1
EMPLOYMENT AGREEMENT EXHIBIT 10.10
This Employment Agreement ("Agreement") is made effective the ____ day
of ___________, 1997, by and between Surrey, Inc., a Texas corporation ("the
Company"), and Xxxxxx X. van der Xxxxx, a Texas resident ("Executive").
RECITALS
WHEREAS, the Executive is engaged by the Company in the principal
capacity of President and the Company is desirous of continuing the employment
of the Executive upon the terms and conditions contained herein, and the
Executive is desirous of continuing employment with the Company upon the terms
and conditions contained herein;
WHEREAS, the Company specializes in the development and manufacture of
high quality glycerin and specialty soap products, as well as the production of
certain personal care and home fragrance products;
WHEREAS, the compensation to be paid to the Executive by the Company
is at least in part dependent upon gross sales which may accrue to the Company
through its operation of processes and procedures, involving trade secrets and
proprietary information relating to its business;
WHEREAS, the Company is engaged in highly competitive business; and
WHEREAS, the Company must maintain its competitive position by
protecting its trade secrets, know how, and proprietary information.
NOW, THEREFORE, in consideration of the mutual premises and agreements
contained herein and for other good and valuable consideration by each of the
parties, the parties hereby agree as follows:
ARTICLE 1 EMPLOYMENT, DUTIES AND TERM.
1.1 Employment. Upon the terms and conditions set forth in this
Agreement, the Company hereby employs Executive, and Executive accepts such
employment, as President of the Company.
1.2 Term. The term of this Agreement shall commence on the
effective date of the Company's initial public offering (the "Commencement
Date") and conclude at 5:00 p.m. on the third anniversary of the Commencement
Date; provided, however, that the term of this Agreement shall be automatically
continued and extended for additional consecutive twelve month periods
commencing upon such termination date, unless, at least thirty (30) days before
the date of termination of the initial term of this Agreement or of any such
extended term the Company shall give the Executive or the Executive shall give
the Company, a notice in writing electing to terminate this Agreement as of
such termination date. Termination of this Agreement, as set forth in Article
3, also shall terminate Executive's employment by the Company and his position
as President and an employee.
1.3 Duties. During the term of this Agreement, Executive agrees
to devote his full business time exclusively to the business and affairs of the
Company and, to the extent necessary to discharge the responsibilities assigned
to Executive hereunder, to use his best efforts to perform faithfully and
efficiently such responsibilities. As President of the Company, Executive
shall perform to the best of his
-1-
2
ability any and all duties that may be delegated to Executive by the Board of
Directors or the Chief Executive Officer of the Company.
1.4 Return of proprietary property. Executive agrees that all
property in his possession belonging to the Company including, without
limitation, all documents, reports, manuals, memoranda, computer printouts,
customer lists, credit cards, calling cards, keys, identification, products,
access cards, automobiles and all other property relating in any way to the
business of the Company are the exclusive property of the Company. Executive
shall return to the Company all such documents and property immediately upon
termination of his employment.
ARTICLE 2 COMPENSATION, BENEFITS AND EXPENSES.
2.1 Base Salary and Bonus.
a. During the term of this Agreement and subject to the
provisions of Article 3, the Company shall pay to Executive the
following base annual salary, payable bi-weekly: from the
Commencement Date through December 31, 1997, a base annual salary not
to exceed $95,000; for the calendar year ending December 31, 1998, a
base annual salary of $150,000 providing the gross sales of the
Company as of December 31, 1998 reach twelve million dollars
($12,000,000); and for the calendar year ending December 31, 1999, a
base annual salary of $175,000 providing the gross sales of the
Company as of December 31, 1999 reach fifteen million dollars
($15,000.000). Executive's compensation shall be reviewed on an
annual basis thereafter in accordance with the Company's policies and
may be adjusted accordingly based upon the Executive's and the
Company's performance.
b. Executive shall also be entitled to receive an annual
bonus as shall be determined by the Company, in accordance with
Company policies in effect from time to time, in an amount not to
exceed $20,000 for each of 1998 and 1999; provided, however, that if
the Company reaches the following income goals, the Executive may
receive an additional bonus for such calendar year: if the Company's
after tax income exceeds one million dollars ($1,000,000) for calendar
1998, an additional bonus for 1998 of $20,000; and if the Company's
after tax income exceeds one million three hundred thousand dollars
($1,300,000) for calendar 1999, an additional bonus for 1999 of
$20,000.
