EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated October 29, 1999, by and between WINDSWEPT
ENVIRONMENTAL GROUP, INC., a Delaware corporation (the "Company"), and ▇▇▇▇▇▇▇
▇'▇▇▇▇▇▇ (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 1
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.
(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 October 29, 1999 and ending on September 30, 2004 and shall
automatically be renewed for successive periods of one (1) year (each, a
"Renewal Period") commencing on October 29, 2004 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.
15. 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 $260,000, 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 (i) federal, state or other taxes on the
income of the Company and its consolidated subsidiaries, (ii) direct charges of
Spotless Plastics (USA), Inc. ("Spotless") or any of its affiliates for services
rendered to the Company to the extent that such charges are in excess of those
that would be charged by unrelated third parties for comparable services and
(iii) interest charged by Spotless on any funds advanced by it to the Company to
the extent that such interest charges are greater than the sum of the cost of
funds of Spotless with respect to any such advance plus one percent (1%) per
annum. 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 Section 1.3(d) of this Agreement, the Company shall, at its sole
expense, provide additional term or other life insurance coverage on the
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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.
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 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
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(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 or 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.
(d) Repurchase of Shares and Options. In the event that (i) the Term of
Employment shall expire, (ii) the Executive's employment hereunder shall be
terminated by the Company other than for Cause, death or disability or (iii) the
Executive's employment hereunder shall be terminated by the Executive by
Resignation with Good Reason, then the Executive shall have the right (provided
that at the time of such expiration or termination, as the case may be, the
shares of the common stock of the Company (the "Common Stock") are not listed
for trading on the New York Stock Exchange or the American Stock Exchange or
included in the NASDAQ National Market or Small-Cap Market or any other
comparable trading market, but excluding the OTC Electronic Bulletin Board and
the National Quotation Bureau pink sheets), to require the Company to purchase
(unless such purchase would cause any impairment of the capital of the Company)
in a single transaction (as opposed to a series of transactions) all shares of
the Common Stock owned by the Executive as of the date hereof or which are
issuable to the Executive under stock options which have been granted as of the
date hereof and which shall have at the time of such expiration or termination,
as the case may be, vested and shall be fully exercisable (collectively, the
"Shares"); provided, however, that as a condition precedent to the obligation of
the Company to purchase the Shares the Executive shall surrender to the Company
and forfeit, for no additional consideration, the option to purchase 2,811,595
shares of Common Stock (the "Conversion Date Options") granted to the Executive
pursuant to the Stock Option Agreement dated the date hereof (the "Conversion
Date Option Agreement"), unless the Conversion Date Options shall have vested
and shall be exercisable in accordance with the terms of the Conversion Date
Option Agreement as of the date of such expiration or termination. If the
Executive wishes to exercise his right under this Section 2.2(c), he shall give
the Company written notice (the "Purchase Notice") within thirty (30) days
following the date of termination or expiration of the Term of Employment, as
the case may be, which notice shall specify the number of Shares as to which he
is exercising his right. The Executive and the Company hereby agree that, if
they are not able to mutually agree upon the purchase price payable for the
Shares, the purchase price shall be an amount equal to the product of the
Appraised Value (as hereinafter defined) multiplied by a fraction, the numerator
of which shall be the number of Shares as to which the Executive is exercising
his right under this Section 2.2(c) as set forth in the Purchase Notice and the
denominator of which shall be the number of shares of Common Stock outstanding
at the date of termination or expiration of the Term of Employment, as the case
may be, on a fully diluted basis (i.e. assuming the exercise of all outstanding
options and warrants for the purchase of Common Stock and the conversion of all
securities convertible or exchangeable into shares of Common Stock). For the
purposes of this Agreement, the term "Appraised Value" shall mean the appraised
value of the Company as a going concerned
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determined by two investment banks, or other financial advisors, one of
which shall be selected by the Company and one of which shall be selected by
the Executive. Each party shall bear the costs and expenses of the investment
bank, appraiser or other financial advisor selected by it. If the investment
banks, appraisers or other financial institutions selected by the Company and
the Executive, respectively, cannot agree on the Appraised Value, the
Appraised Value shall be determined by a third investment bank, appraiser or
other financial advisor jointly selected within sixty (60) days after the date
of the Purchase Notice by the investment banks, appraiser or other financial
institutions selected by the Company and the executive, respectively, and
the costs and expenses of such third investment bank, appraiser or other
financial advisor shall be shared equally by the Company and the Executive.
The closing with respect to any purchase of Shares under this Section 2.2(c)
shall occur not later than thirty (30) days following the agreement by the
Executive and the Company as to the purchase price payable for the Shares or
the determination of the Appraised Value, as the case may be. The Executive
may withdraw his Purchase Notice at any time prior to such closing,
provided that the Executive pays all expenses incurred by the Company, if any,
in connection with the determination of the Appraised Value and any other
out-of-pocket expenses incurred by the Company, including, without
limitation, reasonable attorneys' fees.
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
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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 such 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.
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
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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
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.
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:
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▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇
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If To The Company:
Windswept Environmental Group, Inc.
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▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Secretary
/s/ ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇
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