Exhibit 10.9
January __, 1998
Xx. Xxxxx Maison
0000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
Dear Xxxxx:
Reference is hereby made to the letter agreement dated July 30, 1996
between Environmental Purification Industries, Inc., a Delaware corporation (now
known as EPI Technologies, Inc.) ("EPI, Inc."), and you (the "Employment
Agreement"). For purposes of this Agreement, you are referred to as "Maison."
Meridian National Corporation ("Meridian") hereby agrees as follows:
1. CERTAIN DEFINITIONS. For purposes of this Agreement, the following
terms shall have the following meanings:
(a) "Affiliate" shall have the meaning set forth in Rule 405 of
the Securities Act of 1933, as amended (the "Securities Act").
(b) "Fair Market Value" shall mean (i) if a security is publicly
traded, the average of the last reported sales prices of such security
(trading regular way) for a ten trading day period ending three days
prior to the closing of a transaction or the date of termination of
Maison's employment with EPI, Inc., as the case may be, or if no reported
sale takes place on a trading day included in such period, the average of
the reported closing bid and asked prices in the regular way for such
trading day, in either case as reported on the New York Stock Exchange
or, if such security is not listed or admitted for trading on the New
York Stock Exchange, on the Nasdaq National Market of the National
Association of Securities Dealers, Inc. Automated Quotations System
("Nasdaq"), or if such security is not quoted on the Nasdaq National
Market, the average of the closing bid and asked prices for a ten trading
day period ending three days prior to the closing of a transaction or the
date of termination of Maison's employment with EPI, Inc., as the case
may be, on the Nasdaq SmallCap Market or the Nasdaq over-the-counter
market as reported by Nasdaq or, if bid and asked prices for such
security on a trading day included in such period shall not have been
reported through Nasdaq, the average of the bid and asked prices on such
day, as furnished by any New York Stock Exchange member firm making a
market in such security selected from time to time by the Board of
Directors of Meridian for that purpose, or (ii) if a security is not
publicly traded, the fair market value of such security as determined by
the Board of Directors of Meridian, in good faith and on a reasonable
basis.
(c) "Gross Proceeds" shall mean the cash or securities which
Meridian receives as consideration for the sale of its shares of Common
Stock (as hereinafter defined), or the sale, conversion, liquidation or
redemption by EPI, Inc. of Meridian's shares of Meridian
Xx. Xxxxx Maison
January __, 1998
Page 2
Preferred Stock (as hereinafter defined) received by Meridian in
connection with the IPO (as hereinafter defined), as the case may be. In
the event that the proceeds from the sale of Common Stock or sale,
conversion, liquidation or redemption of the Meridian Preferred Stock are
securities, the Gross Proceeds received by Meridian shall be determined
based on the Fair Market Value of such securities.
(e) "Net Fair Market Value" shall mean the difference of the
Fair Market Value of the Meridian Preferred Stock or Common Stock, as the
case may be, on the date which Maison's employment with EPI, Inc. is
terminated less Meridian's costs of sale including, without limitation,
commissions, attorneys' fees and other out-of-pocket expenses associated
with the transaction.
(d) "Net Proceeds" shall mean the Gross Proceeds received by
Meridian on the sale of its shares of Common Stock or the sale,
conversion, liquidation or redemption by EPI, Inc. of Meridian's shares
of Meridian Preferred Stock, as the case may be, less Meridian's costs of
sale including, without limitation, commissions, attorneys' fees and
other out-of-pocket expenses associated with the transaction.
2. GUARANTY. Meridian hereby guaranties performance of the
obligations of EPI, Inc. under the Employment Agreement. This guaranty is a
continuing and irrevocable guaranty, binding upon Meridian and its successors
and assigns, and the rights and obligations of Maison under this Agreement will
inure to the benefit of, and will be binding upon, Maison and his heirs,
personal representatives and estate. In the event that EPI, Inc. breaches any
of its obligations under the Employment Agreement, Meridian will, upon written
demand by Maison, promptly perform the obligation of EPI, Inc.
