Exhibit 10.4
DECTRON INTERNATIONALE INC.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of this ___ day of _______, 1998 by and
between DECTRON INTERNATIONALE INC., a Quebec, having an office at 4300 Poirer
Blvd., Montreal, Quebec, H4R 2C5, Canada (hereinafter referred to as "Employer")
and NESS LAKDAWALA, an individual with an address C/O Dectron, Inc., 4300 Poirer
Blvd, Montreal, Quebec, H4R 2C5, Canada (hereinafter referred to as "Employee");
W I T N E S S E T H:
WHEREAS, Employer employs, and desires to continue to employ, Employee as
President and Chief Executive Officer of Employer; and
WHEREAS, Employee is willing to continue to be employed as the President
and Chief Executive Officer in the manner provided for herein, and to perform
the duties of the President and Chief Executive Officer of Employer upon the
terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein set forth it is agreed as follows:
1. EMPLOYMENT OF PRESIDENT AND CHIEF EXECUTIVE OFFICER. Employer hereby
employs Employee as President and Chief Executive Officer.
2. TERM.
a. Subject to Section 10 below and further subject to Section 2(b)
below, the term of this Agreement shall commence on the effective date of the
Company's Registration Statement (the "Commencement Date") and expire two years
from such date. Each 12 month period from the Commencement Date forward during
the term hereof shall be referred to as an "Annual Period." During the term
hereof, Employee shall devote substantially all of his business time and efforts
to Employer and its subsidiaries and affiliates.
b. Subject to Section 10 below, unless the Board of Directors of the
Company (the "Board") of Employer shall determine to the contrary and shall so
notify Employee in writing on or before the end of any Annual Period or unless
the Employee notifies Employer in writing on or before the end of any Annual
Period of his desire not to renew this Agreement, then at the end
of each Annual Period, the term of this Agreement shall be automatically
extended for one (1) additional Annual Period to be added at the end of the then
current term of this Agreement.
3. DUTIES. The Employee shall perform those functions generally
performed by persons of such title and position, shall attend all meetings of
the stockholders and the Board, shall perform any and all related duties and
shall have any and all powers as may be prescribed by resolution of the Board,
and shall be available to confer and consult with and advise the officers and
directors of Employer at such times that may be required by Employer. Employee
shall report directly and solely to the Board.
4. COMPENSATION.
a. Employee shall be paid a salary of $200,000(U.S.) for each Annual
Period thereafter with an adjustment for cost of living increases (based on the
Consumer Price Index "CPI"). Employee shall be paid periodically in accordance
with the policies of the Employer during the term of this Agreement, but not
less than monthly.
b. (i) In the event of a "Change of Control" whereby
(A) A person (other than a person who is an officer or a
Director of Employer on the effective date hereof), including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes, or
obtains the right to become, the beneficial owner of Employer securities having
30% or more of the combined voting power of then outstanding securities of the
Employer that may be cast for the election of directors of the Employer;
(B) At any time, the Board-nominated slate of candidates for the
Board is not elected;
(C) Employer consummates a merger in which it is not the
surviving entity;
(D) Substantially all of Employer's assets are sold; or
(E) Employer's stockholders approve the dissolution or
liquidation of Employer; then
(ii) (A) In the event of a Change of Control, Employee shall be
eligible to receive a one-time bonus, equal on an after-tax basis to five times
his then current annual base salary.
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To effectuate this provision, the bonus shall be "grossed-up" to include the
amount necessary to reimburse Employee for his federal, provincial and local
income tax liability on the bonus and on the "gross-up" at the respective
effective marginal tax rates. In no event shall this bonus exceed six times
Employee's then current base salary. Said bonus shall be paid within thirty
(30) days of the Change of Control.
