EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is effective as of October 1, 2003
(the "Effective Date"), and is entered into by and between JOHN W. VERBICKY,
JR., an independent contractor ("Contractor"), and ENVIROKARE TECH, INC., a
Nevada corporation (the "Company").
R E C I T A L S
WHEREAS, by entering into this Agreement, the terms of Contractor's employment
with the Company shall be governed by the terms and conditions of this Agreement
and any prior agreement between Contractor and the Company or any of the
Company's affiliated entities relating to Contractor's employment with the
Company or any of its affiliated entities shall be superseded by the terms of
this Agreement except to the extent set forth herein. Provided however, that any
compensation due the Contractor for the period prior to this document shall be
subject to the terms of a separate agreement.
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, the parties hereto agree as follows:
A G R E E M E N T
1. Employment. As of the Effective Date, the Company hereby employs Contractor
to serve in the capacity of President and Chief Executive Officer. The
Company's Board of Directors (the "Board") may provide other designations
of title to the Contractor by the written mutual consent of the Board of
Directors and the Contractor.
Contractor agrees to perform the duties and functions of President and
Chief Executive Officer to the best of his ability as assigned by the Board
of Directors. Contractor shall endeavor through the application of his
time, energy and attention to execute his duties in a professional manner
with competence and integrity.
The term of this agreement shall be thirty six (36) months.
2. Employment Compensation And Benefits.
(a) Base Salary. Contractor's initial base salary shall be at the annual rate
of One Hundred Forty Thousand Dollars ($140,000) for the first 12 months
hereof ($70,000 of which will be accrued as deferred compensation); One
Hundred Seventy five Thousand Dollars ($175,000) for the second 12 months
hereof ($85,000 of which will be accrued as deferred compensation) and Two
Hundred Thousand Dollars ($200,000) or industry standard, whichever is
greater, for the third 12 months hereof (the "Base Salary"), which shall be
payable at least as frequently as weekly and not subject to deductions and
withholding taxes. The Company, on the basis of Contractor's performance
and the Company's financial success and progress, shall review this salary
level at least annually. All deferred compensation and interest is due and
payable to the contractor 36 months from the date of this agreement or
sooner subject to any termination provisions herein. Deferred compensation
will accrue interest at a annual rate two percentage points (2%) above the
prime lending rate as published in the Wall Street Journal (compounded
quarterly). The relevant deferred amount and all interest so accrued
thereon shall be an unsecured general obligation of the Company, due and
payable according to the terms herein.
(b) Incentive Compensation. As additional compensation to provide incentives
for Contractor to extend efforts which will assist in increasing the
profits of the Company, Contractor shall be eligible to receive incentive
compensation based on achieving individual and organizational performance
objectives in accordance with the terms and conditions of the Company's
management compensation plan as may be modified from time to time.
(c) Expense Reimbursement. The Company shall reimburse Contractor for all
reasonable amounts actually expended at the Contractor's discretion in the
course of performing his duties for the Company. Contractor will tender
receipts, copies or written accounts describing the amounts and purpose of
the expense to the Company.
(d) Other Benefits. As an independent contractor, no benefits other than those
described herein are offered to the Contractor under this agreement. No
medical, dental, life or disability insurance, pension or 401K benefits are
offered herein.
(A) Contractor shall during the term of this Agreement be provided with the use
of a cell phone, car allowance and such other equipment and services as the
Contractor shall reasonably deem necessary to perform his duties.
(B) Warrants. Contractor shall receive, upon signing this agreement, fully
vested warrants to purchase 2,000,000 shares of the Company's common stock
pursuant to the terms and conditions of the warrant agreement which is
attached hereto and made a part hereof. Of this number, the following
applies: In the event that the Company terminates this agreement for
"Cause" (as hereinafter defined) before the end of the first year, any
unexercised warrants to purchase up to 1,333,333 shares shall be forfeited
and cancelled. In the event that this agreement is terminated by the
Contractor without "Reason" (as hereinafter defined) before the end of the
first year, any unexercised warrants to purchase up to 1,33,333 shares
shall be forfeited and cancelled. In the event that this agreement is
terminated by the Contractor without "Reason" (as hereinafter defined)
before the end of the second year, any unexercised warrants to purchase up
to 666,667 shares shall be forfeited and cancelled. In the event that this
agreement is terminated by the company for "Cause" ( as hereinafter
defined) before the end of the second year, any unexercised warrants to
purchase up to 666,667 shares shall be forfeited and cancelled. In the
event that this agreement is terminated by either party with or without
"Reason" or "Cause" after the second anniversary of the date of this
agreement, any unexercised warrants to purchase up to 2,000,000 shares of
the Company's common stock shall not be subject to forfeiture for any
reason. Upon execution of this agreement, warrants to purchase 666,667
shares of the Company's common stock shall not be subject to forfeiture for
any reason.
