EXHIBIT 10.4
ADDENDUM TO
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ADDENDUM (the "Agreement") is made and
entered into this 7th day of June, 2000, by and between Polymer Solutions, Inc.,
a Nevada corporation (the "Company"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a resident
of the State of California, as an individual ("Employee") to amend the
EMPLOYMENT AGREEMENT entered into on the 6th day of February, 1998 with Addendum
of 14th day of June, 1999.
WITNESSETH:
WHEREAS. THE Company and the Employee entered into an Agreement on the
6th day of February, 1998, and,
WHEREAS, the Company desires to continue to retain the services of
Employee, and Employee desires to continue to be employed by the Company for the
term of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the Company and Employee, intending
to be legally bound, hereby agree as follows:
Employment/Position. The Company employs Employee as President and
Chief Executive Officer of Polymer Solutions, Inc. and Employee
accepts such employment and agrees to perform services for the
Company, subject always to such resolutions or instructions as are
established from time to time by the Board of Directors of the
Company or its Chairman (or official delegate thereof), for the
period and upon the other terms and conditions set forth in this
Agreement for the period and upon the other terms and conditions
set forth in this Agreement. The Company and Chairman of the Board
of Directors of the Company also agree to have the Employee
maintained as a Director of the Company during the term of this
agreement.
1. Term. The term of Employee's employment hereunder shall be for a period
of three (3) years, commencing on the original date of the Agreement. The term
of Employee's employment hereunder is subject to earlier termination as
hereafter specified, and will automatically renew on the first and each
subsequent anniversary of the original agreement until terminated as provided
herein.
2. Duties.
a)Job Description. During the term of this Agreement, Employee
agrees to perform such employment duties as the Company's Board of
Directors (the "Board") or Chairman (or official delegate thereof)
shall reasonably assign to him from time to time.
b)No Conflicting Duties. During the term hereof, Employee shall
not serve as an officer, director, employee, consultant or advisor to
any other business, which would constitute a conflict of interest. The
Company consents to Employee providing services to other entities,
provided such services do not interfere with Employee's duties and
responsibilities to the Company. Employee shall notify the Company of
any such non-conflicting duties and the Company shall have the right to
consent that there is not a conflict of interest. The Company shall not
unreasonably withhold consent. Employee hereby confirms that he is
under no contractual commitments inconsistent with his obligations set
forth in this Agreement, and that during the term of this
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Agreement, he will not render or perform services, or enter into any
contract to do so, for any other corporation, firm, entity or person
which are inconsistent with the provisions of this Agreement.
3. Compensation.
a)Salary. As compensation for all services to be rendered by
Employee under this Agreement, the Company shall pay to Employee a base
monthly salary of Twelve Thousand Five Hundred Dollars ($12,500.00)
(the "Base Salary"), all such compensation shall be paid in accordance
with the Company's normal payroll procedures and policies. The Company
shall also provide an annual performance bonus of 40% of the Base
Salary, based upon the attainment of mutually agreed upon benchmarks
established annually. For fiscal year ending March 31, 2001, the
following performance measurement shall be used as a basis for the
bonus calculation:
HIGH MID-POINT LOW
------- --------- ---
PSI WITHOUT ADDITIONAL ACQUISITION:
Before-tax Profit/ 950,000 825,000 700,000
Bonus % 30.0% 15.0% 0.0%
An additional ten (10) percent will be allocated given that an
acquisition bringing at least $2,000,000 sales to the Company is
completed or substantially completed by May 1, 2001. The bonus may also
be raised above the 30 percent in the event that profits exceed the 30
percent bonus target set out above. The bonus will be calculated on a
pro-rata basis of actual performance of Before-tax Profit to above on a
sliding scale.
b)Performance-Based Incentive Plan. Company agrees to provide
Employee with an Economic Value Added (EVA) stock option incentive
compensation plan, similar to the ▇▇▇▇▇ ▇▇▇▇▇▇▇ and Associates EVA
Incentive Plan and agreed upon by Employee.
c)Participation in Benefit Plans. Employee shall be included to
the extent eligible thereunder in any and all plans of the Company
providing general benefits for the Company's employees, including but
not limited to Group Life Insurance, Hospitalization, Disability,
Medical, Dental, Pension, Profit Sharing, and Savings Plans. Employee's
participation in any such plan or program shall be subject to the
provisions, rules and regulations applicable thereto. Notwithstanding
the foregoing, Employee shall be eligible for four (4) weeks of
vacation.
d)Stock Options or Warrants to Purchase Shares. The Board of
Directors will grant to Employee certain qualified stock options,
incentive stock options, nonqualified stock options or Warrants to
Purchase Shares. The number of such shares shall be 250,000. The
exercise price of this initial allocation shall be Cdn$1.00 per share.
