Exhibit 10.3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of the 19th day of May 2004, between NESCO
INDUSTRIES, INC., a Nevada corporation, with its offices at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Company" or the "Employer"), and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, an individual residing at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Executive")
W I T N E S S E T H
WHEREAS, Executive possesses an intimate knowledge of the business and affairs
of Employer, its policies, methods, personnel, opportunities and problems;
WHEREAS, Employer desires to assure itself of Executive's continued employment
by Employer and to compensate him for such efforts; and
WHEREAS, Executive is desirous of committing himself to serve Employer on the
terms herein provided;
NOW, THEREFORE, In consideration of the covenants herein contained, the parties
hereto hereby agree as follows:
1. Employment. Executive is hereby employed as Chairman and interim Chief
Executive Officer of Employer. Executive shall have supervision and control over
the operations and affairs of Employer, and shall have such other powers and
duties as may be from time to time assigned to him by the Board of Directors of
Employer (the "Board"), and Executive hereby accepts such employment, all
subject to the terms and conditions herein contained. A prime objective of
Executive's employment is to locate a party to act as the permanent Chief
Executive Officer of Employer. Pending the identification, approval and hiring
of such party, Executive shall devote the majority of all of his business time,
attention and skills to the business and affairs of Employer and its
subsidiaries. Subsequent to that event, Executive, who remains as Chairman,
shall devote such time and attention as his ongoing obligations to the Employer
shall demand. At all times during the term of Executive's employment, Executive
may pursue other activities, including without limitation other business
obligations, so long as such activities do not adversely affect the performance
of his duties to Employer or are in conflict with the business of the Company.
Any issues regarding the fulfillment of this obligation shall be an arbitrable
matter under this Agreement.
2. Place of Performance. In connection with his employment by Employer,
Executive shall be based at Employer's principal executive offices where same
may be located from time to time.
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3. Compensation
a. Base Salary. Employer shall pay to Executive, and Executive shall
accept, for all services which may be rendered by him pursuant to this
Agreement, a base salary ("Base Salary") as hereinafter set forth. The
Base Salary during the term of this Agreement shall initially be at
the annual rate of $120,000 per year and shall increase 10% on each
December 31 during the term of this Agreement. Employer agrees that
any amounts not paid when due to Executive shall accrue to Executive's
benefit.
Any increase in Base Salary or other compensation granted by Employer,
the Board or any committee thereof shall in no way limit or reduce any
other obligation of Employer hereunder and, once established at an
increased specified rate Executive's Base Salary hereunder shall not
thereafter be reduced, other than as necessitated by Employer's
adverse financial condition. Executive's salary shall be payable in
accordance with Employer's payroll practices as from time to time in
effect.
b. Bonus; Commissions. In addition to Base Salary, Executive shall be
entitled to a minimum annual performance bonus based on the following
schedule
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Annual Operating Profit (1) Bonus
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$0 - $500,000 0
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$500 - $1,000,000 $60,000
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$1,000,000 - $3,000,000 $120,000
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Greater than $3,000,000 $240,000
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(1) Operating profit to be defined by generally accepted accounting principals
for a like business in a like industry.
Bonus payable in January of each year during the term of this Agreement.
c. Life Insurance/Key Man Insurance. During the term of his employment
hereunder, and subject to Executive being insurable without rating,
Employer shall purchase and keep in effect a term life insurance
policy in the amount of $1,000,000 on the life of the Executive. Such
life insurance will name as beneficiaries those individuals designated
by the Executive. All rights therein, including without limitation the
right to renew same, shall be assigned to Executive upon the
termination of this agreement. Employer shall further be entitled to
maintain Key Man insurance on the life of Executive and Executive
agrees to cooperate with the application for same.
