AB PLASTICS CORPORATION
00000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
January 31, 1997
Mr. X. Xxxxxxx Xxxxx
0000 Xxxx Xxxx Xxxxx
Xxxxxx, XX 00000
Dear Xxxxxxx:
This will confirm our agreement with respect to your
employment as Senior Vice President-Sales and Marketing of AB Plastics
Corporation (the "Company"), subject to the terms and conditions set forth
herein.
1. Nature of Employment.
(a) The Company agrees to employ you, and you have agreed to
render services to the Company, in the capacity and with the title of Senior
Vice President-Sales and Marketing of the Company, with responsibilities
relating primarily to the creation, development and maintenance of customer
accounts and customer relations, servicing Sony and other existing customers,
and supervising all sales personnel and functions of the Company, together with
such other or related duties as may be assigned to you from time to time by the
Board of Directors of the Company (the "Board"). Notwithstanding the assignment
of certain duties by the Board, it is expected that, on a day-to-day basis, you
will report and be accountable directly to the Chief Executive Officer of the
Company.
(b) Throughout the period of your employment hereunder, you
shall: (i) devote your full business time, attention, knowledge and skills,
faithfully, diligently and to the best of your ability, to the active
performance of your duties and responsibilities hereunder on behalf of the
Company; (ii) observe and carry out such reasonable rules, regulations,
policies, directions and restrictions as may be established from time to time by
the Board, including but not limited to the standard policies and procedures of
the Company as in effect from time to time; and (iii) do such traveling as may
reasonably be required in connection with the performance of such duties and
responsibilities; provided, however, that except for your initial relocation to
the greater Los Angeles area (to be completed within six (6) months after the
date of this agreement), you shall not be assigned to regular duties that would
reasonably require you to relocate your permanent residence from the greater Los
Angeles area.
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2. Term of Employment.
(a) Your employment hereunder will begin on or prior to
February 28, 1997, with the precise starting date to be at your discretion in
line with any required departure notice that you may be required to give to your
existing employer. Subject to prior termination in accordance with paragraph
2(b) below, your employment will continue through and including February 28,
1998, and will renew for successive additional one (1) year periods thereafter,
subject in each case to achievement of those sales and performance criteria set
forth in Schedule A attached hereto.
(b) This agreement:
(i) may be terminated upon mutual written agreement of the
Company and you;
(ii) may be terminated, at your option, upon ninety (90)
days' prior written notice to the Company, with or without cause, effective as
of a date on or after February 28, 1998;
(iii) may be terminated, at your option, upon fourteen
(14) days' prior written notice to the Company, in the event that the Company
shall (A) fail to make any payment required to be made to you under the terms of
this agreement within thirty (30) days after payment is due, or (B) fail to
perform any other material covenant or agreement to be performed by it hereunder
or take any action prohibited by this agreement, and fail to cure or remedy same
within thirty (30) days after written notice thereof to the Company;
(iv) may be terminated, at the option of the Company, upon
sixty (60) days' prior written notice to you, effective as of a date on or after
February 28, 1998 (and each anniversary thereof in the event of any renewal(s)
of this agreement in accordance with paragraph 2(a) above), in the event that
you or the Company fail to satisfy any of the sales or performance criteria set
forth in Schedule A attached hereto;
(v) may be terminated, at the option of the Company, upon
written notice to you, "for cause" (as hereinafter defined);
(vi) may be terminated, at the option of the Company, upon
written notice to you, in the event of your "permanent disability" (as
hereinafter defined); or
(vii) may be terminated, at the option of the Company,
upon written notice to you at any time after six (6) months after the date of
this agreement and prior to the completion of your relocation to the greater Los
Angeles area, in the event that you have not completed such relocation within
six (6) months after the date of this agreement; or
(viii) shall automatically terminate upon your death.