Subsequent allocations shall be based on the "Ten (10) Day Volume
Weighted Average Price as of the date of the allocation. It is
understood that these will most likely be warrants recognized and
exercisable under US securities laws. They will be allocated
immediately but may not be exercisable until the Company de-lists from
the Vancouver Stock Exchange (VSE), which is the intent of the Company.
These options and/or warrants shall vest as follows:
i) 33.33% February 1, 1999
ii) 33.33% February 1, 2000
iii) 33.33% February 1, 2001
e)All options and/or warrants will immediately vest upon
termination of this employment agreement pursuant to Section 9(e). Upon
the sale of a controlling interest of the Company or any
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change of control of the Company, one hundred percent (100%) of all
options and/or warrants will vest immediately.
f)Expenses. In accordance with the Company's policies established
from time to time, the Company will pay or reimburse Employee for all
reasonable and necessary out-of-pocket expenses.
4. Compensation Upon the Termination of Employee's Employment by the
Company.
a)In the event that Employee is terminated pursuant to Section
9(c) (cause), or 9(d) (resignation), then Employee shall be entitled to
receive Employee's then current monthly Base Salary through the date he
is terminated, but no additional compensation.
b)In the event that Employee is terminated pursuant to Section
9(a) (disability), then Employee shall be entitled to receive
Employee's then current monthly Base Salary for six (6) months after
date of termination for disability.
c)In the event Employee's employment is terminated pursuant to
Section 9(b) (death), and in lieu of Company paid life insurance,
Employee's beneficiary or a beneficiary designated by Employee in
writing to the Company, or in the absence of such beneficiary,
Employee's estate, shall be entitled to receive Employee's then current
Base Salary for twelve (12) months after the date of death, but no
additional compensation.
d)In the event Employee is terminated by the Company pursuant to
Section 9(e) (without cause), the Company shall pay to Employee his
then current monthly Base Salary through the date his employment is
terminated, and severance pay following the date of termination, plus
the same employee benefits Employee received immediately prior to the
termination, for the remaining period of this contract.
e)All payments required to be made by the Company to Employee
pursuant to this Section 4 shall be paid in the manner and at the times
specified in Section 3(a) hereof.
5. Confidential Information. Except as permitted or directed by the
Company's Board, Employee shall not during the term of his employment under this
Agreement or at any time thereafter divulge, furnish, disclose or make
accessible (other than in the ordinary course of the business of the Company) to
anyone for use in any way any confidential or secret knowledge or information of
the Company which Employee has acquired or become acquainted with or will
acquire or become acquainted with prior to the termination of the period of his
employment by the Company (including employment by, or association with, the
Company prior to the date of this Agreement), whether developed by himself or by
others, concerning any trade secrets, confidential or secret designs, processes,
formulae, software or computer programs, plans, devices or material (whether or
not patented or patentable, copyrighted or copyrightable) directly or indirectly
useful in any aspect of the business of the Company, any confidential customer
or supplier lists of the Company, any confidential or secret development or
research work of the Company, or any other confidential, secret or nonpublic
aspects of the business of the Company. Employee acknowledges that the
above-described knowledge or information constitutes a unique and valuable asset
of the Company acquired at great time and expense by the Company, and that any
disclosure or other use of such knowledge or information other than for the sole
benefit of the Company would be wrongful and would cause irreparable harm to the
Company. Both during and after the term of this Agreement, Employee will refrain
from any acts or omissions that would reduce the value of the use of such
knowledge or information to the Company. The foregoing obligations of
confidentiality, however, shall not apply to any knowledge or information which
is now published or which subsequently becomes generally publicly known, other
than as a direct or indirect result of the breach of this Agreement by Employee,
or which Employee possessed
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prior to his consulting or employment relationship with the Company, or which
was received by Employee from a source other than the Company without
contractual restriction on disclosure or use.
