from time to time.
(b) Base Salary. The Executive's base salary shall be reviewed annually
solely for the purpose of awarding possible base salary increases (taking into
account factors relating to the Executive's performance as well as the Company's
performance as a whole). In the event an increase in Base Salary is awarded, the
Base Salary set forth above shall be automatically amended to reflect the new
amount.
(c) In addition to his salary, the Executive shall be entitled to receive a
cash bonus (the "Annual Bonus") in an amount equal to 2.5% of the "Pre-Tax
Income" of the
Company and its consolidated subsidiaries for each fiscal year during the
Term of Employment. For the purposes of this Agreement, the term "Pre-Tax
Income" shall mean the net income of the Company and its consolidated
subsidiaries as determined in accordance with generally accepted accounting
principles at the time applied on a basis consistent with the past practices of
the Company, before any charges for federal, state or other taxes on the income
of the Company and its consolidated subsidiaries. The Annual Bonus shall be paid
within thirty (30) days following the issuance by the Company of the audited
financial statements of the Company and its consolidated subsidiaries for the
relevant fiscal year. The Annual Bonus will be paid at such time on a pro rata
basis if Executive has not been employed pursuant to the terms of this Agreement
for the entire fiscal year.
(d) The Executive shall be entitled to participate in all employee pension
and welfare benefit plans, programs and practices maintained by the Company for
its employees generally in accordance with the terms of such plans, programs and
practices as in effect from time to time, and in any other insurance, pension,
retirement or welfare benefit plans, programs and practices which the Company
provides to its executives from time to time, including plans that supplement
such plans. The Executive shall be entitled to four (4) 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.
(e) The Company shall purchase or lease for the Executive's exclusive use a
new luxury class automobile of his choice and shall replace such automobile, at
the Executive's request, once every three (3) years. The Company shall pay, or
reimburse the Executive for his payment of, any and all reasonable expenses for
the maintenance and operation of such automobile, including fuel, oil,
maintenance and repairs, and the cost of liability and property damage
insurance.
(f) The Company shall also purchase or lease for the Executive's exclusive
use a beeper and cellular telephone of his choice and shall pay, or reimburse
the Executive for his payment of, all charges relating thereto.
(g) The Executive is authorized to incur reasonable ordinary and necessary
business expenses in the performance of his duties hereunder, including expenses
for travel,
entertainment and other business purposes. The Company shall reimburse the
Executive for all such expenses incurred by him, upon presentation of itemized
accounts and submission of receipts in accordance with Company's policies and
procedures.
(h) In addition to any group-term life insurance coverage available
pursuant to this Agreement, the Company shall, at its sole expense, provide
additional term or other life insurance coverage on the Executive's life
providing a death benefit to Executive's designated beneficiary of not less than
One Million Dollars ($1,000,000).
(i) The Company shall reimburse Executive for fees for membership in one
business or social club of his choice. Executive has elected to be a member of
the North Fork Preserve . If he so desires, he may stop seeking reimbursement
for expenses incurred in connection with such membership and obtain a corporate
membership at the Nissequogue Country Club or similar club.
(j) The Company has granted or shall grant to Executive the stock options
described in Schedule A, which shall be governed by the applicable equity
incentive plan and non-plan stock option agreements.
SECTION II
TERMINATION OF EMPLOYMENT
2.1 Termination.
(a) Death. The Executive's employment hereunder shall terminate upon his
death.
(b) Disability. The Company may terminate Executive's employment hereunder
due to the Executive's disability. For purposes of this Agreement, "disability"
means a physical or mental illness, incompetency or incapacity which results in
the Executive's inability to actively participate in the Company's business and
perform his duties as required under this Agreement where such incapacity has
lasted for a continuous period of not less than two hundred seventy (270) days.
The Executive shall receive full salary, pro rata bonus and benefits during such
two hundred seventy (270) day period.
(c) Cause. The Company may terminate the Executive's employment hereunder
for Cause. For the purpose of this Agreement, "Cause" shall be defined as (i)
willful misconduct by the Executive in the performance of his duties hereunder
which causes material damage or injury to the business or reputation of the
Company; (ii) Executive's direct and active fraud or embezzlement or material
violation of the Xxxxxxxx-Xxxxx Act of 2002 in the performance of the
Executive's duties; (iii) continuing refusal by the Executive to perform a
material portion of his duties hereunder which is not cured within thirty (30)
days after written notice to Executive specifying the duties which the Executive
has refused to perform; (iv) any material breach of Sections III or IV of this
Agreement to the detriment of the Company; or (v) the conviction of the
Executive for any felony which conviction results in material damage or injury
to the business or reputation of the Company.