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(c) As used herein, the term "for cause" shall mean and be
limited to: (i) any willful and material breach of this agreement (including,
without limitation, the covenants contained in paragraph 5 below) by you which
in any case is not corrected within thirty (30) days after written notice of
same from the Company to you; (ii) gross neglect by you of your duties and
responsibilities hereunder which in any case is not corrected within thirty (30)
days after written notice of same from the Company to you; (iii) any fraud,
criminal misconduct, breach of fiduciary duty, dishonesty, or gross and willful
misconduct by you in connection with the performance of your duties and
responsibilities hereunder; (iv) your being habitually drunk or otherwise
intoxicated during normal working hours, or your being drunk or addicted to
drugs (provided that this shall not restrict you from the use of
physician-prescribed medication in accordance with the applicable prescription);
(v) the commission by you of any felony or crime of moral turpitude, or any
other action by you which may materially impair or damage the reputation of the
Company; or (vi) habitual breach by you of any of the material provisions of
this agreement (regardless of any prior cure thereof).
(d) As used herein, the term "permanent disability" shall
mean, and be limited to, any physical or mental illness, disability or
impairment that has prevented and/or may reasonably be expected to prevent you
from continuing the performance of your normal duties and responsibilities
hereunder for an aggregate period in excess of three (3) consecutive months. For
purposes of determining whether a "permanent disability" has occurred under this
agreement, the written determination thereof by two (2) qualified practicing
physicians selected and paid for by the Company (and reasonably acceptable to
you) shall be conclusive.
(e) Upon any termination of this agreement as hereinabove
provided, you (or your estate or legal representatives, as the case may be)
shall be entitled to receive any and all unpaid Base Salary and Bonus (as such
terms are hereinafter defined) and other compensation hereunder appropriately
prorated to and as of the effective date of termination (based on the number of
days in the subject fiscal year elapsed prior to the date of termination), and
any other amounts then due and payable to you hereunder. All such payments shall
be made on the next applicable payment date(s) therefor (as provided in
paragraph 3 below) following the effective date of termination. Such payments
shall constitute all amounts to which you shall be entitled upon termination of
this agreement. Furthermore, in the event that termination is pursuant to
paragraph 2(b)(vii) above and the Company has previously paid to you all or any
portion of the non-accountable expense fund pursuant to paragraph 3(g) below,
then you will, within ten (10) days after your receipt of such notice of
termination, refund to the Company the amount previously paid to you in respect
of such expense fund.
3. Compensation and Benefits.
(a) Base Salary. As compensation for your services to be
rendered hereunder, the Company shall pay to you a base salary at the rate of
One Hundred Thousand ($100,000) Dollars per annum (the "Base Salary"), which
shall be payable in periodic installments in accordance with the standard
payroll practices of the Company in effect from time to time, and
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shall be subject to customary payroll deductions and withholdings as required by
law and/or by the Company's benefit plans in which you are a participant.
(b) Bonus. In addition to the Base Salary, in respect of the
period of your employment hereunder, the Company will pay to you, on an annual
basis within ninety (90) days after the close of each fiscal year of the
Company, a bonus (collectively, the "Bonus") of (i) up to $40,000 in respect of
each fiscal year of the Company during which you are at any time employed
hereunder, subject to the Company achieving those target performance levels for
the subject fiscal year as set forth in Schedule B attached hereto, and (ii) an
additional $40,000 in respect of each such fiscal year, subject to the Company
achieving those objectives for diversification of its customer base during such
fiscal year as set forth in Schedule C attached hereto; provided, however, that,
regardless of actual results, the bonus under clause (i) of this paragraph 3(b)
in respect of the Company's fiscal year ending October 31, 1997 shall be not
less than $20,000, which shall be payable on or prior to February 28, 1998.
(c) Stock Options. Simultaneous with the execution and
delivery of this agreement, the Company's corporate parent, AB Plastics Holding
Corporation (the "Parent"), is issuing to you a stock option whereby you may,
subject to the terms and conditions of the stock option agreement, purchase
shares of common stock of the Parent equal to 3% of the fully diluted common
stock of the Parent as of the date hereof.
