SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): May 27, 1998
THE TIREX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 33-17598-NY 22-2824362
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
740 St. Maurice, Suite 201
Montreal, Quebec H3C 1L5
(Address of principal executive offices) (Zip Code)
(514) 878-0727
(Registrant's telephone number, including area code)
(Former name, former address and former
fiscal year, if changed since last report)
Page 1 of 45 pages
<PAGE>
ITEM 5. Other Events
1. On May 27, 1998, the Nais Corporation ("NAIS") commenced an action
against the Company in the U.S. District Court for the Southern District of New
York based upon a financial consulting agreement (the "NAIS Agreement"), dated
May 3, 1997, between NAIS and the Company. The Complaint alleges that the
Company failed to comply with certain compensatory arrangements contained in the
said NAIS Agreement and seeks relief by way of immediate registration of
5,231,092 shares of the Company's common stock issued to NAIS as compensation
and damages in the amount of $630,000. The Company filed an Answer and
Counterclaim, dated July 27, 1998, denying any liability to NAIS and alleging,
among other things, that: (i) NAIS failed to perform; and (ii) NAIS made
material misrepresentations regarding its expertise and ability to perform in
order to induce the Company to enter into the NAIS Agreement. The counterclaims
by the Company seek: (i) reformation of the Agreement requiring the return of
compensation previously tendered to NAIS; and (ii) compensatory damages in an
amount to be determined at trial, but believed by the Company to exceed
$1,000,000.
2. On July 10, 1998, the Certificate of Incorporation of the Company was
amended to change the amount of capital stock, which the Company is authorized
to issue, from 70,000,000 shares of capital stock, par value $.001 per share,
consisting of 69,900,000 shares of Common Stock, par value $.001 per share and
100,000 shares of Open Stock, par value $.001 per share, to 120,000,000 shares
of capital stock, par value $.001 per share consisting of 115,000,000 shares of
Common Stock, par value $.001 per share and 5,000,000 shares of Class A Stock,
par value $.001 per share. Shares of Class A Stock may be issued from time to
time in one or more classes or one or more series, within any class thereof, in
any manner permitted by law, as determined from time to time by the Company's
board of directors or by the executive committee of the board of directors.
In accordance with the Delaware General Corporation Law, Section 228(a),
on July 9, 1998, the holders of record of approximately 50.7% of the issued and
outstanding shares of common stock, $.001 par value, of the Company, in person
or by proxy, by their consent in writing authorized, approved and adopted a
resolution respecting the amendment of the Company's certificate of
incorporation.
The foregoing amendment has no effect on any shares currently issued and
outstanding.
3. On July 23, 1998 the Company entered into an executive agreement with
Louis Sanzaro (the "Sanzaro Agreement") whereby Mr. Sanzaro agreed to serve as
the Company's Vice President in Charge of Operations and as its Chief Operating
Officer for a term of four years, effective June 15, 1998, subject to extension
by mutual agreement of the parties. Mr. Sanzaro has been involved with the
Company in various capacities since October 1995 as both an independent business
man and a consultant. He has been a director of the Company since
2
<PAGE>
January 17, 1997. Mr. Sanzaro was named "Recycler of the Year" for the state of
New Jersey as well as "Recycling Processor of the Decade" for Ocean County, New
Jersey in 1997. He is the president and a member of the board of directors of
the Construction Material Recycling Association. Since 1986, he has served as
the president and chief executive officer of Ocean County Recycling Center, Inc.
("Ocean County Recycling") in Toms River, New Jersey. Ocean County Recycling is
in the business of remanufacturing construction and demolition debris for reuse
as a substitute for virgin materials in the construction and road building
industries. In addition, since 1989, Mr. Sanzaro has served as vice president
and chief operating officer of Ocean Utility Contracting Co., Inc., a New Jersey
company engaged in the installation of sewer and water main pipelines and the
construction of new roadway infrastructure. The Sanzaro Agreement provides for
the payment of an annual salary to Mr. Sanzaro in the amount of $175,000 subject
to annual review and increase as the board of directors shall determine. Such
salary is payable partly in cash and partly in unregistered shares of the
Company's common stock. The Agreement also provides for a signing bonus
consisting of 500,000 unregistered shares of the Company's common stock and
contains the right to receive bonuses in the future at the discretion of the
Company's board of directors in such amounts as the board may determine. The
Sanzano Agreement also provides, under certain circumstances, for the payment of
severance compensation to Mr. Sanzaro in the event of the termination of Mr.
Sanzaro's employment with the Company.
Mr. Sanzaro had previously agreed with the Company that he was to be the
sole and exclusive distributor of the Company's cryogenic scrap tire
disintegration system (the TCS-1 "System") in North America in which capacity he
would be entitled to receive a commission equal to 10% of the total
lease/purchase price on all North American leases/sales of the System. The
Sanzaro Agreement requires Mr. Sanzaro to forego all rights to serve as the
exclusive distributor for the TCS-1 System in North America, or to receive
commissions therefor. In consideration for Mr.Sanzaro's relinquishing such
rights and commissions, the Sanzaro Agreement provides for the issuance of an
additional 2,500,000 unregistered shares of the Company's common stock to Mr.
Sanzaro. Pursuant to the foregoing, on July 29, 1998, the board of directors of
the Company authorized the issuance of 3,000,000 shares of the Company's common
stock to Mr. Sanzaro.
4. On July 24, 1998 the Company and its subsidiary, The Tirex Corporation
Canada Inc. ("Tirex Canada") entered into an Executive Agreement with Jean
Frechette whereby Mr. Frechette agreed to serve as Tirex Canada's President and
Chief Operating Officer for a term of five years, subject to extension by mutual
agreement of the parties. Mr. Frechette holds degrees and certificates in
business management, commercialization, market development, and distribution.
Before joining the government of Quebec in 1990 he served in the private sectors
of industrial and commercial companies for more than 20 years in various
management positions. From 1990 to 1993, Mr. Frechette was employed by the
Government of the Province of Quebec to manage a government study respecting
value added distribution services and to report on the problems facing Quebec
Companies. From 1993 to 1996, Mr. Frechette served as Acting Director for the
Department of Market Development and Commercial Activities and the
Administration
3
<PAGE>
of Business Laws of the Government of Quebec. During that period he also served
on the Committee for the Reorganization of the Quebec Department of Industry,
Trade, Technologies, and Commerce and on the Inter Provincial Trade Barriers
Board. In 1996, Mr. Frechette was asked by the office of the Vice Prime Minister
to join the foreign Investment Services and to prepare and execute strategies to
attract foreign investment to Quebec. Serving in this capacity until July 1998,
Mr. Frechette has been involved with bringing together foreign investment
capital and Canadian companies in need of financing. During his tenure, Mr.
Frechette introduced potential foreign investments, in the amount of
approximately four billion Canadian dollars (CA $4,000,000,000), to Canadian
companies. To date, approximately CA $1.4 billion dollars of such foreign
capital has been invested. Non Canadian investors brought into Canadian
Companies under Mr. Frechette's purview have included ABB, Biomatrix, Haig,
Komatsu, Nordx/CDT, Lockheed Martin, Mitec Telecom, Ilco - Unican, CES Group,
Iris, SCI Systems, Osram Sylvam and many more.
The Frechette Agreement provides for the payment of an annual salary to
Mr. Frechette in the amount of $150,000 subject to annual review and increase as
the board of directors shall determine. Part of such salary may be paid in
unregistered shares of the Company's common stock, rather than cash, with the
consent of Mr. Frechette. It also provides for a signing bonus consisting of
1,000,000 unregistered shares of the Company's common stock and further contains
the right to receive bonuses in the future at the discretion of the Company's
board of directors in such amounts as the board may determine. The Frechette
Agreement also provides, under certain circumstances, for the payment of
severance compensation to Mr. Frechette in the event of the termination of Mr.
Frechette's employment with the Company. In connection with the foregoing, on
July 29, 1998, the board of directors authorized the issuance of 1,000,000
shares of the Company's common stock to Mr. Frechette.
5. Effective June 22, 1998 the Company entered into an Employment
Agreement with Scott Rapfogel, Esq. whereby Mr. Rapfogel agreed to serve as the
Company's Assistant Corporate and U.S. Securities Counsel during the three year
period commencing June 22, 1998. The Employment Agreement provides for the
payment to Mr. Rapfogel of an annual salary of $90,000 subject to annual review
to determine eligibility for performance based raises and bonuses. Such salary
is payable partly in cash and partly in unregistered shares of the Company's
common stock. In connection with the foregoing, the board of directors
authorized the issuance of 95,057 shares of the Company's common stock to Mr.
Rapfogel.
6. On June 23, 1998, the board of directors by unanimous written consent,
recognized that since January of 1995, on behalf, and for the benefit, of the
Company and without any cash compensation therefor, Terence C. Byrne, the
President of the Company and Frances Katz Levine, formerly the Secretary and a
Director and presently Corporate and US Securities Counsel of the Company, have
made substantial financial accommodations and have put themselves at significant
financial risk, including, but not limited to the following: Mr. Byrne's; (i)
having made personal loans to the Company, including a loan in the amount of
$100,000 made in January of 1998; (ii)
4
<PAGE>
having been personally responsible for all credit card debt of the Company,
covering all travel, entertainment, and significant day-to-day operating
expenses of this Corporation; (iii) being the co-guarantor of all bank debt of
the Company and its subsidiaries; and (iv) being the co-guarantor on all
equipment leases of this Corporation; and Ms. Levine having for a continuous
period of three and one-half years, provided, rent-free and with no charge for
the costs of utilities, a fully-equipped law office, dedicated solely and
exclusively to the requirements of the Company and throughout such period,
having paid, without any cash reimbursement ever having been made to her, all
costs and expenses incurred by this Corporation in connection with its legal
service requirements, including but not limited to: (i) telephone charges (ii)
office furnishings, equipment, and supplies; (iii) Federal Express and other
postage; and (iv) secretarial and clerical staff. The board further stated its
belief that the significant growth and development demonstrated by this
Corporation, from January 1995 to the present, could not have been possible
without the above described financial accommodations made by Mr. Byrne and Ms.
Levine and that, in view of the significant contributions made, and the
financial risks incurred, by these persons, it would be fair and equitable to
compensate them for the foregoing financial accommodations made, and risks
incurred, by them. In effectuation of the foregoing, on or about July 9, 1998,
the Company authorized the issuance of 4,000,000 shares of its common stock to
Mr. Byrne and 2,000,000 shares of its common stock to Ms. Levine.