6. Patent and Related Matters.
a)Disclosure and Assignment. Employee will promptly disclose in
writing to the Company complete information concerning each and every
invention, improvement, device, design, apparatus, practice, process,
software or computer program, method or product, whether or not
patentable or copyrightable, made, developed, perfected, devised,
conceived or first reduced to practice by Employee, either solely or in
collaboration with others, during Employee's employment under this
Agreement, or for the period in which a covenant not to compete is in
effect hereunder as to Employee, whether or not during regular working
hours, relating either directly or indirectly to the business, products
or practices of the Company (hereinafter referred to as the
"Inventions"). Employee, to the extent that he has the legal right to
do so, hereby acknowledges that any and all of the Inventions are the
property of the Company and hereby assigns and agrees to assign to the
property of the Company any and all of Employee's right, title and
interest in and to any and all of the Inventions without further
payment.
b)Future Inventions. As to any future Inventions made by Employee
which relate to the business, products or practices of the Company and
which are first conceived or reduced to practice during the term of
this Agreement, or for the period in which a covenant not to compete is
in effect hereunder as to Employee, but which are claimed for any
reason to belong to an entity or person other than the Company,
Employee will promptly disclose the same in writing to the Company and
shall not disclose the same to others if the Company, within twenty
(20) days thereafter, shall claim ownership of such Inventions under
the terms of the Agreement.
c) Limitations of Sections 6(a) and 6(b). The provisions of Sections
6(a) and 6(b) shall not apply to any Invention meeting the following conditions
(an "Excluded Invention"):
i) such Invention was developed entirely on Employee's own time; and
ii) such Invention was made without the use of any
Company equipment, supplies, facilities or trade secret
information; and
iii) such Invention does not relate (i) directly to the business of the
Company, or (ii) to the Company's actual or demonstrably anticipated research or
development; and
iv) such Invention does not result from any work performed by Employee
for the Company; and
v) Employee informs the Company in writing within one month after
commencing work on any Invention that is to be an Excluded Invention and again
informs the Company in writing that such Invention has been developed within one
(1) month of the date when development of such Invention is complete.
d)Assistance of Employee. Upon the request of the Company and
without further compensation therefore, but at no expense to Employee,
and whether during the term of this Agreement or thereafter, Employee
will do all lawful acts, including, but not limited to, the execution
of papers and lawful oaths and the giving of testimony, that in the
opinion of the Company, its successors and assigns, may be necessary or
desirable in obtaining, sustaining, reissuing, extending and enforcing
United States and foreign Letters Patents, including, but not limited
to, design patents, on any and all of the Inventions, and for
perfecting, affirming and
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recording the Company's complete ownership and title thereto, and to
cooperate otherwise in all proceedings and matters relating thereto.
e)Records. Employee will keep complete, accurate and authentic
accounts, notes, data and records of all of the Inventions in the
manner and form requested by the Company. Such accounts, notes, data
and records shall be the property of the Company, and, upon its
request, Employee will promptly surrender the same to it or, if not
previously surrendered upon its request or otherwise, Employee will
surrender the same, and all copies thereof, to the Company upon the
conclusion of his employment.
f)Obligations, Restrictions and Limitations. Employee understands
that the Company may enter into agreements or arrangements with
agencies of the United States Government, and that the Company may be
subject to laws and regulations which impose obligations, restrictions
and limitations on it with respect to inventions and patents which may
be acquired by it or which may be conceived or developed by employees,
consultants or other agents rendering services to it. Employee agrees
that he shall be bound by all such obligations, restrictions and
limitations applicable to any said invention conceived or developed by
him during the term of this Agreement and shall take any and all
further action which may be required to discharge such obligations and
to comply with such restrictions and limitations.
7. Ventures. If, during the term of this Agreement, Employee is engaged in
or associated with the planning or implementing of any project, program or
venture involving the Company and a third party or parties, all rights in the
project, program or venture shall belong to the Company and shall constitute a
corporate opportunity belonging exclusively to the Company. Except as approved
by the Company's Board of Directors, Employee shall not be entitled to any
interest in such project, program or venture or to any commission, finder's fee
or other compensation in connection therewith other than the salary to be paid
to Employee as provided in this Agreement, unless agreed to in writing by the
Board of Directors beforehand.
8. Non-Competition; Solicitation of Customers and Solicitation of
Employees.
a) Non-Competition.
i) Employee agrees that, during the period of his employment
hereunder and for a period of six (6) months following the termination
of his employment with the Company for any reason, he shall not
directly or indirectly, engage in competition with the Company within
any State in the United States in which the Company does business (the
"Territory") in any manner or capacity (e.g., as a management
consultant, principal, partner, officer, director, stockholder or
management employee) in any phase of the Company's business as then
being conducted.
ii) Ownership by Employee, as a passive investment, of less than 2
1/2% of the outstanding shares of capital stock of any corporation
listed on a national securities exchange or publicly traded in the
over-the-counter market shall not constitute a breach of this Section
8.