3. VOTING OF SHARES. During the term of the Employment Agreement, if
Maison is nominated for election as a director of EPI, Inc., Meridian agrees to
vote all of its shares of voting capital stock of EPI, Inc. in favor of election
of Maison as a director of EPI, Inc.
4. BONUS; SALE OF MERIDIAN PREFERRED STOCK.
(a) Upon receipt by Meridian of a payment for advances made by
Meridian to EPI, Inc. from the proceeds of an initial public offering
underwritten by Duke & Co., Inc. (the "IPO") of EPI, Inc.'s common stock,
par value $.01 per share ("Common Stock"), pursuant to an effective
registration statement under the Securities Act, Meridian will promptly
pay to Maison a bonus equal to five percent (5%) of such payment.
(b) Provided that Maison is employed by EPI, Inc. at the time,
in the event that Meridian shall (i) exchange certain advances to EPI,
Inc. for shares of preferred stock of EPI, Inc. ("Meridian Preferred
Stock"), and (ii) contribute certain advances to EPI, Inc. to the capital
of EPI, Inc., each in connection with the IPO, Meridian shall, upon the
sale,
Xx. Xxxxx Maison
January __, 1998
Page 3
conversion, liquidation or redemption by EPI, Inc. of any such shares of
Meridian Preferred Stock received in connection with the IPO, promptly
pay to Maison five percent (5%) of the Net Proceeds received by Meridian
from such sale, conversion, liquidation or redemption.
5. SALE OF CAPITAL STOCK OF EPI, INC. BY MERIDIAN. Provided that
Maison is employed by EPI, Inc. at the time, Meridian agrees to pay to Maison a
percentage of the aggregate amount of Net Proceeds realized by Meridian, in one
or more transactions, upon the sale of up to 850,000 shares of Common Stock
owned by Meridian as of the closing of the IPO, as adjusted for stock splits,
dividends and combinations, as follows:
(a) 1.0% of the aggregate amount of Net Proceeds, if the average
price per share of Common Stock (calculated by dividing the aggregate
amount of Gross Proceeds by the number of shares sold) is equal to or
exceeds $1.00 per share of Common Stock but less than or equal to $1.99
per share of Common Stock;
(b) 2.0% of the aggregate amount of Net Proceeds, if the average
price per share of Common Stock (calculated by dividing the aggregate
amount of Gross Proceeds by the number of shares sold) is equal to or
exceeds $2.00 per share of Common Stock but less than or equal to $2.99
per share of Common Stock;
(c) 3.0% of the aggregate amount of Net Proceeds, if the average
price per share of Common Stock (calculated by dividing the aggregate
amount of Gross Proceeds by the number of shares sold) is equal to or
exceeds $3.00 per share of Common Stock but less than or equal to $3.99
per share of Common Stock;
(d) 4.0% of the aggregate amount of Net Proceeds, if the average
price per share of Common Stock (calculated by dividing the aggregate
amount of Gross Proceeds by the number of shares sold) is equal to or
exceeds $4.00 per share of Common Stock but less than or equal to $4.99
per share of Common Stock;
(e) 4.5% of the aggregate amount of Net Proceeds, if the average
price per share of Common Stock (calculated by dividing the aggregate
amount of Gross Proceeds by the number of shares sold) is equal to or
exceeds $5.00 per share of Common Stock but less than or equal to $5.49
per share of Common Stock; and
(f) 5.0% of the aggregate amount of Net Proceeds, if the average
price per share of Common Stock (calculated by dividing the aggregate
amount of Gross Proceeds by the number of shares sold) is equal to or
exceeds $5.50 per share of Common Stock.
Such payments will be made within thirty (30) days following the date Meridian
receives such Net Proceeds and will be subject to federal, state or local income
tax withholding laws applicable to Meridian or EPI, Inc. Notwithstanding
anything to the contrary in this Agreement, in no event shall
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January __, 1998
Page 4
Meridian be required to pay Maison any Net Proceeds from the sale of up to an
aggregate of 150,000 shares of Common Stock owned by Meridian to any of MNP
Corporation, a Michigan corporation, Xxxxxx Xxxxx or Xxxxxxx Xxxxxx pursuant to
a warrant agreement or otherwise.
