Exhibit 10-17
page 1 of 13
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and
entered into as of April 1, 1995, by and between High Plains
Corporation, a Kansas corporation (the "Company") and Xxxxxxx X.
Xxxxxx (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company believes it to be in its best interest
to provide for continuity of management and to provide
protection for its valuable trade secrets and confidential
information;
WHEREAS, the Company and the Employee entered into that
certain Employment Agreement dated April 1, 1993 (the "Prior
Employment Agreement");
WHEREAS, the Company and the Employee desire to replace the
Prior Employment Agreement with this Agreement to provide
long-term executive salary protection during a critical
corporate expansion period and to create a meaningful
compensation incentive program based on corporate profitability
for present and future executive officers;
WHEREAS, the Company desires to employ the Employee and the
Employee is willing to render his services to the Company on the
terms and conditions with respect to such employment hereinafter
set forth.
NOW, THEREFORE, in consideration of the promises, terms and
conditions hereof, the Company and the Employee hereby agree as
follows:
1. Employment. The Company hereby employs the
Employee and the Employee hereby accepts employment with the
Company upon the terms and conditions hereinafter set forth.
2. Exclusive Services. The Employee shall devote all
necessary working time, ability and attention to the business of
the Company during the term of this Agreement and shall not,
directly or indirectly, render any services of a business,
commercial, or professional nature to any other person,
corporation, or organization whether for compensation or
otherwise, without the prior knowledge of the Board of Directors
of the Company (the "Board").
3. Duties. The Employee is hereby employed as
President and Chief Executive Officer of the Company and shall
render his services either from his home in Tucson, Arizona, or
at
Exhibit 10-17
page 2 of 13
such other company offices as he may deem appropriate from time
to time. The Employee shall have such authority and shall
perform such duties as are reasonably requested by the Board and
commensurate with Employee's title and position, as well as such
other duties as are specified by the bylaws of the Company for
the office of President; subject, however, to such limitations,
instructions, directions, and control as the Board may specify
from time to time in its discretion.
4. Term. This Agreement shall terminate on July 1,
2000, subject to earlier termination as hereinafter provided.
5.Compensation. As compensation for his services
rendered under this Agreement, the Employee shall be entitled to
receive the following:
a. Base Salary. Subject to applicable withholding taxes, the
Employee shall initially be paid a base salary of $127,308 per
year (the "Base Salary"), payable in equal bi-weekly
installments during the term of this Agreement, prorated for any
partial employment month. The Base Salary shall be increased by
three percent (3%) each year as a cost of living increase and
may be increased by the Board in its sole discretion to reflect
merit increases in addition to such cost of living increase.
b. Bonus Pool. Beginning with the fourth fiscal quarter of
the 1995 fiscal year and during the term of this Agreement, the
Company agrees to establish and fund a bonus pool (the "Bonus
Pool") for the key employees of the Company. The Company
shall contribute five and one-half percent (5 1/2%) of its
Net Profits (as defined below) earned during each fiscal quarter
of each fiscal year to the Bonus Pool. The Employee shall
receive thirty-six and 36/100 percent (36.36%) of the amount
contributed by the Company to the Bonus Pool as his incentive
bonus payment (the "Incentive Bonus Payment") and such Incentive
Bonus Payment shall be calculated and distributed, subject to
applicable withholding taxes, to the Employee as follows:
(1) within thirty (30) days following the end of the first
fiscal quarter of each fiscal year, the Company shall calculate,
based on its Net Profits for such quarter, the amount of the
Company's contribution to the Bonus Pool and shall pay to the
Employee eighty percent (80%) of the Employee's Incentive Bonus
Payment for such quarter;
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2) within thirty (30) days following the end of the
second fiscal quarter of each fiscal year, the Company shall
calculate, based on its Net Profits for such quarter, the amount
of the Company's contribution to the Bonus Pool and shall pay to
