Exhibit 10.18
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of this 15th day of June, 2002,
(the "Commencement Date") by and between H.E.R.C. PRODUCTS INCORPORATED, a
Delaware corporation (the "Corporation") and S. XXXXXX XXXX ("Executive").
A. The Corporation has employed Executive as its President and Chief
Executive Officer and wishes to continue to employ Executive in such capacities.
B. Executive is willing to be employed by the Corporation on the terms
and conditions set forth below.
The Corporation and Executive agree as follows:
1. EMPLOYMENT. The Corporation will employ Executive as its President and
Chief Executive Officer. Executive will also serve in such other capacities, as
the Board of Directors shall reasonably deem necessary. Executive will perform
such duties as may be required of him by the Corporation under and subject to
the instruction, direction and control of the Board of Directors of the
Corporation.
2. DEVOTION TO EMPLOYMENT. Executive accepts employment with the
Corporation on the terms and conditions of this Agreement, and will devote all
of his business time and effort to perform his duties on behalf of the
Corporation in his position as set forth in Paragraph 1, provided, however that
nothing herein shall be construed to prevent Executive from making and
supervising personal investments. During the term of this Agreement, Executive
shall not be actively engaged in any other business activity which will in any
way impair his ability to properly meet his obligations to the Corporation or
represent any activity competitive with the Corporation or detrimental to its
business. Executive agrees to comply with the reasonable policies, standards and
regulations of the Corporation from time to time established.
3. COMPENSATION AND BENEFITS. The Corporation agrees to pay Executive
compensation for his services as follows:
3.1 BASE SALARY. The Corporation will pay Executive an annual base
salary, subject to withholding taxes and other normal payroll deductions per the
following schedule:
Base Salary Period.
----------- -------
$150,000.00 6/15/2002-6/14/03
3.2 BONUSES. In addition to the Executive's Base Salary, Executive
shall be paid a bonus equal to the percentage specified below of the
Corporation's annual EBITDA, not including extraordinary accounting events or
any accounting impact from discontinued operations, during each of the periods
specified below during which this Agreement is in effect. Any bonus earned
pursuant to the preceding sentence shall be paid to Executive in cash or stock
of the Company within 30 days after the amount thereof has been determined by
HERC's independent auditors. If the Executive is paid in stock the closing bid
price for December 31 of the year within which the bonus is due shall be used
for the calculation of the amount of stock. Executive may also receive such
other bonuses and increases in Base Salary, if any, as may be awarded to him
from time to time by the Corporation's Board of Directors in the exercise of its
sole discretion:
Period Percentage
------ ----------
01/01/2002 - 12/31/2002 7.5%
3.3 BENEFITS. Executive shall be entitled to such medical, dental,
disability, life insurance and other benefits and perquisites, if any, no less
favorable than such as are afforded to any other senior executive of the
Corporation, subject to applicable waiting periods and other conditions.
Medical, dental and other health insurances shall also provide coverage for
Executive's spouse and dependent children, if any. Executive shall be entitled
to three weeks of vacation in each employment year and to a reasonable number of
other days off for religious and personal reasons.
3.4 BUSINESS EXPENSES. The Corporation will pay or reimburse
Executive for all transportation, hotel and other expenses reasonably incurred
by Executive on business trips and for all other ordinary and reasonable
out-of-pocket expenses actually incurred by him in the conduct of the business
of the Corporation against itemized vouchers submitted with respect to any such
expenses approved in accordance with customary procedures.
3.5 AUTO ALLOWANCE. The Corporation shall either, at the
Corporation's option, pay Executive the sum of $500 per month as an automobile
allowance for business use or provide Executive with a suitable automobile for
business use at the expense of the Corporation.