2.2 Other compensation and benefits. Executive shall be entitled
to paid vacation, personal days, sick days, and other benefits consistent with
those received by other officers and employees of the Company, as shall be as
determined by the Board of Directors pursuant to policies implemented by the
Company from time to time. Executive shall also be entitled to an automobile
allowance, medical, hospital, group life and individual health and disability
insurance coverage as well as such other benefits as may be provided and
modified from time to time by the Company. The Executive shall also be
included in any Directors and Officers' indemnification insurance, if obtained.
In the event that the Executive's employment by the Company is terminated for
any reason, the Executive shall have the right to purchase from the Company any
insurance policies on his life owned by the Company for a price equal to the
cash surrender value of the policies at the date of such termination, plus
prepaid premiums. The right to purchase shall be exercised by the Executive by
written notice to the Company not less than seven (7) days prior to the date of
such termination, and the purchase price of such policies shall be paid by the
Executive to the Company on the date of termination.
2.3 Business expenses. During the term of this Agreement, the
Company shall, in accordance with and to the extent of its uniform policies in
effect from time to time, bear all ordinary and necessary
-2-
3
business expenses incurred by Executive in performing his duties in the service
of the Company. Executive must account for such expenses to the Company in the
manner reasonably prescribed from time to time by the Company. The Company may
provide Executive with cash advances, Company credit cards and/or telephone
calling cards or other reasonable accommodations for any reasonable expense
incurred by Executive in connection with the performance of his duties as set
forth in this Agreement.
ARTICLE 3 TERMINATION.
3.1 Termination by the Company for Cause. The Company may
terminate this Agreement for Cause. For the purposes of this Agreement,
"Cause" means (a) an act or acts of personal dishonesty undertaken by Executive
and intended to result in substantial personal enrichment of Executive at the
expense of the Company; (b) violations by Executive of his obligations under
paragraph 1.2 which are willful and deliberate on Executive's part and which
are not remedied within a ten-day period after receipt of written notice from
the Board of Directors of the Company; or (c) the willful engaging by Executive
in illegal conduct that is injurious to the Company.
3.2 Termination in the event of death or disability. The term of
Executive's employment under this Agreement shall terminate in the event of his
death or disability. "Disability" means the unwillingness or inability of
Executive to perform his duties under this Agreement because of incapacity due
to physical or mental illness, bodily injury, or disease for a period of twelve
(12) consecutive months.
3.3 Termination by mutual agreement. The parties may terminate
this Agreement at any time by mutual written agreement.
3.4 Termination by Executive. This Agreement may be terminated by
Executive upon not less than thirty (30) days written notice to the Company.
If this Agreement is terminated pursuant to this paragraph, Executive will be
entitled to only the compensation as described in Section 2 through the
effective date of such termination.
3.5 Notice of termination and date of termination. The provisions
of paragraph 3.6 shall apply in connection with any early termination of
Executive's employment under this Agreement pursuant to Article 3.
a. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific
termination provisions in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to
provide the basis for such termination. Any purported termination
pursuant to this Article 3 shall be communicated by written notice of
termination to the other party hereto.
b. For purposes of this Agreement, "Date of Termination"
shall mean:
(1) if Executive's employment is terminated due
to death, the last day of the month in which Executive's death
occurs;
(2) if Executive's employment is terminated for
disability, 10 calendar days after notice of termination is
given;
(3) if Executive's employment is terminated by
the Company for Cause, the date specified in the notice of
termination;
-3-
4
(4) if Executive's employment is terminated by
mutual agreement of the parties, the date specified in such
agreement; or
(5) if Executive's employment is terminated for
any other reason, the date specified in the notice of
termination.
3.6 Compensation upon termination, death, or during disability.
a. During any period that Executive fails to perform his
duties hereunder as a result of Disability, Executive shall continue
to receive his base salary and benefits under this Agreement until his
date of termination.
b. If Executive's employment under this Agreement is
terminated by the Company for Cause, the Company shall pay Executive
his base salary and benefits through the date of termination.
c. If Executive's employment under this Agreement is
terminated by mutual agreement or the choice of one of the parties,
the Company shall provide Executive with the payments and benefits
specified in such agreement.
ARTICLE 4 NONCOMPETITION; CONFIDENTIAL INFORMATION.
