Exhibit 10.55
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "AGREEMENT") is effective as of November
15, 2001 (the "EFFECTIVE DATE") by and between KRONOS AIR TECHNOLOGIES, INC., a
Nevada corporation (the "COMPANY") and wholly-owned subsidiary of TSET, INC., a
Nevada corporation (the "PARENT"), and DANIEL R. DWIGHT ("EXECUTIVE").
RECITALS:
WHEREAS, Executive's participation in the business of the Company is
essential to the Company's success;
WHEREAS, the parties hereto acknowledge that the company's ability to
continue as a going concern and perform its obligations hereunder are contingent
on the Company raising additional funds for working capital and/or increasing
its revenues; and
WHEREAS, the parties wish to provide for the employment of Executive by
the Company from and after the date hereof, and to restrict the ability of
Executive to compete with the Company, all on the terms and conditions herein
set forth.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, and for other valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. EMPLOYMENT. Subject to Section 3 below, the Company hereby employs
Executive for a term of two (2) years (the "INITIAL TERM"), commencing on the
Effective Date, to serve as the President and Chief Executive Officer of the
Company and to perform such services and duties as are consistent with such
position and as may be directed by the Company's Board of Directors. After the
Initial Term, this Agreement shall automatically renew (each, a "RENEWAL TERM")
for successive one (1) year terms unless either party provides written notice to
the other party within three (3) months of the end of the Initial Term or any
Renewal Term of its or his desire not to renew this Agreement. The Initial Term
and Renewal Term are sometimes collectively referred to as the "EMPLOYMENT
TERM." Executive hereby accepts such employment. During the term of his
employment hereunder, Executive shall devote his full business time, attention,
knowledge and skills faithfully, diligently and to the best of his ability to
perform his duties hereunder, and Executive shall not engage in any venture or
activity which interferes with Executive's performance of his duties hereunder
as reasonably determined by the Board of Directors; PROVIDED, HOWEVER, Executive
may serve on a limited number of boards of directors and may engage in
charitable activities, provided such activities do not interfere with the
performance of his duties to the Company.
2. COMPENSATION AND BENEFITS. During the Employment Term, the Company
shall pay Executive the compensation and other amounts set forth below.
2.1. SALARY. The Company shall pay Executive an annual salary
("SALARY") of One Hundred Eighty Thousand Dollars (US $180,000.00), which amount
may be increased after the Initial Term at the discretion of the Board of
Directors. In no event may Executive's salary be decreased during the Employment
Term without Executive's prior consent. The Executive's Salary shall be payable
in installments according to the Company's regular payroll practices and subject
to such deductions as may be required by law.
2.2. BONUS. Executive shall be eligible for annual incentive bonus
compensation (a "BONUS") for each calendar year in an amount equal to the
Executive's Salary, based principally upon the achievement of the "BONUS
OBJECTIVES" as set forth in SCHEDULE A attached hereto. The Bonus Objectives
shall be updated annually by the Board of Directors. If such Bonus Objectives
are achieved, Executive shall be paid the specified Bonus calculated in
accordance with Schedule A attached hereto.
2.3. BENEFITS. Executive shall receive: (i) the Executive benefits
and perquisites provided by the Company to its executive officers from
time-to-time, including, if offered, medical, dental, life and disability
insurance at the Company's cost, and five (5) weeks' paid vacation during each
calendar year; and (ii) reimbursement for reasonable and necessary out-of-pocket
expenses incurred in the performance of his duties hereunder, including, but not
limited to, certain home office expenses, travel and entertainment expenses
(such expenses shall be reimbursed by the Company, from time to time, upon
presentation of appropriate receipts therefor). To the extent that certain
medical, dental, life and disability insurance is not available to Executive
through the Company, the Company shall reimburse Executive for such costs as set
forth on SCHEDULE B attached hereto.
2.4. STOCK AWARDS. The Company shall provide Executive with the
stock options set forth in the Stock Option Agreement annexed hereto as EXHIBIT
"A" and made a part hereof, subject to the terms and conditions of such Stock
Option Agreement.
3. TERMINATION.
3.1. Executive's employment pursuant to this Agreement shall be
terminated by the first to occur of the following events:
(a) The death of Executive.
