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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 30th day of September, 1996 by
and between 7-7, Inc., a corporation (hereinafter referred to as the "Company")
and ▇▇▇▇ ▇▇▇▇▇▇ (hereinafter referred to as the "Employee").
WHEREAS, the Company desires to employ the Employee to serve as an
officer and employee of the Company, serving in the capacity of the director of
engineering and compliance of 7-7, Inc., to perform various functions and
duties related thereto; and
WHEREAS, the Employee desires to be employed by the Company as an
employee and officer of the Company.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the Company and the Employee agree as follows.
1. Employment. The Company agrees to employ the Employee for a
period of five (5) years beginning as of the date of the merger of 7-7, Inc.,
an Ohio corporation into 7-7 Merger, Inc., an Arkansas corporation. Employee
agrees to be employed by the Company for such time period upon the terms and
conditions stated herein. The Employee shall be an employee of the Company and
shall provide services to the Company or to Exsorbet Industries, Inc., an Idaho
corporation, or the successor of either, as the Company may direct. The
Employee will observe all Company policies and procedures as are applicable to
similarly situated executive employees and conduct himself in accordance with
directions from the Company. The Employee shall devote his working time and
best efforts to performance of the duties of this employment as designated by
the Company and shall, at all times, conduct himself so as to reflect favorably
upon the Company. The provisions of this paragraph shall not be construed as
limiting Employee from continuing the performance of part time businesses in
existence on the date of this Agreement. Employee shall be a salaried,
management level employee. As such, no additional compensation shall be
provided for hours worked in excess of forty per week or in excess of any
maximum time period established by the United States of America or any State
thereof in which Employee may provide services for the Company.
2. Identification of the Company. 7-7, Inc. is an Arkansas
corporation. It is a wholly-owned subsidiary of Exsorbet Industries, Inc., an
Idaho corporation (hereinafter referred to as "Exsorbet"). Exsorbet is a
publicly traded company, trading under the symbol "EXSO" on the NASDAQ Stock
Market.
3. Duties. Employee shall act as an officer of the Company, serving
as its director of engineering and compliance. Employee's job duties include:
(a) those duties normally associated with the person serving in the capacity of
the director of engineering and compliance, and as have been performed on
behalf of 7-7, Inc., an Ohio corporation prior to its merger with 7-7 Merger,
Inc., an Arkansas corporation; and (b) any other duties reasonably required by
the president of Exsorbet
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Industries, Inc. The duties of Employee include the supervision and direction
of affairs of the Company, subject to the Company's by-laws and Board of
Directors approval.
4. Removal by Shareholder Action. Both parties understand and
acknowledge that Employee may be removed as an officer of the Company by
certain shareholder action. If Employee is removed as an officer of the
Company, he shall continue to serve the Company as an employee providing the
same type of sales, supervisory, and technical services as exist on the date of
execution of this agreement and thereafter. The remaining provisions of this
agreement concerning benefits and compensation due to Employee shall remain in
full force and effect despite removal of Employee as a Company officer unless
such removal is for cause, as defined herein, or is otherwise in compliance
with other provisions of this agreement.
5. Company Benefits. The Employee will be the beneficiary of and
permitted to participate in all of the Company s standard benefit plans and
perquisites which are from time to time made available to employees similarly
situated. The Employee understands, however, that all such standard benefit
plans of the Company are subject to change from time to time and can also be
eliminated completely. Employee may elect to purchase disability insurance
equal to two-thirds of the base salary of Employee, through an insurance
company and agent determined by Employee. Such expense shall be paid by
Employee. However, the Company agrees to cause such amount to be withheld from
compensation due to Employee on a pre-tax basis, to the extent permissible
under the Internal Revenue Code and applicable state statutes and regulations.
6. Compensation. The Company shall pay the Employee an annual
salary equal to Seventy-Five Thousand Dollars ($75,000.00) for the period
beginning on the merger of 7-7, Inc. with 7-7 Merger, Inc., an Arkansas
corporation. Such amount shall be adjusted annually in accordance with the
cost of living index, to be paid bi-weekly or upon such other basis as is
reasonably determined by Exsorbet Industries, Inc. In no event shall Employee
be provided with a compensation check less frequently than one time per month.
The compensation due to Employee may, at the option of the Company, be
increased based upon the contributions of Employee. The increase in
compensation described herein shall not, however, place a mandatory obligation
upon the Company.