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d. Expenses. During the term of his employment hereunder, Executive shall
be entitled to receive prompt reimbursement for all reasonable
expenses incurred by him in performing services hereunder, provided
that Executive properly accounts therefor in accordance with
Employer's policy relating thereto. Without limiting the generality of
the foregoing, the parties agree that any travel Executive undertakes
in connection with the performance of his duties hereunder shall be in
business class or better, and Employer shall reimburse Executive for
such expenses.
e. Benefit Plans. Executive shall be entitled to participate in or
receive benefits under any employee benefit plan or arrangement
currently available, or made available by Employer in the future, to
its executives and key management employees, subject to and on a basis
consistent with the terms, conditions and overall administration of
such plan or arrangement. Employer shall not make any changes in any
employee benefit plans or arrangements in effect on the date hereof or
during the term of this Agreement in which Executive participates
(including, without limitation, any pension and retirement plan,
supplemental pension and retirement plan, savings and profit sharing
plan, stock ownership plan, stock purchase plan, stock option plan,
life insurance plan, medical insurance plan, disability plan, dental
plan, health-and-accident plan or arrangement) which would adversely
effect Executive's rights or benefits thereunder, unless such change
occurs pursuant to a program applicable to all executives of Employer
and does not result in a proportionately greater reduction in the
rights of or benefits to Executive as compared with any other
executive of Employer. Any payments or benefits payable to Executive
hereunder in respect of any calendar year during which Executive is
employed by Employer for less than the entire such year shall, unless
otherwise provided in the applicable plan or arrangement, be prorated
in accordance with the number of calendar days in such calendar year
during which he is so employed.
f. Vacations, Holidays and Sick Leave. Executive shall be entitled to the
number of paid holidays, personal days off, vacation days and sick
leave days in each calendar year as are determined by Employer from
time to time for its senior executive officers, but not less than five
(5) weeks in any calendar year (prorated, in any calendar year during
which Executive is employed under this Agreement for less than the
entire such year, in accordance with the number of calendar days in
such calendar year during which he is so employed) . Vacation may be
taken in Executive's discretion, so long as it is not inconsistent
with the reasonable business needs of Employer. Executive shall be
entitled to accrue from year to year all vacation days not taken by
him.
g. Perquisite. Executive shall be entitled to continue to receive the
perquisites and fringe benefits appertaining to the office of the
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President and Chief Operating Officer of Employer in accordance with
present practice and appropriate to the industry.
h. Warrants: Executive shall be entitled to warrants as more specifically
described in that certain Share Exchange Agreement between the Company
and Hydrogel Design Systems, Inc.
i. Base Salary Not Effected by Other Benefits. None of the benefits to
which Executive is entitled under any of the provisions of Sections 3
(b) - 3 (g) hereof shall in any manner reduce or be deemed to be in
lieu of the Base Salary payable to Executive pursuant to Section 3(a)
hereof.
4. Term of Employment. The employment by Employer of Executive pursuant hereto
shall commence as of the effective date (the "Effective Date") and, subject
to the provisions of Section 5 hereof, shall terminate three (3) years
after the Effective Date (the "Termination Date") . This Agreement shall
automatically be extended for one additional year beyond the Termination
Date (the "Extended Termination Date") unless at least thirty (30) calendar
days prior to the Termination Date, Executive or Employer shall have given
notice that he or it does not wish to extend this Agreement.
5. Premature Termination. Anything in this Agreement contained to the contrary
notwithstanding:
a. Death. Executive's employment hereunder shall terminate forthwith upon
the death of Executive.
b. Disability. Executive's employment hereunder shall terminate, at the
option of Employer, in the event that the Board makes a good faith
determination that Executive suffers from Disability (as hereinafter
defined) so as to be unable to substantially perform his duties
hereunder for an aggregate of one hundred and eighty (180) calendar
days during any period of twelve (12) consecutive months. As used in
this Agreement, the term "Disability" shall mean the material
inability, in the opinion of three-fourths (3/4) of the entire
membership of the Board set forth in a resolution giving the
particulars thereof, of Executive to render his agreed-upon services
to Employer due to physical and/or mental infirmity, which opinion is
concurred in by a physician or psychiatrist reasonably satisfactory to
Employer and Executive or his duly appointed representative or
guardian.
