AGREEMENT
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AGREEMENT dated as of June 25, 2004 between XXXXXXX XXXXXX,
(hereinafter the "Executive"), residing at 0000 Xxxxx Xxxx Xxxxx, Xxxxxx Xxxx,
Xxxxxxxx 00000 and XXXXXXXXX ENERGY CORPORATION, a Delaware corporation ( the
"Company"), having its principal place of business at 0000 Xxxxx XxxxxXxxx
Xxxx., Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000.
RECITALS
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WHEREAS, Executive is a director of the Corporation, and holds the
position of Chief Executive Officer and is employed in accordance with an
Employment Agreement dated August 15, 2001 (the "Employment Agreement").
WHEREAS, the Executive desires to retire as a director and as the
Chief Executive Officer of the Company, and as an employee of the Company.
WHEREAS, in connection with the Executive's retirement, Executive and
the Company mutually desire to terminate the Employment Agreement on the basis
herein provided.
NOW, THEREFORE, upon the agreements and covenants set forth herein,
the parties hereto agree as follows:
1. Termination of Employment Agreement. The parties acknowledge and
agree that, effective at the close of business on the date hereof, the Executive
is hereby retiring from employment with the Company as its Chief Executive
Officer and as an employee of the Company. Accordingly, the Employment Agreement
is hereby terminated and of no further force or effect, and neither the
Executive nor the Company shall have any further liability or obligation
thereunder, except for any regular salary and health benefits which are earned,
accrued and unpaid as of the date hereof, all of which shall be paid in
accordance with the Company's current payroll schedule. The termination of the
Employment Agreement shall not limit or affect any obligation or liability of
the Company to the Executive for the retirement benefits provided by this
Agreement.
2. Resignation. By executing this Agreement, the Executive hereby
voluntarily resigns, effective at the times set forth in Section 23 of this
Agreement, from all capacities and positions with the Company and its
subsidiaries, including but not limited to, director of the Company and the
office of Chief Executive Officer of the Company.
3. Retirement Pay and Benefits. The Company shall pay the Executive
two months salary as retirement pay, net of applicable FICA, Medicare, federal
withholding taxes, and Colorado state withholding taxes, payable in accordance
with the Company's regular payroll schedule, and two (2) months of health
benefits substantially identical to the health benefits provided prior to the
Executive's retirement. After all such salary and benefits have been paid to
Executive, Executive shall be offered the same COBRA benefits as are offered to
other terminated employees.
4. Post Retirement Matters. Each of the parties anticipate that,
following the retirement and resignation of the Executive, they will cooperate
with each other and work together in a positive manner, relative to matters set
forth in this Agreement, provided however, that this provision is not intended
to vary any of the rights and duties of the parties set forth in this Agreement.
5. Removal as Guarantor. The Company shall use its best efforts to
remove the Executive as a personal guarantor or co-xxxxxx of, and from any other
form of personal liability for, all debts of the Company to banks and other
third parties.