5
<PAGE>
ITEM 7. EXHIBITS
Exhibits filed as part of this Report are as follows:
Exhibit 3. Certificate of Amendment to the Certificate of Incorporation,
filed with the Secretary of State of Delaware on July 10, 1998
Exhibit 10.1 Executive Agreement made as of July 23, 1998 between the
Company and Louis Sanzaro
Exhibit 10.2 Executive Agreement made as of July 24, 1998 among the
Company, The Tirex Corporation Canada Inc. and Jean Frechette
Exhibit 10.3 Employment Agreement made as of June 22, 1998 between the
Company and Scott Rapfogel
Exhibit 20. Notice to Shareholders, dated February 4, 1998
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE TIREX CORPORATION
Dated: July 30, 1998 By /s/ Terence C. Byrne
--------------------------------
Terence C. Byrne, President
6
Exhibit 3
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
OF
THE TIREX CORPORATION
It is hereby certified that:
1. The name of the corporation (hereinafter called the "corporation") is
The Tirex Corporation.
2. The certificate of incorporation is hereby amended by deleting Article
FOURTH in its entirety and by substituting in lieu of said Article FOURTH the
following:
"FOURTH: The aggregate number of shares of all classes of the capital
stock which the corporation shall have the authority to issue is one
hundred twenty million (120,000,000) of which one hundred fifteen million
(115,000,000) shares shall be common stock, par value $.001 per share and
five million (5,000,000) shares shall be Class A Stock, par value $.001
per share. Shares of Class A Stock may be issued from time to time in one
or more classes or one or more series, within any class thereof, in any
manner permitted by law, as determined from time to time by the board of
directors or by the executive committee of the board of directors and
stated in the resolution or resolutions providing for the issuance of such
shares adopted by the board of directors pursuant to authority hereby
vested in it, each class or series to be appropriately designated, prior
to the issuance of any shares thereof, by some distinguishing letter,
number, designation or title. All shares of stock in such classes or
series may be issued for such consideration and have such voting powers,
full or limited, or no voting powers, and shall have such designations,
preferences and relative, participating, optional or other special rights,
and qualifications, limitations or restrictions thereof, permitted by law,
as shall be stated and expressed in the resolution or resolutions
providing for the issuance of such shares adopted by the board of
directors pursuant to authority hereby vested in it. The number of shares
of stock of any class or series, so set forth in such resolution or
resolutions may be increased (but not above the total number of authorized
shares) or decreased (but not below the number of shares thereof then
outstanding) by resolution or resolutions adopted by the board of
directors pursuant to authority hereby vested in it. The board of
directors of the corporation may determine the times when, the terms under
which and the consideration for which the corporation shall issue, dispose
of or receive
7
<PAGE>
subscriptions for its shares, including treasury shares, or acquire its
own shares. The consideration for the issuance of the shares shall be paid
in full before their issuance and shall not be less than the par value per
share. Upon payment of such consideration, such shares shall be deemed to
be fully paid and nonassessable by the corporation."
3. The amendment of the certificate of incorporation herein certified has
been duly adopted in accordance with the provisions of Section 228 and 242 of
the General Corporation Law of the State of Delaware.
4. The capital of the corporation will not be reduced under or by reason
of any amendment herein certified.
Executed at Montreal, Canada on July 10, 1998.
Attest: THE TIREX CORPORATION
By /s/ John L. Threshie, Jr. By /s/ Terence C. Byrne
-------------------------------- ---------------------------
JOHN L. THRESHIE, JR., Secretary TERENCE C. BYRNE, President
8
Exhibit 10.1
THE TIREX CORPORATION
EXECUTIVE AGREEMENT
This Executive Agreement (the "Agreement") is made and entered into as of
this 23rd day of July, 1998 by and between The Tirex Corporation, a Delaware
corporation (the "Corporation"), and Louis Sanzaro ("the Executive").
Whereas, the Corporation desires to employ the Executive as its Vice
President-in-charge of Operations, to serve in such position as its Chief
Operations Officer and the Executive is willing to accept such employment by the
Corporation, on the terms and subject to the conditions set forth in this
Agreement.
Whereas, since October 1995, the Corporation and the Executive have had an
acknowledged understanding and agreement that the Executive would hold the
position sole and exclusive distributor of the Corporation's cryogenic scrap
tire disintegration system (the "TCS-1") in North America and that pursuant to
his serving in such capacity, the Executive would be entitled to receive a
commission of 10% of the total lease/purchase price on all sales by the
Corporation of TCS-1's in North America.
Whereas, in connection with its retention of the Executive pursuant to
this Agreement, the Corporation has required and the executive has agreed to
give up all rights to any commissions on sales of TCS-1's made heretofore in
North America and to forego all future rights which he may have had to serve as
sole and exclusive distributor of TCS-1's in North America or to receive any
commissions on any sales of TCS-1's made by the Corporation in North America
heretofore or hereafter.
Whereas, the Corporation is in its very early stage of development, with
very limited assets, income, operations, and financial resources on hand to
finance the development of its technology and the commencement of operations.
Its future financial prospects and position are therefore highly contingent and,
as at the date hereof, impossible to predict. Based upon the foregoing, the
Corporation's Board of Directors believe that unregistered shares of the
Corporation's common stock, which cannot be sold into the public market for an
extended period of time, may reasonably be deemed to have a value which reflects
the Corporation's poor financial position and uncertain future, and can
reasonably be expected to be saleable by the Corporation, in arm's length
transactions, for approximately fifty percent (50%) of the current market value
of the publicly traded stock of the Corporation, or for substantially less.
9
<PAGE>
Now Therefore, it is agreed as follows:
1. Definitions
For the purposes of this Agreement the following terms shall have the
following meanings:
1.0 The "Corporation" shall mean The Tirex Corporation and Tirex Canada
Inc., and all other corporations, partnerships, or other entities, now or in the
future controlled by, under common control with, or in control of, The Tirex
Corporation, jointly and severally.
1.1 "Change in Control" shall mean (i) the time that the Corporation first
determines that any person and all other persons who constitute a group (within
the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934
("Exchange Act") have acquired direct or indirect beneficial ownership (within
the meaning of Rule 13d-3 under the Exchange Act) of twenty percent (20%) or
more of the Corporation's outstanding securities, unless a majority of the
"Continuing Directors", as that term is defined in Paragraph 1.3, approves the
acquisition not later than ten (10) business days after the Corporation makes
that determination, or (ii) the first day on which a majority of the members of
the Corporation's Board of Directors are not "Continuing Directors."
1.2 "Constructive Termination" shall mean termination by the Corporation
of the Executive's employment by reason of material breach of this Agreement by
the Corporation, such "Constructive Termination" to be effective upon 30 days
written notice thereof from the Executive to the Corporation.
1.3 "Continuing Directors" shall mean, as of any date of determination,
any member of the Board of Directors of the Corporation who (i) was a member of
that Board of Directors on January 19, 1995, (ii) has been a member of that
Board of Directors for the two years immediately preceding such date of
determination, or (iii) was nominated for election or elected to the Board of
Directors with the affirmative vote of the greater of (x) a majority of the
Continuing Directors who were members of the Board at the time of such
nomination or election or (y) at least four Continuing Directors.
1.4 "Effective Date" shall mean June 15, 1998.
1.5 Termination For Cause" shall mean termination by the Corporation of
the Executive's employment by the Corporation by reason of the Executive's
willful dishonesty towards, fraud upon, or deliberate injury or attempted injury
to, the Corporation or by reason of the Executive's willful material breach of
this Agreement which has resulted in material injury to the Corporation. For
purposes of this paragraph, no act, or failure to act, on the Executive's part
shall be considered "willful" or "deliberate" unless done, or omitted to be
done, by him not
10
<PAGE>
in good faith and without reasonable belief that his action or omission was in
the best interest of the Corporation. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause without (i)
Written notice to the Executive setting forth the reasons for the Corporation's
intention to terminate for Cause, (ii) an opportunity on not less than 20 days
written notice from the Corporation to the Executive for the Executive, together
with his counsel, to be heard before the full Board of Directors of the
Corporation, and (iii) delivery to the Executive of a Notice of Termination as
defined in Paragraph 6.9 hereof from the Board of Directors finding that,
following such hearing before the Board, in the good faith opinion of such
Board, the Executive was guilty of conduct set forth above and specifying the
particulars thereof in detail.
1.6 "Termination for 'Good Reason'" shall mean termination by the
Executive of the Executive's employment by the Corporation because of: (i) a
"Change in Control", as defined in Paragraph 1.1, above, (ii) a failure by the
Corporation to comply with any material provision of this Agreement which has
not been cured within ten (10) days after notice of such noncompliance has been
given by the Executive to the Company, (iii) the determination by the Executive
that because of changes in the composition or policies of the Board of Directors
of the Corporation, or of other events or occurrences of material effect, that
the Executive can no longer properly and effectively discharge his
responsibilities as Chief Executive Officer of the Corporation after giving the
Corporation not less than thirty (30) days prior written notice of the effective
date of such termination, or (iv) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of Termination satisfying
the requirements of Paragraph 6.9 hereof (and for purposes of this agreement no
such purported termination shall be effective).
1.7 "Termination Other Than For Cause" shall mean termination by the
Corporation of the Executive's employment by the Corporation (other than in a
Termination for Cause) and shall include "Constructive Termination", as that
term is defined in Paragraph 1.2.
1.8 "Termination Upon a Change in Control" shall mean a termination by the
Corporation of the Executive's employment with the Corporation within 120 days
following a "Change in Control", as that term is defined in Paragraph 1.1.
1.9 "Voluntary Termination" shall mean termination by the Executive of the
Executive's employment by the Corporation other than (i) Constructive
Termination, (ii) Termination Upon a Change in Control, (iii) Termination for
Good Reason, and (iv) termination by reason of the Executive's death or
disability as described in Paragraphs 7.4 and 7.5.
11
<PAGE>
2. Employment
During the term of this Agreement, the Executive agrees to be employed by
the Corporation and to serve as its Vice President in Charge of Operations,
serving in such positions as the Corporation's Chief Operations Officer or in
such other positions as the Corporation shall require, and the Corporation
agrees to employ and retain the Executive in such capacities.