the Employee eighty percent (80%) of the Employee's Incentive
Bonus Payment for such quarter; provided, however, that the
Employee's Incentive Bonus Payment for such quarter shall not
exceed the amount, if any, that (x) the Employee's Incentive
Bonus Payment as calculated on the basis of the fiscal
year-to-date Net Profits for such fiscal year exceeds (y) the
sum of all prior Incentive Bonus Payments made to the Employee
during such fiscal year;
(3) within thirty (30) days following the end of the third
fiscal quarter of each fiscal year, the Company shall calculate,
based on its Net Profits for such Bonus Pool and shall pay to
the Employee eighty percent (80%) of the Employee's Incentive
Bonus Payment for such quarter; provided, however, that the
Employee's Incentive Bonus Payment for such quarter shall not
exceed the amount, if any, that (x) the Employee's Incentive
Bonus Payment as calculated on the basis of the fiscal
year-to-date Net Profits for such fiscal year exceeds (y) the
sum of all prior Incentive Bonus Payments made to the Employee
during such fiscal year; and
(4) within thirty (30) days following the receipt by the
Company of the Company's audited financial statements for each
fiscal year, the Company shall calculate, based on its Net
Profits for such fiscal year, the amount of the Company's
contribution to the Bonus Pool for such fiscal year and shall
pay to the Employee one hundred percent (100%) of the amount, if
any, that (x) the Employee's Incentive Bonus Payment as
calculated on the basis of the fiscal year net Profits for such
fiscal year exceeds (y) the sum of all prior Incentive Bonus
Payments made to the Employee during such fiscal year.
Notwithstanding the foregoing, for the fourth
fiscal quarter of the 1995 fiscal year, the Employee shall
receive one hundred percent (100%) of his Incentive Bonus
Payment based on the Company's Bonus Pool contribution for such
fiscal quarter.
"Net Profits" shall be the net earnings of the
Company as disclosed in its reports filed pursuant to Section 13
of
Exhibit 10-17
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the Securities Exchange Act of 1934, as amended, for the fiscal
period in question, determined in accordance with generally
accepted accounting principles.
6. Benefits. In addition to the compensation to be
paid to the Employee pursuant to Paragraph 5 hereof, during the
term of this Agreement, the Employee shall further be entitled
to receive the following:
a. Participation in Employee Plans. The Employee shall be
entitled to participate in any health, disability group term
life insurance, pension, retirement or profit sharing plan, or
any other fringe benefits which may be extended generally from
time to time to employees or executive officers of the Company,
including, but not limited to, annual paid vacation.
b. Disability Salary Continuation. If the Employee becomes
disabled during the term of this Agreement, the Company shall
continue to pay the Employee his Base Salary during the first
ninety (90) day period of such disability, and additionally, but
only to the extent the Employee is not paid by disability
insurance available through the Company, shall continue to pay
the Employee, but at the rate of sixty percent (60%) of his Base
Salary (not to exceed $6,000 per month), for the period of such
disability, not to exceed the remaining term of this Agreement.
"Disability" as used herein shall mean any physical, emotional
or mental, injury, illness or incapacity, other than death,
which renders the Employee unable to perform the duties required
of him under this Agreement. The existence of any disability
shall be determined to exist in the sole discretion of the Board
which shall not be arbitrarily exercised. All payments under
this Paragraph shall cease upon the expiration of other
termination of this Agreement or of the Employee's employment.
7. Reimbursement of Expenses. Subject to such rules
and procedures as from time to time are specified by the
Company, the Company shall reimburse the Employee on a monthly
basis for reasonable business expenses necessarily incurred in
the performance of his duties under this Agreement.
8. Key Man Insurance. At Company's option, Company
and Employee agree to cooperate in obtaining a life insurance
policy on the Employee during the term of this agreement in an
amount at the Company's discretion, to be purchased and owned by
the Company, and payable to the benefit of the Company.
Employee agrees to participate in any examinations or tests
required for the issuance
Exhibit 10-17
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of such policy as is determined to be necessary by the insurer.