6. Covenant Not to Compete. The Executive shall not, directly or
indirectly, enter into or engage in the combustion and gasification, helium and
natural gas, renewable energy and/or tire recycling businesses, of the type in
which the Company is engaged as of the date hereof or at the time of any
activity proscribed hereby, anywhere, either as an individual for his own
account, or as a partner, joint venturer, employee, agent, or salesperson for
any person or entity , or as an officer, director or stockholder of a
corporation, or as a member or manager of a limited liability company, or
otherwise, for a period of two (2) years after the date hereof, except that the
foregoing shall not restrict the Executive from acquiring up to five percent
(5%) of the outstanding capital stock of an entity whose securities are publicly
traded. It is agreed that the geographic scope and duration of this covenant not
to compete (a) is required in order to protect the Company's niche in the
combustion and gasification, helium and natural gas, renewable energy and tire
recycling businesses, (b) is required to order to protect the Company's trade
secrets, and (c) is reasonable. It is agreed by the parties that this covenant
may be enforced against the Executive by the Company or by any of its
subsidiaries (a) in which the Company has a greater than 20% ownership, or (b)
in which the Company is actively involved in the operations and is not merely a
passive investor ("Subsidiaries"), by injunction, as well as by all other legal
remedies available to the Company or Subsidiaries. It is agreed by the parties
hereto that if any portion of this covenant not to compete is held to be
unreasonable, arbitrary or against public policy, it shall be considered
divisible both as to time and geographic area so that a lesser period of time or
geographical areas shall remain effective so long as the same is not
unreasonable, arbitrary, or against public policy. The parties hereto agree
that, in the event any court determines the specified time period or the
specified geographical area ( or a lesser period or area that is determined by
the court) is reasonable, non-arbitrary and not against public policy, the same
may be enforced against the Executive by injunction, as well as by all other
legal remedies available to the Company or the Subsidiaries. A breach of the
Company's obligations to pay the retirement benefits specified by Section 3 of
this Agreement, or a failure by the Company to take all reasonable steps to
permit the transfers of stock and the removal of the restrictive legend as
provided by Section 12 of this Agreement, which is not cured within ten (10)
days after the Company has received written notice of such breach, will cause
the Executive's obligations under this Section 6 to be null and void, provided,
however, that if the Executive is in breach of any of his obligations,
agreements or duties under this Agreement prior to any such breach by the
Company, for which breach by the Executive the Company or a Subsidiary has
obtained injunctive relief, whether as a temporary restraining order (other than
an ex parte order without at least three (3) days prior written notice to the
Executive), preliminary injunction or permanent injunction, then the Executive's
obligations under this Section 6 shall remain in full force and effect
notwithstanding such breach by
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the Company pending final adjudication of the parties' respective rights in such
litigation..
7. Non-Solicitation. For a period of two (2) years after the date
hereof, the Executive shall not, directly, or indirectly, either as an
individual, proprietor, stockholder, partner, officer, director, manager,
member, employee or otherwise, solicit:
(a) any officer, director, employee, consultant, or other individual;
(i) To leave his or her employment or position with the Company
or any of its Subsidiaries;
(ii) To compete with the business of the Company or any of its
Subsidiaries; or
(iii)To violate the terms of any employment; non-competition or
similar agreement with the Company or any of its
Subsidiaries; and
(b) vendors, customers or professionals;
(i) To compete with the business of the Company or any of its
Subsidiaries;
(ii) To violate the terms of any agreement with the Company or
any of its Subsidiaries;
(iii)To change his, her or its relationship with the Company or
any of its Subsidiaries.
For purposes of this paragraph, references to the business of the Company
shall include the business of the Company, and its Subsidiaries. A breach of the
Company's obligations to pay the retirement benefits specified by Section 3 of
this Agreement, or a failure by the Company to take all reasonable steps to
permit the transfers of stock and the removal of the restrictive legend as
provided by Section 12 of this Agreement, which is not cured within ten (10)
days after the Company has received written notice of such breach, will cause
the Executive's obligations under this Section 6 to be null and void, provided,
however, that if the Executive is in breach of any of his obligations,
agreements or duties under this Agreement prior to any such breach by the
Company, for which breach by the Executive the Company or a Subsidiary has
obtained injunctive relief, whether as a temporary restraining order (other than
an ex parte order without at least three (3) days prior written notice to the
Executive), preliminary injunction or permanent injunction, then the Executive's
obligations under this Section 7 shall remain in full force and effect
notwithstanding such breach by the Company pending final adjudication of the
parties' respective rights in such litigation.