c. Cause. Employer may terminate Executive's employment hereunder for
Cause. For purposes of this Agreement, Employer shall have "Cause" to
terminate Executive's employment hereunder upon (i) the willful,
intentional and continued failure by Executive to substantially
perform his duties hereunder (other than any such failure resulting
from Executive's incapacity due to physical or mental illness) after
demand for substantial performance is delivered by Employer
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specifically identifying the manner in which Employer believes
Executive has not substantially performed his duties and a continued,
intentional disregard of such demand or (ii) the willful engaging by
Executive in conclusively proven misconduct which is materially
injurious to Employer, monetarily or otherwise. No act, or failure to
act, on Executive's part shall be considered "willful" unless done, or
omitted to be done, by him not in good faith and without reasonable
belief that his action or omission was in the best interest of
Employer. Notwithstanding the foregoing, Executive shall not be deemed
to have been terminated for Cause unless and until there shall have
been delivered to Executive a copy of a resolution, duly adopted by
the affirmative vote of not less than three-fourths (3/4) of the
entire membership of the Board at a meeting of the Board called and
held for such purpose (after reasonable notice to Executive and an
opportunity for him, together with his counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board,
Executive conducted, or failed to conduct, himself in a manner set
forth above in clause (i) or (ii) of this Section 5(c), and specifying
the particulars thereof in detail.
d. Termination by Executive. Executive may terminate his employment
hereunder (i) for Good Reason (as hereinafter defined) or (ii) if his
physical or mental health becomes impaired to an extent that makes the
continued performance of his duties hereunder hazardous to his
.physical or mental health or his life, provided that Executive shall
have furnished Employer with a written statement from a doctor or
psychiatrist to such effect, and provided further, that, at Employer's
request and expense, Executive shall submit to an examination by a
physician or psychiatrist selected by Employer and such physician or
psychiatrist shall have concurred in the conclusion of Executive's
physician or psychiatrist. Where Executive terminates his employment
pursuant to clause (ii) of this Section 5 (d), he shall continue to
receive his full Base Salary, payable at the time such payments are
due for the balance of the current term of this Agreement together
with all other amounts to which Executive is entitled, including,
without limitation, expense reimbursement amounts accrued to the Date
of Termination or amounts under any benefit plan of Employer, at the
time such payments are due.
e. "Good Reason" Defined. For purposes of this Agreement, "Good Reason"
shall mean (i) a Change in Control (as hereinafter defined) of
Employer, or (ii) any limitation of the powers of Executive, or (iii)
any removal of Executive as, or any failure to re-elect Executive to
his title hereunder except in connection with termination of
Executive's employment for Cause (as hereinafter defined) or
Disability; provided, however, that any removal of Executive as, or
any failure to re-elect Executive (except in connection with
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termination of Executive's employment for Cause or Disability) shall
not diminish or reduce the obligations of Employer to Executive under
this Agreement. or (iv) the failure of Employer to obtain the
assumption of the agreement to perform this Agreement by any successor
to Employer, as provided for in Section 8 hereof.
f. "Change of Control" Defined. For purposes of this Agreement, a "Change
in Control" (as hereinafter defined) of Employer shall be deemed to
have occurred if (i) any "person" (as such term is used in Section 13
(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), other
than Employer or any "group" (as such term is defined in Section 13(d)
(3) of the Exchange Act) of which they are a member, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of Employer representing twenty
percent (20%) of more of the combined voting power of Employer's then
outstanding securities, or (ii) during any period of two (2)
consecutive years during the term of this Agreement, individuals who
at the beginning of such period constitute the Board cease for any
reason to constitute at least a majority thereof, unless the election
of each director who was not a director at the beginning of such
period has been approved in advance by directors representing at least
two- thirds (2/3) of the directors then in office who were directors
at the beginning of the period.
g. Notice of Termination. Any termination of Executive's employment by
Employer or by Executive (other than termination pursuant to Section
5(a) hereof) shall be communicated by written Notice of Termination to
the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the
provision so indicated.