9. Confidentiality/Trade Secrets. The Employee
acknowledges that his position with the Company is one of the
highest trust and confidence both by reason of his position and
by reason of his access to and contact with the trade secrets
and confidential and proprietary business information of the
Company. Both during the term of this Agreement and thereafter,
the Employee covenants and agrees as follows:
a. he shall use his best efforts and exercise utmost diligence
to protect and safeguard the trade secrets and confidential and
proprietary information of the Company including but not limited
to the identity of its customers and suppliers, its arrangements
with customers and suppliers, and its technical and financial
data, records, compilations of information, processes, recipes
and specifications relating to its customers, suppliers,
products and services;
b. he shall not disclose any of such trade secrets and
confidential and proprietary information, except as may be
required in the course of his employment with the Company or by
law; and
c. he shall not use, directly or indirectly, for his own
benefit or for the benefit of another, any of such trade secrets
and confidential and proprietary information.
All files, records, documents, drawings,
specifications, memoranda, notes, or other documents relating to
the business of the Company, whether prepared by the Employee or
otherwise coming into his possession, shall be the exclusive
property of the Company and shall be delivered to the Company
and not retained by the Employee upon termination of his
employment for any reason whatsoever, or at any other time upon
request of the Board.
The Employee further acknowledges that, although the
policies set forth in this paragraph nine have not been strictly
enforced by the Company in the past, the provisions of this
paragraph are an integral part of the consideration for this
Employment Agreement, and will be strictly enforced by the
Company in the future.
10. Discoveries. The Employee covenants and agrees
that he will fully inform the Company of and disclose to the
Company all inventions, designs, improvements, discoveries and
processes ("Discoveries") which he has now or may hereafter have
during his employment with the Company and which pertain or
relate to the business of the Company or to any experimental
work, products,
Exhibit 10-17
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services or processes of the Company in progress or planned for
the future, whether conceived by the Employee alone or with
others, and whether or not conceived during regular working
hours or in conjunction with the use of any Company assets. All
such Discoveries shall be the exclusive property of the Company
whether or not patent or trademark applications are filed
thereon. The Employee shall assist the Company, at any time
during or after his employment, in obtaining patents on all such
Discoveries deemed patentable by the Company and shall execute
all documents and do all things necessary to obtain letters
patent, vest the Company with full and exclusive title thereto,
and protect the same against infringement by others. If such
assistance takes place after his employment is terminated the
Employee shall be paid by the Company at a reasonable rate for
any time actually spent in rendering such assistance at the
request of the Company.
11. Non-Competition. The Employee covenants and
agrees that, during the period of his employment, he shall not,
without the prior written consent of the Board, directly or
indirectly, as an employee, employer, consultant, agent,
principal, partner, shareholder, corporate officer, director, or
through any other kind of ownership (other than ownership of
securities of publicly held corporations of which the Employee
owns less than five percent (5%) of any class of outstanding
securities) or in any other representative or individual
capacity, engage in or render any services to any business in
competition with the business then being conducted by the
Company, or any subsidiary thereof, at any place in which the
Company has owned an ethanol production plant, sold alcohol or
transacted any business within the two (2) year period prior to
the incident or event of competition in question. In the event
that the Employee terminates his employment with the Company
pursuant to Paragraph 14(a) or is terminated by the Company
pursuant to Paragraph 14(c) (and except as provided in Paragraph
15, below) the Employee agrees that such covenant against
competition shall continue for a period of two (2) years from
the end of the month in which such termination becomes
effective. If at any time the foregoing provisions shall be
deemed to be invalid or unenforceable by reason of being vague
or unreasonable as to duration or place of performance, this
Paragraph 11 shall be considered divisible and shall become and
be immediately amended to include only such time and such areas
as shall be determined to be reasonable and enforceable by a
court of competent jurisdiction; and the Company and the
Employee expressly agree that this Paragraph 11, as so amended,
shall be valid and binding as though any invalid or
unenforceable provision had not been included herein.
