EMPLOYMENT AGREEMENT
Employment Agreement dated as of March 15, 1998 by and between
International Plastic Technologies, Inc. (the "Company"), a Delaware
corporation, and Xxxxxx Xxxxxxxx (the "Employee").
WHEREAS, the Employee is employed as President and Chief Executive
Officer of the Company; and
WHEREAS, the Employee's services have contributed to the growth of the
Company; and
WHEREAS, the Company desires to continue to employ and retain the
experience, ability and services of the Employee and to prevent any other
competitive business from securing his services to utilize his experience,
background and know-how; and
WHEREAS, the Board of Directors recognizes that these arrangements are
being made to help assure a continuing dedication by the Employee to his duties
to the Company; and
WHEREAS, the Board of Directors wishes to demonstrate to the employees
of the Company that the Company is concerned with the welfare of its employees
and intends to ensure that loyal employees are treated fairly;
NOW, THEREFORE, in consideration of the mutual promises hereinafter
contained and for other good and valuable consideration, each of the parties,
intending to be legally bound, hereby agree to the following terms and
conditions.
1. Term. The Company hereby employs the Employee, and the Employee
hereby accepts such employment, for a term commencing as of the date of this
Agreement and ending on the earlier of (i) February 28, 2008, or (ii) the date
of termination of the Employee's Employment pursuant to the provisions of
Section 4 or 5 (said period hereinafter referred to as the "Term").
2. Duties. The Employee shall serve in the capacity of President and
Chief Executive Officer of the Company (or such other and comparable titles and
positions as shall be given to the Employee by the Board of Directors of the
Company), it being understood that such duties shall be reasonably comparable to
those duties heretofore performed by the Employee for the Company. The Employee
shall devote substantially all of his business time and effort to the
performance of his duties hereunder, except for illness or incapacity.
3. Compensation and Benefits.
3.1 Salary. During the Term of this Agreement, the Company
shall pay the Employee an annual salary (the "Annual Salary"), calculated as
follows: (i) One Hundred Twenty Five Thousand Dollars ($125,000), payable in
accordance with the Company's regular
payroll schedule, less such deductions as shall be required to be withheld by
law; plus (ii) an annual salary increase in an amount equivalent to the greater
of five percent (5%) or the increase in the Consumer Price Index (as defined
below). To compute the annual increase attributable to the Consumer Price Index,
the Consumer Price Index as of January, 1998 shall be compared with the Consumer
Price Index for each successive January of the Term. Any increase so calculated
shall be applied to the Annual Salary and shall be payable beginning January of
each year of the Term. For purposes of this Section, the Consumer Price Index
shall mean the Consumer Price Index for All Urban Consumers, All-Items, for New
York-Northeast New Jersey-Long Island, NY-NJ-CT (1982-84=100) published by the
United States Bureau of Labor Statistics, Department of Labor, or its successor
then in effect. If publication of the Consumer Price Index is discontinued, the
parties hereto shall accept comparable statistics on the cost of living
adjustment for New York City as computed and published by an agency of the
United States or by a responsible financial periodical or recognized authority
to be selected by the parties.
3.2 Bonus. During the Term, the Employee may receive an annual
bonus in an amount as shall be determined by the Board of Directors of the
Company.
3.3 Benefits. During the Term, the Employer shall provide and
the Employee may participate (to the extent that the Employee is eligible under
the terms of such plans or programs) in the following:
(a) family medical insurance coverage (with "family"
defined as spouse and all dependent children, under
the age 21);
(b) life and disability insurance; and
(c) all other incentive programs available to executive
officers of the Company.
3.4 Automobile. During the Term, the Employer shall provide
the Employee with an automobile to the same extent and in accordance with the
policy for executive officers of the Company. The automobile shall be comparable
in quality to that which the Company presently provides to the Employee. The
Company shall also pay all insurance, maintenance, fuel, repairs, registration
fees and other operating costs. The maximum amount paid by the Company pursuant
to this Section 3.4 shall be $1,000 per month.
3.5 Expenses. The Company shall pay or reimburse the Employee
for all reasonable and properly documented out-of-pocket expenses actually
incurred or paid by the Employee during the Term in the performance of the
Employee's services under this Agreement.