3. Duties and Responsibilities
The Executive shall devote his full business time, energy, and skills to
the affairs of the Corporation, reporting solely and exclusively to its
President, and at all times during the term of this Agreement the Executive
shall have powers and duties at least commensurate with his position as Chief
Operations Officer.
The Executive hereby acknowledges that the Corporation reserves the right
to review with the Executive, his present directorships and any other positions
held by him in business organizations, and the Executive agrees to terminate his
participation in such position if the Corporation shall determine, in a
particular case, that there is a potential material conflict with the
Corporation's best interests. Any future proposed directorships and positions
shall be subject to review by the Corporation's Board of Directors, providing
however, that such Board shall not prohibit any such activities unless such
potential material conflict shall exist.
4. Term of Employment
The term of employment of the Executive by the Corporation shall be for a
period of four (4) years beginning with the Effective Date (the "Initial Term"),
unless terminated earlier pursuant to Section 6. At any time prior to the
expiration of the Initial Term, the Corporation and the Executive may by mutual
written agreement extend the Executive's employment under the terms of this
Agreement for such additional periods as they shall mutually agree.
5. Release of Rights
In consideration for the Corporation's entering into this Agreement on the
terms set forth herein, the Executive, intending to be legally bound hereby,
does hereby remise, release, discharge, indemnify and hold harmless the
Corporation, and each shareholder, officer, director and employee of the
Corporation, of and from all manner of actions and causes of action, suits,
debts, dues, accounts, bonds, wages, benefits, covenants, contracts, agreements,
judgments, claims and demands whatsoever in law or in equity, and including
without limitation all such actions, claims and demands, etc. arising out of,
being based upon, or being in any way connected with or related to any
arrangements, agreements, promises, understandings or discussions between the
Corporation and the Executive with respect to or in any way connected with the
Executive's past,
12
<PAGE>
present, or future rights to serve as a distributor of TCS-1 Systems in North
America or to receive commissions of any kind in connection with sales of TCS-1
Systems heretofore or hereafter made by the Company in North America.
6. Salary, Benefits and Bonus Compensation
6.1 Signing Bonus. In consideration of the Executive's agreeing to
discontinue his other business activities in order to enter into this agreement,
the Corporation will issue to the Executive, upon execution of this Agreement,
500,000 shares of the common stock of The Tirex Corporation.
6.2 Base Salary. As payment for the services to be rendered by the
Executive as provided in Section 3, the Corporation agrees to pay to the
Executive a "Base Salary" for the twelve (12) calendar months beginning the
Effective Date at the rate of one hundred seventy-five thousand dollars
($175,000) per annum payable in 52 equal weekly installments subject to annual
review and increase, as the board of directors shall determine.
6.3 Compensation Shares in Lieu of Cash Payments. Notwithstanding the
requirements of Paragraph 6.2, above, the Executive and the Corporation agree
and acknowledge that:
6.3.1 As at the date hereof and for the foreseeable future, the
Corporation does not and will not have the financial resources to pay more than
one thousand United States dollars (US $1,000) per week of the Base Salary and
that, therefore, the Corporation's obligation to pay the balance of the Base
Salary will be satisfied by the issuance to the Executive of shares of the
common stock of The Tirex Corporation ("Compensation Shares"), which
compensation shares shall constitute compensation pursuant to the terms of this
Executive Agreement.
6.3.2 All Compensation Shares will be issued to and held by the Executive
pursuant to the terms of a stock restriction agreement, on terms mutually
agreeable to the parties.
6.3.3 All Compensation Shares will be issued to the Executive at a value
equal to fifty percent (50%) of the average of the high and low bid prices of
The Tirex Corporation's common stock, during the period when such Compensation
Shares were earned, as traded in the over-the-counter market and quoted in the
Electronic Bulletin Board of the NASD or such other public market in the United
States in which the common stock of the Tirex Corporation shall then be traded.
6.3.4 From time to time, all or part of the Compensation Shares may be
registered by the Corporation under a Registration Statement on Form S-8,
including a Re-offer Prospectus, as and at such time as the board of directors
of the Corporation or the executive committee thereof shall determine.
13
<PAGE>
6.4 Bonuses. the Executive shall be eligible to receive a discretionary
bonus for each year (or portion thereof) during the term of this Agreement and
any extensions thereof, with the actual amount of any such bonus to be
determined in the sole discretion of the Board of Directors based upon its
evaluation of the Executive's performance during such year. All such bonuses
shall be reviewed annually by the Compensation Committee, if any shall be in
existence.
6.5 Additional Benefits. During the term of this Agreement, the Executive
shall be entitled to the following fringe benefits:
(a) Executive Benefits. The Executive shall be eligible to participate
in such of the Corporation's benefits and deferred compensation
plans as are now generally available or later made generally
available to executive officers of , including, without limitation,
the Corporation's Stock Option Plan, profit sharing plans, annual
physical examinations, dental and medical plans, personal
catastrophe and disability insurance, financial planning, retirement
plans and supplementary executive retirement plans, if any. For
purposes of establishing the length of service under any benefit
plans or programs of the Corporation, the Executive's employment
with will be deemed to have commenced on the Effective Date.
(b) Vacation. The Executive shall be entitled to reasonable vacation
time during each year during the term of this Agreement and any
extensions thereof, in an amount to be determined by the Executive
in his sole discretion.
6.6 Compensation For Release of Rights. In consideration for the release
of rights hereinabove given by the Executive, as set forth in Section 5 of this
Agreement, the Corporation shall issue to the Executive, upon execution of this
Agreement, two million, five hundred thousand (2,500,000) shares of its common
stock, $.001 par value.
6.7 Reimbursement for Expenses. During the term of this Agreement, the
Corporation shall reimburse the Executive for reasonable and properly documented
out-of-pocket business and/or entertainment expenses incurred by the Executive
in connection with his duties under this Agreement.
7. Termination
7.1 Termination For Cause. Termination For Cause may be effected by the
Corporation in accordance with the procedures set forth in Paragraph 1.5 at any
time during the term of this Agreement and shall be effected by written
notification to the Executive in accordance with Paragraph 6.9, below. Upon the
effectiveness of a Termination For Cause, the Executive shall promptly be paid
all accrued salary, bonus compensation to the extent earned, vested deferred
compensation (other than pension play or profit sharing plan benefits which will
14
<PAGE>
be paid in accordance with the applicable plan), any benefits under any plans of
in which the Executive is a participant to the full extent of the Executive's
rights under such plans, accrued vacation pay and any appropriate business
expenses incurred by the Executive in connection with his duties hereunder, all
to the date of termination, but the Executive shall not be paid any other
compensation or reimbursement of any kind.
7.2 Termination Other Than For Cause. Notwithstanding anything else in
this Agreement, the Corporation may effect a Termination Other Than For Cause at
any time upon giving written notice to the Executive of such termination. Upon
the effectiveness of any Termination Other Than For Cause, the Executive shall
promptly be paid all accrued salary, bonus compensation to the extent earned,
vested deferred compensation (other than pension plan or profit sharing plan
benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of in which the Executive is a participant to the full
extent of the Executive's rights under such plans (including accelerated
vesting, if any, of awards granted to the Executive under the Corporation's
stock option plan), accrued vacation pay and any appropriate business expenses
incurred by the Executive in connection with his duties hereunder, all to the
date of termination, and all severance compensation as provided in Paragraph
7.1.
7.3 Termination For Good Reason. Notwithstanding anything else in this
Agreement, the Executive may effect a Termination for Good Reason at any time
upon giving written notice to the Corporation of such termination in accordance
with the provisions of Paragraph 6.9 hereof. Upon the effectiveness of any
Termination for Good Reason the Executive shall promptly be paid all accrued
salary, bonus compensation to the extent earned, vested deferred compensation
(other than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of in which
the Executive is a participant to the full extent of the Executive's rights
under such plans (including accelerated vesting, if any, of awards granted to
the Executive under's stock option plan), accrued vacation pay and any
appropriate business expenses incurred by the Executive in connection with his
duties hereunder, all to the date of termination, and all severance compensation
as provided in Paragraph 7.1.
7.4 Termination by Reason of Disability. If, during the term of this
Agreement, the Executive fails to perform his duties under this Agreement on
account of illness or physical or mental incapacity, and such illness or
incapacity continues for a period of more than twelve (12) consecutive months,
the Corporation shall have the right to terminate the Executive's employment
hereunder by written notification to the Executive and payment to the Executive
of all accrued salary, bonus compensation to the extent earned, vested deferred
compensation (other than pension plan or profit sharing plan benefits which will
be paid in accordance with the applicable plan), any benefits under any plans of
in which the Executive is a participant to the full extent of the Executive's
rights under such plans, accrued vacation pay and any appropriate business
expenses incurred by the Executive in connection with his duties hereunder, all
to the date of termination, with the exception of medical and dental benefits
which shall continue through the expiration of this Agreement, but the Executive
shall not be paid any other compensation or reimbursement of any kind.
15
<PAGE>
7.5 Death. In the event of the Executive's death during the term of this
Agreement, the Executive's employment shall be deemed to have terminated as of
the last day of the month during which his death occurs and the Corporation
shall promptly pay to his estate or such beneficiaries as the Executive may from
time to time designate all accrued salary, bonus compensation to the extent
earned, vested deferred compensation (other than pension plan or profit sharing
plan benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of in which the Executive is a participant to the full
extent of the Executive's rights under such plans, accrued vacation pay and any
appropriate business expenses incurred by the Executive in connection with his
duties hereunder, all to the date of termination, but the Executive's estate
shall not be paid any other compensation or reimbursement of any kind.
7.6 Voluntary Termination. In the event of a Voluntary Termination, the
Corporation shall promptly pay all accrued salary, bonus compensation to the
extent earned, vested deferred compensation (other than pension plan or profit
sharing plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of in which the Executive is a participant
to the full extent of the Executive's rights under such plans, accrued vacation
pay and any appropriate business expenses incurred by the Executive in
connection with his duties hereunder, all to the date of termination, but no
other compensation or reimbursement of any kind.
7.7 Termination Upon a Change in Control. In the event of a Termination
Upon the effectiveness of a Change in Control, the Executive shall immediately
be paid all accrued salary, bonus compensation to the extent earned, vested
deferred compensation (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of in which the Executive is a participant to the full extent of the
Executive's rights under such plans (including accelerated vesting, if any, of
any awards granted to the Executive under the Corporation's Stock Option Plan),
accrued vacation pay and any appropriate business expenses incurred by the
Executive in connection with his duties hereunder, all to the date of
termination, and all severance compensation as provided in Paragraph 7.1.