8. Confidentiality. The Executive will not at any time after the date
hereof, directly or indirectly, divulge, disclose or communicate to any person,
firm, corporation, or other entity in
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any manner whatsoever, any confidential or proprietary information of the
Company or its Subsidiaries ("Confidential Information"). The Executive may not
make use of any Confidential Information for any purpose except as expressly set
forth in this Agreement. The Executive agrees that all nonpublic information,
whether written or otherwise, regarding the Company's business, including but
not limited to, information regarding customers, customer lists, employees,
employee salaries, costs, prices, earnings, and any financial or cost accounting
reports, trade secrets, products, services, formulae, compositions, machines,
equipment, apparatus, systems, manufacturing procedures, operations, potential
acquisitions, new location plans, prospective and executed contracts and other
business arrangements, marketing plans, business plans and sources of supply, is
presumed to be Confidential Information of the Company for purposes of this
Agreement. The Executive further agrees that he will return to the Company all
books, records, lists and other written, typed or printed materials, whether
furnished by the Company or prepared by the Executive, which contain any
Confidential Information and the Executive agrees that he will neither make nor
retain any copies of such materials except to the extent reasonably necessary to
protect Executive's personal interests in the unlikely event of a subsequent
dispute with the Company. For purposes of this Section 8, references to the
business or information of or relating to the Company shall include the
information or business of the Company and any Subsidiary of the Company.
Notwithstanding any other provision of this Agreement, disclosure of
Confidential Information shall not be precluded if such Confidential
Information: (i) is or becomes generally publicly known through no improper
action or inaction by the Executive or his affiliates, agents, or
representatives; (ii) is rightfully disclosed to the Executive by a third party
without restriction; (iii) is approved in writing by the Company for disclosure;
or (iv) was independently developed by the Executive without use of any of the
Company's; (v)required to be disclosed by a valid order of or other legal
process of a court or other governmental body or agency of the United States or
any political subdivision thereof; provided, however, that the Executive shall
first have given notice to the Company and shall have made a reasonable effort
to obtain a protective order requiring that the Proprietary Information so
disclosed be used only for the purposes for which the order was issued; is
otherwise required by law; or (vi) is otherwise necessary to establish rights or
enforce obligations under this Agreement, but only to the extent that any such
disclosure is necessary for such purpose.
9. Equitable Relief; Breach.
(a) The Executive acknowledges and agrees that, except as
otherwise provided in Sections 6 and 7 hereof, in the event the Executive shall
violate or threaten to violate any of the restrictions of Sections 6, 7 and 8
hereof, the Company will be without an adequate remedy at law and will therefore
be entitled to enforce such restrictions by temporary or permanent injunctive or
mandatory relief in any court of competent jurisdiction without the necessity of
proving damages and without prejudice to any other remedies which it may have at
law or in equity, it being understood that such remedy shall be in addition to
any other remedies which the Company may have at law or in equity.
(b) THE EXECUTIVE UNDERSTANDS THAT THE AGREEMENTS IN THIS SECTION
9 ARE BEING SUBSTANTIALLY RELIED UPON BY THE COMPANY, WITHOUT
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WHICH NO AGREEMENT WOULD BE ENTERED INTO BY THE COMPANY.
10. Patents. The Executive hereby waives any and all rights he has in,
or to the return of, any Patents, as that term is defined in that certain
Amended and Restated Patent Reassignment Agreement made as of September 30, 2003
but effective as of July 7, 1998 (the "Patent Reassignment Agreement") between
the Executive, Xxxxx Xxxxxx, and the Company, under the Patent Reassignment
Agreement or otherwise, and the Executive hereby covenants that he shall assign
all of his rights in those Patents to the Company, irrespective of whether they
have already assigned some or all of such rights, and consent to the recordation
of any such assignments in the United States Patent and Trademark Office. The
Executive hereby covenants that he shall execute all documents, and take all
other actions after the date hereof as may be reasonably requested by the
Company or which the Company believes are required to effectuate any such
assignment of the Patents to the Company.