iii) Employee further agrees that, during the term of this
Agreement, he will not, directly or indirectly, assist or encourage any
other person in carrying out, directly or indirectly, any activity that
would be prohibited by the above provisions of this Section 9 if such
activity were carried out by Employee, either directly or indirectly,
and in particular Employee agrees that he will not, directly or
indirectly, induce any employee of the Company to carry out, directly
or indirectly, any such activity.
b)Agreement Not to Solicit Customers. Employee agrees that
during his employment by the Company hereunder and for the period in
which a covenant not to compete is in effect
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hereunder as to Employee, he will not, either directly or indirectly,
on his own behalf or in the service or on behalf of others, solicit,
divert or appropriate, or attempt to solicit, divert or appropriate, to
any competing business (i) any person or entity whose account with the
Company was sold or serviced by or under the supervision of Employee
during the year preceding the termination of such employment, or (ii)
any person or entity whose account with the Company has been directly
solicited at least twice by the Company within the eighteen (18) month
period prior to the date of termination of employment.
c)Agreement Not to Solicit Employees. Employee agrees that during
his employment by the Company hereunder and for the three (3) year
period following the termination of such employment for any reason, he
will not, either directly or indirectly, on his own behalf or in the
service or on the behalf of others solicit, divert or hire away, or
attempt to solicit, divert or hire away any person then employed by the
Company or then serving as a sales representative of the Company.
d)Reasonableness. The restrictions contained in this Agreement are
considered by Employee to be fair and reasonable and necessary for the
protection of the legitimate business interests of the Company, and it
is Employee's intent that such restrictions be enforceable and enforced
to their fullest extent. Employee acknowledges that Employee can earn a
livelihood without violating any of the undertakings contained in this
Agreement.
e)Notice to Future Employers. For the period of six (6) months
following the termination of Employee's employment with the Company,
Employee shall provide a copy of this Agreement to any future or
prospective employer of Employee and agrees that the Company also may
do so.
f)Voluntary Reduction of Scope. The Company shall have the right,
but not the obligation, to reduce the geographical scope, duration or
coverage of the foregoing covenants and provisions, in its sole
discretion, either before or after any determination of their
enforceability, and such covenants and provisions, as so reduced, shall
be binding on the parties.
g)Reformation. In the event that any provision in this Section 8
is held to be overbroad as written, such provision shall be deemed
amended to narrow its application to the extent necessary to make the
provision enforceable to the fullest extent allowable. The parties
hereby agree that such amendment shall be accomplished as follows:
i) In the case of duration, the length of the covenant or provision
shall be reduced in increments of one (1) month each until it is of the greatest
duration as is enforceable under applicable law.
ii) In the case of geographic scope, the geographic scope of the
covenant or provision shall be reduced until it is of the greatest geographic
scope as may be enforceable under applicable law, which reduction shall be
effected by eliminating in the following order, one by one, the individual
States within the Territory, beginning with the State in which the Company had
the lowest gross sales within the prior twelve (12) months according to the
Company's records, and continuing in the inverse order ranked by the Company's
gross sales over the prior twelve (12) months until the geographic scope of the
covenant or provision is determined to be enforceable, and then, if necessary,
by eliminating in the following order, one by one, the counties in the State of
California, beginning with the county furthest from Butte County and continuing
in the inverse order of proximity to Butte County until such scope is
enforceable.
9. Termination Prior to Expiration of the Term.
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a)Disability. Employee's employment shall terminate upon the
Employee becoming totally or permanently disabled for a period of six
(6) months. For purposes of this Agreement, the term "totally or
permanently disabled" or "total or permanent disability" means
Employee's inability on account of sickness or accident, whether or not
job-related, to engage in regularly or to perform adequately his
assigned duties under this Agreement. A reasonable determination by the
Board of Directors of the existence of a disability shall be conclusive
for all purposes hereunder. In making such determination of disability,
the Board of Directors may utilize such advice and consultation as the
Board of Directors deems appropriate, but there is no requirement of
procedure or formality associated with the making of a determination of
disability.
b) Death of Employee. Employee's employment shall terminate
immediately upon the death of Employee.
c)Termination for Cause. The Company may terminate Employee's
employment at any time for "Cause" (as hereinafter defined) immediately
upon written notice to Employee. Such written notice shall set forth
with reasonable specificity the Company's basis for such termination.