(B) All stock options, warrants and stock appreciation rights
("Rights") granted by Employer to Employee under any plan or otherwise prior to
the effective date of the Change of Control, shall become vested, accelerate and
become immediately exercisable. In the event Employee owns or is entitled to
receive any unregistered securities of Employer, then Employer shall use its
best efforts to affect the registration of all such securities as soon as
practicable, but no later than 120 days after the effective date of the
registration statement; provided, however, that such period may be extended or
delayed by Employer for one period of up to 60 days if, upon the advice of
counsel at the time such registration is required to be filed, or at the time
Employer is required to exercise its best efforts to cause such registration
statement to become effective, such delay is advisable and in the best interests
of Employer because of the existence of non-public material information, or to
allow Employer to complete any pending audit of its financial statements;
c. Employer shall include Employee in its health insurance program
available to Employer's executive officers and shall pay 100% of the premiums
for such program.
d. Employee shall have the right to participate in any other employee
benefit plans established by Employer.
e. Employee shall be entitled to a car provided to him by the
Company and the Company will pay all insurance and maintenance and expenses in
connection therewith.
5. BOARD OF DIRECTORS. Employer agrees that so long as this Agreement is
in effect, Employee will be nominated to the Board as part of management's slate
of Directors.
6. EXPENSES. Employee shall be reimbursed for all of his actual
out-of-pocket expenses incurred in the performance of his duties hereunder,
provided such expenses are acceptable to Employer, which approval shall not be
unreasonably withheld, for business related travel and entertainment expenses,
and that Employee shall submit to Employer reasonably detailed receipts with
respect thereto.
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7. VACATION. Employee shall be entitled to receive eight (8) weeks paid
vacation time after each year of employment upon dates agreed upon by Employer.
Upon separation of employment, for any reason, vacation time accrued and not
used shall be paid at the salary rate of Employee in effect at the time of
employment separation.
8. SECRECY. At no time shall Employee disclose to anyone any
confidential or secret information (not already constituting information
available to the public) concerning internal affairs or proprietary business
operations of Employer.
9. COVENANT NOT TO COMPETE. Subject to, and limited by, Section 11(b),
Employee will not, at any time, anywhere in the world, during the term of this
Agreement, and for one (1) year thereafter, either directly or indirectly,
engage in, with or for any enterprise, institution, whether or not for profit,
business, or company, competitive with the business (as identified herein) of
Employer as such business may be conducted on the date thereof, as a creditor,
guarantor, or financial backer, stockholder, director, officer, consultant,
advisor, employee, member, inventor, producer, director, or otherwise of or
through any corporation, partnership, association, sole proprietorship or other
entity; provided, that an investment by Employee, his spouse or his children is
permitted if such investment is not more than four percent (4%) of the total
debt or equity capital of any such competitive enterprise or business and
further provided that said competitive enterprise or business is a publicly held
entity whose stock is listed and traded on a national stock exchange or through
the NASDAQ Stock Market. As used in this Agreement, the business of Employer
shall be deemed to include the provision of dehumidification, refrigeration, air
conditioning and indoor air quality services.
10. TERMINATION.
a. TERMINATION BY EMPLOYER
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(i) Employer may terminate this Agreement upon written notice
for Cause. For purposes hereof, "Cause" shall mean (A) engaging by the Employee
in conduct that constitutes activity in competition with Employer; (B) the
conviction of Employee for the commission of a felony; and/or (C) the habitual
abuse of alcohol or controlled substances. Notwithstanding anything to the
contrary in this Section 10(a)(i), Employer may not terminate Employee's
employment under this Agreement for Cause unless Employee shall have first
received notice from the Board advising Employee of the specific acts or
omissions alleged to constitute Cause, and such acts or omissions continue after
Employee shall have had a reasonable opportunity (at least 30 days from the date
Employee receives the notice from the Board) to correct the acts or omissions so
complained of. In no event shall alleged incompetence of Employee in the
performance of Employee's duties be deemed grounds for termination for Cause.