4. TERM. The term of this Agreement and Executive's employment hereunder
shall commence as of the Commencement Date, and shall continue for a term of one
(1) year, unless sooner terminated as provided herein. This agreement is subject
to automatic renewal under the terms hereof for one year periods provided,
however, that on or before six (6) months prior to the termination date under
paragraph 5 hereof, upon written notice provided to the Executive by the Company
or to the Company by the Executive, the terms of this Agreement shall be
renegotioated between Executive and Company or written notice of intent to
terminate this Agreement shall otherwise be given on such date.
5. SEVERANCE.
5.1 Early Termination. This Agreement shall terminate prior to the
end of its term: (a) upon the death of Executive, or (b) if Executive fails,
because of illness or incapacity, to render the services contemplated by this
Agreement for a period of six consecutive months. The Corporation may terminate
this Agreement and Executive's employment hereunder prior to the end of its term
for Cause, upon notice to Executive by the Corporation.
EMPLOYMENT AGREEMENT: S. XXXXXX XXXX 2
JUNE 15, 2002
5.2 WITH CAUSE. If Executive's employment hereunder is terminated
with "Cause" (as hereinafter defined), then in that event Executive shall
receive only the amount of Executive's salary payable to the effective date of
such termination. As used herein, the term "Cause" shall mean: (a) the refusal
or failure by Executive to carry out specific directions of the Chairman of the
Board, President and Chief Executive Officer of the Corporation which are of a
material nature and consistent with his status as an Executive of the
Corporation, or the refusal or failure by Executive to perform a material part
of Executive's duties hereunder, or a breach of any of Executive's fiduciary
duties to the Corporation; (b) fraudulent or dishonest action by Executive in
his relations with the Corporation or any of its Affiliates, or with any
customer or business contact of the Company or any of its Affiliates
("dishonest" for these purposes shall mean Executive's knowingly or recklessly
making of a material misstatement or omission for his personal benefit); or (c)
the conviction of Executive of any crime involving an act of moral turpitude.
Notwithstanding the foregoing, no Cause for termination shall be deemed to exist
with respect to Executive's acts described in clause (a) above unless the
Company shall have given written notice to Executive specifying the facts
sufficient to constitute Cause with reasonable particularity and, within five
business days after such notice, Executive shall not have cured or eliminated
the problem or thing giving rise to such of cause.
6. RESIGNATION AS DIRECTOR. If, for any reason; (a) Executive terminates
his employment with the Corporation, or; (b) the Corporation terminates
Executive's employment under the terms of this Agreement, or; (c) this Agreement
expires without being renewed or extended, then Executive will resign as a
director, effective upon the occurrence of such termination or expiration,
whichever is applicable if he is a director at that time.
7. PROTECTION OF CONFIDENTIAL INFORMATION: Non-Competition.
7.1 CONFIDENTIAL INFORMATION. Executive warrants that he is not
subject to any restriction on his executing and performing this Agreement, and
acknowledges and agrees that:
(a) As a result of his employment by the Corporation, Executive
has obtained and will obtain secret and confidential information concerning the
business of the Corporation and its Affiliates, including, without limitation,
financial information, patents and other proprietary rights, trade secrets and
"know-how," customers, and certain business methodologies ("Confidential
Information").
(b) The Corporation and its Affiliates will suffer substantial
damage, which will be difficult to compute if, during the period of his
employment with the Corporation or thereafter, Executive should divulge
Confidential Information or, thereafter, Executive should enter a business
competitive with those of the Corporation.
(c) The provisions of this Agreement are reasonable and
necessary for the protection of the business of the Corporation and its
Affiliates.