-2-
4. Termination Due to Death, Disability, Voluntary Resignation or
Termination Without Cause.
4.1 Termination Due to Death. If the Employee dies during the
Term, this Agreement shall terminate as of the date of the Employee's death and
the Employee's estate or beneficiaries shall be entitled to receive any salary,
bonus and other benefits earned and accrued prior to the date of death together
with reimbursement for any out-of-pocket expenses incurred prior to the date of
death. The Employee's estate or beneficiaries shall also be entitled to receive
payments equivalent to the Employee's Annual Salary for a period of three (3)
years following the date of death.
4.2 Termination Due to Disability. If the Employee is unable
to competently perform the duties assigned to him because of ill health or other
disability, for a period in excess of one hundred twenty (120) consecutive or
non-consecutive days out of any twelve (12) month period, the Company may, at
its option, terminate the employment of the Employee immediately by written
notice to the Employee. The Employee shall be entitled to receive any salary,
bonus and other benefits earned and accrued together with reimbursement for any
out-of-pocket expenses incurred, for the period prior to the notice of
termination. The Employee shall also be entitled to receive for a period of
three (3) years following the date of the Company's notice of termination, the
Employee's Annual Salary and all other benefits provided to executive officers,
with the exception of those benefits provided pursuant to Sections 3.2 and 3.5
hereof.
4.3 Termination Due to Voluntary Resignation. If the Employee
voluntarily resigns from the Company (in which case such resignation shall be
effective on the date the Employee provides the Company with notice of such
resignation), the Employee shall be entitled to receive any salary, bonus or
other benefits earned and accrued prior to the date of resignation, together
with reimbursement for any out-of-pocket expenses incurred prior to the date of
resignation.
4.4 Termination Without Cause. The Company may terminate the
Employee at any time for any reason other than those specified in Section 5
hereof, effective thirty (30) days after written notice is given to the Employee
of such termination; provided, however, that the Employee shall be entitled to
receive for a the remainder of the Term as defined in subsection (i) of Section1
following the date of the Company's notice of termination, the Employee's Annual
Salary and all other benefits provided to executive officers, with the exception
of those benefits provided pursuant to Sections 3.2 and 3.5 hereof. The Employee
shall not be obligated to perform any services for the Company during such
period.
5. Termination for Cause. If the Employee: (i) is convicted of a felony
or any crime involving the Company or its subsidiaries (except where such felony
or crime derives from actions taken at the direction of the Board of Directors
of the Company in writing); or (ii) is determined by the Board of Directors of
the Company to have engaged in: (a) willful misconduct (as hereinafter defined);
(b) willful or gross neglect; (c) fraud; (d) misappropriation; (e) embezzlement;
(f) material breach of his fiduciary duty; or (g) conduct in wanton disregard of
-3-
corporate policy in the performance of his duties hereunder, the Company may
terminate the Employee's employment immediately, at any time within thirty (30)
days after receiving notice of the occurrence of any of the events described in
clauses (i) and (ii) above, by written notice to the Employee. In the event of
termination under this Section 5, the Employee shall have the right to receive
compensation and other benefits hereunder on and after the date of the
termination up until the arbitration proceedings have been concluded pursuant to
Section 8.4. As used in this Agreement, the term "willful misconduct" shall mean
willful failure of the Employee to perform his duties.
