EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of July, 1993, between ▇▇▇▇▇ COMPANY,
a California corporation (hereinafter called the "Company"), and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(hereinafter called the "Executive").
WHEREAS, the Company desires to employ the Executive in an executive
capacity and to compensate him therefor; and
WHEREAS, the Executive is desirous of committing himself to serve the
Company on the terms and conditions herein provided;
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein contained, the parties
hereto, intending to be legally bound hereby, agree as follows:
1. EMPLOYMENT. The Company agrees to employ the Executive, and the
Executive hereby agrees to serve the Company, for a term of three (3) years
commencing as of July 1, 1993, and ending on the third anniversary thereof;
provided, however, that unless the Company or the Executive gives written notice
to the contrary at least ninety (90) days prior to July 1, 1996 or any
subsequent anniversary of the date hereof, the term of this Agreement shall
automatically be extended for an additional term of one (1) year on each
anniversary date of the date hereof commencing July 1, 1996. The term of this
Agreement is hereinafter called the "Employment Period" or the "full term of the
Employment Period." Each year of the Employment Period shall be deemed to
commence on July 1.
2. POSITION AND DUTIES. The Executive shall serve as the President
of ▇.▇. ▇▇▇▇▇▇ Co., a division of the Company ("▇▇▇▇▇▇ Division"), reporting to
the President of the Company. The Executive shall have supervision and control
over, and responsibility for, the day-to-day operations of the ▇▇▇▇▇▇ Division
and shall have such other powers and duties as determined by the President of
the Company.
3. ACCEPTANCE OF EMPLOYMENT. The Executive hereby accepts such
employment for the compensation and upon the other terms and conditions provided
for in this Agreement and agrees to devote his best efforts to such employment
for as long as he shall be employed hereunder. During the Employment Period,
the Executive shall devote substantially full time and efforts to the business
and affairs of the Company (including its subsidiaries and affiliates) and the
promotion of its interests (except for reasonable vacations and absences
resulting from sickness or
accident) and shall not be actively engaged in any other business activities
or duties except for activities approved in advance in each case by the Board
of Directors of the Company.
4. COMPENSATION. The Executive shall receive the following
compensation for his services hereunder:
(a) BASE SALARY AND INCENTIVE COMPENSATION.
(i) The Company shall pay to the Executive during the
Employment Period a base salary at the rate of One hundred thirty thousand
dollars ($130,000.00) per year ("Base Salary"), which shall be paid in equal
semi-monthly installments on or before the fifteenth and last days of each
calendar month of each such year or portion thereof during the Employment
Period. The Board of Directors of the Company shall review the Base Salary at
the beginning of each year of the Employment Period and may increase such Base
Salary in an amount to be determined in the discretion of the Board of Directors
of the Company. Upon any increase in the rate of Base Salary pursuant to the
foregoing sentence, such increased rate of Base Salary shall thereafter
constitute the Executive's Base Salary for all purposes of this Agreement.
(ii) In addition to Base Salary, the Executive shall be
entitled to receive, in respect of each preceding year of the Employment Period,
a lump sum cash bonus (the "Incentive Bonus") to be paid during the first
calendar quarter of each year in an amount to be determined by the Board of the
Company, based upon the Executive's performance against objectives to be
mutually agreed upon by the Executive and the Board of Directors of the Company.
The amount of the Incentive Bonus may range from zero (0) to fifty percent (50%)
of Base Salary, with a target level of twenty-five percent (25%) of Base Salary
if such agreed-upon objectives are met. Provided, however, that in any event,
the Executive shall receive an Incentive Bonus of at least $20,000 for the first
six months of the Employment Period, to be paid in the first calendar quarter of
1994.
(b) AUTOMOBILE ALLOWANCE. During the Employment Period, at the
Executive's option, either (1) the Company shall provide the Executive, for the
Executive's sole use, an automobile, and the Company shall promptly reimburse
all of the Executive's operating expenses with regard to such automobile,
provided the Executive properly accounts therefor in accordance with Company
policy, or (2) the Executive shall be entitled to receive an allowance of $625
per month to be applied to the cost of purchasing or leasing an automobile for
use by the Executive in his performance of services hereunder, and the Company
shall promptly reimburse all operating expenses with regard to such automobile
up to a maximum of $125 per month, provided that the
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Executive properly accounts therefor in accordance with Company policy.
