Exhibit
10.4


 


EMPLOYMENT
AGREEMENT


 


This Employment Agreement is
Agreement is entered into on June 27, 2003, between SUB-URBAN INDUSTRIES, INC.
(the “Company”), a California corporation, having its principal place of
business located at 500 Molino #215, Los Angeles, CA 90013, and Joseph E.
Shortal, an individual (the “Employee”).


 


WITNESSETH:


 


WHEREAS, the Employee has
expertise in the areas of sales, marketing, administration and management;


 


WHEREAS, the parties acknowledge that the Employee’s abilities and
services are unique and essential to the prospects of the Company; and


 


WHEREAS, in light of the foregoing, the Company desires to employ the
Employee as its Chief Executive Officer and (interim) Chief Financial Officer,
and the Employee desires to accept such employment.


 


NOW, THEREFORE, the parties hereto agree as follows:


1.             Employment.
The Company hereby employs the Employee, and the Employee hereby accepts
employment, upon the terms and conditions hereinafter set forth.


 


2.             Term. This
Agreement shall commence on the date hereof and shall terminate as of the
earlier of:


(a) three (3) years from the date hereof, plus - absent any prior
termination of this Agreement pursuant to this Section 2 - automatic renewals
for one-year effective upon each annual anniversary of the date of this
Agreement;


(b) the death or “Permanent Disability” (as hereafter defined) of the
Employee;


(c) thirty (30) days
after a material breach hereof by the Employee and notice thereof by the
Company to the Employee, if such breach remains uncured; or


 


(d) thirty (30)
days after a material breach hereof by the Company and notice thereof by the
Employee to the Company, if such remains uncured


 


The exercise of the Company’s or the Employee’s right to terminate this
Agreement pursuant to clause (c) or (d) hereof, as the case may be, shall not
abrogate the rights and remedies of the terminating party in respect of the
breach giving rise to such termination.


 

















 


3.             Compensation.
For all services rendered under this Agreement:


                (a)           (i)            The
Company shall pay the Employee a base salary of $3,000 per month ($36,000 per
annum) in equal monthly or semi-monthly installments commencing on the later of
July 1, 2003, or upon the receipt of at least $300,000 of equity (or debt
convertible into equity) financing from third parties (“External Funding”). The
base salary shall be increased to $10,000 per month ($120,000 per annum)
beginning when the Company has received an aggregate of at least $2,000,000 of
External Funding. Notwithstanding anything herein to the contrary, (i) the
amount of base compensation payable to the Employee shall not be less than the
base compensation payable to any other senior executive of the Company, and
(ii) if cash flow constraints preclude full payment of base salaries to all
senior management employees of the Company, the Employee agrees to deferral and
accrual of all or part of his base salary pari passu with deferments by other
senior management employees; provided, however that the aggregate accrual may
not exceed an amount equal to 25% of one year’s annual base salary without the
Employee’s consent.


 


(ii) If the Employee is unable to perform effectively his duties
hereunder (herein “Disability”) for a period of at one hundred eighty
(180) days or more in any consecutive one year period (herein “Permanent
Disability”), the Company may elect, upon notice to the Employee, to pay
the Employee one-third of the compensation the Employee would otherwise be
entitled to pursuant to clause (i) above for the balance of the term specified
in Section 2(a) hereof and shall thereupon have no further obligation under
Section 3(b) or (e) hereof.


                (b) The Employee
shall be entitled to incentive compensation as determined by the Board of
Directors, which amount shall not be less than the amount of incentive
compensation payable to any other senior executive of the Company.


 


                (c) During the
term of his employment, the Employee shall be entitled to participate in
employee benefit plans or programs of the Company, if any, to the extent that
his position, tenure, salary, age, health and other qualifications make him
eligible to participate, subject to the rules and regulations applicable
thereto. Such additional benefits shall include, subject to the approval of the
Board of Directors, medical, dental, life insurance and income insurance, paid
vacation and equity stock incentive plans; provided, however, that in no event
shall Employee’s benefits hereunder be less favorable than those afforded any
other senior executive of the Company.


                (d) The Company
will furnish the Employee with a Company- owned/financed or leased automobile
of the make and model then authorized by the Company’s policy (together with
full insurance coverage with policy limits not less than those required by
applicable finance or lease agreements) and a cell phone and service, all
without cost to the Employee.

















 


                (e) The Employee
shall be entitled to reimbursement of all reasonable expenses incurred by him
in the performance of his duties, subject to the presenting of appropriate
vouchers in accordance with the Company’s policy.


 


                (f)
Notwithstanding anything herein to the contrary, in the event of


a termination by Company of Employee’s employment hereunder, or a
material change in the Employee’s title or the scope and/or nature of his
duties, which constitutes a material breach of this Agreement (“Severance
Event”), Employee shall receive, in lieu of any damages otherwise
applicable to the remainder of the term of this Agreement, severance
compensation comprised of (i) a lump sum payment in an amount equal to three
(3) times the Employee’s annual base compensation applicable at the time of
Severance Event plus (ii) for a period of three (3) years following the
Severance Event, a continuation of all fringe and other benefits inuring to
Employee at the time of the Severance Event.