7.8 Constructive Termination. The Executive may give notice to the
Corporation that the Corporation has effected a Constructive Termination of the
Executive's employment by reason of the Corporation's material breach of this
Agreement, by written notification to the Corporation in accordance with
Paragraph 6.9, below. Upon the effectiveness of any Constructive Termination the
Executive shall immediately be paid all accrued salary, bonus compensation to
the extent earned, vested deferred compensation (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of in which the Executive is a
participant to the full extent of the Executive's rights under such plans
(including accelerated vesting, if any, of any awards granted to the Executive
under the Corporation's Stock Option Plan), accrued vacation pay and any
appropriate business expenses incurred by the Executive in connection with her
duties hereunder, all to the date of termination, and all severance compensation
provided in Paragraph 7.1.
16
<PAGE>
7.9 Notice of Termination. The Corporation may effect a termination of
this Agreement pursuant to the provisions of this Section upon giving thirty
(30) days' written notice to the Executive of such termination. The Executive
may effect a termination of this Agreement pursuant to the provisions of this
Section upon giving thirty (30) days' written notice to the Corporation of such
termination.
8. Severance Compensation
8.1 Severance Compensation in the Event of: Termination Other Than for
Cause Pursuant to Paragraph 7.2; Termination for Good Reason Pursuant to
Paragraph 7.3; Termination Upon a Change in Control Pursuant to Paragraph 7.7;
or a Constructive Termination Pursuant to Paragraph 7.8. In the event the
Executive's employment is terminated in a termination: Other Than for Cause
pursuant to Paragraph 7.2; for Good Reason pursuant to Paragraph 7.3; a Change
in Control pursuant to Paragraph 7.7; or a Constructive Termination pursuant to
Paragraph 7.8, the Executive shall be paid as severance compensation twice the
amount of his Base Salary (at the rate payable at the time of such termination),
for a period of twelve (12) months from the date of such termination.
Notwithstanding anything in this Paragraph to the contrary, the Executive may in
the Executive's sole discretion, by delivery of a notice to the Corporation
within thirty (30) days following a Termination Upon a Change in Control, elect
to receive from Compensation a lump sum severance payment by bank cashier's
check equal to the present value of the flow of cash payments that would
otherwise be paid to the Executive pursuant to this Paragraph. The Executive
shall also be entitled to an accelerated vesting of any awards granted to the
Executive under the Corporation's Stock Option Plan or any other employee or to
the extent provided in the stock executive compensation plans then in effect,
stock option or other affiliated agreement, if any, entered into at the time of
grant or award. The Executive shall continue to accrue retirement benefits and
shall continue to enjoy any benefits under any plans of in which the Executive
is a participant to the full extent of the Executive's rights under such plans,
including any perquisites provided under this Agreement, though the remaining
term of this Agreement; provided, however, that the benefits under any such
plans of in which the Executive is a participant, including any such
perquisites, shall cease upon re-employment by a new employer. By way of
additional severance compensation, the Corporation shall issue to the Executive
within five (5) business days of the date of termination, a number of shares of
the common stock of the Corporation equal to the number of shares of such common
stock, if any, which the Executive shall have forfeited under the terms of the
Stock Restriction Agreement, attached as Exhibit "A" hereto, which stock shall
be fully registered under a Form S-8 registration statement, if available to the
Corporation, or if such Form shall not be available to the Corporation, the
Corporation shall immediately take steps to register such shares with the
Securities and Exchange Commission on such Form of registration statement as
shall then be available to the Corporation, including without limitation Form
S-1.
17
<PAGE>
8.2 No Severance Compensation Upon Other Termination. In the event of
Termination For Cause pursuant to Paragraph 6.1, or termination by reason of the
Executive's Disability or Death pursuant to Paragraphs 6.4 or 6.5, or Voluntary
Termination pursuant to Paragraph 6.6 hereof, neither the Executive nor his
estate shall not be paid any severance compensation.
9. Payment Obligations
The Corporation's obligation to pay the Executive the compensation and to
make the arrangements provided herein shall be unconditional, and the Executive
shall have no obligation whatsoever to mitigate damages hereunder. If litigation
after a Change in Control shall be brought to enforce or interpret any provision
contained herein, the Corporation, to the extent permitted by applicable law and
the Corporation's Articles of Incorporation and Bylaws, hereby indemnifies the
Executive for the Executive's reasonable attorneys' fees and disbursements
incurred in such litigation.
10. Confidentiality
The Executive agrees that all confidential and proprietary information
relating to the business of the Corporation shall be kept and treated as
confidential both during and after the term of this Agreement, except as may be
permitted in writing by the Corporation's Board of Directors or as such
information is within the public domain or comes within the public domain
without any breach of this Agreement.
11. Withholdings
All compensation and benefits to the Executive hereunder shall be reduced
by all federal, state, local and other withholdings and similar taxes and
payments required by applicable law.
12. Indemnification
In addition to any rights to indemnification to which the Executive is
entitled to under the Corporation's Articles of Incorporation and Bylaws, the
Corporation shall indemnify the Executive at all times during and after the term
of this Agreement to the maximum extent permitted under Delaware Business
Corporation Law or any successor provision thereof and any other applicable
state law, and shall pay the Executive's expenses in defending any civil or
criminal action, suit, or proceeding in advance of the final disposition of such
action, suit or proceeding, to the maximum extent permitted under such
applicable state laws.
18
<PAGE>
13. Notices
Any notices permitted or required under this Agreement shall be delivered
by hand, certified mail, or recognized overnight courier, in all cases with
written proof of receipt required, addressed to the parties as set forth below
and shall be deemed given upon receipt to the Corporation at:
The Tirex Corporation
740 St. Maurice Suite, 201
Montreal, Quebec H3C 1L5
addressed to the Executive at:
Louis V. Sanzaro
1497 Lakewood Road
Toms River, NJ 08755
or at any other address as any party may, from time to time, designate by notice
given in compliance with this Paragraph.
14. Law Governing
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware.
15. General
15.1 Titles and Captions. All section titles or captions contained in this
Agreement are for convenience only and shall not be deemed part of the context
nor effect the interpretation of this Agreement.
15.2 Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this Agreement.
19
<PAGE>
15.3 Agreement Binding. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
15.4 Attorney Fees. In the event an arbitration, suit or action is brought
by any party under this Agreement to enforce any of its terms, or in any appeal
therefrom, it is agreed that the prevailing party shall be entitled to
reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.
15.5 Computation of Time. In computing any period of time pursuant to this
Agreement, the day of the act, event or default from which the designated period
of time begins to run shall be included, unless it is a Saturday, Sunday, or a
legal holiday, in which event the period shall begin to run on the next day
which is not a Saturday, Sunday, or legal holiday, in which event the period
shall run until the end of the next day thereafter which is not a Saturday,
Sunday, or legal holiday.
15.6 Pronouns and Plurals. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine, neuter, singular, or plural as
the identity of the person or persons may require.
15.7 Presumption. This Agreement or any section thereof shall not be
construed against any party due to the fact that said Agreement or any section
thereof was drafted by said party.
15.8 Further Action. The parties hereto shall execute and deliver all
documents, provide all information and take or forbear from all such action as
may be necessary or appropriate to achieve the purposes of the Agreement.
15.9 Parties in Interest. Nothing herein shall be construed to be to the
benefit of any third party, nor is it intended that any provision shall be for
the benefit of any third party.
20
<PAGE>
15.10 Savings Clause. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.
THE TIREX CORPORATION
By /s/ Terence C. Byrne
--------------------------------
TERENCE C. BYRNE, President
/s/ Louis V. Sanzaro
--------------------------------
LOUIS V. SANZARO
21
Exhibit 10.2
----------
THE TIREX CORPORATION CANADA INC.
----------
Executive Agreement
--------------------
This Executive Agreement (the "Agreement") is made and entered into as of
this 24th day of July, 1998 by and among:
The Tirex Corporation
740 St. Maurice, Suite 201
Montreal, Quebec
Canada H3C 1L5 ("Tirex America")
The Tirex Corporation Canada Inc.
740 St. Maurice, Suite 201
Montreal, Quebec
Canada H3C 1L5 ("Tirex Canada")
Jean Freschette
2235 Du Fleuve Quest
Port St. Francois, Quebec
Canada J3T 1N9 (the "Executive")
- ----------
NOTE: Tirex America and Tirex Canada are sometimes referred to hereinafter,
collectively, as the "Tirex Corporations".
Whereas, Tirex Canada, a corporation formed under the federal laws of
Canada, is a wholly owned subsidiary of Tirex America, a publicly-held Delaware
corporation, the common stock of which is traded in the over-the-counter market
in the United States and quoted on the electronic bulletin board of the National
Association of Securities Dealers (the "OTC Bulletin Board").
22
<PAGE>
Whereas, The Tirex Corporations desire to employ the Executive as
President of Tirex Canada, to serve in such position as its Chief Executive
Officer and the Executive is willing to accept such employment by Tirex Canada,
on the terms and subject to the conditions set forth in this Agreement.
Whereas, The Tirex Corporations are in very early stages of development,
with very limited assets, income, operations, and financial resources on hand to
finance the development of their technology and the commencement of their
commercial operations. Their future financial prospects and positions are
therefore highly contingent and, as at the date hereof, impossible to predict.
Based upon the foregoing, Tirex America's Board of Directors believe that
unregistered shares of Tirex America's common stock, which cannot be sold into
the public market for an extended period of time, may reasonably be deemed to
have a value which reflects Tirex America's poor financial position and
uncertain future, and can reasonably be expected to be saleable by Tirex
America, in arm's length transactions, for approximately fifty percent (50%) of
the current market value of the publicly traded stock of Tirex America, or for
substantially less.
Now Therefore, it is agreed as follows:
1. Definitions
For the purposes of this Agreement the following terms shall have the
following meanings:
1.0 "Tirex Canada" shall mean The Tirex Corporation Canada Inc. and all
other corporations, partnerships, or other entities, now or in the future
controlled by The Tirex Corporation Canada Inc., jointly and severally.