(b) The Complete Disability of Executive. "COMPLETE
DISABILITY" as used herein shall mean the inability of Executive, due to
illness, accident or any other physical or mental incapacity, to perform the
services provided for in this Agreement for an aggregate of 90 days within any
period of twelve (12) consecutive months during the term hereof.
(c) The discharge of Executive by the Company for Cause.
"CAUSE" as used herein shall mean:
(i) illegal drug use or alcohol abuse;
(ii) conviction of a felony or a crime involving moral
turpitude in the courts of the United States or any state thereof;
(iii) acts of fraud by Executive against the Company or
its affiliates, or in connection with the performance of his duties hereunder,
as determined by the Company after investigation, notice of the charge to
- 2 -
Executive and after allowing Executive an opportunity to explain the conduct in
question;
(iv) Executive's willful failure or refusal to comply
with any of the provisions of this Agreement; or
(v) Executive's failure to comply with any of the
provisions of this Agreement or to perform Executive's duties and obligations
under this Agreement, in any material respect, in the Board of Directors'
discretion (a "DEFAULT"); PROVIDED, HOWEVER, that in the case of this subsection
(v), termination for "Cause" shall occur and be effective only if the Company
has given written notice of the Default to Executive and Executive has failed to
cure the Default in question during a period of thirty (30) days after the date
of Executive's receipt of such notice.
3.2. Upon any termination pursuant to Section 3.1, the Company
shall be released from all obligations hereunder (except for the obligation to
pay any compensation or benefits described in Section 2 hereof which are accrued
and unpaid as of the effective date of termination), including, without
limitation, any obligation post-termination to compensate Executive pursuant to
Section 2 hereof.
3.3. TERMINATION BY EXECUTIVE.
(a) Executive may terminate his employment for Good Reason
(as defined below) and receive the payments and benefits specified in Sections
2.1 and 2.3 herein for a period of time that shall be the greater of (i) one (1)
year from the date of such termination, or (ii) the remainder of Executive's
Employment Term hereunder. In such event, any payment to Executive pursuant to
this Section 3.3 shall be payable in installments according to the Company's
regular payroll practices and subject to such deductions as may be required by
law.
(b) For purposes of this Agreement, "GOOD REASON" will exist:
(i) if the Company fails, after receipt of written notice
from Executive and a period of thirty (30) days to cure such failure, or to
honor any of its material obligations under this Agreement;
(ii) if Executive's authority, duties or title is changed
by the Company in a manner which is adverse to Executive;
(iii) if Executive is removed as President and Chief
Executive Officer of the Parent; or
(iv) if there is a Change of Control of the Company
and/or the Parent and Executive's employment is terminated by the Company for
any reason other than Cause, death or disability within six (6) months after the
Change of Control.
(c) As used herein, the term "CHANGE OF CONTROL" shall mean:
- 3 -
(i) any person (defined for the purposes of this Section
to mean any person within the meaning of Section 13(d) of the Securities
Exchange Act of 1934 (the "EXCHANGE ACT"), other than the Company and/or the
Parent, or an employee benefit plan established by the Board of Directors of the
Company and/or the Parent, acquires, directly or indirectly, the beneficial
ownership (determined under Rule 13d-3 of the regulations promulgated by the
Securities and Exchange Commission under Section 13(d) of the Exchange Act) of
securities issued by the Company or the Parent, respectively, having
thirty-three and one-third percent (33 1/3%) or more of the voting power of all
of the voting securities issued by the Company or the Parent, respectively, in
the election of directors at the meeting of the holders of voting securities to
be held for such purpose, except for a capital-raising transaction that has been
approved by the Board of Directors of the Company or the Parent, respectively;
or
(ii) a majority of the directors elected at any meeting
of the holders of voting securities of the Company and/or the Parent are persons
who were not nominated for such election by the Board of Directors of the
Company and/or the Parent or a duly constituted committee of the Board of
Directors of the Company and/or the Parent having authority in such matters; or
(iii) the Company and/or the Parent merges or
consolidates with or transfers substantially all of its assets to another
person.