6. Covenant of the Employee.
6.1 Covenant Against Competition. The Employee acknowledges that:
(i) the principal business of the Company and its subsidiaries is the design,
marketing and manufacture of injection molded plastic products and assemblies
(the "Present Business"); (ii) the Company and its subsidiaries is one of a
limited number of entities within its industry which have developed the present
business; (iii) the Present Business is national in scope; (iv) the Employee's
work for the Company and its subsidiaries has given and will continue to give
him access to the confidential affairs and proprietary information of the
Company and its subsidiaries not readily available to the public; and (v) the
agreements and covenants of the Employee contained in this Section 6.1 are
essential to the business and goodwill of the Company. Accordingly, the Employee
covenants that:
(a) Throughout the Employee's employment with the Company and
for a period of two (2) years following the date that the Employee is given
notice of termination from the Company (in the case of termination for
disability, termination without cause or termination with cause) or for a period
of two (2) years following the date that the Employee resigns from the Company
(the "Restricted Period"), the Employee shall not, in the United States of
America, directly or indirectly: (1) engage in the Present Business or any other
principal line of business developed by the Company during the Term (hereinafter
collectively referred to as the "Company Business") for the Employee's own
account; (2) render any services in any capacity to any person or entity (other
than the Company or its subsidiaries) engaged in the Company Business; or (3)
become interested in any entity engaged in the Company Business (other than the
Company or its subsidiaries) as a partner, shareholder, principal, agent,
trustee, consultant or in any other relationship or capacity; provided, however,
the Employee may own, directly or indirectly, solely as an investment,
securities of any such entity which are traded on any national securities
exchange or NASDAQ if the Employee: (A) is not a controlling person of, or a
member of a group which controls such entity and (B) does not, directly or
indirectly, own ten percent (10%) or more of any class of securities of such
entity.
(b) During the Restricted Period, the Employee shall keep
secret and retain in strictest confidence, and shall not use for his benefit or
the benefit of others, except in connection with the business and affairs of the
Company and its subsidiaries, all confidential matters relating to the Company
Business and to the Company and its subsidiaries learned by the Employee
heretofore or hereafter, directly or indirectly, from the Company and its
subsidiaries, including
-4-
any information concerning the business, affairs, customers, clients, sources of
supply and customer lists of the Company or its subsidiaries (the "Confidential
Company Information") and shall not disclose the Confidential Company
Information to anyone except with the Company's express written consent and
except for Confidential Company Information which: (1) is publicly known at the
time of receipt, or thereafter becomes publicly known through no wrongful act of
the Employee, or (2) is received from a third party who is not under an
obligation to keep such information confidential. The rights of the Company
pursuant to this Section are in addition to and shall not be deemed to limit
those rights and remedies available under common law for protection of the type
of confidential information which constitutes "trade secrets" as defined by
controlling law.
(c) The Employee shall not, without the Company's prior
written consent, directly or indirectly, knowingly solicit or encourage to leave
the employment of the Company or its subsidiaries, any employee of the Company
or its subsidiaries nor shall the Employee hire any employee who has left the
employment of the Company or its subsidiaries within one (1) year of the
termination of such Employee's employment with the Company or its subsidiaries.
(d) All memoranda, notes, lists, records and other documents
(and all copies thereof) constituting Confidential Company Information made or
compiled by the Employee or made available to the Employee concerning the
Company Business or the Company or its subsidiaries shall be the Company's
property, shall be kept confidential in accordance with the provisions of this
Section and shall be delivered to the Company at any time upon request.
6.2 Rights and Remedies Upon Breach. If the Employee breaches,
or threatens to commit a breach of any of the provisions of Section 6.1 (the
"Restrictive Covenants"), the Company shall have the following rights and
remedies (upon compliance with any necessary prerequisites imposed by law for
the availability of such remedies), each of the rights and remedies being
independent of the other and severally enforceable, and all of the rights and
remedies being in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity:
(a) The right and remedy to have the Restrictive Covenants
specifically enforced by any court having equity jurisdiction, including,
without limitation, the right to have restraining orders and injunctions
(preliminary, mandatory, temporary and permanent) entered against the Employee
preventing violations of such covenants, threatened or actual, and whether or
not then continuing, it being acknowledged and agreed that any such breach will
cause irreparable injury to the Company and that money damages will not provide
an adequate remedy to the Company;
(b) The right and remedy to require the Employee to account
for and pay over to the Company all compensation, profits, monies, accruals,
increments or other benefits derived or received by him primarily as the result
of any transactions constituting a breach of the Restrictive Covenants. The
Employee shall promptly account for and pay over such sums to the Company.
-5-
The Company may set-off any amounts due to the Company under this Section
against any amounts owed to the Employee.
7. Indemnification. The Company shall indemnify, defend and hold the
Employee harmless from any losses, liabilities, claims, damages, costs,
attorneys fees and expenses as may result from the Employee's actions that were
either taken within the scope of the Employee's duty or authorized in writing by
the Board of Directors of the Company. The Company shall have the right to
settle and/or compromise any such claims on behalf of the Employee. The Employee
shall cooperate with and assist the Company in any litigation or settlements
involving any claims which are the subject of this provision.