(A) Authority:Contractor's authority including without limitation his authority
to bind Company to contracts, instruments and expenditures of any kind and
to dispose of or encumber Company assets shall not be less than that
specified or incidental to the Company's By-Laws as presently in effect.
Company hereby authorizes Contractor with operating expense approval
authority for up to $100,000 per expense item and capital expense approval
authority for up to $50,000 per capital item.
(A) Insurance/Indemnification: Company will maintain Directors and Officers
liability insurance for the benefit of Contractor, throughout the term of
this agreement, in amounts considered prudent for publicly traded companies
of like size and engaging in similar businesses as the Company. Board of
Directors agrees to hold harmless the Contractor for any liabilities
created or ensuing from his conduct of business on the Company's behalf.
Company will provide contractor with written proof of insurance at the time
of execution of this agreement.
3. Termination.
(a) At Will. The Company shall employ Contractor at will, and either Contractor
or the Company may terminate Contractor's employment with the Company at
any time and for any reason, without "Cause" or "Reason" (as hereinafter
defined) by giving 90 days written notice and subject to the obligations
defined in Section 5 herein.
(b) The Company may at any time immediately terminate the employment of the
Contractor under this agreement for "Cause" (as hereinafter defined), upon
ninety (90) days written notice. For purposes of this agreement, the term
"Cause" shall mean gross or willful misconduct leading to his being
convicted of a non-misdemeanor felony in a U.S. court of law. "Cause" shall
not include unsatisfactory performance of duties except as provided above.
The Contractor may at any time immediately terminate his employment under
this agreement for "Reason" (as hereinafter defined) upon ninety (90) days
written notice. For purposes of this agreement the term "Reason" shall mean
(i) a material breach by the Company of any term of this agreement
including failure to pay Contractor as prescribed in Section 2(a), (ii) any
event of bankruptcy or insolvency in respect of the Company (iii)any
reduction in Contractor's compensation or position or the duties or
authority of the Contractor to a level less than customary to the office of
Chief Executive Officer of an industrial corporation (subject to the terms
of the Company's By-Laws as presently in effect), (iv)any change in control
as defined in Section 4 herein (v) Contractor's death or disability as
defined in Section 3(c) below.
(c) "Disability" shall mean a physical or mental incapacity as a result of
which Contractor becomes unable to continue the performance of his
responsibilities for the Company and its affiliated companies and which, at
least six (6) months after its commencement, is determined to be total and
permanent by a physician agreed to by the Company and Contractor, or in the
event of Contractor's inability to designate a physician, his legal
representative. In the absence of agreement between the Company and
Contractor, each party shall nominate a qualified physician and the two
physicians so nominated shall select a third physician who shall make the
determination as to Disability.
(d) Return of Materials. In the event of any termination of Contractor's
employment for any reason whatsoever, Contractor shall promptly deliver to
the Company all Company property, including, but not limited to, documents,
data, and other information pertaining to Confidential Information, as
defined below. Executive shall not take with him any documents or other
information, or any reproduction, summary or excerpt thereof, containing or
pertaining to any Confidential Information.
4. Change in Control.
(a) Statement of Purpose. The Company believes that it is in the best interest
of the Company and its stockholders to foster Contractor's objectivity in
making decisions with respect to any pending or threatened Change in
Control of the Company and to ensure that the Company will have the
continued dedication and availability of Contractor, notwithstanding the
possibility, threat or occurrence of a Change in Control. The Company
believes that these goals can best be accomplished by alleviating certain
of the risks and uncertainties with regard to Contractor's financial and
professional security that would be created by a pending or threatened
Change in Control and that inevitably would distract Contractor and could
impair his ability to objectively perform his duties for and on behalf of
the Company. Accordingly, the Company believes that it is appropriate and
in the best interest of the Company and its stockholders to provide to
Contractor compensation arrangements upon a Change in Control that lessen
Contractor's financial risks and uncertainties and that are reasonably
competitive with those of other corporations. The purpose of this provision
is to provide that, in the event of a "Change in Control," Contractor may
become entitled to receive certain additional compensation, as described
herein, in the event of his termination under specified circumstances.