4. CONFIDENTIALITY/COVENANT AGAINST UNFAIR COMPETITION.
4.1. The Company and the Executive acknowledge that the services to
be performed by the Executive under this Agreement are unique and extraordinary
and, as a result of such employment, the Executive will be in possession of
confidential information relating to the business practices of the Company. The
term "CONFIDENTIAL INFORMATION" shall mean any and all information (verbal and
written) relating to the Company or any of its affiliates, or any of their
respective activities, other than such information which can be shown by the
Executive to be in the public domain (such information not being deemed to be in
the public domain merely because it is embraced by more general information
which is in the public domain) other than as the result of breach of the
provisions of this Section 4.1, including, but not limited to, information
relating to: trade secrets, personnel lists, financial information, research
projects, services used, pricing, software, software code, technical memoranda,
designs and specifications, new products and services, comparative analyses of
competitive products, technology, know-how, customers, customer lists and
prospects, product sourcing, marketing and selling and servicing. The Executive
agrees that he will not, during or for a period of three (3) years after the
termination of employment, directly or indirectly, use, communicate, disclose or
disseminate to any person, firm or corporation any Confidential Information.
4.2. Executive agrees that during the Employment Term and for a
period of two (2) years following the termination of his employment (for any
reason), he will not, for his own account or jointly with another, directly or
indirectly, for or on behalf of any individual, partnership, corporation, or
other legal entity, as principal, agent or otherwise:
(a) own, control, manage, be employed by, consult with, or
otherwise participate in, a business involved within the Trade Area (as
hereinafter defined) involved in:
- 4 -
(i) the development or manufacture of air purification
technology; or
(ii) the development or manufacture of any other
technology which the Company is selling or developing at the time of Executive's
termination (the activities described in this clause (a) are hereinafter
referred to collectively as the "BUSINESS");
(b) solicit or induce, or in any manner attempt to solicit or
induce, any person:
(i) which is or was a customer of the Company or any of
its future subsidiaries or any successor of any such customer or client;
(ii) employed by the Company or any of its future
subsidiaries to leave such employment, whether or not such employment is
pursuant to a written contract and whether or not such employment is at will, or
hire any person who has been employed by the Company or any its future
subsidiaries at any time during the six (6) month period preceding such hiring;
or
(c) interfere with the Company's business relationships,
including, without limitation, the business relationships with the Company's
customers, clients, vendors or referral sources.
4.3. As used herein, the term "TRADE AREA" shall mean any locations
in which the Company has conducted business at any time during the twelve (12)
month period preceding the termination of employment.
4.4. Executive recognizes the importance of the covenants contained
in this Section 4 and acknowledges that, based on his past experience and his
position as an executive of the Company and the projected expansion of the
Company's business, the restrictions imposed herein are: (a) reasonable as to
scope, time and area; (b) necessary for the protection of the Company's
legitimate business interests, including, without limitation, the Company's
trade secrets, goodwill, and its relationship with customers and suppliers; (c)
not unduly restrictive of any Executive's rights as an individual; and (d)
supported by adequate consideration. Executive acknowledges and agrees that the
covenants contained in this Section 4 are essential elements of this Agreement.
4.5. If Executive commits a breach or threatens to commit a breach
of any of the provisions of this Section 4, the Company shall have the right and
remedy, in addition to any others that may be available, at law or in equity, to
seek to have the provisions of this Section 4 specifically enforced by any court
having equity jurisdiction, through injunctive or other relief (without any bond
or security being required to be posted), it being acknowledged that any such
breach or threatened breach will cause irreparable injury to the Company, the
amount of which will be difficult to determine, and that money damages will not
provide an adequate remedy to the Company.
4.6. If any covenant contained in this Section 4, or any part
thereof, is hereafter construed to be illegal, invalid or unenforceable, such
illegality, invalidity or unenforceability shall attach only to such provision
- 5 -
and shall not in any manner affect or render illegal, invalid or unenforceable
any of the remaining covenants, which shall be given full effect, without regard
to the invalid portions, and this Agreement shall be carried out as if any such
illegal, invalid or unenforceable provision were not contained herein. In any
such case, the provision deemed unenforceable shall be remade or interpreted by
the parties in a manner that such provisions shall be enforceable to preserve,
to the maximum extent possible, the original intention and meaning thereof and
such provision, as so modified, shall remain in full force and effect
thereafter. If Executive breaches the covenants set forth in this Section 4, the
running of the noncompete period described herein (but not his obligation) shall
be tolled for so long as such breach continues. The provisions of this Section 4
shall survive the expiration and termination of this Agreement, and the
termination of Executive's employment hereunder.