(c) EMPLOYEE BENEFITS. The Executive shall be entitled to
participate in and receive benefits under all of the Company's executive life
insurance, disability and deferred compensation plans in effect on the date
hereof, or any such plans or arrangements made available by the Company in the
future to its executive employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements.
The Executive shall be entitled to participate in and receive benefits under the
Company's company-wide employee benefits plans for medical and dental benefits
on a basis consistent with the terms, conditions and overall administration of
such plans, and in addition shall be entitled to obtain, at the Company's
expense, one annual physical examination each year during the Employment Period,
at a cost not to exceed $1,000 per examination.
(d) 401(K) PLAN. The Executive shall be entitled to participate
in and receive benefits under the Company's 401(K) Plan, a copy of which is
attached hereto as Exhibit A and incorporated herein by reference.
(e) CLUB MEMBERSHIP. The Company shall pay the initiation fee
(the "Initiation Fee"), up to a maximum of $15,000.00, for the membership of
Executive in a club of the Executive's choice located in the Houston, Texas
area. During the Employment Period, the Executive shall be entitled to
reimbursement of the cost of the monthly dues at such club, so long as the
Executive is a member of such club. In the event that the Executive's
employment is terminated by the Company for Cause, or is terminated by the
Executive whether for Good Reason or any other reason, the Executive shall
reimburse to the Company that portion of the Initiation Fee that is equal to the
product of the Initiation Fee multiplied by a fraction, the numerator of which
is equal to thirty-six (36) minus the number of months which the Employment
Period lasted prior to the Executive's termination, and the denominator of which
is equal to thirty-six (36).
(f) EQUIPMENT. Executive shall be entitled to the use of a
personal computer in his home, along with the use of a car phone, both of which
shall be purchased by the Company through its capital request process.
Executive shall be entitled to receive prompt reimbursement for all reasonable
phone-line charges incurred by him while using the personal computer or car
phone to perform services hereunder, provided that the Executive properly
accounts therefor in accordance with Company policy. Any car phone expenses
which are reimbursed by the Company shall be in addition to, and shall not
constitute a part of, the car allowance reimbursements provided in paragraph (b)
above.
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(g) RELOCATION EXPENSES. Executive shall be entitled to receive
prompt reimbursement for the following relocation costs and expenses incurred as
a result of Executive's acceptance of employment with the Company:
(i) Standard closing costs (including broker fees, mortgage
points and title expenses) incurred by Executive in the sale of his current
primary residence located in Plano, Texas and the purchase of a primary
residence in Houston, Texas.
(ii) Costs and expenses incurred to move Executive's
household goods and pets from Plano, Texas to Houston, Texas, along with such
insurance as is reasonable and necessary with respect thereto.
(iii) Reasonable expenses incurred by Executive as
necessary to locate a primary residence in Houston, Texas, along with either
(a) reasonable expenses incurred by Executive in maintaining a temporary
residence in Houston, as necessary, for a period of time not to exceed two (2)
months, while Executive is searching for or waiting to complete the purchase of
a permanent residence in Houston or (b) reasonable expenses, including rental
and related utility charges, incurred by Executive to rent a furnished apartment
in Houston for up to eighteen (18) months.
(iv) In addition, upon Executive's relocation to Houston,
as demonstrated by Executive's establishment of a permanent primary residence in
Houston through the purchase of a primary residence or the execution of a
long-term lease in Houston, Executive shall be entitled to receive a payment of
five thousand dollars ($5,000) to cover incidental costs.
5. TERMINATION.
(a) CAUSE. The Company may terminate the Executive's employment
hereunder for Cause. For the purposes of this Agreement, termination for Cause
shall mean termination because of the Executive's personal dishonesty, willful
misconduct, breach of fiduciary duty involving personal profit, intentional or
recklessly negligent failure to perform stated duties, willful violation of any
law, rule, or regulation (other than traffic violations or similar offenses) or
final cease-and-desist order, or material breach of any provision of this
Agreement.