(b) Definition of Change in Control. As used in this Agreement, the phrase
"Change in Control" shall mean:
(i) The acquisition (other than from the Company) by any person, entity or
"group," within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
(excluding, for this purpose, the Company or its subsidiaries, or any
executive benefit plan of the Company or its subsidiaries which
acquires beneficial ownership of voting securities of the Company), of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of twenty-five percent (25%) or more of either
the then-outstanding shares of common stock or the combined voting
power of the Company's then-outstanding voting securities entitled to
vote generally in the election of directors; or
(ii)Individuals who, as of the date hereof, constitute the Board of
Directors of the Company (as of the date hereof the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board of
Directors of the Company, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Company's stockholders, is or was approved by a vote
of at least a majority of the directors then comprising the Incumbent
Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors
of the Company) shall be, for purposes of this Agreement, considered
as though such person were a member of the Incumbent Board; or
(iii)Approval by the stockholders of the Company of a reorganization,
merger or consolidation with any other person, entity or corporation,
other than
(A) a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of another entity) more than fifty percent (50%) of the combined
voting power of the voting securities of the Company or such other entity
outstanding immediately after such merger or consolidation, or
(A) a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no person acquires twenty-five
percent (25%) or more of the combined voting power of the Company's then
outstanding voting securities; or
(C) approval by the stockholders of the Company of a plan of complete
liquidation of the Company or an agreement for the sale or other
disposition by the Company of all or substantially all of the Company's
assets.
5. Severance Payments
(a) In the event that (A) the Company shall at anytime terminate the
agreement without "Cause", or (B) the Contractor shall terminate the
agreement for "Reason" then and in each such case the Company shall
immediately (within thirty days)of the termination date pay and
provide to the Contractor in cash all accrued deferred salary and
interest and 50% of the "base salary" defined in Section 2(a) herein
for the ensuing twelve (12) month period beyond the termination date
or 50% for each remaining month of the agreement term, whichever is
less subject to any notice periods required herein. Additionally, all
of Contractor's unexercised warrants to purchase up to 2,000,000
shares of company common stock become non-forfeitable and fully
vested. Contractor will also be entitled to additional compensation
under specific circumstances of Change of Control as defined in
Section (4) above. In any event, if this agreement is not otherwise
terminated all accrued deferred compensation and interest are due and
payable to the Contractor on the date (36) months from the date of
execution of this agreement.
(b) In the event that (A) the Company shall at anytime terminate the
agreement for "Cause" or the Contractor shall terminate the agreement
without "Reason" then and in each such case the Company shall
immediately (within thirty days of the termination date) pay the
Contractor 50% of all accrued compensation plus interest.
(c) If this agreement is terminated as a result of a Change of Control
event, the Contractor shall receive additional cash compensation equal
to one (1.0) times the Contractor's annual Compensation rate at the
time of the Change of Control event. Such payment shall be due and
payable to the Contractor on the date of the Change of Control event.
(d) All rights of Contractor to compensation under the terms of this
Section 5 are absolute with no requirement to mitigate damages.
(e) The effective termination date, in all cases, shall be the date ninety
(90) days after written notification to the Contractor or the Company.
(f) In the event of termination of this agreement due to the Contractor's
death or disability, the compensation due to the Contractor at that time
shall be due and payable to the Contractor's heirs and/or successors.
6. Nondisclosure of Confidential Information. Contractor acknowledges that
during the term of his employment with the Company, he will have access to
and become acquainted with information of a confidential, proprietary or
secret nature which is or may be either applicable to, or related in any
way to, the present or future business of the Company, the research and
development or investigation of the Company, or the business of any
customer of the Company ("Confidential Information"). For example,
Confidential Information includes, but is not limited to, devices, secret
inventions, processes and compilations of information, records,
specifications, designs, plans, proposals, software, codes, marketing and
sales programs, financial projections, cost summaries, pricing formula, and
all concepts or ideas, materials or information related to the business,
products or sales of the Company and its customers and vendors. Contractor
shall not disclose any Confidential Information, directly or indirectly, or
use such information in any way, either during the term of this Agreement
or at any time thereafter, except as required in the course of employment
with the Company. Contractor also agrees to comply with the Company's
policies and regulations, as established from time to time for the
protection of its Confidential Information, including, for example,
executing the Company's standard confidentiality agreements. This section
shall survive termination of this Agreement.