1.1 "Change in Control" shall mean (i) the time that the Tirex
Corporations first determine that any person and all other persons who
constitute a group (within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934 ("Exchange Act") have acquired direct or indirect
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of twenty percent (20%) or more of Tirex America's outstanding securities,
unless a majority of the "Continuing Directors", as that term is defined in
Paragraph 1.3, approves the acquisition not later than ten (10) business days
after Tirex America makes that determination, or (ii) the first day on which a
majority of the members of Tirex America's Board of Directors are not
"Continuing Directors."
1.2 "Constructive Termination" shall mean termination by Tirex Canada of
the Executive's employment by reason of material breach of this Agreement by the
Tirex Corporations, or either one of them, such "Constructive Termination" to be
effective upon 30 days written notice thereof from the Executive to the Tirex
Corporations.
23
<PAGE>
1.3 "Continuing Directors" shall mean, as of any date of determination,
any member of the Board of Directors of Tirex America who (i) was a member of
that Board of Directors on January 19, 1995, (ii) has been a member of that
Board of Directors for the two years immediately preceding such date of
determination, or (iii) was nominated for election or elected to the Board of
Directors with the affirmative vote of the greater of (x) a majority of the
Continuing Directors who were members of the Board at the time of such
nomination or election or (y) at least four Continuing Directors.
1.4 "Effective Date" shall mean August 17,1998.
1.5 Termination For Cause" shall mean termination by Tirex Canada of the
Executive's employment by Tirex Canada by reason of the Executive's willful
dishonesty towards, fraud upon, or deliberate injury or attempted injury to,
Tirex Canada or by reason of the Executive's willful material breach of this
Agreement which has resulted in material injury to Tirex Canada. Notwithstanding
the foregoing, the Executive shall not be deemed to have been terminated for
Cause without (i) Written notice to the Executive setting forth the reasons for
Tirex Canada's intention to terminate for Cause, (ii) an opportunity on not less
than 20 days written notice from Tirex Canada to the Executive for the
Executive, together with his counsel, to be heard before the full Board of
Directors of Tirex Canada, and (iii) delivery to the Executive of a Notice of
Termination as defined in Paragraph 6.9 hereof from the Board of Directors
finding that, following such hearing before the Board, in the good faith opinion
of such Board, the Executive was guilty of conduct set forth above and
specifying the particulars thereof in detail.
1.6 "Termination for 'Good Reason'" shall mean termination by the
Executive of the Executive's employment by Tirex Canada because of: (i) a
"Change in Control", as defined in Paragraph 1.1, above, (ii) a failure by Tirex
Canada to comply with any material provision of this Agreement which has not
been cured within ten (10) days after notice of such noncompliance has been
given by the Executive to the Company, (iii) the determination by the Executive
that because of changes in the composition or policies of the Board of Directors
of Tirex Canada, or of other events or occurrences of material effect, that the
Executive can no longer properly and effectively discharge his responsibilities
as Chief Executive Officer of Tirex Canada after giving Tirex Canada not less
than thirty (30) days prior written notice of the effective date of such
termination, or (iv) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Paragraph 6.9 hereof (and for purposes of this agreement no such
purported termination shall be effective).
1.7 "Termination Other Than For Cause" shall mean termination by Tirex
Canada of the Executive's employment by the Corporation (other than in a
Termination for Cause) and shall include "Constructive Termination", as that
term is defined in Paragraph 1.2.
1.8 "Termination Upon a Change in Control" shall mean a termination by the
Corporation of the Executive's employment with the Corporation within 120 days
following a "Change in Control", as that term is defined in Paragraph 1.1.
24
<PAGE>
1.9 "Voluntary Termination" shall mean termination by the Executive of the
Executive's employment by Tirex America other than (i) Constructive Termination,
(ii) Termination Upon a Change in Control, (iii) Termination for Good Reason,
and (iv) termination by reason of the Executive's death or disability as
described in Paragraphs 6.4 and 6.5.
2. Employment
During the term of this Agreement, the Executive agrees to be employed by
Tirex Canada and to serve as its President and Chief Operating Officer or in
such other positions as the Tirex Corporations shall require, and the Tirex
Corporations agree to employ and retain the Executive in such capacities.
3. Duties and Responsibilities
The Executive shall devote his full time, energy, and skills to the
affairs of Tirex Canada, reporting solely and exclusively to Terence C. Byrne,
the President and Chief Executive Officer of Tirex America and Chairman of the
Board and Chief Executive Officer of Tirex Canada; At all times during the term
of this Agreement the Executive shall have powers and duties at least
commensurate with his position as Chief Operating Officer of Tirex Canada.
The Executive hereby acknowledges that the Tirex Corporations reserve the
right to review with the Executive his present directorships and any other
positions held by him in business organizations, and the Executive agrees to
terminate his participation in such positions if the Tirex Corporations shall
determine, in a particular case, that there is a potential material conflict
with Tirex Canada's best interests. Any future proposed directorships and/or
positions in or with other business organizations shall be subject to review by
the boards of directors of the Tirex Corporations, providing however, that such
Boards shall not prohibit any such activities unless such potential material
conflict with the Executives duties as president of Tirex Canada shall exist.
4. Term of Employment
4.1 Term. The term of employment of the Executive by Tirex Canada shall be
for a period of five (5) years beginning with the Effective Date (the "Initial
Term"), unless terminated earlier pursuant to Section 6. At any time prior to
the expiration of the Initial Term, the Tirex Corporations and the Executive may
by mutual written agreement extend the Executive's employment under the terms of
this Agreement for such additional periods as they shall mutually agree.
25
<PAGE>
4.2 Assumption of Contract by Tirex America. In the event that the
ownership and control of Tirex Canada shall hereafter be transferred to any
party and such party shall refuse to honor this Executive Agreement, then Tirex
America shall employ the Executive for the balance of the Initial Term, under
substantially the same terms and conditions which obtain under this Agreement,
including compensation terms identical to those provided for hereunder.
5. Salary, Benefits and Bonus Compensation
5.1 Signing Bonus. In consideration of the Executive's agreeing to
discontinue, as expeditiously as practicable in a reasonable and orderly manner,
his other business activities in order to enter into this agreement, the
Corporation will issue to the Executive, upon execution of this Agreement, one
million (1,000,000) shares of the common stock of The Tirex Corporation.
5.2 Annual Salary. As payment for the services to be rendered by the
Executive as provided in Section 3, the Corporation agrees to pay to the
Executive an annual salary ("Salary"), beginning as of the Effective Date, at
the rate of one hundred fifty thousand United States dollars (US $150,000) per
annum payable in 26 equal bi-weekly installments subject to annual review and
increase, as the board of directors shall determine.
5.3 Compensation Shares in Lieu of Cash Payments. Notwithstanding the
requirements of Paragraph 5.2, above, the Executive and the Tirex Corporations
agree and acknowledge that:
5.3.1 From time to time, during the foreseeable future, the Tirex
Corporations may not have available the financial resources to pay to the
Executive, in cash, the full amount of the Salary; In such event, with the
consent of the Executive, the obligations of the Tirex Corporations with respect
to any unpaid amount of Salary will be satisfied by the issuance to the
Executive of shares of the common stock of Tirex America ("Compensation
Shares"), which Compensation Shares shall constitute compensation pursuant to
the terms of this Executive Agreement.
5.3.2 All Compensation Shares will be issued to and held by the Executive
pursuant to the terms of a stock restriction agreement, on terms mutually
agreeable to the parties.
5.3.3 All Compensation Shares will be issued to the Executive at a value
equal to fifty percent (50%) of the average of the high and low bid prices of
The Tirex Corporation's common stock, during the period when such Compensation
Shares were earned, as traded in the over-the-counter market and quoted in the
OTC Electronic Bulletin Board or such other public market in the United States
in which the common stock of Tirex America shall then be traded.
26
<PAGE>
5.3.4 From time to time, all or part of the Compensation Shares may be
registered by Tirex America under a Registration Statement on Form S-8,
including a Re-offer Prospectus, as and at such time as the board of directors
of Tirex America or the executive committee thereof shall determine.
5.4 Bonuses. the Executive shall be eligible to receive a discretionary
bonus for each year (or portion thereof) during the term of this Agreement and
any extensions thereof, with the actual amount of any such bonus to be
determined in the sole discretion of the Board of Directors based upon its
evaluation of the Executive's performance during such year. All such bonuses
shall be reviewed annually by the Compensation Committee, if any shall be in
existence.
5.5 Additional Benefits. During the term of this Agreement, the Executive
shall be entitled to the following fringe benefits:
(a) Executive Benefits. The Executive shall be eligible to participate
in such of the Corporation's benefits and deferred compensation
plans as are now generally available or later made generally
available to executive officers of , including, without limitation,
the Corporation's Stock Option Plan, profit sharing plans, annual
physical examinations, dental and medical plans, personal
catastrophe and disability insurance, financial planning, retirement
plans and supplementary executive retirement plans, if any. For
purposes of establishing the length of service under any benefit
plans or programs of the Corporation, the Executive's employment
with will be deemed to have commenced on the Effective Date.
(b) Vacation. The Executive shall be entitled to reasonable vacation
time during each year during the term of this Agreement and any
extensions thereof, in an amount to be determined by the mutual
agreement of the Executive and the boards of directors of the Tirex
Corporations.
(c) Car Allowance. The Executive shall receive a monthly car allowance
of five hundred Canadian dollars (CA $500).
5.6 Reimbursement for Expenses. During the term of this Agreement, the
Tirex Corporations shall reimburse the Executive for reasonable and properly
documented out-of-pocket business and/or entertainment expenses incurred by the
Executive in connection with his duties under this Agreement.
27
<PAGE>
6. Termination
6.1 Termination For Cause. Termination For Cause may be effected by the
Corporation in accordance with the procedures set forth in Paragraph 1.5 at any
time during the term of this Agreement and shall be effected by written
notification to the Executive in accordance with Paragraph 6.9, below. Upon the
effectiveness of a Termination For Cause, the Executive shall promptly be paid
all accrued salary, bonus compensation to the extent earned, vested deferred
compensation (other than pension play or profit sharing plan benefits which will
be paid in accordance with the applicable plan), any benefits under any plans of
in which the Executive is a participant to the full extent of the Executive's
rights under such plans, accrued vacation pay and any appropriate business
expenses incurred by the Executive in connection with his duties hereunder, all
to the date of termination, but the Executive shall not be paid any other
compensation or reimbursement of any kind.