EMPLOYMENT AGREEMENT: S. XXXXXX XXXX 3
JUNE 15, 2002
7.2 MAINTAIN CONFIDENTIALITY. Executive agrees that he will not at
any time, either during the term of this Agreement or thereafter, divulge to any
person or entity any Confidential Information obtained or learned by him as a
result of his employment with the Corporation or any of its Affiliates, except
(a) in the course of performing his duties hereunder, (b) with the Corporation's
express written consent; (c) to the extent that any such information is in the
public domain other than as a result of Executive's breach of any of his
obligations hereunder; or (d) where required to be disclosed by court order
subpoena or other government process. If Executive shall be required to make
disclosure pursuant to the provisions of clause (d) of the preceding sentence,
Executive promptly, but in no event more than 72 hours after learning of such
subpoena, court order, or other government process, shall notify, by personal
delivery or by electronic means, confirmed by mail, the Corporation and, at the
Corporation's expense, Executive shall: (i) take all reasonably necessary steps
required by the Corporation to defend against the enforcement of such subpoena,
court order or other government process, and (ii) permit the Corporation to
intervene and participate with counsel of its choice in any proceeding relating
to the enforcement thereof.
7.3 RECORDS. Upon termination of his employment with the Corporation,
Executive will promptly deliver to the Corporation all original and copies of
memoranda, notes, records, reports, manuals, drawings, blueprints, formula and
other documents relating to the business of the Corporation and its Affiliates
and all property associated therewith, which he may then possess or have under
his control; provided, however, that Executive shall be entitled to retain
copies of such documents reasonably necessary to document his financial
relationship (both past and future) with the Corporation.
7.4 NON-COMPETE. During the term of this Agreement and the 18-month
period following the termination of Executive's employment with the Corporation
under the terms of this Agreement, Executive, without the prior written
permission of the Corporation, shall not, anywhere in the United States of
America, directly or indirectly, (a) enter into the employ of or render any
services to any person, firm or corporation engaged in any business which is a
"Competitive Business" (as defined below); (b) engage in any Competitive
Business for his own account; (c) become associated with or interested in any
Competitive Business as an individual, partner, shareholder, creditor, director,
officer, principal, agent, employee, trustee, consultant, advisor or in any
other relationship or capacity; (d) employ or retain, or have or cause any other
person or entity to employ or retain, any person who was employed or retained by
the Corporation in the six-month period prior to the termination of Executive's
employment; or (e) solicit, interfere with, or endeavor to entice away from the
Corporation, for the benefit of a Competitive Business, any of its customers or
other persons with whom the Corporation has a contractual relationship. However,
nothing in this Agreement shall preclude Executive from investing his personal
assets in the securities of any corporation or other business entity which is
engaged in a Competitive Business if such securities are traded on a national
stock exchange or in the over-the-counter market and if such investment does not
result in his beneficially owning, at any time, more than 1% of the
publicly-traded equity securities of such Competitive Business.
EMPLOYMENT AGREEMENT: S. XXXXXX XXXX 4
JUNE 15, 2002
7.5 INJUNCTIVE RELIEF. If Executive breaches, or threatens to breach,
any of the provisions of Sections 7.2, 7.3 or 7.4, the Corporation shall have
the right and remedy to have the provisions of this Agreement specifically
enforced by any court having equity jurisdiction, it being acknowledged and
agreed by Executive that the services being rendered hereunder to the
Corporation are of a special, unique and extraordinary character and that any
such breach or threatened breach will cause irreparable injury to the
Corporation and that money damages will not provide an adequate remedy in the
Corporation.
7.6 MODIFICATION OF SCOPE. If any provision of Section 7.2 or 7.4 is
held to be unenforceable because of the scope, duration or area of its
applicability, the tribunal making such determination shall have the power to
modify such scope, duration, or area, or all of them, and such provision or
provisions shall then be applicable in such modified form.
8. DEFINITIONS. As used in this Agreement:
8.1 "Affiliate" shall mean any entity that, directly or indirectly,
is controlled by, controlling, or under common control with the Corporation.
8.2 "Competitive Business" shall mean a business which is directly
competitive with any business engaged in by the Corporation.