6. TERMINATION OF MAISON EMPLOYMENT PRIOR TO SALE OF MERIDIAN
PREFERRED STOCK OR COMMON STOCK. In the event that (i) Maison's employment with
EPI, Inc. is terminated by EPI, Inc. on or prior to February 28, 2002 for any
reason other than "cause" (as such term is defined in the Employment Agreement),
is terminated due to the death or "permanent disability" (as such term is
defined in the Employment Agreement) of Maison on or prior to February 28, 2002,
or is terminated by Maison at any time prior to July 27, 2007 due to a decrease
in his base compensation pursuant to the last sentence of Paragraph 3(b) of the
Employment Agreement, (ii) the Employment Agreement is not renewed by EPI, Inc.
upon its expiration on February 28, 2002, (iii) Maison's employment with EPI,
Inc. is terminated by Maison during the period commencing March 1, 2002 through
and including July 26, 2007 for any reason other than due to a decrease in his
base compensation pursuant to the last sentence of Paragraph 3(b) of the
Employment Agreement, (iv) Maison's employment with EPI, Inc. is terminated by
EPI, Inc. for any reason other than "cause" during the period commencing March
1, 2002 through and including July 26, 2007, or is terminated during such period
due to the death or "permanent disability" of Maison, or (v) Maison's employment
with EPI, Inc. is terminated by either Maison or EPI, Inc. for any reason other
than "cause" on or subsequent to July 27, 2007 or is terminated after such date
due to the death or "permanent disability" of Maison, then, in any such case,
Meridian shall be required to pay Maison a percentage of the proceeds received
by Meridian on the sale of the Meridian Preferred Stock and Common Stock based
on the percentages set forth in Paragraphs 4 and 5, respectively; PROVIDED,
HOWEVER, that:
(a) Meridian shall only be required to make such payment or
payments to Maison upon the sale of up to 850,000 shares of Common Stock
or the sale, conversion, liquidation or redemption of the Meridian
Preferred Stock received by Meridian in connection with the IPO;
(b) the amount of such payment or payments to Maison shall be
computed based on the product of the applicable percentages set forth in
Paragraphs 4 and 5 multiplied by the lesser of (x) the Net Proceeds from
the sale, conversion, liquidation or redemption, and (y) the Net Fair
Market Value of the Meridian Preferred Stock and the Common Stock, as the
case may be; and
(c) the sale of the shares of Common Stock or the sale,
conversion, liquidation or redemption of the Meridian Preferred Stock
occurs on or prior to, (1) in the case of Paragraphs 6(a)(i) and
6(a)(ii), the fifth anniversary of the date of Maison's termination, (2)
in the case of Paragraph 6(a)(iii), the date which is two years and 180
days from the date of termination of employment by Maison, (3) in the
case of Paragraph 6(a)(iv), (i) the sixth anniversary of the date of
Maison's termination if such termination occurs after February 28, 2002
but on or before July 31, 2003, (ii) the seventh anniversary of the date
of Maison's
Xx. Xxxxx Maison
January __, 1998
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termination if such termination occurs after July 31, 2003 but on or
before July 31, 2004, (iii) the eighth anniversary of the date of
Maison's termination if such termination occurs after July 31, 2004 but
on or before July 31, 2005, (iv) the ninth anniversary of the date of
Maison's termination if such termination occurs after July 31, 2005 but
on or before July 31, 2006, and (v) the tenth anniversary of the date of
Maison's termination if such termination occurs after July 31, 2006, and
(4) in the case of Paragraph 6(a)(v), the tenth anniversary of the date
of Maison's termination if such termination.