 


4.             Duties. The
Employee shall be employed as Chief Executive Officer and (interim) Chief
Financial Officer of the Company. His duties as Chief Executive Officer shall
include overall responsibility for managing the administrative, personnel,
marketing, sales and finance, together with such additional duties as may be
assigned to him from time to time by the Board of Directors in connection with
the conduct of its business. The Employee shall perform and discharge such
duties well and faithfully. A material change in the Employee’s title or the
scope and/or nature of his duties which is not consistent with the foregoing
and with the office of Chief Executive Officer, without the express written
consent of the Employee, shall constitute a material breach of this Agreement
by the Company. If the Employee is elected to be a director of the Company or
any subsidiary thereof during the term of this Agreement, the Employee will
serve in such capacity without further compensation.


5.             Extent of
Services. Absent a Disability pursuant to Section 3(a)(ii) hereof, the
Employee shall devote sufficient professional time, attention and energies to
the business of the Company in order to perform his duties under this Agreement
for the benefit of the Company, all as determined by the Employee in the good
faith exercise of this reasonable discretion. During the term of this
Agreement, the Employee shall not be engaged in any other business or
professional activity (whether or not such activity is pursued for gain, profit
or other pecuniary advantage) if such other business or professional activity
materially interferes with the Employee’s duties hereunder or otherwise
constitutes a breach of any other provision of this Agreement.


 

















 


6.             Purchase of
Stock. Concurrently herewith, and as partial


consideration for entering into this Agreement, the Employee is
purchasing shares of the Company’s Common Stock as described in that certain “Founder’s
Stock Purchase Agreement,” a copy of which is attached as Exhibit A
hereto and incorporated herein by reference.


 


7.             Proprietary
Information. Concurrently herewith, as a condition of the


Employee’s engagement under this Agreement, the Employee has executed
the “Proprietary Information and Inventions Agreement,” a copy of which
is attached hereto as Exhibit B hereto and incorporated herein by
reference.


8.             Indemnification.
To the maximum extent permitted by California law, the Company shall indemnify
and hold the Employee harmless from expenses, judgments, fines, settlements and
other amounts (including attorneys fees and related costs) actually and
reasonably incurred by the Employee in connection with the defense or
settlement of civil, criminal, administrative and/or investigative proceeding against
the Employee in the Employee’s capacity as an officer and/or director of the
Company.


9.             Insurance.
The Company may, at its election and for its benefit, insure the Employee
against accidental loss or death and the Employee shall submit to such physical
examination and supply such information as may be required in connection
therewith.


 


10.           No Relocation~ Location of
Performance 


 


                                (a)           The parties acknowledge that the
Employee is not required to change his place of residence from Los Angeles
County, CA to perform hereunder.


                                (b)           The Employee’s services will be
performed in the greater Los


Angeles area. The Employee’s performance hereunder shall be within such
area or its environs. The parties acknowledge, however, that the Employee may
be required to travel extensively in connection with the performance of his
duties hereunder.


11.           Assignment.
This Agreement may not be assigned by any party hereto; provided that the
Company may assign this Agreement: (i) to an affiliate so long as such
affiliate assumes the Company’s obligations hereunder; provided that no such
assignment shall discharge the Company of its obligations herein, or (ii) in
connection with a merger or consolidation involving the Company or a sale of
substantially all its assets to the surviving corporation or purchaser as the
case may be, so long as such assignee assumes the Company’s obligations
thereunder.

















 


12.           Notices. Any
notice required or permitted to be given under this Agreement shall be
sufficient if in writing and sent by registered mail to the Employee at his
residence at 1327 Sunset Plaza Dr, Los Angeles, CA 90069 or to the Company at
its address set forth above, Attention: James Blondell, President, or to such
other address of which a party is given notice as herein provided.


 


13.           Waiver of Breach.
A waiver by the Company or the Employee of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any subsequent breach by the other party.


14.           Additional
Documents and Acts. Each party agrees to execute such additional documents
and perform such additional acts as may be requested by the other party to
effect the reasonable intent of this Agreement.


15.           Disputes. In
the event of any litigation to enforce or interpret any provision of this
Agreement, a court of competent jurisdiction may award either party reasonable
attorneys’ fees and costs, in addition to any other appropriate relief.


16.           Entire Agreement.
This instrument contains the entire agreement of the parties. It may be changed
only by an agreement in writing signed by a party against whom enforcement of
any waiver, change, modification, extension or discharge is sought.


 


IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first hereinabove written.


 


SUB-URBAN INDUSTRIES, INC., A California Corporation


 


 


	
  By:

  	
  /s/
  James Blondell

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  James
  Blondell, Its President

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/
  Joseph E. Shortal

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Aaron Apodaga

  	
   

  	
  Joseph
  E. Shortal, An Individual

  	
   

  	
   

  	
   

  
	
   

  	
  Aaron
  Apodaga, Its Secretary

  	
   

  	
  “Employee”