11. No Release. The Company and the Executive each acknowledge that
neither party is releasing the other party or their respective affiliates of or
from any liabilities for the claims they may have against the other party or
their respective affiliates, if any, and nothing in this Agreement shall be
construed to be a release or waiver of any such claims. The Company and the
Executive each acknowledge that such party is not currently taking any legal
action against the other party and does not presently contemplate taking any
legal action against the other party.
12. Limitation on Stock Sales.
(a) The Executive agrees that he will not sell any of the shares
of the Company's common stock in any public trading market for a period of
ninety (90) days after the date hereof and, for the next three (3) consecutive
periods of 90 days, the Executive will limit public sales of the Company's stock
in such 90 day periods, together with the sales of any Company common stock in
any public trading market by Xxxxx Xxxxxx, to an aggregate of 50,000 shares,
75,000 shares and 100,000 shares, respectively (subject to customary adjustment
for stock splits, stock dividends, reclassifications, mergers, consolidations
and the like), and for a period of two (2) years thereafter, the Executive shall
abide by the Rule 144(e) volume limitations on any sales of shares of Common
Stock of the Company irrespective of the applicability of Rule 144 to such
sales.
(b) So long as the Executive is entitled to have the restrictive
legends removed from his shares of Common Stock of the Company under Rule 144(k)
or any successor rule, the Company will take all necessary steps to facilitate
the removal of all restrictive legends by the Company's transfer agent at the
time that two (2) year period has expired and will take all reasonable and
customary steps taken by issuers to permit the Executive to make the sales and
transfers of shares of the Company's stock pursuant to this Section 12.
(c) The Executive shall not sell, transfer, gift or otherwise
dispose of any shares of Common Stock of the Company during the periods set
forth herein in any non-public transaction unless the recipient of those shares
agrees to abide by the limitations set forth in this Section 12 (relating to
public trading market volume limitations and further non-public sales, gifts,
transfers and
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other dispositions.)
(d) All the certificates representing the Executive's shares of
Common Stock of the Company shall bear the following legend:
"The sale, transfer or other disposition of the shares
represented by this certificate is subject to an Agreement
dated June 25, 2004 between Xxxxxxxxx Energy, Inc. and
Xxxxxxx Xxxxxx."
The Executive shall deliver to the Company, at the time of execution of this
Agreement, photocopies of all certificates representing shares of common stock
owned by the Executive (front and back) bearing such legend.
(e) In calculating the amounts which may be sold pursuant to this
arrangement, the shares sold or transferred by Xxxxx Xxxxxx and the Executive
will not be aggregated with each other, except with respect to sales of shares
in the first three (3) ninety (90) day periods as set forth in Section 12(a)
above, and shares sold or otherwise transferred by other persons will not be
included as shares sold or transferred by the Executive unless, after the date
hereof, shares of the Company's stock are transferred to Executive or by
Executive in a manner which requires aggregation of the transferred shares under
Rule 144. Such aggregation rules will apply for the period during which the
Executive is required by law or this Agreement to abide by the volume
limitations of Rule 144(e) irrespective of whether Rule 144 by its terms applies
to the Executive at the time of any sales by Executive.
(f) To the extent that compliance with Rule 144 is required by
law for any sales of shares of the Company's stock by the Executive, the
Executive shall furnish customary Rule 144 representation letters and selling
broker representation letters to the Company, and will file all required notices
on Form 144. Forms of such representation letters are attached hereto as
Exhibits 12(f)(i), 12(f)(ii) and 12(f)(iii) respectively. It is understood that,
for sales which are limited to the Rule 144(e) volume limitations solely as a
result of this Agreement, but which would otherwise be eligible for sale under
Rule 144(k), the only representation letter that is required is the letter
represented by Exhibit 12(f)(iii).