Exhibit 10-17
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12. Solicitation of Employees. The Employee covenants
and agrees that, during the period of his employment and for a
two (2) year period following termination of his employment, he
shall not, without the prior written consent of the Board,
directly or indirectly, solicit, engage or hire for employment
or employ an employee of the Company, or its affiliates, for
himself or any other person or entity.
13. Remedies for Breach of Covenants of the Employee.
The Covenants set forth in Paragraphs 9, 10, 11 and 12 of this
Agreement shall continue to be binding upon the Employee,
notwithstanding the termination of his employment with the
Company for any reason whatsoever. Such covenants shall be
deemed and construed as separate agreements independent of any
other provisions of this Agreement and any other agreement
between the Company and the Employee. The existence of any
claim or cause of action by the Employee against the Company,
whether predicated on this Agreement of otherwise, shal not
constitute a defense to the enforcement by the Company of any or
all of such covenants. It is expressly agreed that the remedy
at law for the breach of any such covenant is inadequate and
injunctive relief shall be available to prevent the breach or
any threatened breach thereof.
14. Termination. This Agreement (other than
Paragraphs 9, 10, 11 and 12 hereof which shall survive any
termination hereof) may be terminated as follows:
a. By the Employee. The Employee may terminate this Agreement
at any time during the term of this Agreement by giving thirty
(30) days prior written notice of termination to the Board. The
Employee shall receive any Base Salary and Incentive Bonus
Payment accrued on the date of termination and shall not be
entitled to any Base Salary or Incentive Bonus Payments beyond
the date of termination under this Subparagraph a of Paragraph
14, and any unvested stock options shall be subject to the terms
and conditions of the Company's 1992 Stock Option Plan.
b. By the Company Without Cause. The Board, without cause,
may terminate this Agreement at any time during the term of this
Agreement upon thirty (30) days prior written notice to the
Employee. In the case of a termination under this Subparagraph
b or Paragraph 14, the Company shall continue to pay to the
Employee an amount equal to his then current Base Salary and the
regularly scheduled Incentive Bonus Payments, which would have
been payable as calculated under Paragraph 5(b), for the
remainder of the term of this Agreement or any extensions
thereof. In addition, (i) the Employee shall be entitled to
continuation of coverage for the
Exhibit 10-17
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remainder of the term of this Agreement under all Company
paid or partially paid health, disability, or group life
insurance plans or any retirement, pension, or profit sharing
plans, in each case at such level as had been available to the
Employee immediately prior to the termination, subject to the
coverage, terms and conditions or such plans, and (ii) any
unvested portion of any stock options held by the Employee as of
the day immediately preceding such termination shall immediately
vest and become exercisable, and (iii) the right to complete the
purchase of any shares of stock which the Employee has elected
to purchase pursuant to any Employee Stock Purchase Plan adopted
by the Company shall immediately vest and become exercisable
upon full payment for the stock in accordance with the terms of
the plan.
c. By the Company with Cause. The Board may, upon written
notice effective immediately, terminate this Agreement at any
time during the term of this Agreement for cause, which
includes but is not limited to the following:
(1) If the Employee should be convicted of a felony;
(2) The inability of the Employee to meet any requirements
set forth by the United States Bureau of Alcohol, Tobacco and
Firearms to maintain the licenses required by the Company to
operate its business; and
(3) If the Employee should willfully breach or habitually
neglect his duties which he is required to perform under this
Agreement or otherwise fail to comply with the terms and
conditions of this Agreement specifically including, but not
limited to, the covenants set forth in Paragraphs 9, 10, 11 and
12 hereof, and fails to cure any such breach or failure within
the (10) days after written notice thereof given by the Company
to the Employee.