6.2 Termination Other Than For Cause. Notwithstanding anything else in
this Agreement, the Corporation may effect a Termination Other Than For Cause at
any time upon giving written notice to the Executive of such termination. Upon
the effectiveness of any Termination Other Than For Cause, the Executive shall
promptly be paid all accrued salary, bonus compensation to the extent earned,
vested deferred compensation (other than pension plan or profit sharing plan
benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of in which the Executive is a participant to the full
extent of the Executive's rights under such plans (including accelerated
vesting, if any, of awards granted to the Executive under the Corporation's
stock option plan), accrued vacation pay and any appropriate business expenses
incurred by the Executive in connection with his duties hereunder, all to the
date of termination, and all severance compensation as provided in Paragraph
6.1.
6.3 Termination For Good Reason. Notwithstanding anything else in this
Agreement, the Executive may effect a Termination for Good Reason at any time
upon giving written notice to the Corporation of such termination in accordance
with the provisions of Paragraph 6.9 hereof. Upon the effectiveness of any
Termination for Good Reason the Executive shall promptly be paid all accrued
salary, bonus compensation to the extent earned, vested deferred compensation
(other than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of in which
the Executive is a participant to the full extent of the Executive's rights
under such plans (including accelerated vesting, if any, of awards granted to
the Executive under's stock option plan), accrued vacation pay and any
appropriate business expenses incurred by the Executive in connection with his
duties hereunder, all to the date of termination, and all severance compensation
as provided in Paragraph 6.1.
6.4 Termination by Reason of Disability. If, during the term of this
Agreement, the Executive fails to perform his duties under this Agreement on
account of illness or physical or mental incapacity, and such illness or
incapacity continues for a period of more than twelve (12) consecutive months,
the Corporation shall have the right to terminate the Executive's employment
hereunder by written notification to the Executive and payment to the Executive
of all accrued
28
<PAGE>
salary, bonus compensation to the extent earned, vested deferred compensation
(other than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of in which
the Executive is a participant to the full extent of the Executive's rights
under such plans, accrued vacation pay and any appropriate business expenses
incurred by the Executive in connection with his duties hereunder, all to the
date of termination, with the exception of medical and dental benefits which
shall continue through the expiration of this Agreement, but the Executive shall
not be paid any other compensation or reimbursement of any kind.
6.5 Death. In the event of the Executive's death during the term of this
Agreement, the Executive's employment shall be deemed to have terminated as of
the last day of the month during which his death occurs and the Corporation
shall promptly pay to his estate or such beneficiaries as the Executive may from
time to time designate all accrued salary, bonus compensation to the extent
earned, vested deferred compensation (other than pension plan or profit sharing
plan benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of in which the Executive is a participant to the full
extent of the Executive's rights under such plans, accrued vacation pay and any
appropriate business expenses incurred by the Executive in connection with his
duties hereunder, all to the date of termination, but the Executive's estate
shall not be paid any other compensation or reimbursement of any kind.
6.6 Voluntary Termination. In the event of a Voluntary Termination, the
Corporation shall promptly pay all accrued salary, bonus compensation to the
extent earned, vested deferred compensation (other than pension plan or profit
sharing plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of in which the Executive is a participant
to the full extent of the Executive's rights under such plans, accrued vacation
pay and any appropriate business expenses incurred by the Executive in
connection with his duties hereunder, all to the date of termination, but no
other compensation or reimbursement of any kind.
6.7 Termination Upon a Change in Control. In the event of a Termination
Upon the effectiveness of a Change in Control, the Executive shall immediately
be paid all accrued salary, bonus compensation to the extent earned, vested
deferred compensation (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of in which the Executive is a participant to the full extent of the
Executive's rights under such plans (including accelerated vesting, if any, of
any awards granted to the Executive under the Corporation's Stock Option Plan),
accrued vacation pay and any appropriate business expenses incurred by the
Executive in connection with his duties hereunder, all to the date of
termination, and all severance compensation as provided in Paragraph 6.1.
6.8 Constructive Termination. The Executive may give notice to the
Corporation that the Corporation has effected a Constructive Termination of the
Executive's employment by reason of the Corporation's material breach of this
Agreement, by written notification to the Corporation in accordance with
Paragraph 6.9, below. Upon the effectiveness of any Constructive
29
<PAGE>
Termination the Executive shall immediately be paid all accrued salary, bonus
compensation to the extent earned, vested deferred compensation (other than
pension plan or profit sharing plan benefits which will be paid in accordance
with the applicable plan), any benefits under any plans of in which the
Executive is a participant to the full extent of the Executive's rights under
such plans (including accelerated vesting, if any, of any awards granted to the
Executive under the Corporation's Stock Option Plan), accrued vacation pay and
any appropriate business expenses incurred by the Executive in connection with
her duties hereunder, all to the date of termination, and all severance
compensation provided in Paragraph 6.1.
6.9 Notice of Termination. Tirex Canada may effect a termination of this
Agreement pursuant to the provisions of this Section upon giving thirty (30)
days' written notice to the Executive of such termination. The Executive may
effect a termination of this Agreement pursuant to the provisions of this
Section upon giving thirty (30) days' written notice to Tirex Canada of such
termination.
7. Severance Compensation
7.1 Severance Compensation in the Event of: Termination Other Than for
Cause Pursuant to Paragraph 6.2; Termination for Good Reason Pursuant to
Paragraph 6.3; Termination Upon a Change in Control Pursuant to Paragraph 6.7;
or a Constructive Termination Pursuant to Paragraph 6.8. In the event that,
after the expiration of one-year from the Effective date of this Agreement, the
Executive's employment is terminated in a termination: Other Than for Cause
pursuant to Paragraph 6.2; for Good Reason pursuant to Paragraph 6.3; a Change
in Control pursuant to Paragraph 6.7; or a Constructive Termination pursuant to
Paragraph 6.8, the Executive shall be paid the following as severance
compensation:
7.1.1 For terminations which occur during the second year of the term of
this Agreement: fifty percent (50%) of the amount of the annual Salary (at the
rate payable at the time of such termination), for a period of twelve (12)
months from the date of such termination. The Executive shall also be entitled
to accelerated vesting of any awards granted to the Executive under any Stock
Option Plan, stock option agreement, or any other employee benefit plan or any
agreement entered into in connection therewith at the time of grant or award.
The Executive shall continue to accrue retirement benefits and shall continue to
enjoy any benefits under any plans of in which the Executive is a participant to
the extent of fifty percent (50%) of the Executive's pre-termination rights
under such plans, including any perquisites provided under this Agreement,
though the twelve months following such termination, provided, however, that the
benefits under any such plans of in which the Executive is a participant,
including any such perquisites, shall cease upon re-employment by a new
employer. By way of additional severance compensation, Tirex Canada shall issue
to the Executive within five (5) business days of the date of termination, a
number of shares of the common stock of Tirex Canada equal to the number of
shares of such common stock, if any, which the Executive shall have forfeited
under the terms of any Stock Restriction Agreement.
30
<PAGE>
7.1.2 For terminations which occur during the third year of the term of
this Agreement: one hundred percent (100%) of the amount of the annual Salary
(at the rate payable at the time of such termination), for a period of twelve
(12) months from the date of such termination. The Executive shall also be
entitled to accelerated vesting of any awards granted to the Executive under any
Stock Option Plan, stock option agreement, or any other employee benefit plan or
any agreement entered into in connection therewith at the time of grant or
award. The Executive shall continue to accrue retirement benefits and shall
continue to enjoy any benefits under any plans of in which the Executive is a
participant to the full extent of the Executive's pre-termination rights under
such plans, including any perquisites provided under this Agreement, though the
twelve months following such termination, provided, however, that the benefits
under any such plans of in which the Executive is a participant, including any
such perquisites, shall cease upon re-employment by a new employer. By way of
additional severance compensation, Tirex Canada shall issue to the Executive
within five (5) business days of the date of termination, a number of shares of
the common stock of Tirex Canada equal to the number of shares of such common
stock, if any, which the Executive shall have forfeited under the terms of any
Stock Restriction Agreement.
7.1.3 For terminations which occur after the expiration of the first three
years of the initial term of this Agreement, including any extensions of such
term: two hundred percent (200%) of the amount of the annual Salary (at the rate
payable at the time of such termination), for a period of twelve (12) months
from the date of such termination. The Executive shall also be entitled to
accelerated vesting of any awards granted to the Executive under any Stock
Option Plan, stock option agreement, or any other employee benefit plan or any
agreement entered into in connection therewith at the time of grant or award.
The Executive shall continue to accrue retirement benefits and shall continue to
enjoy any benefits under any plans of in which the Executive is a participant to
the full extent of the Executive's pre-termination rights under such plans,
including any perquisites provided under this Agreement, though the twelve
months following such termination, provided, however, that the benefits under
any such plans of in which the Executive is a participant, including any such
perquisites, shall cease upon re-employment by a new employer. By way of
additional severance compensation, Tirex Canada shall issue to the Executive
within five (5) business days of the date of termination, a number of shares of
the common stock of Tirex Canada equal to the number of shares of such common
stock, if any, which the Executive shall have forfeited under the terms of any
Stock Restriction Agreement.
7.1.4 Notwithstanding the provisions of Subparagraphs 7.1.1 and 7.1.2,
above, or Paragraph 7.2, below, if the basic cause of termination shall be a
Change in Control, as that term is defined in Paragraph 1.1, above: (i) the
Executive shall be paid, as severance compensation, two hundred percent (200%)
of the amount of the annual Salary (at the rate payable at the time of such
termination), for a period of twelve (12) months from the date of such
termination; and (ii) the Executive may in the Executive's sole discretion, by
delivery of a notice to Tirex America within thirty (30) days following a
Termination Upon a Change in Control, elect to receive from Compensation a lump
sum severance payment by bank cashier's check equal to the present value of the
flow of cash payments that would otherwise be paid to the Executive pursuant to
this Paragraph. In addition, Tirex America shall, on request of the
31
<PAGE>
Executive, immediately take steps to register any or all Compensation Shares or
other unregistered shares of the common stock of Tirex America then held by the
Executive, of issuable to him in accordance with the provisions of this Section
7, with the Securities and Exchange Commission under a Form S-8 registration
statement filed with the United States Securities and Exchange Commision and
effective under the United States Securities Act of 1933, as Amended, or such
other Form of registration statement as shall then be available to Tirex America
including without limitation Forms S-1 and SB-2.