(d) Executive may, for any reason, elect to terminate his employment
hereunder by providing ninety (90) days written notice.
(e) Resignation for Good Reason. The Executive may terminate his employment
hereunder for Good Reason which, for purposes hereof, shall be defined as:
(i) any substantial diminution of the duties or authority of the
Executive inconsistent with his title, authorities, duties
and responsibilities provided herein;
(ii) the failure of the shareholders of the Company to re-elect
the Executive as a Director of the Company;
(iii) any reduction or failure to pay the Executive's
compensation required to be paid pursuant this Agreement;
(iv) any reduction in the benefits required to be provided herein
or any other material breach of this Employment Agreement;
(v) breach of any option agreement or failure to issue shares as
required under any option, agreement or certificate; or,
(vi) any relocation of the principal location of Executive's
employment as set forth herein without his consent.
2.2 Effect of Termination.
(a) Termination by the Company for Cause or Due to Executive's Death or
Disability.If the Executive employed hereunder shall be terminated due to the
Executive's Death, disability or for Cause, the Company shall pay the Executive
his full salary, pro rata share of his Annual Bonus and other benefits through
the date of employment termination at the rate then in effect, and the Company
shall have no further obligations to the Executive under this Agreement except
his rights, if any, under any applicable health insurance, life insurance,
disability insurance and/or any other benefit plan or policy.
(b) Termination by the Company without Cause or Resignation by the
Executive with Good Reason. If the Executive's employment hereunder shall be
terminated by the Company other than for Cause, death or disability or shall be
terminated by the Executive by Resignation with Good Reason, the Company agrees
to pay an amount equal to the Base Compensation which would have been payable
pursuant to Section 1.5(a) hereof over the remaining Term of Employment and to
provide the benefits described or referenced in Sections
1.5(d), (h) and (i) during the remaining Term of Employment, subject to the
Executive's compliance in full with the terms and conditions of Section IV
hereof.
(c) Options. None of the stock options granted to the Executive on or prior
to the date hereof shall expire or be terminated as a result of the termination,
either by the Company for the Executive, of the Executive's employment by the
Company hereunder, including his Resignation for Good Reason, unless otherwise
specifically provided in the relevant stock option agreement or certificate.
2.3 No Mitigation.
Any amounts paid to Executive as a consequence of termination of employment
shall be paid as severance pay and not as liquidated damages. It is expressly
agreed that Executive shall have no duty to seek or accept subsequent employment
and any amounts or benefits received by him as a result of such subsequent
employment shall not be offset against any amounts required to be paid by the
Company hereunder.
SECTION III
CONFIDENTIAL INFORMATION AND INVENTIONS
3.1 Nondisclosure of Confidential Information.
(a) The Executive agrees to treat as confidential and retain in the
strictest confidence and shall not use, divulge, disclose or make accessible to
any other firm, partnership, corporation or any other person or entity outside
the Company any Confidential Information (as hereinafter defined), except (i)
while employed by the Company and in the business of and for the benefit of the
Company, (ii) when such information is in the public domain through no fault of
the Executive, or (iii) when required to do so by a court of competent
jurisdiction, by any governmental agency having supervisory authority over the
business of the Company, or by any administrative body or legislative body with
purported or apparent jurisdiction to order the Executive to divulge, disclose
or make accessible such information. The Executive agrees to exercise his best
efforts to prevent the unauthorized use of Confidential Information and to
ensure that Confidential Information shall be stored at locations and under such
conditions as to reasonably prevent the unauthorized disclosure, use or
duplication of such information and
materials. All Confidential Information disclosed by the Company to the
Executive under this Agreement (including, or without limitation, information
incorporated in computer software or held in electronic storage media) shall be
and remain the exclusive property of the Company. All such Confidential
Information shall not be retained in any form by the Executive for personal use
or otherwise and all physical embodiments and copies thereof shall be returned
to the Company at its request unless, at the Company's option, the Company
instructs the Executive to destroy all or any part of the same. Upon termination
of the Executive's services with the Company, all Confidential Information,
memoranda, notes, records, reports, papers, drawings, designs, computer files or
programs in any media, and other documents (and all copies) relating to the
business of the Company or its clients, and all associated property other than
material published by the Company for the general public then in the Executive's
possession, whether prepared by the Executive or others, will be returned to the
Company.