(d) Auto Allowance and Reimbursement. In addition to the other
compensation and benefits hereunder, the Company will also pay to you,
throughout the period of your employment hereunder, a non-accountable automobile
allowance of $600 per month, payable on or about the first business day of each
calendar month, and will further reimburse you, upon presentment of appropriate
receipts and vouchers therefor, for your actual out-of-pocket costs of insuring
the vehicle which you primarily utilize for business purposes hereunder. The
automobile allowance hereunder is intended to reimburse you for the costs and
expenses of the business use of an automobile, provided that you will not be
required to account to the Company for the actual expenditure of such automobile
allowance, and you will be solely responsible for any and all taxes which may be
payable in respect of the receipt of such automobile allowance.
(e) Other Fringe Benefits. The Company shall also make
available to you, throughout the period of your employment hereunder, such other
benefits and perquisites as are generally provided by the Company to its
executive employees, including but not limited to eligibility for participation
in any group life, health, dental, vision, disability or accident insurance,
pension plan, profit-sharing plan, retirement savings plan, 401(k) plan, or
other such benefit plan or policy which may presently be in effect or which may
hereafter be adopted by the Company for the benefit of its executive employees
generally; provided, however, that nothing herein contained shall be deemed to
require the Company to adopt or maintain any particular plan or policy.
Participation in such benefit plans may be subject to standard waiting periods
following the commencement of full-time employment; provided, however, that
pending your qualification for participation in the Company's group medical
insurance, the Company will
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reimburse you, upon presentment of appropriate receipts and vouchers therefor,
for the premium costs payable by you for "COBRA" continuation coverage for you
and your existing dependents under your current employer's medical plan.
(f) Business Expenses. Throughout the period of your
employment hereunder, the Company shall also reimburse you, upon presentment of
appropriate receipts and vouchers therefor, for any reasonable out-of-pocket
business expenses incurred by you in connection with the performance of your
duties and responsibilities hereunder; provided, however, that no reimbursement
shall be required to be made for any expense item which has not previously been
approved if and to the extent required in accordance with the Company's standard
policies and procedures in effect from time to time.
(g) Relocation. Commencing immediately upon the execution and
delivery of this agreement, you will make all reasonable efforts to relocate
your permanent residence to the greater Los Angeles area, with the objective of
completing such relocation within six (6) months after the date of this
agreement. During such six-month period (or such shorter amount of time until
you complete your relocation), the Company will reimburse you, upon presentment
of appropriate receipts and vouchers therefor, for all reasonable commuting
expenses for one round-trip each week to and from your existing residence to the
greater Los Angeles area, so as to permit you to perform your services hereunder
at the Company's facilities first set forth above. In addition, the Company will
also pay or reimburse you, upon presentment of appropriate receipts and vouchers
therefor, for your reasonable moving expenses in moving your family, household
furnishings and other personal belongings to your new permanent residence in the
greater Los Angeles area, and will further pay to you, on prior to
_________________, 1997, the additional sum of $10,000 as a non-accountable
expense fund to cover expenses related to the relocation (such as brokerage fees
and other expenses related to the sale of your current residence, and up-front
payments relating to a mortgage on your new residence), provided that you will
not be required to account to the Company with respect to the expenditure of
such expense fund, and you will be solely responsible for any and all taxes
which may be payable in respect of the receipt of such expense fund.
4. Vacation, etc.
You shall be entitled to take, from time to time, up to four
(4) weeks of paid vacation per year, to be taken at such times as shall be
mutually convenient to you and the Company, and so as not to interfere unduly
with the conduct of the business of the Company. You shall also be entitled to
paid holidays, personal days and sick days in accordance with the Company's
standard policies and procedures in effect from time to time.
5. Restrictive Covenants.
(a) You hereby acknowledge and agree that (i) the business
contacts, customers, suppliers, technology, know-how, trade secrets, marketing
techniques, promotional methods and other aspects of the business of the Company
have been and are of value to the
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Company, and have provided and will hereafter provide the Company with
substantial competitive advantage in the operation of its business, and (ii) by
reason of your employment with the Company, you will have detailed knowledge and
will possess confidential information concerning the business and operations of
the Company. You further acknowledge that your business background and skills
are not uniquely suited to businesses of the type conducted by the Company, and
that, if required, you would be able to earn a comparable living in one or more
other lines of business.