7. Additional Compensation. Employee shall receive 1.89875
percent of the "pre-tax income," of Exsorbet Industries, Inc. which is solely
attributable to the operation of 7-7, Inc. or its successor and which exceeds
the "base amount" specified below for the time periods indicated. "Pre-tax
income" shall be calculated in accordance with generally accepted accounting
principles, and the following guidelines shall apply in calculating such "pre-
tax income:"
(a) 7-7, Inc. or its successor will operate as a subsidiary or
separate division of Exsorbet Industries, Inc.;
(b) only expenses incurred by 7-7, Inc. will be used in determining
"pre-tax income;"
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(c) expenses of Exsorbet Administration, Inc. in the operation of 7-7,
Inc. will not be used in calculating "pre-tax income" unless agreed to
by and between the parties; and
(d) if Exsorbet Industries, Inc. or one of its subsidiaries other
than 7-7, Inc. causes additional capital to be placed into the
operation of 7-7, Inc. for working capital, equipment, or other
capital expenditures, an interest charge equivalent to the prime
interest rate may be taken as a deduction to "pre-tax income," and
management of 7-7, Inc. will have reasonable input regarding the
revenues and expenses of 7-7; and
(e) any corporate charges from Exsorbet Industries, Inc. to the
"pre-tax income" must be mutually agreed.
The "base amount" and time period for pay-out is as follows:
Time Period Base Amount
----------- -----------
7-1-1996 to 12-31-1996 $0.00
1-1-97 ▇▇ ▇▇-▇▇-▇▇ $2,000,000.00
1-1-98 ▇▇ ▇▇-▇▇-▇▇ $2,300,000.00
1-1-99 ▇▇ ▇▇-▇▇-▇▇ $2,645,000.00
1-1-2000 to 12-31-2000 $3,041,750.00
1-1-2001 to 12-31-2001 $3,498,013.00.
It is specifically noted that should Employee voluntarily terminate
this Agreement, the right to receive the proceeds specified in this paragraph
shall immediately cease. If Employee is terminated without cause, however,
such proceeds will be distributed to Employee.
8. Expenses. The Company shall reimburse Employee for all
authorized, ordinary, and necessary expenses incurred by Employee in connection
with the duties of Employee. Employee shall submit all reasonably requested
receipts and documentation evidencing the nature and incurring of such expenses
to the accounting department of Exsorbet Industries, Inc. Reimbursement will
occur during the next pay period.
9. Noncompetition and Nondisclosure.
(a) The Employee acknowledges that the Company has or will provide
substantial training and will impart to the Employee confidential
information and trade secrets
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about its business, sales policies, and manufacturing methods. The
Employee also understands that the nature of the business is such that
the relationship between the Company and its customers is maintained
through close personal contact with the Company Employees. Therefore,
the Employee agrees that during the period of his employment and for
a period of two years immediately following termination of such
employment, the Employee will not, directly or indirectly, for himself
or on behalf of others, as an individual on his own account or as an
employee, agent, or employee for any person, partnership, firm, or
corporation:
(1) solicit or provide services to any individual or entity
which had been a customer or client of the Company or of
Exsorbet Industries, Inc., or any of its subsidiaries, within
the one year period immediately prior to Employee's
termination with the Company; or
(2) solicit or provide services to any individual or entity
which had negotiated with the Company, Exsorbet Industries,
Inc., or any of its subsidiaries for services to be provided
by any such entity within the one year period immediately
prior to Employee's termination with the Company.
As used in this entire paragraph, the term "solicit or provide
services" shall refer to soliciting work or employment of the same
type as is performed by the Company, Exsorbet Industries, Inc., or any
of its subsidiaries. The provisions of this agreement shall be
limited to North America.
(b) Employee agrees that the trade secrets, customer lists, price
lists, operating manuals, policy manuals, confidential corporate
documents, or other specialized information learned while with the
Company is proprietary and the product of the Company. Employee
agrees that he will not, after the termination of his employment with
the Company, whether during the initial term of this agreement, at the
end of the initial term, or thereafter, use or divulge such
information, directly or indirectly, without the express written
consent of the Company. In the event that the provisions of this
paragraph are construed as being overly broad, such provisions shall
be limited to a two year time period following the termination of
Employee's employment relationship with the Company.
(c) The Employee also agrees that during the period of his employment
and for two years thereafter he will not, directly or indirectly,
induce or attempt to induce any employee to terminate employment with
the Company or interfere with or disrupt Company's relationship with
other employees, unless such action is taken as a part of the duties
of Employee under this agreement and in consideration of the fiduciary
duty owed by Employee to the Company. Employee further agrees that
for the same time period, he will not solicit, entice, take away, or
employ any person employed
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with the Company.