5. COMPANY PROPERTY. The Company shall be the sole owner of all
products and proceeds of the Executive's services hereunder, including, but not
limited to, all software, software products and code, technical memoranda,
design and specifications, materials, ideas, concepts, formats, suggestions,
developments, arrangements, packages, programs and other intellectual properties
that the Executive may have or may in the future acquire, obtain, develop or
create in connection with and during the term of the Executive's employment with
the Company (including his employment with the Company prior to the date
hereof), free and clear of any claims by the Executive (or anyone claiming under
the Executive) of any kind or character whatsoever (other than the Executive's
right to receive compensation hereunder). The Executive shall, at the request of
the Company, execute such assignments, certificates or other instruments as the
Company may from time to time deem necessary or desirable to evidence,
establish, maintain, perfect, protect, enforce or defend its right, title and
interest in or to any such properties. Upon the termination of the Executive's
employment for any reason whatsoever, all documents, records, notebooks,
equipment, price lists, specifications, programs, customer and prospective
customer lists and other materials which refer or relate to any aspect of the
Business which are in the possession of the Executive (including all copies
thereof), shall be promptly returned to the Company.
6. RELATED PARTY TRANSACTIONS. So long as Executive is employed by the
Company, he shall not, without the prior written consent of the Company,
knowingly cause or permit the Company, or any subsidiary to enter into or effect
any agreement or transaction, or provide or receive any service, between the
Company or any subsidiary on the one hand, and Executive or a Related Party
(defined below), on the other hand, except for the employment relationship
contemplated hereby. In any event, any such agreements, transactions or services
shall be at prices and terms which are equal to the prices and terms available
for similar agreements, transactions or services with unrelated third parties.
As used herein, "RELATED PARTY" means (i) any person related by blood, adoption,
or marriage to the Executive, (ii) any director or officer of the Company or any
of its subsidiaries, (iii) any corporation or other entity in which the
Executive has, directly or indirectly, at least five percent (5%) beneficial
interest in the capital stock or other type of equity interest in such
corporation or other entity, or (iv) any partnership in which the Executive is a
general partner or a limited partner having a five percent (5%) or more interest
therein.
7. SUCCESSORS. This Agreement is personal to Executive and without the
prior written consent of the Company shall not be assignable by Executive. This
Agreement is not assignable by the Company except in connection with the sale of
- 6 -
all or substantially all of the Company's assets. Subject to the foregoing, this
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.
8. INDEMNIFICATION. As an Executive, officer and director of the
Company, Executive shall be indemnified against all liabilities, damages, fines,
costs and expenses by the Company in accordance with the indemnification
provisions of the Company's Articles of Incorporation as in effect on the date
hereof, and otherwise to the fullest extent to which Executives, officers and
directors of a corporation organized under the laws of the State of Nevada may
be indemnified pursuant to the laws of such state, as the same may be amended
from time to time (or any subsequent statute of similar tenor and effect),
subject to the terms and conditions of such statute. The Company shall carry and
maintain current Directors and Officers insurance in amounts customary with
industry practices.
9. CANCELLATION OF PRIOR AGREEMENTS AND RECOGNITION OF AMOUNTS OWED. As
of the Effective Date, the parties hereto agree that the Consulting Agreement
dated January 1, 2001 between the Company and Executive (the "FIRST CONSULTING
AGREEMENT") and the Finders Agreement dated August 21, 2000 between the Company
and Executive shall be terminated. The Company hereby acknowledges and agrees
that pursuant to the terms of the First Consulting Agreement, the Company owes
Executive Two Hundred Fifty Thousand Five Hundred Eighty-Two Dollars (US
$250,582) (the "OUTSTANDING BALANCE") as of December 31, 2001, which amounts are
presently past due. The parties hereto agree that the Outstanding Balance shall
continue to accrue interest at one percent (1%) per month until the Outstanding
Balance is paid in full. Payments from the Company to Executive shall be
allocated first to out of pocket expenses, second to salary, and third to
repayment of the Outstanding Balance. In addition, the Company hereby
acknowledges and agrees that pursuant to the First Consulting Agreement and the
Consulting Agreements dated August 1, 2000 between the Company and Executive
(the "SECOND CONSULTING AGREEMENT"), Executive has earned two hundred
seventy-one thousand (271,700) options of the Company (the "CONSULTING OPTIONS")
that are fully vested and exercisable under the terms and conditions of the
First Consultant Agreement, the Second Consulting Agreement and the Letter
Agreement dated April 12, 2001 between the Company and Executive. The Company
hereby acknowledges and agrees that the Outstanding Balance and the Consulting
Options have been earned by Executive and shall survive the expiration and
termination of this Agreement, and the termination of Executive's employment
hereunder.