8. Other Provisions.
8.1 Severability. The Employee acknowledges and agrees that:
(i) he has had an opportunity to seek the advice of counsel in connection with
this Agreement; (ii) the Restrictive Covenants herein are reasonable in
geographical and temporal scope and in all other respects; and (iii) the Company
would not have entered into this Agreement but for the Restrictive Covenants
contained in this Agreement. If it is determined that any of the provisions of
this Agreement, including, without limitation, any of the Restrictive Covenants,
or any part thereof, is invalid or unenforceable, the remainder of the
provisions of this Agreement shall not thereby be affected and shall be given
full effect, without regard to the invalid portions.
8.2 Blue-Penciling. If any court determines that any of the
covenants contained in this Agreement, including, without limitation, any of the
Restrictive Covenants, or any part thereof, is unenforceable because of duration
or geographical scope, the said duration or scope of such provision, as the case
may be, shall be reduced so that such provision becomes enforceable and, in its
reduced form, such provision shall then be deemed enforceable and shall be
enforced.
8.3 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally, sent
by express mail or by certified or registered mail, (return receipt requested
and postage prepaid). Any such notice shall be deemed complete when so delivered
personally, or if mailed, five (5) days after the date of deposit with the
United States Postal Service, as follows:
(i) If to the Company, to:
Xxxxxxx Xxxxxxxxxx & Xxxxxx, LLP
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx Xxxxxxx, Esq.
-6-
(ii) If to the Employee, to:
Xxxxxx Xxxxxxxx
0 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Any party may, by notice given in accordance with this Section to the
other parties hereto, designate another recipient or address for receipt of
notices hereunder.
8.4 Arbitration. Any controversy or claim arising out of, or
relating to this Agreement, or its breach, shall be settled by arbitration in
accordance with the then governing rules of the American Arbitration Association
in the City of New York. Judgement upon the award rendered may be entered and
enforced in any court of competent jurisdiction.
8.5 Entire Agreement. This Agreement supersedes all previous
written or oral understandings and agreements between the Company and the
Employee and contains the entire agreement between the parties with respect to
the subject matter hereof.
8.6 Waivers and Amendments. This Agreement and any of the
terms contained herein may not be amended, superseded, canceled, renewed,
extended or waived, unless by a written instrument signed by the parties or, in
the case of a waiver, by the party waiving compliance. No delay on the part of
any party in exercising any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any waiver on the part of any party of any such
right, power or privilege, preclude any other or further exercise thereof or the
exercise of any other such right, power or privilege. The failure of either
party to insist upon performance of any terms or conditions of the Agreement
shall not be construed a waiver of future performance of any such term, covenant
or condition, and the obligations of either party with respect thereto shall
continue in full force and effect.
8.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
8.8 Assignment. This Agreement, and the Employee's rights and
obligations hereunder, may not be assigned by the Employee. Any purported
assignment by the Employee in violation hereof shall be null and void. In the
event of any sale, transfer or other disposition of all or substantially all of
the Company's assets or business, whether by merger, consolidation or otherwise,
the Company must assign this Agreement and the other party to said transaction
must consent to and honor the assignment or the Company must pay the remainder
of the present value of the Agreement with interest at 6% per annum.
8.9 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company, its successors and assigns, including
without limitation any person, partnership, company or corporation which may
acquire substantially all of the Company's assets or business, or with or into
which the Company may be liquidated, consolidated, merged or
-7-
otherwise combined. This Agreement shall also inure to the benefit of, and shall
be binding upon the Employee, his heirs, distributees and personal
representatives.
8.10 Headings. The headings in this Agreement are for
reference only and shall not affect the interpretation of this Agreement.
8.11 Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have signed their names
as of the day and year first above written.
International Plastic Technologies, Inc.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Xxxxx X. Xxxxxx, Chairman
/s/ Xxxxxx Xxxxxxxx
---------------------------
Xxxxxx Xxxxxxxx
-8-