(b) TERMINATION OTHER THAN FOR CAUSE. The Company may terminate
the Executive's employment hereunder without Cause, if the Company shall
determine that such termination is in the best interests of the Company and the
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Company shall have delivered to the Executive a Notice of Termination hereunder.
(c) TERMINATION BY THE EXECUTIVE. The Executive may terminate
his employment hereunder (i) for Good Reason or (ii) for any other reason, by
giving a Notice of Termination hereunder to the Company. For purposes of this
Agreement, "Good Reason" shall mean the Executive's termination of employment
within six (6) months of a significant change in the nature or scope of the
Executive's authorities or duties from those described in Section 2, a reduction
in total compensation from that provided in Section 4, any transfer requiring
the Executive to relocate from the Houston area, or the breach by the Company of
any other provision of this Agreement.
(d) DEATH. The Executive's employment hereunder shall terminate
upon his death.
(e) DISABILITY. If, as a result of the Executive's incapacity
due to physical or mental illness, the Executive shall have been absent from his
duties hereunder on a full-time basis for 180 consecutive days and, within
thirty (30) days after a Notice of Termination (as hereinafter defined) is given
by the Company, the Executive shall not have returned to the performance of his
duties hereunder on a full-time basis, the Company may terminate the Executive's
employment hereunder.
(f) NOTICE OF TERMINATION. Any termination by the Company
pursuant to subparagraphs (a), (b) or (e) above or by the Executive pursuant to
subparagraph (c) above shall be communicated by written Notice of Termination to
the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated.
(g) DATE OF TERMINATION. Date of Termination shall mean (i) if
the Executive's employment is terminated by his death, the day after his death;
(ii) if the Executive's employment is terminated pursuant to subparagraph (b) or
(e) above, thirty (30) days after Notice of Termination is given (provided that,
in the case of termination under subparagraph (e), the Executive shall not have
returned to the performance of his duties on a full-time basis during such
thirty day period), and (iii) if the Executive's employment is terminated
pursuant to subparagraph (a) or (c) above, the date specified in the Notice of
Termination.
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6. COMPENSATION UPON TERMINATION.
(a) TERMINATION FOR CAUSE. If the Executive's employment shall
be terminated for Cause, the Company shall pay the Executive the pro rata
portion of his Base Salary earned through the Date of Termination at the rate in
effect at the time Notice of Termination is given, and the Company shall have no
further obligations to the Executive under this Agreement.
(b) TERMINATION BY THE COMPANY OR EXECUTIVE UNDER CERTAIN
CIRCUMSTANCES. If the Company shall terminate the Executive's employment
pursuant to Section 5(b) or 5(e) hereof, or if the Executive shall terminate his
employment for Good Reason under Section 5(c)(i) hereof, the following
provisions shall apply:
(i) The Company shall continue to pay to the Executive
the Base Salary provided for in Section 4(a)(i) hereof at the rate in effect at
the time Notice of Termination is given, for a period of twelve months after the
date that the Notice of Termination is given, less amounts earned during such
period by Executive with respect to other employment.
(ii) With respect to the Company's 401(K) Plan, or any
incentive plan, all rights granted to the Executive shall fully vest and be
exercisable by the Executive to the extent provided by such plan.
(iii) The Executive shall be entitled to participate in and
receive for a period of twelve (12) months after the date that the Notice of
Termination is given (i) benefits under the Company's company-wide employee
benefit plans for medical and dental benefits on a basis consistent with the
terms, conditions and overall administration of such plans, (ii) benefits under
Section 4(b) hereof, in the form provided to the Executive at the date that the
Notice of Termination is given and (iii) reasonable office accommodations.
(c) VOLUNTARY TERMINATION. If the Executive shall terminate his
employment hereunder other than for Good Reason pursuant to Section 4(c)(ii)
hereof, the Company shall pay the Executive, through the Date of Termination,
his full Base Salary at the rate in effect at the time Notice of Termination is
given, and the Company shall have no further obligations to the Executive under
this Agreement.