9. NOTICES. All notices provided for by this Agreement shall be made in
writing and shall be deemed given when (a) personally delivered to the party
entitled to receive it; (b) transmitted by electronic means; or (c) mailed first
class mail, by certified mail, return receipt requested, addressed to the person
entitled to it at the address set forth below (or at such other address as may
have been designated by written notice). The notice shall be deemed to be
received on the date of its actual delivery or electronic transmission to the
party entitled thereto, or three days after mailing. If sent to the Corporation,
notices shall be delivered to:
H.E.R.C. PRODUCTS INCORPORATED
0000 Xxxx Xxxxxxx Xxxx, Xxxxx X
Xxxxxxx, Xxxxxxx 00000
Telecopier: (000) 000-0000
with a copy to:
Xxxx X Xxxxxx III
Vice President--Office of General Counsel
H.E.R.C. PRODUCTS INCORPORATED
0000 X. Xxxxxxx Xxxx, Xxxxx X
Xxxxxxx, Xxxxxxx 00000
Telecopier: (000) 000-0000
EMPLOYMENT AGREEMENT: S. XXXXXX XXXX 5
JUNE 15, 2002
and, if sent to Executive, notices shall be delivered to:
S. Xxxxxx Xxxx
c/o Herc Products Incorporated
0000 Xxxxxxx Xxxx, Xxxxx X
Xxxxxxx, Xxxxxxx 00000
"Personal and Confidential"
Telecopier: (000) 000-0000
10. ASSIGNMENT. The rights and benefits of the Corporation under this
Agreement shall be transferable, and all covenants and agreements hereunder
shall inure to the benefit of and be enforceable by, its successors and assigns.
Executive may not assign this Agreement, but it shall inure to the benefit of
and be binding upon his heirs and legal representatives.
11. ARBITRATION. In the event of any dispute between the parties as to the
interpretation of any of the terms and provisions of this agreement, the matter
shall be submitted to arbitration in the following manner: Either party shall
serve written notice upon the other party that they desire to submit the dispute
to arbitration and within fifteen (15) days of the date of any such written
notice each party shall appoint an arbitrator within ten (10) days thereafter
the two arbitrators so selected shall appoint a third. In the event either party
shall fail to appoint an arbitrator within such fifteen-day period or if the two
arbitrators so appointed shall fail to select a third within such ten-day
period, then a judge of the Superior Court of Maricopa County or such other
court as may have jurisdiction thereover shall appoint such arbitrator. The
three arbitrators shall determine the controversy in accordance with the Rules
of the American Arbitration Association and a decision of the majority of the
arbitrators shall bind and be conclusive upon the parties. The parties shall pay
the expense of arbitration in the manner determined by the arbitrators and
judgment upon the award rendered by the arbitrators may, if permissible, be
entered in any court having jurisdiction.
12. MISCELLANEOUS.
12.1 GOVERNING LAW. This agreement shall be governed by and construed
in accordance with the laws of the State of Arizona.
12.2 WAIVER. No waiver or modification of this Agreement shall be
valid unless in writing and duly executed by the party to be charged therewith.
Waiver by either party hereto of any breach or default by the other party of any
of the terms and provisions of this Agreement shall not operate as a waiver of
any other breach or default, whether similar to or different from the breach or
default waiver.
12.3 SEVERABILITY. All agreements, provisions, representations,
warranties and covenants contained herein are severable, and in the event that
any one or more of them shall be held to be invalid, illegal or unenforceable in
any respect by any court of competent jurisdiction, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected thereby, and this Agreement shall be interpreted as if such invalid,
EMPLOYMENT AGREEMENT: S. XXXXXX XXXX 6
JUNE 15, 2002
illegal or unenforceable agreements, provisions or covenants were not contained
herein.
12.4 ENTIRE AGREEMENT. This Agreement constitutes and embodies the
full and complete understanding and agreement of the parties hereto provided,
and supersedes all prior understandings or agreements, whether oral or in
writing.
The parties have executed this Agreement the day and year first above-written.
H.E.R.C. PRODUCTS INCORPORATED
By:_______________________________
Its_______________________________
Executive: S. XXXXXX XXXX
__________________________________
EMPLOYMENT AGREEMENT: S. XXXXXX XXXX 7
JUNE 15, 2002