As used herein, the term "Cause" shall mean (i) conviction of any
felonious crime, (ii) non compliance, in a reasonable manner and in a
reasonable time period, with reasonable directives of the Board or the
Chairman communicated to Employee, or (iii) serious violation of
Company rules, policies, or procedures, or breach of this Agreement or
any other agreement with the Company; provided that "Cause" shall exist
with respect to a breach under either subsection (ii) or (iii) hereof
only if Employee fails to cure such breach within ten (10) calendar
days after written notice from the Company of such breach.
d) Resignation. Employee's employment shall be terminated on the
date that is two (2) months following the written submission of
Employee's resignation to the Board.
e)Termination Without Cause. The Company may terminate Employee's
employment without cause upon written notice to Employee. Termination
"without cause" shall mean termination of employment on any basis other
than termination of Employee's employment hereunder pursuant to
Sections 9(a), 9(b), 9(c) or 9(d). The restructuring or reduction of
Employee's duties and responsibilities shall be deemed, at Employee's
discretion, as termination without cause.
f)Surrender of Records and Property. Upon termination of his
employment with the Company, Employee shall deliver promptly to the
Company all computer equipment, computer software, keys, records,
manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof, which
are the property of the Company and which relate in any way to the
business, products, practices or techniques of the Company, and all
other property, trade secrets and confidential information of the
Company, including, but not limited to, all documents which in whole or
in part contain any trade secrets or confidential information of the
Company, which in any of these cases are in his possession or under his
control.
g) Assignment. This Agreement shall not be assignable, in whole or in
part, by either party without the written consent of the other party, except
that the Company may, without the consent of Employee, assign its rights and
obligations under this Agreement to any corporation, firm or other business
entity (i) with or into which the Company may merge or consolidate, or (ii) to
which the Company may sell or transfer all or substantially all of its assets or
of which 50% or more of the equity investment and of the voting control is
owned, directly or indirectly, by, or is under common ownership with, the
Company. Upon such assignment by the Company, the Company shall obtain the
assignees'
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written agreement enforceable by Employee to assume and perform, from and after
the date of such assignment, the terms, conditions, and provisions imposed by
this Agreement upon the Company. After any such assignment by the Company and
such written agreement by the Assignee, the Company shall be discharged from all
further liability hereunder and such assignee shall thereafter be deemed to be
the Company for the purposes of all provisions of this Agreement including this
Section 9.
h) Injunctive Relief. Employee agrees that it would be difficult to
compensate the Company fully for damages for any violation of the provisions of
this Agreement, including without limitation the provisions of Sections 5, 6, 8
and 9. Accordingly, Employee specifically agrees that the Company shall be
entitled to temporary and permanent injunctive relief to enforce the provisions
of this Agreement. This provision with respect to injunctive relief shall not,
however, diminish the right of the Company to claim and recover damages in
addition to injunctive relief.
10. Miscellaneous.
a) Governing Law. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of
California.
b)Prior Agreements. This Agreement contains the entire agreement
of the parties relating to the subject matter hereof and supersedes all
prior agreements and understanding with respect to such subject matter,
and the parties hereto have made no agreements, representations or
warranties relating to the subject matter of this Agreement which are
not set forth herein.
c) Withholding Taxes. The Company may withhold from any benefits
payable under this Agreement all federal, state, city or other taxes as
shall be required pursuant to any law or governmental regulation or
ruling.
d) Amendments. No amendment or modification of this Agreement
shall be deemed effective unless made in writing signed by the parties
hereto.
e)No Waiver. No term or condition of this Agreement shall be
deemed to have been waived nor shall there be any estoppel to enforce
any provisions of this Agreement, except by a statement in writing
signed by the party against whom enforcement of the waiver or estoppel
is sought. Any written waiver shall not be deemed a continuing waiver
unless specifically stated, shall operate only as to the specific term
or condition waived and shall not constitute a waiver of such term or
condition for the future or as to any act other than that specifically
waived.
f)Severability. If, after application of any provision of this
Agreement specifying how reformation shall be accomplished, including
Section 10(g), any provision of this Agreement or portion thereof is
determined by a court of competent jurisdiction to be wholly or
partially unenforceable for any reason, such provision or portion
thereof shall be considered separate from the remainder of this
Agreement, which shall remain in full force and effect.
g) Survival. Sections 4, 5, 6, 7, and 8 shall survive termination
of this Agreement.
IN WITNESS WHEREOF, the parties have executed and sealed this Agreement
as of the day and year set forth above.
Signed: /s/ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Signed: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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Date: June 14, 2000 Date: July 31, 2000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Chairman
Polymer Solutions, Inc.
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