(d) TERMINATION UPON DEATH. If this Agreement terminates as a
result of the Executive's death, the Company shall pay to the survivors of the
Executive his full Base Salary at the rate in effect at the time of death,
through the date of death.
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7. CONFIDENTIALITY. The Executive agrees not to divulge,
communicate, use to the detriment of the Company or for the benefit of any other
person or persons, or misuse in any way any confidential or proprietary
information or trade secrets of the Company, including without limitation any
copyrights, ideas, knowledge, trade secrets, know-how, customer lists, cost
information, or technical data arising out of the business of the Company,
without the express written permission of the Company. The Executive agrees
that the remedy at law for any breach by the Executive of the foregoing covenant
will be inadequate, and that the Company shall be entitled to injunctive relief
to restrain the Executive from breaching further any of such covenants.
8. COVENANT NOT TO COMPETE. In order to induce the Company to enter
into this Agreement, the Executive agrees that during the term of his employment
by the Company and for twelve (12) months thereafter he will not, directly or
indirectly, serve as an employee or consultant for, or otherwise engage in or
have any ownership interest in (except for an interest in the Company and except
for the ownership, solely for investment purposes of less than five percent (5%)
of the common stock of a publicly traded company), any person, firm,
corporation, partnership, association, agency or business (whether as a
principal, agent, holder of any equity security or other instrument convertible
into an equity security, employee, consultant or otherwise) that engages in the
United States in any business that is the same as, similar to, or competitive
with the business engaged in by the Company so long as the Company shall engage
in such business, including but not limited to, manufacturing and distribution
of coatings, sealants, polyurethane foam and any future business of the Company.
The parties agree that the period provided for, and the area encompassed, in
this paragraph are necessary and reasonable in order to protect the parties and
the Company in the conduct of the Company's business.
The parties intend that the foregoing covenant shall be construed as a
series of separate covenants, one for each geographic area of the country. If,
in any judicial proceedings, the court shall refuse to enforce any of the
separate covenants with respect to a particular geographic area, then such
unenforceable covenant shall be deemed eliminated to the extent necessary to
permit the remaining separate covenants to be enforced, and the remaining
covenants, to the extent required, shall be modified to preserve their validity.
The parties agree that the remedies at law for any breach by the
Executive of the foregoing covenant will be inadequate, and that the Company
shall be entitled to injunctive relief to restrain the Executive from further
breaching such covenant. Furthermore, in the event the Executive does breach
the foregoing covenant, the Company and Executive agree that the Company shall
have no further obligations to the Executive
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hereunder and the Executive shall forfeit all rights to any payments or other
benefits to which he would otherwise have been entitled hereunder.
9. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall not be terminated by the voluntary or
involuntary dissolution of the Company or by any merger or consolidation in
which the Company is not the surviving or resulting corporation, or upon any
transfer of all or substantially all of the assets of the Company. In the event
of any such merger, consolidation or transfer of assets, the provisions of this
Agreement shall bind and inure to the benefit of the surviving or resulting
corporation, or the corporation to which such assets shall have been
transferred, as the case may be.
(b) This Agreement and all rights of the Executive hereunder
shall inure to the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts would still be payable to him hereunder if he had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Executive's devisee, legatee, or other
designee or, if there be no such designee, to the Executive's estate.
10. MISCELLANEOUS.
(a) NOTICE. For the purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States or registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
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If to the Executive:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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If to the Company:
▇▇▇▇▇ Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Financial Officer
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
(b) WAIVER. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer or agent as may be
specifically designated by the Board of Directors of the Company. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
(c) GOVERNING LAW. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
Texas.
(d) VALIDITY. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
(e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
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(f) ENTIRE AGREEMENT. This Agreement embodies the entire
Agreement of the parties respecting the employment of the Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"COMPANY"
▇▇▇▇▇ COMPANY
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Its: President
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"EXECUTIVE"
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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