(ii) Employer may terminate Employee's employment under this
Agreement if, as a result of any physical or mental disability, Employee shall
fail or be unable to perform his duties under this Agreement for any consecutive
period of 120 days during any twelve-month period. If Employee's employment is
terminated under this Section 10(a)(ii): (A) for the first year after
termination, Employee shall be paid 100% of his full compensation under Section
4(a) of this Agreement at the rate in effect on the date of termination, and in
each successive 12 month period thereafter Employee shall be paid an amount
equal to 80% of his compensation under Section 4(a) of this agreement at the
rate in effect on the date of termination; and (B) Employee shall continue to be
entitled, insofar as is permitted under applicable insurance policies or plans,
to such general medical and employee benefit plans (including profit sharing or
pension plans) as Employee had been entitled to on the date of termination.
(iii) This agreement automatically shall terminate upon the
death of Employee, except that Employee's estate shall be entitled to receive
any amount accrued under Section 4(a) and the pro-rata amount payable under
Section 4(e) for the period prior to Employee's death and any other amount to
which Employee was entitled of the time of his death.
b. TERMINATION BY EMPLOYEE
(i) Employee shall have the right to terminate his employment
under this Agreement upon 30 days' notice to Employer given within 90 days
following the occurrence of any of the following events (A) through (F):
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(A) Employee is not elected or retained as President and Chief
Operating Officer.
(B) Employer acts to materially reduce Employee's duties and
responsibilities hereunder. Employee's duties and responsibilities shall not be
deemed materially reduced for purposes hereof solely by virtue of the fact that
Employer is (or substantially all of its assets are) sold to, or is combined
with, another entity, provided that Employee shall continue to have the same
duties and responsibilities with respect to Employer's business, and Employee
shall report directly to the chief executive officer and/or board of directors
of the entity (or individual) that acquires Employer or its assets.
(C) A Material Reduction (as hereinafter defined) in Employee's
rate of base compensation, or Employee's other benefits. "Material Reduction"
shall mean a ten percent (10%) differential;
(D) A failure by Employer to obtain the assumption of this
Agreement by any successor;
(E) A material breach of this Agreement by Employer, which is
not cured within thirty (30) days of written notice of such breach by Employer;
(F) A Change of Control.
(ii) Anything herein to the contrary notwithstanding, Employee
may terminate this Agreement upon thirty (30) days written notice.
c. If Employer shall terminate Employee's employment other than due
to his death or disability or for Cause (as defined in Section 10(a)(i) of this
Agreement), or if Employee shall terminate this Agreement under Section
10(b)(i), Employer's obligations under Section 4 shall be absolute and
unconditional and not subject to any offset or counterclaim and Employee shall
continue to be entitled to receive all amounts provided for by Section 4 and all
additional employee benefits under Section 4 regardless of the amount of
compensation he may earn with respect to any other employment he may obtain.
11. CONSEQUENCES OF BREACH BY EMPLOYER;
EMPLOYMENT TERMINATION
a. If this Agreement is terminated pursuant to Section 10(b)(i)
hereof, or if Employer shall terminate Employee's
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employment under this Agreement in any way that is a breach of this Agreement by
Employer, the following shall apply:
(i) Employee shall receive as a bonus, and in addition to his
salary continuation pursuant to Section 10.c., above, a cash payment equal to
the Employee's total base salary as of the date of termination hereunder for the
remainder of the term plus an additional amount to pay all federal, state and
local income taxes thereon on a grossed-up basis as heretofore provided, payable
within 30 days of the date of such termination.
(ii) Employee shall be entitled to payment of any previously
declared bonus and additional compensation as provided in Section 4(a) and (b)
above.
b. In the event of termination of Employee's employment pursuant to
Section 10(b)(i) of this Agreement, the provisions of Section 9 shall not apply
to Employee.
12. REMEDIES
Employer recognizes that because of Employee's special talents,
stature and opportunities in the Company's business, and because of the special
creative nature of and compensation practices of said industry and the material
impact that individual projects can have on company's results of operations, in
the event of termination by Employer hereunder (except under Section 10(a)(i) or
(iii), or in the event of termination by Employee under Section 10(b)(i) before
the end of the agreed term, the Employer acknowledges and agrees that the
provisions of this Agreement regarding further payments of base salary, bonuses
and the exercisability of Rights constitute fair and reasonable provisions for
the consequences of such termination, do not constitute a penalty, and such
payments and benefits shall not be limited or reduced by amounts' Employee might
earn or be able to earn from any other employment or ventures during the
remainder of the agreed term of this Agreement.