(b) For the purposes of this Agreement, "Confidential Information" means as
of any date all information in whatever form transmitted relating to the past,
present or proposed future business affairs of the Company and its affiliates or
another party whose information the Company has in its possession under
obligation of confidentiality, which is disclosed by the Company and its
affiliates to the Executive, or which is produced or developed during the
employment relationship including, without limitation, trade secrets, computer
programs, product and production planning, customer lists, research,
development, business plans, pricing and fee policies, information relating to
operations, systems, security, merchandising, marketing, affiliate relations,
products, financial data, and specialized knowledge, data or property concerning
any idea, invention, discovery, process, program or service or product provided,
used, developed, investigated, manufactured or considered by the Company, its
affiliates or its customers during the course of the employment of the Executive
by the Company, whether commercial or experimental or patented, patentable or
not and which is not publicly available.
3.2 Inventions.
(a) For the purposes of this Agreement, "Inventions" means any and all
inventions, ideas, disclosures or discoveries including improvements, original
works of authorship, designs, formulas, processes, computer programs, databases
and trade secrets and
related proprietary information and materials relating to the business of
the Company and its affiliates or the types of business in which it is engaged,
which Executive (solely or jointly with other) conceives, develops or makes
while employed by the Company. The Executive agrees that all Inventions that (i)
are developed using equipment, supplies, facilities or trade secrets of the
Company and its affiliates; (ii) result from services performed by the Executive
for the Company and its affiliates (solely or jointly with others); or (iii)
relate to the business or actual or anticipated research or development of the
Company and its affiliates, shall be the sole and exclusive property of the
Company, and the Executive shall, and hereby does, assign all of his rights to
such Inventions to the Company and its affiliates. The Executive agrees promptly
to disclose to the Company any Invention developed during or as the result of
the Executive's employment by the Company. In addition, the Executive hereby
transfers and assigns any "moral" rights that the Executive may have in any such
Inventions under any copyright or other similar law, whether domestic or
foreign. The Executive agrees to waive and never to assert any such "moral"
rights in any such Invention during or after the termination of his employment.
(b) The Executive agrees (at the Company's expense) to assist the Company
in obtaining and enforcing patents, copyrights, and other legal protections in
any and all countries for any Invention. The Executive agrees to execute any
documents that the Company considers necessary to enable it to obtain or enforce
such patents, copyrights and other legal protections. In addition, by execution
of this Agreement, the Executive hereby irrevocably designates and appoints the
Company and its duly authorized officers and agents as the Executive's agent and
attorney-in-fact to act for and in his behalf, to execute and file any and all
such documents as the Company in its discretion determine necessary or advisable
in obtaining or enforcing patents, copyrights and other legal protections, and
to do all other lawfully permitted acts to accomplish the same, with the same
legal force and effect as if executed by the Executive. The Executive
acknowledges that all original works of authorship that are made by the
Executive (solely or jointly with others) within the scope of the Executive's
employment at the Company and that are protected by copyright as "works made for
hire," as that term is defined in the United States Copyright Act (17 U.S.C. ss.
101).
3.3 Specific Enforcement. The Executive agrees that any breach of the
covenants contained in Sections 3.1 and 3.2 would irreparably injure the Company
and its affiliates. Accordingly, the Executive agrees that the Company may, in
addition to pursuing any other remedies it may have under this Agreement or
otherwise in law or in equity, have the provisions of this Agreement
specifically enforced by, and obtain an injunction against the Executive
restraining any further violation of this Agreement by the Executive from, any
court in the State of New York having jurisdiction over the matter.
SECTION IV
RESTRICTIVE COVENANTS
Executive hereby covenants and agrees that, during his employment with the
Company and, for a period of one (1) year following the date of the expiration
of the Term of Employment or, in the event of his termination of employment with
the Company prior to the expiration of the Term of Employment either by the
Company for Cause or by the Executive other than by Resignation for Good Reason,
for a period of one (1) year following the date of such termination, he shall
not, without the written consent of the Company; (1) become an officer,
employee, consultant, director or trustee of any entity, or any subsidiary or
affiliate of any such entity, that directly competes with the Company in any
market or service area in which it was active during Executive's employment by
the Company; (2) recruit on behalf of a competing entity any person (other than
a family member) who is an employee of the Company on the last day of employment
of Executive by the Company; or (3) solicit current clients on behalf of a
competitor of the Company.
SECTION V
INDEMNIFICATION AND ATTORNEYS' FEES
5.1 The Company shall indemnify and hold harmless Executive from and
against any and all liabilities, claims, costs, expenses or damages incurred in
connection with or arising out of any action, suit or proceeding relating to his
work for the Company to the fullest
extent permitted under the Delaware General Corporation Law; provided,
however that in any such action, suit or proceeding in which Executive is a
defendant, the Company shall have the right to select counsel and control the
defense unless it is an adverse party or unless such representation, in the
opinion of counsel to the Company, presents a conflict of interest.