7. SALE OF BOTH MERIDIAN PREFERRED STOCK AND COMMON STOCK. Subject to
the limitations on payments set forth in Paragraph 6, in the event that Meridian
sells both its shares of Meridian Preferred Stock received in connection with
the IPO and up to 850,000 shares of Common Stock (net of any prior sales of
Common Stock for which Maison received compensation) to a single purchaser or
one or more purchasers which are Affiliates either in a single transaction or
series of related transactions (a "Single Sale Transaction"), for the purpose of
determining the amount owed to Maison pursuant to this Agreement it shall be
assumed that fifty percent (50%) of the consideration from such Single Sale
Transaction was paid to Meridian for the Meridian Preferred Stock and fifty
percent (50%) of the consideration from such Single Sale Transaction was paid to
Meridian for its shares of Common Stock. In the event that at the time of a
Single Sale Transaction Meridian owns in excess of 850,000 shares of Common
Stock (net of any prior sales of Common Stock for which Maison received
compensation) or any shares of preferred stock issued by EPI, Inc. in addition
to the shares of Meridian Preferred Stock received in connection with the IPO
and such additional shares of Common Stock and/or EPI, Inc. preferred stock are
also sold in the Single Sale Transaction, the Fair Market Value of such
additional shares of Common Stock and/or EPI, Inc. preferred stock shall be
deducted from the consideration paid to Meridian for the Single Sale Transaction
prior to computing any amounts due to Maison from such Single Sale Transaction.
8. PARAGRAPH HEADINGS; ENTIRE AGREEMENT. The Paragraph headings set
forth herein are for reference purposes only and shall not in any way affect the
meaning or interpretation of the terms of this Agreement. This Agreement
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, both oral
and written, between the parties with respect to the subject matter hereof
including, without limitation, that certain agreement between Meridian and
Maison dated July 30, 1996. No inducement, promise, understanding or condition
not set forth herein has been made or relied upon by either party hereto.
Neither this Agreement nor any provisions hereof is intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
9. BINDING AGREEMENT. The rights and obligations of Meridian under
this Agreement will inure to the benefit of, and will be binding upon, Meridian
and its successors and assigns, and the rights and obligations of Maison under
this Agreement will inure to the benefit of, and will be binding upon, Maison
and his heirs, personal representatives and estate.
Xx. Xxxxx Maison
January __, 1998
Page 6
10. ARBITRATION. Any controversy or claim arising out of or relating
to this Agreement, or the breach of this Agreement, will be settled by
arbitration in accordance with the Rules of the American Arbitration Association
then pertaining in the City of Toledo, Ohio, and judgment upon the award
rendered by the Arbitrator or Arbitrators may be entered in any Court having
jurisdiction thereof. The Arbitrator or Arbitrators will possess the power to
issue mandatory orders and restraining orders in connection with such
arbitration.
11. NOTICES. Any notice to be given under this Agreement must be
personally delivered in writing or will be deemed duly given after it is posted
in the United States mail, postage prepaid, registered or certified, return
receipt requested, and if mailed to Meridian, must be addressed to Meridian at
its principal place of business, attention: Chairman, and if mailed to Maison,
must be addressed to him at his home address last shown on the records of
Meridian, or at such other address or addresses as either Meridian or Maison may
in the future designate in writing to the other.
12. WAIVER. The failure of either party to enforce any provision or
provisions of this Agreement will not in any way be construed as a waiver of any
such provision or provisions as to any future violations thereof, nor prevent
that party thereafter from enforcing each and every other provision of this
Agreement. The rights granted the parties herein are cumulative and the waiver
of any single remedy will not constitute a waiver of such party's right to
assert all other legal remedies available to it under the circumstances.
13. EFFECTIVE DATE. This Agreement will become effective on the date of
the closing of the IPO, provided that Maison is employed by EPI, Inc. on such
date.
14. MISCELLANEOUS. No modification, termination or attempted waiver of
this Agreement will be valid unless in writing and signed by the party against
whom the same is sought to be enforced. This Agreement will be governed by and
construed according to the laws of the State of Ohio, without regard to conflict
of laws principles.
Xx. Xxxxx Maison
January __, 1998
Page 7
If the foregoing understanding respecting the Agreement between you and
Meridian is acceptable to you, please indicate your approval by signing a copy
of this letter in the space provided below and return it to me.
Sincerely,
MERIDIAN NATIONAL CORPORATION
By:
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Xxxxxxx X. Xxxxxxx, Chairman
The terms and provisions of this Agreement are hereby approved and
accepted this ___ day of January, 1998.
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Xxxxx Maison