10. MISCELLANEOUS.
10.1. GUARANTEE BY THE PARENT. The Parent hereby unconditionally
guarantees to Executive, the due performance and prompt payment of the
obligations of the Company hereunder.
10.2. MODIFICATION AND WAIVER. Any term or condition of this
Agreement may be waived at any time by the party hereto that is entitled to the
benefit thereof; provided, however, that any such waiver shall be in writing and
signed by the waiving party, and no such waiver of any breach or default
hereunder is to be implied from the omission of the other party to take any
action on account thereof. A waiver on one occasion shall not be deemed to be a
- 7 -
waiver of the same or of any other breach on a future occasion. This Agreement
may be modified or amended only by a writing signed by both parties hereto.
10.3. GOVERNING LAW. The validity and effect of this Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of Nevada.
10.4. TAX WITHHOLDING. The Company may withhold from any amounts
payable under this Agreement such taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
10.5. SECTION CAPTIONS. Section and other captions contained in
this Agreement are for reference purposes only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.
10.6. SEVERABILITY. Every provision of this Agreement is intended
to be severable. If any term or provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the validity
of the remainder of this Agreement.
10.7. INTEGRATED AGREEMENT. This Agreement constitutes the entire
understanding and agreement among the parties hereto with respect to the subject
matter hereof, and supersedes any other employment agreements executed before
the date hereof. There are no agreements, understandings, restrictions,
representations, or warranties among the parties other than those set forth
herein or herein provided for and the Company and Executive hereby agree and
acknowledge that the Company, its subsidiaries and affiliates, shall have no
obligation to pay Executive any compensation other than as provided for herein.
10.8. INTERPRETATION. No provision of this Agreement is to be
interpreted for or against any party because that party or that party's legal
representative drafted such provision. For purposes of this Agreement: "herein,"
"hereby," "hereunder," "herewith," "hereafter," and "hereinafter" refer to this
Agreement in its entirety, and not to any particular section or subsection. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, and all of which shall constitute one and the same
instrument.
10.9. NOTICES. All notices, requests, demands, or other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given upon receipt if delivered in person or by Federal
Express (or similar overnight courier service) to the parties at the following
addresses:
If to Executive: Daniel R. Dwight
47 Payson Road
Belmont, Massachusetts 02478
With a copy to: Hutchins, Wheeler & Dittmar
A Profession Corporation
101 Federal Street
Boston, Massachusetts 02110
Attention: Steven J. Cagnetta, Esq.
- 8 -
If to the Company: TSET, Inc.
14523 Westlake Drive
Lake Oswago, Oregon 97034
With a copy to: Clayton E. Parker, Esq.
Kirkpatrick & Lockhart LLP
201 South Biscayne Boulevard, Suite 2000
Miami, Florida 33131
Any party may change the address to which notices, requests, demands or other
communications to such party shall be delivered or mailed by giving notice
thereof to the other parties hereto in the manner provided herein. Any notice
may be given on behalf of a party by its counsel.
10.10. NO JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES' ACCEPTANCE OF THIS AGREEMENT.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
- 9 -
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the Effective Date.
COMPANY:
KRONOS AIR TECHNOLOGIES, INC.
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
PARENT:
TSET, INC.
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
EXECUTIVE:
--------------------------------------------
Daniel R. Dwight
- 10 -
SCHEDULE A
DESCRIPTION OF BONUS OBJECTIVES
A-1
SCHEDULE B
INSURANCE COSTS
Insurance Item Cost Per Month
-------------- --------------
A-2
SCHEDULE C
STOCK OPTION AGREEMENT
A-3