10. Termination. This employment agreement may be terminated at any
time:
(a) by the Employee's death or disability which renders Employee
unable to perform services required by Employee under this Agreement;
(b) by the Company for good cause as hereinafter defined;
(c) upon thirty (30) days written notice by the Employee; or
(d) at the election of the Company without good cause, provided that
the Employee shall receive a separation pay in an amount equal to all the
direct compensation that would otherwise have been due had this employment
agreement been carried out to its full term.
The term "good cause" means (a) intentional or reckless misrepresentation
by the Employee to the Company s customers or potential customers concerning
the Company' s ability to provide its products or services; (b) a criminal act
[or acts] by the Employee which results in a financial loss to the Company; (c)
intentional and repeated refusal by the Employee to perform the duties assigned
to him under this Agreement; (d) conviction of the Employee of a felony crime
or a crime involving moral turpitude; or (e) intentional misconduct by Employee
which is probable to result in a material financial harm to the Company unless
termination of Employee occurs. The provisions of subparts (c) and (e) of this
paragraph shall not be "good cause" unless Employee is given written notice of
the specific event(s) or act(s) in question. Thereafter, "good cause" shall
only exist if either Employee engages in such event(s) or act(s) or Employee
fails to provide assurances that he will no longer engage in such event(s) or
act(s).
11. Waiver. Failure of the Company to exercise any rights under this
Agreement, or to insist on full performance of all obligations hereunder shall
not be construed as waiving any such rights.
12. Assignment. This agreement shall not be assignable by either
party without the written consent of the other. However, any payments due
hereunder shall, in the event of the death of Employee, be payable to
Employee's beneficiary or estate, as designated by Employee's last will and
testament or in accordance with applicable law.
13. Vesting. No title to any payments due herein shall vest in
Employee until actual payment is made by the Company in accordance with the
provisions of this agreement. Neither party shall have the right or power to
assign, anticipate, transfer, mortgage, or encumber any payment prior to its
actual receipt.
14. Miscellaneous Matters.
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(a) Entire Agreement. This Agreement is the entire agreement between the
parties. The Employee agrees that no other promises or inducements have
been made to him unless contained in writing, attached hereto or
incorporated herein by reference.
(b) Binding Effect. This Agreement shall be binding upon the parties,
their heirs, personal representatives, successors, and permitted assigns.
It is specifically understood and agreed that the compensation specified in
paragraph 7, above, shall become due and payable even in the event of the
death or disability of the Employee. In the event of the death of the
Employee, such amount shall be paid as directed in the Last Will and
Testament (including any codicils, changes, alterations, or modifications
in compliance with applicable laws) of the Employee, or in the event that
the Employee fails to make provision for such amount in his Last Will and
Testament (including any codicils, changes, alterations, or modifications
in compliance with applicable laws), such amount shall be paid in
accordance with the laws of descent and distribution in the State where the
estate of the Employee is probated.
(c) Modification. This Agreement may not be modified unless such
modification is made in writing and signed by all parties.
15. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any one or more of the
provisions of this Agreement shall not affect the validity or enforceability of
the other provisions.
16. Governing Law. This agreement and any amendments or addendums
thereto shall be governed by and construed in accordance with the laws of the
State of Arkansas.
17. Headings. Titles of the paragraphs are placed herein for
convenient reference only and shall not to any extent have the effect of
modifying, amending or changing the express terms and provisions of this
Agreement.
18. No Third Party Rights. None of the provisions contained in this
Agreement shall be for the benefit of or enforceable by any third parties,
except as is specified in paragraph 14(b), above.
19. Counterparts. This Agreement may be executed in several
counterparts, all of which together shall constitute one agreement binding on
all parties hereto, notwithstanding that all the parties have not signed the
same counterpart.
20. Applicable Law. This Agreement shall be construed in accordance
with the laws and statutes of the State of Arkansas.
21. Dispute Resolution. In the event of any dispute arising under
this agreement or between the parties whatsoever, resolution of such disputes
shall be submitted to arbitration in accordance with the rules of the American
Arbitration Association. Any such arbitration proceeding shall
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consist of an arbitrator chosen by each party. The two arbitrators chosen
shall select a neutral arbitrator. The decision of the arbitration panel shall
be conclusively binding upon both parties unless there has been a clear error
in applicable of law to the facts determined by such arbitration panel.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement on the date first written.
7-7, INC., an Arkansas corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Authorized Officer of the Company
EMPLOYEE
/s/ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
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