13. ARBITRATION. Any controversies between Employer and Employee
involving the construction or application of any of the terms, provisions or
conditions of this Agreement, save and except for any breaches arising out of
Sections 8 and 9 hereof, shall on the written request of either party served on
the other be submitted to arbitration. Such arbitration shall comply with and
be governed by the rules of the American Arbitration Association. An
arbitration demand must be made within one (1) year of the date on which the
party demanding arbitration first had notice of the existence of the claim to be
arbitrated, or the right to
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arbitration along with such claim shall be considered to have been waived. An
arbitrator shall be selected according to the procedures of the American
Arbitration Association. The cost of arbitration shall be born by the losing
party or in such proportions as the arbitrator shall decide. The arbitrator
shall have no authority to add to, subtract from or otherwise modify the
provisions of this Agreement, or to award punitive damages to either party.
14. ATTORNEYS' FEES AND COSTS. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which he may be entitled.
15. ENTIRE AGREEMENT; SURVIVAL. This Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
herein and supersedes, effective as of the date hereof any prior agreement or
understanding between Employer and Employee with respect to Employee's
employment by Employer. The unenforceability of any provision of this Agreement
shall not effect the enforceability of any other provision. This Agreement may
not be amended except by an agreement in writing signed by the Employee and the
Employer, or any waiver, change, discharge or modification as sought. Waiver of
or failure to exercise any rights provided by this Agreement and in any respect
shall not be deemed a waiver of any further or future rights.
b. The provisions of Sections 4, 8, 9, 10(a)(ii), 10(a)(iii), 10(c),
11, 12, 13, 14, 17, 18 and 19 shall survive the termination of this Agreement.
16. ASSIGNMENT. This Agreement shall not be assigned to other parties.
17. GOVERNING LAW. This Agreement and all the amendments hereof, and
waivers and consents with respect thereto shall be governed by the internal laws
of the Province of Quebec, without regard to the conflicts of laws principles
thereof.
18. NOTICES. All notices, responses, demands or other communications
under this Agreement shall be in writing and shall be deemed to have been given
when
a. delivered by hand;
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b. sent be telex or telefax, (with receipt confirmed), provided that
a copy is mailed by registered or certified mail, return receipt requested; or
c. received by the addressee as sent be express delivery service
(receipt requested) in each case to the appropriate addresses, telex numbers and
telefax numbers as the party may designate to itself by notice to the other
parties:
(i) if to the Employer:
Dectron Internationale Inc.
4300 Poirer Blvd.
Montreal, Quebec H4R 2C5
Canada
Attention: Ness Lakdawala
Telefax: (514) 334-9184
Telephone: (514) 334-9609
Gersten, Savage, Kaplowitz & Fredericks, LLP
101 East 52nd Street
9th Floor
New York, New York 10022
Attention: Arthur S. Marcus, Esq.
Telefax: (212) 980-5192
Telephone: (212) 752-9700
(ii) if to the Employee:
Ness Lakdawala
c/o Dectron Internationale Inc.
4300 Poirer Blvd.
Montreal, Quebec H4R 2C5
Canada
19. SEVERABILITY OF AGREEMENT. Should any part of this Agreement for any
reason be declared invalid by a court of competent jurisdiction, such decision
shall not affect the validity of any remaining portion, which remaining
provisions shall remain in full force and effect as if this Agreement had been
executed with the invalid portion thereof eliminated, and it is hereby declared
the intention of the parties that they would have executed the remaining
portions of this Agreement without including any such part, parts or portions
which may, for any reason, be hereafter declared invalid.
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IN WITNESS WHEREOF, the undersigned have executed this agreement as of the
day and year first above written.
DECTRON INTERNATIONALE INC.
By:
-------------------------------
Mauro Parisi
Chief Financial Officer
By:
-------------------------------
Ness Lakdawala
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