The Employee shall receive any Base Salary and
Incentive Bonus Payment accrued on the date of termination and
shall not be entitled to any Base Salary or Incentive Bonus
Pay-ments beyond the date of termination under this Subparagraph
c or paragraph 14, and any unvested stock options shall be
subject to the terms and conditions of the Company's 1992 Stock
Option Plan.
Exhibit 10-17
page 9 of 13
d. Upon Death or Disability. This Agreement shall terminate
and the Company shall, upon such termination, pay to the
Employee or the Employee's beneficiaries, estate or legal
representative a one-time payment in an amount equal to (i) one
hundred percent (100%) of the Employee's then current annual
Base Salary and (ii) fifty percent (50%) of the amount of the
Employee's total Incentive Bonus Payments for the most recently
completed fiscal year, if either of the following conditions
exist:
(1) If the Employee becomes disabled as defined in
Paragraph 6(b) of this Agreement for a period of more than one
hundred eighty (180) consecutive days; or
(2) If the Employee should die.
15. Termination After Change in Control. In the event
of a change in Control, as defined below, any termination of the
Employee's employment with the Company within the remainder of
the term of this Agreement following such Change in Control,
whether by the Employee or by the Company and whether with our
without cause, the following shall occur:
a. The provisions of Paragraphs 11 and 12 shall
not apply and shall be void;
b. The Company shall continue to pay the Employee an amount
equal to his then current Base Salary and the regularly
scheduled Incentive Bonus Payments, which would have been
payable as calculated under Paragraph 5(b), during the remainder
of the term of this Agreement or any extensions thereof, with
the exception that, for purposes of this paragraph fifteen only,
"Net Profits" as defined in paragraph five shall not ever be
computed to be less than 15% of the Company's gross revenues for
the fiscal period in question;
c. The Employee shall be entitled to continuation of coverage
during the remainder of the term of this Agreement under all
Company paid or partially paid health, disability, or group life
insurance plans or any retirement, pension, or profit sharing
plans, in each case at such level as had been available to the
Employee immediately prior to the Change in Control, subject to
the coverage, terms and conditions or such plans; and
d. Any unvested portion of all stock options held by the
Employee, and the right to complete the purchase of any shares
of stock which the Employee has elected to purchase
Exhibit 10-17
page 10 of 13
pursuant to any stock option plan adopted by the Company,
as of the day immediately preceding the effective date of such
termination, shall immediately vest and become exercisable and,
for purposes of such options, such termination shall be deemed
to be a termination by the Company without cause.
16. Definitions Related to Change of Control.
a. "Change of Control" means any one of the following: (i)
Continuing Directors (as defined below) no longer constitute at
least 60% of the Board of Directors; (ii) any person or group of
persons (as defined in Rule 13d-5 under the Securities Exchange
Act of 1934), together with its affiliates, become the
beneficial owner, directly or indirectly, of 35% or more of the
Company's then outstanding Common Stock or 35% or more of the
voting power of the Company's then outstanding securities
entitled generally to vote for the election of the Company's
Directors; (iii) the approval by the Company's stockholders of
the merger or consolidation of the Company with any other
corporation, the sale or substantially all of the assets of the
Company or the liquidation or dissolution of the Company,
unless, in the case of a merger or consolidation, the then
Continuing Directors in office immediately prior to such merger
or consolidation will constitute at least 60% of the Board of
Directors of the surviving corporation of such merger or
consolidation and any parent (as such term is defined in Rule
12b-2 under the Securities Exchange Act of 1934) of such
corporation; or (iv) at least 60% of the then Continuing
Directors in office immediately prior to any other action
proposed to be taken by the Company's stockholders or by the
Company's Board of Directors determine that such proposed
action, if taken, would constitute a change of control of the
Company and such action is taken.
b. "Continuing Director" means any individual who either (i)
was a member of the Company's Board of Directors on the date
hereof, or (ii) was designated (before initial election as a
Director) as a Continuing Director by a majority of the then
Continuing Directors.