13. Hammer Mill. Subject to the provisions of this Section 13, the
Company will return the hammer mill which is currently located (though not in
use) at the Company's Hutchins, Texas facility to the Executive and his
partners. The Executive hereby represents and warrants that no person other than
the Executive and his partners, whom the Executive has disclosed to the Company
prior to the execution of this Agreement, or the Company, has any title or
ownership interest in the hammer mill. The Company will make the hammer mill
available to the Executive for him to take possession of it and remove it from
the Hutchins, Texas facility at the Executive's expense, upon at least 48 hours
prior written notice by the Executive to the Company. In the event the Executive
has not removed the hammer mill from the Company's Hutchins, Texas facility
within sixty (60) days after the date hereof, the Company shall have no duty or
obligation to the Executive or his partners with respect to the hammer mill.
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14. Representations of the Executive. The Executive represents,
warrants, and agrees with the Company as follows:
(a) No consents of governmental and other regulatory agencies,
foreign or domestic, or of other parties, are required to be received by or on
the part of the Executive to enable him to enter into and carry out this
Agreement and the transactions contemplated hereby.
(b) The Executive has the legal capacity to enter into this
Agreement and to carry out his obligations hereunder. This Agreement constitutes
the valid and binding obligation of the Executive, and is enforceable in
accordance with its terms.
(c) Neither the execution and delivery of this Agreement, nor
compliance by the Executive with any of the provisions hereof, nor the
consummation of the transactions contemplated hereby, will:
(i) violate any judgment, order, injunction, decree or award
against, or binding upon, the Executive;
(ii) violate or otherwise breach the terms of any agreement
or understanding, written or oral, to which the Executive is a party or is
otherwise bound; or
(iii) violate any law or regulation of any jurisdiction
known to the Executive.
(d) No representation, warranty or statement by the Executive in
this Agreement intentionally contains any untrue statement of a material fact,
or omits to state a fact necessary in order to make such representations,
warranties or statements not misleading.
15. Representations of the Company. The Company represents, warrants,
and agrees with the Executive as follows:
(a) No consents of any governmental and other regulatory
agencies, foreign or domestic, or of other parties, are required to be received
by or on the part of the Company to enable it to enter into and carry out this
Agreement and the transactions contemplated hereby.
(b) The Company has the requisite corporate power to enter into
this Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by the Board of Directors of the Company, and
no other corporate proceedings are necessary to authorize the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby. This Agreement constitutes the valid and binding obligation of the
Company, and is enforceable in accordance with its terms.
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(c) Neither the execution and delivery of this Agreement nor
compliance by the Company with any of the provisions hereof, nor the
consummation of the transactions contemplated hereby, will:
(i) violate the Certificate of Incorporation or By-Laws of
the Company;
(ii) violate any judgment, order, injunction, decree or
award against, or binding upon, the Company;
(iii) violate or otherwise breach the terms of any agreement
or understanding, written or oral, to which the Company is a party or is
otherwise bound; or
(iv) violate any law or regulation of any jurisdiction
relating to the Company.
(d) No representation, warranty or statement by the Company in
this Agreement contains any untrue statement of a material fact, or omits to
state a fact necessary in order to make such representations, warranties or
statements not misleading.
16. Choice of Law and Venue. The parties agree that this Agreement is
made and entered into in Arapahoe County, Colorado and shall be governed by and
construed in accordance with the laws of the State of Colorado, and that any
litigation, special proceeding or other proceeding as between the parties that
may be brought, or arise out of, in connection with or by reason of this
Agreement shall be brought in the applicable state or federal court in or for
Arapahoe County, Colorado, which courts shall have exclusive jurisdiction and
venue thereof.
17. Entire Agreement. This Agreement contains the full and complete
understanding and agreement of the parties hereto with respect to the subject
matter contained herein and supersedes all prior written, and prior or
contemporaneous oral, understandings or agreements with respect to the subject
matter hereof. No modification of this Agreement shall be binding unless made in
writing and signed by the party sought to be charged.
18. Binding Effect. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors,
assigns and legal representatives.