7.1.5 In the event that the Executive shall be entitled to any cash
payments pursuant to this Section 7 and The Tirex Corporations shall not have
sufficient cash resources available therefor, the Executive shall be issued
shares of the Common Stock of Tirex America in lieu of such cash payments, in
whole or in part, as the parties hereto shall mutually agree.
7.2 No Severance Compensation Upon Other Termination. In the event of
Termination: (i) for any reason during the first year following the Effective
Date of this Agreement; (ii) For Cause pursuant to Paragraph 6.1; (iii)
termination by reason of the Executive's Disability or Death pursuant to
Paragraphs 6.4 or 6.5; or (iv) Voluntary Termination pursuant to Paragraph 6.6
hereof, neither the Executive nor his estate shall not be paid any severance
compensation.
8. Payment Obligations
Tirex Canada's obligation to pay the Executive the compensation and to
make the arrangements provided herein shall be unconditional, and the Executive
shall have no obligation whatsoever to mitigate damages hereunder. If litigation
after a Change in Control shall be brought to enforce or interpret any provision
contained herein, Tirex Canada, to the extent permitted by applicable law and
Tirex Canada's Articles of Incorporation and Bylaws, hereby indemnifies the
Executive for the Executive's reasonable attorneys' fees and disbursements
incurred in such litigation.
9. Confidentiality
The Executive agrees that all confidential and proprietary information
relating to the business of Tirex Canada shall be kept and treated as
confidential both during and after the term of this Agreement, except as may be
permitted in writing by Tirex Canada's Board of Directors or as such information
is within the public domain or comes within the public domain without any breach
of this Agreement.
32
<PAGE>
10. Withholdings
All compensation and benefits to the Executive hereunder shall be reduced
by all federal, state, local and other withholdings and similar taxes and
payments required by applicable law.
11. Indemnification
In addition to any rights to indemnification to which the Executive is
entitled to under Tirex Canada's Articles of Incorporation and Bylaws, Tirex
Canada shall indemnify the Executive at all times during and after the term of
this Agreement to the maximum extent permitted under Delaware Business
Corporation Law or any successor provision thereof and any other applicable
state law, and shall pay the Executive's expenses in defending any civil or
criminal action, suit, or proceeding in advance of the final disposition of such
action, suit or proceeding, to the maximum extent permitted under such
applicable state laws.
12. Notices
Any notices permitted or required under this Agreement shall be delivered
by hand, certified mail, or recognized overnight courier, in all cases with
written proof of receipt required, addressed to the parties as set forth below
and shall be deemed given upon receipt to Tirex Canada at:
The Tirex Corporation
740 St. Maurice Suite, 201
Montreal, Quebec H3C 1L5
addressed to the Executive at:
Jean Frechette
2235 Du Fleuve Ouest
Port St.Francois
Quebec, Canada
J3T 1N9
Telephone: (819) 293-2989
or at any other address as any party may, from time to time, designate by notice
given in compliance with this Paragraph.
33
<PAGE>
13. Law Governing
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware.
14. General
14.1 Titles and Captions. All section titles or captions contained in this
Agreement are for convenience only and shall not be deemed part of the context
nor effect the interpretation of this Agreement.
14.2 Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this Agreement.
14.3 Agreement Binding. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
14.4 Attorney Fees. In the event an arbitration, suit or action is brought
by any party under this Agreement to enforce any of its terms, or in any appeal
therefrom, it is agreed that the prevailing party shall be entitled to
reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.
14.5 Computation of Time. In computing any period of time pursuant to this
Agreement, the day of the act, event or default from which the designated period
of time begins to run shall be included, unless it is a Saturday, Sunday, or a
legal holiday, in which event the period shall begin to run on the next day
which is not a Saturday, Sunday, or legal holiday, in which event the period
shall run until the end of the next day thereafter which is not a Saturday,
Sunday, or legal holiday.
14.6 Pronouns and Plurals. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine, neuter, singular, or plural as
the identity of the person or persons may require.
14.7 Presumption. This Agreement or any section thereof shall not be
construed against any party due to the fact that said Agreement or any section
thereof was drafted by said party.
14.8 Further Action. The parties hereto shall execute and deliver all
documents, provide all information and take or forbear from all such action as
may be necessary or appropriate to achieve the purposes of the Agreement.
34
<PAGE>
14.9 Parties in Interest. Nothing herein shall be construed to be to the
benefit of any third party, nor is it intended that any provision shall be for
the benefit of any third party.
14.10 Savings Clause. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.
THE TIREX CORPORATION CANADA INC.
By /s/ Terence C. Byrne
------------------------------------
TERENCE C. BYRNE,
Chairman of the Board
THE TIREX CORPORATION
By /s/ Terence C. Byrne
------------------------------------
TERENCE C. BYRNE, President
/s/ Jean Frechette
------------------------------------
JEAN FRECHETTE
35
Exhibit 10.3
----------
THE TIREX CORPORATION
----------
EMPLOYMENT AGREEMENT
Employment Agreement, made as of the 22nd day of June 1998, by and between
The Tirex Corporation
740 St. Maurice, Suite 201
Montreal, Quebec H3C 1L5
(the "Company")*
and
Scott Rapfogel
16 Regency Circle
Englewood, NJ 02631
(the "Employee")
- ----------
* Unless context necessarily implies otherwise, all references herein to
the "Company" shall be to The Tirex Corporation and all other corporations,
partnerships, or other entities, now or in the future controlled by, under
common control with, or in control of, Tirex Corporation, jointly and severally.
Whereas, Effective June 22, 1998 (the "Effective Date"), Scott Rapfogel
was appointed as the Company's Assistant Corporate and U.S. Securities Counsel.
This appointment was confirmed, ratified, and by the written unanimous consent
of the Executive Committee on June 23, 1998.
Whereas, the Company and the Employee desire that the term of this
Agreement begin as at the Effective Date and continue for the three-year period
ending on June 21, 2001;
Whereas, The Company is in the very early stage of development, with
limited income, and financial resources on hand to finance the development of
its technology and its proposed
36
<PAGE>
operations. Its future financial prospects and position are therefore highly
contingent and impossible to predict. Based upon the foregoing, unregistered
shares of the Company's common stock, have a value which reflects the Company's
poor financial position and uncertain future, and can be expected to be saleable
by the Company, in arm's length transactions, for not more than fifty percent
(50%) of the current market value of the Company's publicly traded stock.
Now therefore, in consideration of the premises and of the mutual promises
and covenants hereinafter set forth, the parties agree as follows:
1. Employment
The Company agrees to employ the Employee and the Employee agrees to
accept the employment described in this Agreement.
2. Duties
The Employee shall serve as the Company's Assistant Corporate and U.S.
Securities Counsel, his powers and duties in that capacity to be such as may be
determined by the Corporate and U.S. Securities Counsel of the Company. With
respect to all capacities in which the Employee shall serve, he shall report to
the Corporate and U.S. Securities Counsel of the Company. The services of the
Employee will be performed at 16 Regency Circle, Englewood, NJ 07631 and any
such other places requested by the Company.
3. Extent of Services
Employee shall devote such of his time, energy, and skill to the affairs
of the Corporation, as shall be required for his duties, reporting solely to the
Company's Corporate and U.S. Securities Counsel, and at all times during the
term of this Agreement the Employee shall have powers and duties at least
commensurate with his position as Assistant Corporate and United States
Securities Counsel.
4. Term
The term of this Agreement shall be deemed to have begun on the Effective
Date, and shall continue for three year period which commenced on the Effective
Date and shall end on June 21, 2001. The parties presently anticipate that the
employment relationship may continue beyond this three-year term. This Agreement
shall not give the Employee any enforceable right to employment beyond this
term.
37
<PAGE>
5. Compensation
As his compensation for his services to the Company, during the term of
this agreement, in whatever capacity rendered, the Company shall pay to the
Employee a salary in the following amounts:
(a) through and until June 21, 1999 ("Year One"), ninety thousand United
States dollars per year:
(b) from June 22, 1999 through June 21, 2000 ("Year 2") an annual salary
in an amount to be negotiated by the Company and the Employee in
good faith but in all events not less than ninety thousand United
States dollars; and
(c) from June 22, 2000 through June 21, 2001 ("Year 3") an annual salary
in an amount to be negotiated by the Company and the Employee in
good faith but in all events not less than ninety thousand United
States dollars;
Except as otherwise set forth in this Agreement, the above stated salary
will be payable in accordance with the Company's standard payroll procedures. In
addition, the Employee's performance shall be reviewed every twelve months with
respect to his eligibility for performance-based raises and bonuses, but this is
no assurance or expectation that raises or bonuses will be granted or paid.
Raises will be granted and bonuses will be paid, if at all, in the sole
discretion of the Board of Directors.
The Employee shall be entitled to vacation time during each contract year
of this Agreement and any extensions thereof, in the amount of four weeks per
contract year.
6. Form of Payment
6.1 Cash and Compensation Shares. In Year 1 the salary shall be payable
$65,000 in cash and $25,000 in unregistered shares of the Company's common
stock, $.001 par value per share (the "Compensation Stock"). The Year 1
Compensation Stock shall be payable in two installments. $12,500 of such
Compensation Stock (the "Initial Shares") shall be payable as soon as
practicable following the execution of this Employment Agreement subject to the
provisions of Section 6.2 hereof. The second $12,500 Year 1 Compensation Stock
installment (the "Second Shares") shall be due and payable on December 31, 1998.
In connection with Year 2 and Year 3, the parties agree to enter into good faith
negotiations as to the apportionment of such salary between cash and
Compensation Stock, which shall be paid and issued in accordance with the
Company's standard payroll and compensation stock issuance procedures.
Notwithstanding the foregoing, in no event will the Employee be required to
accept less than $65,000 (US) of such salary, in each of Year 2 and Year 3, in
cash.
38
<PAGE>
6.2 Valuation. All Compensation Shares will be issued to the Employee at a
value equal to fifty percent (50%) of the average of the high and low bid prices
of the Company's common stock as traded in the over-the-counter market and
quoted in the NASDAQ Electronic Bulletin Board during the period when such
shares were earned. The Initial Shares will be issued to the Employee at a value
equal to fifty percent (50%) of the average of the high and low bid prices of
the Company's common stock as traded in the over-the-counter market and quoted
in the NASDAQ Electronic Bulletin Board during the 30 day period immediately
following the effective date hereof. The Second Shares which will be issued to
the Employee at a value equal to fifty percent (50%) of the average of the high
and low bid prices of the Company's common stock as traded in the
over-the-counter market and quoted in the NASDAQ Electronic Bulletin Board
during the five month period ending December 31, 1998.