17. Arbitration of Disputes. Except for Paragraphs
9-12, any dispute or claim arising out of or relating to this
Agreement or any termination of the Employee's employment shall
be settled by arbitration in Wichita, Kansas in accordance with
the then current rules of the American Arbitration Association
pertain-ing to employment disputes, and judgment upon any award
rendered therein may be entered in any court having proper
jurisdiction.
Exhibit 10-17
page 11 of 13
18. Notices. Any notices to be given hereunder by
either party to the other may be effected either by personal
delivery in writing or by mail, registered or certified, postage
prepaid, with return receipt requested. Mailed notices shall be
addressed as follows:
a. If to the Company:
High Plains Corporation
000 X. Xxxxxxx, Xxxxx #000
Xxxxxxx, Xxxxxx 00000
b. If to the Employee:
Xxxxxxx X. Xxxxxx
0000 X. Xxxx Xxxx Xx.
Xxxxxx, Xxxxxxx 00000
Either party may change its address for notice by giving notice
in accordance with the terms of this Paragraph 18.
19. Termination of Prior Employment Agreement. The
Company and the Employee hereby agree that the terms and
conditions contained in this Agreement are intended to replace
the terms and conditions of the Prior Employment Agreement, and
that the Prior Employment Agreement and all terms and conditions
therein shall terminate upon the execution of this Agreement.
20. Indemnity. Subject to the provisions and
limitations of the Articles of Incorporation, as amended, of the
applicable law, the Company shall (i) indemnify the Employee and
hold him harmless for all acts or decisions made by him in good
faith while performing services for the Company; (ii) use its
best efforts to obtain coverage for him under any insurance
policy now in force or hereinafter obtained during the term of
this Agreement covering the officers, directors or other key
management of the Company against lawsuits; and (iii) pay all
expenses, including attorneys' fees, actually and necessarily
incurred by the Employee in connection with the defense of such
act, suit or proceeding and in connection with any related
appeal including the cost of court settlements.
21. General Provisions.
a. Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of Kansas.
Exhibit 10-17
page 12 of 13
b. Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid, or unenforceable, such provision
shall be fully severable and this Agreement shall be construed
and enforced as if such illegal, invalid, or unenforceable
provision had never comprised a part hereof and the remaining
provisions hereof shall remain in full force and effect and
shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid, or unenforceable provision there shall be
added automatically as a part of this Agreement a provision as
similar in terms to such illegal, invalid, or unenforceable
provision as may be possible and still be legal, valid or
enforceable.
c. Attorney Fees. If any action at law or in equity,
including an action for declaratory relief or under the
arbitration provisions of Paragraph 17, is brought to enforce or
interpret the provisions of this Agreement, the prevailing party
shall be entitled to recover reasonable attorneys' fees from the
other party. These fees shall be in addition to any other
relief that may be awarded.
d. Entire Agreement. This Agreement sets forth the entire
understanding of the parties and supersedes all prior agreements
or understandings, whether written or oral, with respect to the
subject matter hereof. No terms, Conditions, warranties, other
than those contained herein, and no amendments or modifications
hereto shall be binding unless made in writing and signed by the
parties hereto.
e. Binding Effect. This Agreement shall extend to and be
binding upon and insure to the benefit of the parties hereto,
their respective heirs, representatives, successors and assigns.
This Agreement may not be assigned by the Employee.
f. Waiver. The waiver by either party hereto of a breach of
any term or provision of this Agreement shall not operate or be
construed as a waiver of a subsequent breach of the same
provision by any party or of the breach of any other term or
provision of this Agreement.
g. Titles. Titles of the paragraphs herein are used solely
for convenience and shall not be used for interpretation or
construing any work, clause, paragraph, or provision of this
Agreement.
Exhibit 10-17
page 13 of 13
h. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original,
but which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Employee have
executed this Agreement as of the date and year first above
written above.
EMPLOYEE: HIGH PLAINS CORPORATION
Xxxxxxx X. Xxxxxx By: Xxxxxxx X. Friend
Title: Executive V.P.