19. Waiver; Severability. The waiver by either party of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach. If any provision of this Agreement, or part thereof,
shall be held to be invalid or unenforceable, such invalidity or
unenforceability shall attach only to such provision and not in any way affect
or render invalid or unenforceable any other provisions of this Agreement, and
this Agreement shall be carried out as if such invalid or unenforceable
provision, or part thereof, had been reformed, and any court of competent
jurisdiction is authorized to so reform such invalid or unenforceable provision,
so that it would be valid, legal and enforceable to the fullest extent permitted
by applicable law.
20. Notices; Deliveries. Any notice, delivery or other communication
required or permitted hereunder shall be sufficiently given if delivered by hand
or sent by certified mail, return receipt requested, facsimile transmission,
overnight mail or nationally recognized overnight courier,
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addressed as follows:
If to the Company:
0000 Xxxxx XxxxxXxxx Xxxx., Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Chief Operations Officer
Telecopier Number: (000) 000-0000
If to the Executive:
0000 Xxxxx Xxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Telecopier Number: (000) 000-0000
or such other address as shall be furnished in writing by either party, and any
notice, delivery or communication given pursuant to the provisions hereof shall
be deemed to have been given as of the date delivered or so mailed or
transmitted.
21. Counterparts; Headings. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which taken
together shall constitute one agreement. The headings contained in this
Agreement are solely for the convenience of the parties, and are not intended to
and do not limit, construe or modify any of the terms and conditions hereof.
22. Representation by Counsel; Interpretation. Each party acknowledges
that it has been represented by counsel, or has been afforded the opportunity to
be represented by counsel, in connection with this Agreement and the language
hereof has been negotiated by the parties in arm's length negotiations.
Accordingly, any rule or law or any legal decision that would require the
interpretation of any claimed ambiguities in this Agreement against the party
that drafted it has no application and is expressly waived by the parties. The
provisions of this Agreement shall be interpreted in a reasonable manner to give
effort to the intent of the parties hereto.
23. Right of Rescission. The Company shall have the right, at any
time, to rescind this Agreement in all respects, by written notice to the
Executive, in the event that the Company has not received from or on behalf of
Xxxxxx International 2000, Inc., a Grand Cayman corporation ("Xxxxxx") the
amount of $12,300 plus applicable interest accrued thereon, which is owed by
Xxxxxx to the Company, within ten (10) days following the date hereof, and if
this Agreement is so rescinded, this Agreement shall be void and neither party
shall have any further duty or obligation to the other hereunder, provided,
however, that if such payment is not received by the Company from or on behalf
of Xxxxxx within such ten day period, but such payment is subsequently tendered
to the Company in good and collectible funds but prior to the Company furnishing
notice of rescission of this Agreement to the Executive, then the Company's
right to rescind this Agreement pursuant to this Section 23 shall be
automatically and immediately terminated and this Agreement shall remain in full
force and effect. In the event this Agreement is rescinded by the Company
pursuant to this Section 23, any retirement pay and benefits paid by the Company
to the Executive pursuant to Section 3 hereof prior to rescission shall be
applied to any subsequent severance pay or other compensation other than regular
salary, if any, and the Company shall not be liable to the Executive for regular
salary, benefits or perquisites which would have otherwise have been payable to
the
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Executive between the date hereof and the date of rescission of this Agreement,
if this Agreement had not existed. The Executive's resignation as an officer and
employee of the Company shall be effective as of the date hereof and shall
remain effective notwithstanding any rescission of this Agreement by the Company
but the Executive's resignation as a director of the Company shall not be
effective until the earlier of the date that the Company gives written notice to
the Executive of its waiver of any right to rescind the Agreement under this
Section 23, or sixty (60) days after the date hereof, irrespective of whether
Xxxxxx has made some or all of the payment required by this Section 23.
[Remainder of page intentionally left blank.
Signatures are on the following page.]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
XXXXXXXXX ENERGY CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Chief Operating Officer
/s/ Xxxxxxx Xxxxxx
-------------------------
XXXXXXX XXXXXX
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