7. Non-Solicitation. Contractor agrees that so long as he is employed by the
Company and for a period of six (6) months after termination of his
employment for any reason, he shall not (a) directly or indirectly solicit,
induce or attempt to solicit or induce any employee of the Company or any
of its affiliated companies to discontinue his employment with the Company;
(b) usurp any opportunity of the Company or any of its affiliated companies
of which Executive became aware during his tenure at the Company or which
is made available to him on the basis of the belief that Contractor is
still employed by the Company; or (c) directly or indirectly solicit or
induce or attempt to influence any person or business that is an account,
customer or client of the Company or any of its affiliated companies to
restrict or cancel the business of any such account, customer or client
with the Company or any of its affiliated companies. This section shall
survive termination of this Agreement.
8. Successors.
(a) This Agreement is personal to Contractor, and without the prior
written consent of the Company shall not be assignable by Contractor
other than by will or the laws of descent and distribution with the
exception that Contractor's warrants to purchase company common stock
up to 2,000,000 shares are assignable at the Contractor's discretion
and without any approval or encumbrance by the company. All such
assigned warrants entitle the assignees to all the same rights and
privileges as warrants issued to the Contractor pro rata. This
Agreement shall inure to the benefit of and be enforceable by
contractor's legal representatives.
(b) The rights and obligations of the Company under this Agreement shall
inure to the benefit of and shall be binding upon the successors,
heirs and assigns of the Company.
9. Governing Law. This Agreement is made and entered into in the State of
Florida, and the internal laws of Florida shall govern its validity and
interpretation in the performance by the parties hereto of their respective
duties and obligations hereunder.
10. Modifications. This Agreement may be amended or modified only by an
instrument in writing executed by all of the parties hereto.
11. Entire Agreement. Except as otherwise set forth herein, this Agreement
supersedes any and all prior written or oral agreements between Contractor
and the Company. This Agreement contains the entire understanding of the
parties hereto with respect to the terms and conditions of Contractor's
employment with the Company; provided, however, that this Agreement is not
intended to supersede any agreements that Contractor may previously have
entered into regarding the protection of trade secrets and confidential
information.
12. Dispute Resolution. Any controversy or dispute between the parties
involving the construction, interpretation, application or performance of
the terms, covenants, or conditions of this Agreement or in any way arising
under this Agreement (a "Covered Dispute") shall be subject to resolution
under the Laws of the State of Florida.
13. Notices. Any notice or communications required or permitted to be given to
the parties hereto shall be delivered personally or be sent by United
States registered or certified mail, postage prepaid and return receipt
requested, and addressed or delivered as follows, or at such other
addresses the party addressed may have substituted by notice pursuant to
this Section:
To the Company: Enviorkare Tech, Inc.
5850 T.G. Lee Blvd.
Orlando, FL 32822
To Contractor: John W. Verbicky, Jr.
15 Iron Horse Drive, Suite B211
Bedford, New Hampshire 03110
603 629 9165
14. Captions. The captions of this Agreement are inserted for convenience and
do not constitute a part hereof.
15. Severability. In case any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement,
but this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein and there shall be
deemed substituted for such invalid, illegal or unenforceable provision
such other provision as will most nearly accomplish the intent of the
parties to the extent permitted by the applicable law. In case this
Agreement, or any one or more of the provisions hereof, shall be held to be
invalid, illegal or unenforceable within any governmental jurisdiction or
subdivision thereof, this Agreement or any such provision thereof shall not
as a consequence thereof be deemed to be invalid, illegal or unenforceable
in any other governmental jurisdiction or subdivision thereof.
16. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which shall together
constitute one in the same Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered effective as of the day and year first written above.
/s/ John W. Verbicky
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John W. Verbicky, Jr.
ENVIROKARE TECH, INC.
by: /s/ Nicholas Pappas
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its: Chairman of the Board of Directors