(b) You shall not, directly or indirectly, for yourself or
through or on behalf of any other person or entity:
(i) at any time, divulge, transmit or otherwise
disclose or cause to be divulged, transmitted or otherwise disclosed, any of the
Company's proprietary and confidential business contacts, client or customer
lists, technology, know-how, trade secrets, marketing techniques, contracts or
other confidential or proprietary information of the Company of whatever nature,
whether now existing or hereafter created or developed (provided, however, that
for purposes hereof, information shall not be considered to be confidential or
proprietary if (A) it is a matter of common knowledge or in the public domain,
(B) it is generally known in the industry, or (C) you can demonstrate that such
information was already known to the recipient thereof, or was independently
developed or acquired, other than by reason of any breach of any obligation
under this agreement or any other confidentiality or non-disclosure agreement);
and/or
(ii) at any time during the period from the date
hereof through and including the date of the termination of your employment with
the Company, and for an additional period of one (1) year thereafter, (A)
solicit any customers of the Company (or any customers being developed by the
Company) for the purpose or with the result of providing or rendering goods
and/or services relating to the design, manufacture or sale of injection-molded
plastic products of any kind, and/or (B) induce or attempt to induce any
employee of the Company to leave the employ of the Company, or in any way
interfere with the Company's relationship with any of its employees.
(c) We each hereby acknowledge and agree that, in the event of
any breach by you, directly or indirectly, of the foregoing restrictive
covenants, it will be difficult to ascertain the precise amount of damages that
may be suffered by the Company by reason of such breach; and accordingly, we
hereby agree that, as liquidated damages (and not as a penalty) in respect of
any such breach, the breaching party or parties shall be required to pay to the
Company, on demand from time to time, cash amounts equal to any and all gross
revenues derived by the breaching party or parties, directly or indirectly, from
any and all violative acts or activities. We hereby agree that the foregoing
constitutes a fair and reasonable estimate of the actual damages that might be
suffered by reason of any breach of this paragraph 5 by you, and we hereby agree
to such liquidated damages in lieu of any and all other measures of damages that
might be asserted in respect of any subject breach.
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(d) We each hereby further acknowledge and agree that any
breach by you, directly or indirectly, of the foregoing restrictive covenants
will cause the Company irreparable injury for which there is no adequate remedy
at law. Accordingly, you expressly agree that, in the event of any such breach
or any threatened breach hereunder by you, directly or indirectly, the Company
shall be entitled, in addition to any and all other remedies available
(including but not limited to the liquidated damages provided for in paragraph
5(c) above), to seek and obtain injunctive and/or other equitable relief to
require specific performance of or prevent, restrain and/or enjoin a breach
under the provisions of this paragraph 5.
(e) In the event of any dispute under or arising out of this
paragraph 5, the prevailing party in such dispute shall be entitled to recover
from the non-prevailing party or parties, in addition to any damages and/or
other relief that may be awarded, its reasonable costs and expenses (including
reasonable attorneys' fees) incurred in connection with prosecuting or defending
the subject dispute.
6. Non-Assignability.
In light of the unique personal services to be performed by
you hereunder, it is acknowledged and agreed that any purported or attempted
assignment or transfer by you of this agreement or any of your duties,
responsibilities or obligations hereunder shall be void.
7. Notices.
Any notices, requests, demands or other communications
required or permitted under this agreement shall be in writing and shall be
deemed to have been given when delivered personally or three (3) days after
being mailed by certified mail, return receipt requested, addressed to the party
being notified at the address of such party first set forth above, or at such
other address as such party may hereafter have designated by notice; provided,
however, that any notice of change of address shall not be effective until its
receipt by the party to be charged therewith. Copies of any notices or other
communications to the Company shall simultaneously be sent by first class mail
to AB Plastics Holding Corporation, c/o Xxxxxxx X. Xxxxx, 00 Xxxxxx Xxxxxx Xxxx,
Xxx Xxxxxx, Xxxxxxxxxxx 00000, and Private Equity Partners, L.L.C., 000
Xxxxxxxxx Xxxxxx - 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Xxxx: Xxxxxxxx J. F.