4.1 Noncompetition. Executive agrees that during the term of this
Agreement and for a period of two (2) years following the termination of
employment for any reason he will not directly or indirectly, alone or as a
partner, officer, director, shareholder or employee of any other company or
entity, engage in any competition with the Company's business as conducted by
the Company during the term of this Agreement or contemplated by the Company at
the time of termination of employment or with any part of the Company's
contemplated business with respect to which Executive has confidential
information as governed by Section 4.3 hereof. For the purposes of this
clause, a "shareholder" shall not include beneficial ownership of less than 5
percent of the combined voting power of all issued and outstanding securities
of a publicly held corporation.
4.2 Covenant not to recruit or solicit. Executive recognizes that
the Company's work force constitutes an important and vital aspect of its
business. Executive agrees that for a period of two (2) years following the
termination of this Agreement for any reason whatsoever, he shall not solicit,
or assist anyone else in the solicitation of, any of the Company's then-current
permanent or temporary employees to terminate their employment with the Company
and to become employed by any business enterprise with which Executive may then
be associated, affiliated, or connected, or to solicit or cause to be solicited
any customers of the Company in an attempt to obtain business which pertains to
the business of the Company.
4.3 Prohibitions against use of Confidential Information.
Executive will not, during or subsequent to the termination of his employment
under this Agreement, use or disclose, other than in connection with his
employment with the Company, any Confidential Information to any person not
employed by the Company or not authorized by the Company to receive such
Confidential Information, without prior written consent of the Company.
Executive will use reasonable and prudent care to safeguard and protect and
prevent the unauthorized use and disclosure of Confidential Information. The
obligations contained in this section will survive as long as the Company in
its sole judgment considers the information to be Confidential Information.
"Confidential Information" shall include, but not be limited to, sales, sales
volume or strategy, pricing or pricing strategy, number or location of sales
staff,
-4-
5
processes, methods or ideas belonging to or relating to the affairs of the
Company, or the names of its customers or contracts.
ARTICLE 5 ENFORCEMENT AND REASONABLENESS OF RESTRICTIONS.
5.1 Enforceability. Executive agrees that it would be
difficult to compensate the Company fully for the damages
resulting from any violation of the provisions of this
Agreement, including without limitation the provisions of
Sections 4 of this Agreement. Accordingly, Executive
specifically agrees that the Company shall be entitled to
temporary and permanent injunctive relief to enforce the
provisions of this Agreement and that such relief may be
granted without the necessity of proving actual damages. Such
remedies shall be cumulative and shall not preclude the
parties from seeking damages resulting from a breach of this
Agreement. In addition, Executive covenants and agrees that
upon a violation of this Agreement, the Company shall be
entitled to an accounting and repayment of all profits,
compensation, commissions, remuneration, and other benefits
that Executive directly or indirectly has realized and/or may
realize as a result of, growing out of or in any connection
with any such violation. These remedies shall be in addition
to and not in limitation of any other rights or remedies to
which the Company, its affiliates or related entities have or
may be entitled at law, in equity or under this agreement.
5.2 Reasonableness of Restrictions.
a. Executive has carefully read and considered the
provisions of this Agreement and, having done so, agree that the
restrictions set forth herein, including but not limited to the time
period of the restrictions and the geographical area of such
restrictions are fair and reasonable, and are reasonably required for
the protection of the interests of the Company, its subsidiaries,
affiliates, related entities and employees.
b. In the event that, notwithstanding the foregoing, any
of the provisions of this Agreement shall be held to be invalid or
unenforceable, the remaining provisions thereof shall nevertheless
continue to be valid and enforceable as though the invalid or
unenforceable parts had not been included therein. In the event that
any provision relating to the time period and/or the areas of
restriction shall be declared by a court of competent jurisdiction to
exceed the maximum time period or areas such court deems reasonable
and enforceable, the time period and/or areas of restriction deemed
reasonable and enforceable by said court shall become and thereafter
be the maximum time period and/or areas.
ARTICLE 6 STOCK OPTION AND OTHER INCENTIVE PLANS.
Provided that Executive is employed by the Company at all relevant
times, Executive shall also be eligible to participate in the Company's profit
sharing, pension, stock option and other incentive bonus plans as shall be in
effect from time to time for officers and/or employees of the Company.
ARTICLE 7 ARBITRATION.
Any controversy or dispute, of whatever nature, between or among the
parties involving the meaning of words or provision under this Agreement,
whether or not there has been a breach or default hereof, shall be settled by
arbitration in accordance with the Arbitration Rules of the American
Arbitration Association by a sole Arbitrator and judgment upon the award
rendered by the Arbitrator may be entered in any Court of appropriate
jurisdiction. The decision of the Arbitrator shall be final and conclusive.