h. Date of Termination. "Date of Termination" shall mean (i) if
Executive's employment is terminated by his death, the date of his
death, (ii) if Executive's employment is terminated pursuant to
Section 5(b) hereof, thirty (30) calendar days after Notice of
Termination is given (provided that Executive shall not have returned
to the performance of his duties on a full- time basis during such
thirty (30) day period), (iii) if Executive's employment is terminated
pursuant to Section 5(c) hereof, the date specified in the Notice of
Termination, and (iv) if Executive's employment is terminated for any
other reason, the date on which a Notice of Termination is given;
provided, however, that if, within thirty (30) calendar days after any
Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be the date on which
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the dispute is finally determined, either by mutual written agreement
of the parties, by a binding and final arbitration award or by a final
judgment order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been
perfected)
6. Payments and Benefits Upon Early Termination.
a. Early Termination for Death or Disability. Upon the termination of
this Agreement prior to the Termination Date (or, if this Agreement
shall have been extended to the Extended Termination Date, as provided
in Section 4 hereof, prior to the Extended Termination Date) by
Employer as a result of death, or Disability of Executive, Employer
shall pay Executive:
i. his Base Salary and any unpaid base salary accrued and unpaid
through the Date of Termination at the rate in effect at the time
of Notice of Termination is given or, in the case of the death of
Executive, the Date of Termination, payable at the time such
payments are due; and
ii. all other amounts to which Executive is entitled, including,
without limitation, expense reimbursement amounts accrued to the
Date of Termination or amounts under any benefit plan of
Employer, at the time such payments are due.
b. Early Termination Other than for Death, Disability or Cause. Upon the
termination of this Agreement prior to the Termination Date (or, if
this Agreement shall have been extended to the Extended Termination
Date, as provided in Section '4 hereof, prior to the Extended
Termination Date) (X) by Employer other than for death, Disability or
Cause or (Y) by Executive for Good Reason or as a result of a breach
of this Agreement by Employer, Employer shall pay to Executive:
i. this Base Salary and any unpaid base salary accrued and unpaid
through the Termination Date at the rate in effect at the time
Notice of Termination is given, payable at the time such payments
are due (or, if this Agreement shall have been extended to the
Extended Termination Date, as provided in Section 4 hereof, his
Base Salary through the Extended Termination Date at the rate in
effect at the time Notice of Termination is given, payable at the
time such payments are due);
ii. An amount equal to one year of Base Salary at the rate in effect
at the time Notice of Termination is given payable on the
Termination Date or the Extended Termination Date, whichever date
is applicable.
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iii. all other amounts to which Executive is entitled, including,
without limitation, expense reimbursement amounts accrued to the
Date of Termination or amounts under any benefit plan of
Employer, at the time such payments are due; and
iv. In addition, for the thirty-six (36) month period after
termination for any of the reasons specified in this Section 6
(b), Employer shall arrange to provide Executive with life and
health insurance benefits substantially similar to those which
Executive was receiving immediately prior to the Notice of
Termination.
c. Mitigation Not Required. Executive shall not be required to mitigate
the amount of any payment provided for in this Section 6 by seeking
other employment or otherwise, nor shall the amount of any payment
provided for in this Section 6 be reduced by any compensation earned
by Executive as the result of employment by another employer after the
Date of Termination, or otherwise.
7. Non-disclosure;
a. Confidential Information. Executive shall not, to the detriment of
Employer, knowingly use for his own benefit or disclose or reveal to
any unauthorized person, any trade secret or other confidential
information received by Executive in the course of his employment or
engagement in any capacity by Employer which relates to Employer or to
any of the businesses operated by it, including, but not limited to,
any customer lists, customer needs, price and performance information,
specifications, hardware, software, devices, supply sources and
characteristics, business opportunities, marketing, promotional,
pricing and financing techniques, or other information relating to the
business of Employer, and Executive confirms that such information
constitutes the exclusive property of Employer. However, said
restriction on confidential information shall not apply to information
which is: (i) generally available in the industry in which Employer
operates, (ii) disclosed in published literature or (iii) obtained by
Executive from a third party without binder or secrecy. Executive
agrees that, except as otherwise expressly agreed to by Employer, he
will return to Employer, promptly upon the request of the Board or any
executive officer designated by the Board, any physical embodiment of
such confidential information.