6.3 Option. Upon the mutual agreement of the Company and the Employee, the
Company may issue to the Employee, a common stock purchase option (the
"Option"), exercisable for the same number of shares of Compensation Stock that
would have been issued had the Employee been paid directly in Compensation
Stock. Each such Option shall be exercisable, at any time during a period of
three years from issuance, at an exercise price of $.001 per share.
6.4 Registration Rights. The Company shall as promptly as practicable,
register the Initial Shares and Second Shares, whether issued directly or
underlying an Option, in a registration statement on Form S-8, and the Employee
may, from time to time, request that his other Compensation Shares, including
Compensation Shares underlying any Options issued to the Employee, be registered
under a Registration Statement on Form S-8. Upon receipt of such request, the
Company will use its best efforts to promptly prepare and file such Registration
Statement with the U.S. Securities Exchange Commission.
7. Expenses
The Company shall reimburse the Employee for reasonable, documented,
out-of-pocket expenses incurred by the Employee in fulfilling his duties. Any
such expense reimbursement shall be payable, at the discretion of the Employee,
in cash or Compensation Shares.
8. Termination
8.1 For Cause. The Company may terminate the Employee's employment at any
time "for cause" with immediate effect upon delivering written notice to the
Employee. For purposes of this Agreement, "for cause" shall include: (a)
embezzlement, theft, larceny, material fraud, or other acts of dishonesty; (b)
material violation by employee of any of his obligations under this Agreement;
(c) conviction of or entrance of a plea of guilty or nolo contendere to a felony
or other crime which has or may have a material adverse effect on the Employee's
ability to carry out his duties under this Agreement or upon the reputation of
the Company; (d) conduct
39
<PAGE>
involving moral turpitude; (e) gross insubordination or repeated insubordination
after written warning by the President of the Company; or (f) material and
continuing failure by the Employee to perform the duties described in Section 2
above in a quality and professional manner for at least thirty (30) days after
written warning by the Board of Directors or the President of the Company. Upon
termination for cause, the Company's sole and exclusive obligation will be to
pay the Employee his compensation earned through the date of termination, and
the Employee shall not be entitled to any compensation after the date of
termination.
8.2 Upon Death. In the event of the Employee's death during the term of
the this Agreement, the Company's sole and exclusive obligation will be to pay
to the Employee's spouse, if living, or to his estate, if his spouse is not then
living, the Employee's compensation earned through the date of death.
8.3 Upon Disability. The Company may terminate the Employee's employment
upon the Employee's total disability. The Employee shall be deemed to be totally
disabled if he is unable to perform his duties under this Agreement by reason of
mental or physical illness or accident for a period of three consecutive months.
Upon termination by reason of the Employee's disability, the Company's sole and
exclusive obligation will be to pay the Employee his compensation earned through
the date of termination.
8.4 Without Cause. The Company may terminate the Employee's employment
without cause at any time after expiration of the three-year term of this
Agreement. In the event the Company terminates the Employee's employment without
cause during the three year term of this Agreement, the Company will be
obligated to pay the Employee all remaining salary due to Employee under this
Agreement.
9. Covenant Not to Compete
9.1 Covenant. At all times during the terms of this Agreement, during any
period following the term of this Agreement when the Employee shall continue to
be employed by the Company in any capacity whatsoever, and during the one year
period after the Employee's employment with the Company has been terminated by
either party and for any reason, the Employee will not directly or indirectly:
(a) enter into or attempt to enter into the "Restricted Business" (as
defined below) in the continental United States or Canada;
(b) induce or attempt to persuade any former, current or future
employee, agent, manager, consultant, director, or other participant
in the Company's business to terminate such employment or other
relationship in order to enter into any relationship with the
Employee, any business organization in which the Employee is a
participant in any capacity whatsoever, or any other business
organization in competition with the Company's business; or
40
<PAGE>
(c) use contracts, proprietary information, trade secrets, confidential
information, customer lists, mailing lists, goodwill, or other
intangible property used or useful in connection with the Company's
business.
9.2 Indirect Activity. The term "indirectly," as used in Section 7.1
above, includes acting as a paid or unpaid director, officer, agent,
representative, employee of, or consultant to any enterprise, or acting as a
proprietor of an enterprise, or holding any direct or indirect participation in
any enterprise as an owner, partner, limited partner, joint venturer,
shareholder, or creditor, except a 10% or less equity position in a publicly
traded company.
9.3 Restricted Business. The term "Restricted Business" means any business
related to the disintegration of scrap tires, the manufacture of equipment used
for such purpose, or the sale or brokerage of the by-products from the
disintegration of scrap tires.
10. Severability
The covenants set forth in Section 9 above shall be construed as a series
of separate covenants, one for each county in each of the states of the United
States and one for each of the analogous jurisdictions in Canada to which such
restriction applies. If, in any judicial proceeding, a court of competent
jurisdiction shall refuse to enforce any of the separate covenants deemed
included in this Agreement, or shall find that the term or geographic scope of
one or more of the separate covenants is unreasonably broad, the parties shall
use their best good faith efforts to attempt to agree on a valid provision which
shall be a reasonable substitute for the invalid provision. The reasonableness
of the substitute provision shall be considered in light of the purpose of the
covenants and the reasonable protectable interests of the Company and the
Employee. The substitute provision shall be incorporated into this Agreement. If
the parties are unable to agree on a substitute provision, then the invalid or
unreasonably broad provision shall be deemed deleted or modified to the minimum
extent necessary to permit enforcement.
11. Confidentiality
The Employee acknowledges that he will be exposed to information that is
or will be confidential and proprietary to the Company. The information includes
customer lists, technology designs, plans and information, marketing plans,
pricing data, product plans, software, and other intangible information. Such
information shall be deemed confidential to the extent not generally known
within the trade. The Employee agrees to make use of such information only in
the performance of his duties under this Agreement, to maintain such information
in confidence and to disclose the information only to persons with a need to
know.
41
<PAGE>
12. Remedies
The Employee acknowledges that monetary damages would be inadequate to
compensate the Company for any breach by the Employee of the covenants set forth
in Sections 9 and 11 above. The Employee agrees that, in addition to other
remedies which may be available, the Company shall be entitled to obtain
injunctive relief against the threatened breach of this Agreement or the
continuation of any breach, or both, without the necessity of proving actual
damages.
13. Waiver
The waiver by the Company of the breach of any provision of this Agreement
by the Employee shall not operate or be construed as a waiver of any subsequent
breach by the Employee.
14. Assignment
This Agreement may be assigned by the Company as part of the sale of
substantially all of its business; provided, however, that the purchaser shall
expressly assume all obligations of the Company under this Agreement. Further,
this Agreement may be assigned by the Company to an affiliate, provided that any
such affiliate shall expressly assume all obligations of the Company under this
Agreement, and provided further that the Company shall then fully guarantee the
performance of the Agreement by such affiliate. Employee agrees that if this
Agreement is so assigned, all the terms and conditions of this Agreement shall
obtain between such assignee and himself with the same force and effect as if
said Agreement had been made with such assignee in the first instance. This
Agreement is personal to the Employee and shall not be assigned without written
consent of the Company.
15. Notices
All notices required or permitted to be given hereunder shall be mailed by
certified mail, or delivered by hand or by recognized overnight courier to the
party to whom such notice is required or permitted to be given hereunder, in all
cases with written proof of receipt required. Any such notice shall be deemed to
have been given when received by the party to whom notice is given, as evidenced
by written and dated receipt of the receiving party.
Any notice to the Company or to any assignee of the Company shall be
addressed as follows:
42
<PAGE>
The Tirex Corporation
740 St. Maurice, Suite 201
Montreal, Quebec H3C 1L5
Any notice to Employee shall be addressed as follows:
Scott Rapfogel
16 Regency Circle
Englewood, NJ 07631
16. General
16.1 Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
16.2 Titles and Captions. All section titles or captions contained in this
Agreement are for convenience only and shall not be deemed part of the context
nor effect the interpretation of this Agreement.
16.3 Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this Agreement.
16.4 Agreement Binding. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
16.5 Further Action. The parties hereto shall execute and deliver all
documents, provide all information and take or forbear from all such action as
may be necessary or appropriate to achieve the purposes of the Agreement.
16.6 Savings Clause. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.
16.7 Survival of Certain Agreements. The covenants and agreements set
forth in Articles 9, 11, and 12 shall all survive the expiration of the term of
this Agreement and shall all survive termination of this Agreement and remain in
full force and effect regardless of the cause of such termination.
43
<PAGE>
17. Prior Agreements
This Agreement supersedes and cancels any and all prior agreements,
whether written or oral, between the parties.
In Witness Whereof, the parties hereto have executed the above Agreement
as of the day and year first above written.
THE TIREX CORPORATION
By /s/ Terence C. Byrne
------------------------------------
Terence C. Byrne, President
/s/ Scott Rapfogel
------------------------------------
Scott Rapfogel
44
Exhibit 20
THE TIREX CORPORATION
----------
Notice of Corporate Action
Pursuant to Delaware General Corporation Law
Section 228(d)
----------
To: The Shareholders of
The Tirex Corporation (the "Company")
In accordance with the Delaware General Corporation Law, Section 228(a),
on July 9, 1998, the holders of record of approximately 50.7% of the issued and
outstanding shares of common stock, $.001 par value, of the Company, in person
or by proxy, by their consent in writing authorized, approved and adopted a
resolution respecting the amendment of the Company's certificate of
incorporation. Pursuant thereto, effective July 10, 1998, the certificate of
incorporation of the Company was amended so as to change the amount of capital
stock, which the Company is authorized to issue, from 69,900,000 shares of
Common Stock, par value $.001 per share and 100,000 shares of Open Stock, par
value $.001 per share; to 115,000,000 shares of Common Stock, par value $.001
per share and 5,000,000 shares of Class A Stock, par value $.001 per share. The
Board of Directors has the power to designate the Class A Stock in one or more
classes and/or series, with such rights and preferences as the Board of
Directors shall determine.
The foregoing amendment increases the number of shares of capital stock
which the Board of Directors has the authority to issue, but has no effect on
any shares currently issued and outstanding and the amount and nature of your
shareholdings in the Company have not been changed perforce of this amendment.
THE TIREX CORPORATION
Terence C. Byrne
Dated: July 13, 1998
45