Gorman.
8. General.
(a) Neither this agreement nor any of the terms or conditions
hereof may be waived, amended or modified except by means of a written
instrument duly executed by the party to be charged therewith. Any waiver or
amendment shall only be applicable in the specific instance, and shall not
constitute or be construed as a waiver or amendment in any other or subsequent
instance. No failure or delay on the part of either party in respect of any
enforcement of obligations hereunder shall in any manner affect such party's
right to seek or effect enforcement at any other time or in respect of any other
required performance.
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(b) Neither this agreement nor any rights or obligations
hereunder may be assigned by either party without the express prior written
consent of the other party, except that the Company may, without the requirement
of your consent, assign this agreement and all of the Company's rights and
obligations hereunder in connection with and as part of any bona fide sale of
the business of the Company.
(c) The captions and paragraph headings used in this agreement
are for convenience of reference only, and shall not affect the construction or
interpretation of this agreement or any of the provisions hereof.
(d) This agreement, and all matters or disputes relating to
the validity, construction, performance or enforcement hereof, shall be
governed, construed and controlled by and under the laws of the State of
California.
(e) This agreement shall be binding upon and shall inure to
the benefit of each of us and our respective heirs, executors, administrators,
personal representatives, successors and permitted assigns.
(f) This agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original hereof, but all of
which together shall constitute one and the same instrument.
(g) Except for any legal or judicial proceeding which may be
brought for injunctive and/or any other equitable relief as contemplated by
paragraph 5(d) above, any dispute involving the interpretation or application of
this agreement shall be resolved by final and binding arbitration before one or
more arbitrators designated by the American Arbitration Association in Los
Angeles, California. The award of such arbitrator(s) may be enforced in any
court of competent jurisdiction. The prevailing party in any action or
proceeding hereunder shall be entitled to an award for its costs and reasonable
attorneys' fees in connection with such action or proceeding, and the
arbitrator(s) in any arbitration hereunder shall be empowered and directed to
make such an award in his, her or their discretion.
(h) This agreement constitutes the sole and entire agreement
and understanding between us as to the subject matter hereof, and supersedes all
prior discussions, agreements and understandings of every kind and nature
between us as to such subject matter.
(i) This agreement is intended for the sole and exclusive
benefit of the parties hereto and their respective heirs, executors,
administrators, personal representatives, successors and permitted assigns, and
no other person or entity shall have any right to rely on this agreement or to
claim or derive any benefit herefrom absent the express written consent of the
party to be charged with such reliance or benefit.
(j) If any provision of this agreement is held invalid or
unenforceable, either in its entirety or by virtue of its scope or application
to given circumstances, such provision shall
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thereupon be deemed modified only to the extent necessary to render same valid,
or not applicable to given circumstances, or excised from this agreement, as the
situation may require; and this agreement shall be construed and enforced as if
such provision had been included herein as so modified in scope or application,
or had not been included herein, as the case may be.
If the foregoing accurately reflects our agreement and understanding
with respect to the subject matter hereof, kindly acknowledge same by
countersigning and returning a counterpart copy of this letter.
Very truly yours,
AB PLASTICS CORPORATION
By:/s/Xxxxxxx X. Xxxxx, CEO
------------------------------
(Title)
Acknowledged, Confirmed and
Agreed To:
/s/ X. Xxxxxxx Xxxxx
----------------------------
X. Xxxxxxx Xxxxx
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Schedule A
[Insert sales and performance criteria relating to continuation of employment.]
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Schedule B
[Insert budgets and objectives for bonus purposes.]
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Schedule C
[Insert customer base diversification goals for bonus purposes.]
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