b. Remedies. Executive recognizes that the possible restrictions on his
activities which may occur as a result of his performance of his
obligations under this Section 7 are required for the reasonable
protection of Employer and its investments, and Executive expressly
acknowledges that damages alone will be an inadequate remedy for any
breach or violation of this Section 7, and that Employer, in addition
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to all other remedies at law or in equity, shall be entitled, as a
matter of right, to injunctive relief, including specific performance,
with respect to any such breach or violation, in any court of
competent jurisdiction. If any of the provisions of this Section 7 are
held to be in any respect an unreasonable restriction upon Executive,
then they shall be deemed to extend only over the maximum period of
time, geographic area, and/or range of activities as to which they may
be enforceable.
c. Nonexclusive. The undertakings of Executive contained in Sections
7(a), 7(b) and 7(c) hereof shall be in addition to, and not in lieu
of, any obligations which he may have with respect to the subject
matter hereof, whether by contract, as a matter of law or otherwise.
8. Successors; Benefits.
a. Successors. Employer shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Employer, by
agreement in form and substance satisfactory to Executive, to
expressly assume and agree to perform this Agreement in the same
manner and to the same extent that Employer would be required to
perform it if no such succession had taken place. Failure of Employer
to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle
Executive to compensation from Employer in the same amount and on the
same terms as he would be entitled to hereunder if he terminated his
employment for Good Reason, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective
shall be deemed the Date of Termination. As used in this Agreement,
"Employer" shall mean Employer as hereinbefore defined and any
successor to its business and/or assets as aforesaid which executes
and delivers the agreement provided for in this Section 8 or which
otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
b. Benefits. This Agreement and all rights of Executive hereunder shall
inure to the benefit of and be enforceable by Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributes, devisees and legatees. If Executive should die while any
amounts would still be payable to him hereunder if he had continued to
live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to Executive's
devisee, legatee, or other designee or, if there be no such designee,
to Executive's estate.
9. Miscellaneous Provisions.
a. Execution in Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original but all
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of which taken together shall constitute one and the same agreement.
b. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly
given or made as of the date delivered, if delivered personally, or
three (3) calendar days after having been mailed, if mailed by
registered or certified mail, postage prepaid, return receipt
requested, as follows:
If to Employer, to:
Chief Financial Officer
Nesco Industries, Inc.
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If to Executive, to:
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or to such other address as either party hereto shall have designated
by like notice to the other party hereto (except that a notice of
change of address shall only be effective upon receipt)
c. Amendment. This Agreement may only be amended by a written instrument
executed by each of the parties hereto.
d. Entire Agreement. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements and understandings of the parties
hereto, oral and written, with respect to the subject matter hereof.
e. Applicable Law. This Agreement shall be governed by the laws of the
State of New York applicable to contracts made and to be wholly
performed therein.
f. Headings. The headings contained herein are for the sole purpose of
convenience of reference and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this
Agreement.
g. Waiver, etc. The failure of either of the parties hereto to at any
time enforce any of the provisions of this Agreement shall not be
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deemed or construed to be a waiver of any such provision, nor to in
any way affect the validity of this Agreement or any provision hereof
or the right of either of the parties hereto to thereafter enforce
each and every provision of this Agreement. No waiver of any breach of
any of the provisions of this Agreement shall be effective unless set
forth in a written instrument executed by the party against whom or
which enforcement of such waiver is sought; and no waiver of any such
breach shall be construed or deemed to be a waiver of any other or
subsequent breach and delivered by the parties hereto as of the date
first above written.
IN WITNESS WHEREOF, the undersigned have set their hands and seals as of the
first above written.
Nesco Industries, Inc.
By: /s/ ▇▇▇ ▇▇▇▇▇
Name: ▇▇▇ ▇▇▇▇▇
Title: Treasurer
Accepted and Agreed
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