5.2 If Executive requires a consultation with a tax advisor or attorney
with respect to any issues relating to the Xxxxxxxx-Xxxxx Act, any SEC Rule or
Regulation or any other corporate governance issue, Executive may personally
hire an accountant or lawyer of his choosing to discuss such matters. The
reasonable fees and costs for such professional services will be fully paid for
by the Company.
SECTION VI
6.1 Parties Benefited: Assignment. This Agreement shall become effective as
of the date hereof and, from and after that time, shall extend to and be binding
upon, and inure to the benefit of, the Executive, his heirs and his personal
representative or representatives, and the Company and its successors and
assigns (including any assignee of substantially all the assets of the Company).
Neither this Agreement nor any obligations hereunder may be assigned by the
Executive.
6.2 Notices. All notice given or served hereunder shall be in writing and
sent by (a) certified or registered mail, return receipt requested, (b) personal
delivery, with receipt or (c) Federal Express, Express Mail or other reputable
overnight courier service, with receipt, to the parties as follows:
If to the Executive:
Xxxxxxx X'Xxxxxx
00 Xxxxxxx Xx. Xxxx
Xxxx Xxxxxxxx, Xxx Xxxx 00000
If to the Company:
Windswept Environmental Group, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxx Xxxxx, Xxx Xxxx 00000
Attention: Chairman of the Board of Directors
Any such notice shall be deemed to have been received on delivery, in the
case of (b) above; on the second business day following mailing, in the case of
(a) above; and on the first business day following mailing or transmission in
the case of (c) or (d) above.
6.3 Severability. Each section and subsection of this Agreement constitutes
a separate and distinct provision hereof. It is the intent of the parties hereto
that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applicable in each jurisdiction
in which enforcement is sought. Accordingly, if any provision of this Agreement
shall be adjudicated to be invalid, ineffective or unenforceable, the remaining
provisions shall not be affected thereby.
6.4 Amendment. This Agreement contains the full and complete agreement of
the parties relating to the employment of the executive hereunder and supersedes
all prior agreements, arrangements or understandings, whether written or oral,
relating thereto. No amendment, supplement, modification, waiver or termination
of this Agreement shall be binding unless executed in writing by the parties. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof, nor shall such waiver
constitute a continuing waiver.
6.5 Disputes. Any dispute or question arising from this Agreement or its
interpretation shall be settled in accordance with the laws of the State of New
York before the state or federal courts in the State of New York. Each party
consents to the exclusive jurisdiction of such courts and shall bear its own
costs and expenses of such proceedings.
6.6 Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
6.7 Third Parties. Nothing expressed or implied in this Agreement is
intended, or shall be construed, to confer upon or give any person or entity
other than the Company and the Executive any rights or remedies under, or by
reason of, this Agreement.
6.8 Affiliate. As used herein, the term "affiliate" shall mean any
corporation, partnership or other business entity controlling, controlled by or
under common control with the Company.
6.9 Applicable Law. This Agreement shall be construed and applied in
accordance with the laws of the State of New York without regard to conflict of
law principles.
6.10 Captions and Headings. The captions and headings of the several
Articles and Sections herein are inserted for convenience of reference only and
are not intended to be part of or to affect the meaning or interpretation of
this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and delivered by its duly authorized officer, and the Executive has
duly executed and delivered this Agreement, as of the date first written above.
WINDSWEPT ENVIRONMENTAL GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title:
/s/ Xxxxxxx X'Xxxxxx
--------------------------------------
XXXXXXX X'XXXXXX
SCHEDULE A
NUMBER OF OPTIONS EXERCISE PRICE VESTING TERMINATION DATE
----------------- -------------- ------- ----------------
15,469,964 $0.09 Fully vested June 29, 2015
2,000,000 $0.01 Fully vested May 23, 2010
250,000 $0.1875 Fully vested May 23, 2010
2,811,595 $0.07904 Fully vested October 1, 2009
2,674,714 $0.07904(1) Fully vested October 1, 2009
650,000 $0.19 Fully vested September 10, 2006
250,000 $0.22 Fully vested December 28, 2007
200,000 $0.34 Fully vested August 17, 2008
------------------------
1 The exercise price is subject to standard adjustments with respect to the
occurrence of certain events, such as dividend payments or a reclassification of
the Company's common stock.