With respect to such arbitration:
-5-
6
a. All questions as to the meaning of the above clause,
or as to the arbitrability of any dispute under said clause, shall be
resolved by the Arbitrator, and the decision thereon shall be binding,
and not subject to judicial review.
b. Each party shall have the right to seek from any
court of appropriate jurisdiction equitable or provisional remedies
(such as temporary restraining orders, temporary injunctions, and the
like) before or during any arbitration.
c. The arbitration proceeding shall be in the
Association's office in Austin, Texas.
d. If the parties hereto are unable to mutually agree
upon a sole Arbitrator, the parties shall select a sole Arbitrator
from the panel provided by the American Arbitration Association.
Further, the Arbitrator shall have the discretion to award attorneys'
fees and costs in favor of any part if, in the opinion of the
Arbitrator, the dispute arose because one of the parties was not
acting in good faith or was in breach or default of the terms and
conditions set forth in this Agreement. If no such finding by the
Arbitrator is made, each of the parties to the arbitration shall bear
equally the fees and costs of the said arbitration proceeding.
e. Any award of the Arbitrator may be entered in any
Court of appropriate jurisdiction under applicable Texas statutes,
which statutes, relating to arbitration, are incorporated herein by
reference.
ARTICLE 8 MISCELLANEOUS PROVISIONS.
8.1 Notice. All notices, requests and demands given to or made
pursuant hereto, shall, except as otherwise specified herein, be in writing and
be personally delivered or mailed postage prepaid, registered or certified U.S.
mail, to any party at the registered office of the Company or at such other
address as such party may, by notice hereunder, designate. Any notice
hereunder shall be deemed effectively given and received: (a) if personally
delivered upon delivery; or (b) if mailed, on the registered date or the date
stamped on the certified mail receipt.
8.2 Withholding. To the extent required by any applicable law,
including, without limitation, any federal or state income tax or excise tax or
laws, the Federal Insurance Contribution Act, the Federal Unemployment Tax Act,
or any comparable federal, state or local laws, the Company retains the right
to withhold such portion of any amount or amounts payable to Executive under
this Agreement as the Company deems necessary.
8.3 Captions. The various headings or captions in this Agreement
are for the convenience of the parties and shall not affect the meaning or
interpretation of this Agreement.
8.4 Governing law. The validity, interpretation, construction,
performance, enforcement and remedies of or relating to this Agreement, and the
rights and obligations of the parties hereunder, shall be governed by the
substantive laws of the State of Texas without reference to the conflicts of
laws provisions thereof.
8.5 Construction. Wherever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or valid under applicable law, such provision shall be in effect
only to the extent such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
-6-
7
8.6 Waiver. Failure on the part of either party to exercise any
right or remedy hereunder shall not operate as a waiver thereof; nor shall any
single or partial exercise of any right or remedy hereunder preclude any other
further exercise thereof, or the exercise of any other right or remedy granted
hereby or by any related document or by law.
8.7 Modification. This Agreement may not be modified or amended
except by written instrument signed by the parties hereto.
8.8 Entire Agreement. This Agreement constitutes the entire
Agreement and understanding between the parties hereto in reference to all
matters here and agreed upon.
8.9 Successors. This Agreement shall inure to the benefit of and
be binding upon the Company, its successors and assigns, and upon the
Executive, his heirs, executors, administrators, legatees and legal
representatives.
8.10 Assignment. This Agreement and all rights hereunder are
personal to the Executive and shall not be assignable, and any purported
assignment in violation thereof shall be null and void. Any person, firm or
corporation succeeding to the business of the Company by merger, consolidation,
purchase of assets or otherwise, shall assume by contract or operation of law
the obligations of the Company hereunder; provided, however, that the Company
shall, notwithstanding such assumption and/or assignment, remain liable and
responsible for the fulfillment of the terms and conditions of the Agreement on
the part of the Company.
8.11 Advice of counsel. The parties hereto have relied on their
respective counsel, and are fully advised of the rights, responsibilities and
benefits described herein.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed
it effective the day and year first above written.
SURREY, INC.
By:________________________________________
Xxxx X. van der Xxxxx
Its: Chief Executive Officer
EXECUTIVE
___________________________________________
Xxxxxx van der Xxxxx
-7-
