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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement is made this 1st day of July, 1996, by and
between DONLAR CORPORATION, an Illinois corporation (the "Company"), having a
principal place of business at Xxxxxxx Campus, 0000 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxx Xxxx, Xxxxxxxx 00000, and XXXXXXXX X. XXXX (RICO or the "Employee").
In consideration of the compensation agreed to and the mutual covenants and
agreements set forth herein, the parties agree as follows:
EMPLOYMENT; DURATION
1.01 The Company agrees to employ Rico as Executive Vice-President of the
Company, and Rico agrees to be so employed for a period of five (5) years
beginning on the 1st day of July, 1996, provided, however, that the Employee
shall have the option to renew this Agreement for an additional two (2) years,
if this Agreement has not earlier terminated, by giving notice of renewal not
more than ninety (90) days and not less than sixty (60) days prior to the
termination of the five (5) year employment period.
DUTIES
2.01 The duties of the Employee shall be those of an executive
vice-president and officer involved in all the tasks involved in managing the
business of the Company. Rico shall be given all executive powers and
authority that are reasonably required to enable him to efficiently perform his
duties. Rico shall also perform such reasonable duties as shall be determined
from time to time by the Chief Executive Officer and by the Company's Board of
Directors.
2.02 The Employee shall devote his entire productive time, ability and
attention to the business of the Company during the term of this Agreement.
The Employee shall not directly or indirectly render any services of a
business, commercial or professional nature to any other person or
organization, whether for compensation or otherwise, without the prior written
consent of the Company.
COMPENSATION
3.01 Base salary. As compensation for his full-time employment under this
Agreement, RICO shall be paid a base salary of ONE HUNDRED SEVENTY-FIVE
THOUSAND DOLLARS ($175,000.00) per year, payable semi-monthly. The
Compensation Committee of the Board of Directors of the Company shall review
Employee's performance periodically and in its sole discretion may award
increases in base salary from time to time.
3.02 Incentive Bonus-Cash. The Compensation Committee of the Company's
Board of Directors in its sole discretion from time to time may adopt cash
bonus programs and may grant cash bonuses to Employee in any amount such
Compensation Committee in its sole
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discretion deems appropriate in recognition of full or partial attainment of
goals established under such programs.
3.03 Incentive Bonus - Stock option. In addition to the base salary and
the discretionary cash incentive bonuses set forth above, RICO shall also be
eligible to receive as compensation for his continued employment options to
purchase common shares of the Company as an incentive bonus. Any stock option
bonus shall be calculated and be a function of the Employee's level of
performance in realizing certain business goals established by the Compensation
Committee of the Board of Directors from year to year. These annual stock
option incentive bonuses shall be earned by the degree of goal achievement
obtained by the Employee and the Company in the areas of Company business
specified by the Compensation Committee.
DISABILITY
4.01 The Company shall pay to the Employee full compensation during any
period or periods of disability not exceeding two (2) years in aggregate
duration.
INSURANCE BENEFITS
5.01 The Company agrees to include the Employee in the hospital, surgical
and medical benefit plan adopted by the Company from time to time. In
addition, the Company will provide the Employee with term life insurance
coverage in the face amount of $500,000.00 throughout the employment term.
REIMBURSEMENT OF EMPLOYEE EXPENSES
6.01 The Employee is authorized to incur reasonable business expenses for
promoting the business of the Company, including expenditures for
entertainment, food and travel. The Company will reimburse the Employee from
time to time for all business expenses provided the Employee presents to the
Company (a) receipts for the expenditure; (b) the time, place and designation
of the type of entertainment, travel or other expense; (c) the business reason
for the expenditure and the nature of the business benefit derived; and (d)
such other information or evidence as the Company may reasonably require.
PROPRIETARY RIGHTS
7.01 Disclosure. The Employee shall disclose promptly to the Board of
Directors of the Company any and all inventions, trade secrets, discoveries and
improvements, whether patentable or unpatentable, conceived or made by the
Employee during the period of employment and related to the present or future
business or activities of the Company, and hereby assigns and agrees to assign
all his interest therein to the Company. Whenever requested to do so by the
Company, the Employee shall execute any and all applications, assignments or
other instruments which the Company shall deem necessary to apply for and
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obtain Letters Patent of the United States or any foreign country or to
otherwise protect the Company's interest in such inventions, discoveries or
improvements. It is understood that the provisions of paragraph 1 of this
Agreement do not apply to an invention for which no equipment, supplies,
facility, or trade secret information of the Company was used and which was
developed entirely on the Employee's own time, unless (a) the invention relates
to (i) the business of the Company, or (ii) the Company's actual or
demonstrably anticipated research and development, or (b) the invention results
from any work performed by the Employee for the Company.
7.02 Confidentiality. During his employment with the Company or at any
time thereafter, the Employee will neither disclose to others nor use for his
own benefit or for the benefit of others any confidential proprietary
information, including trade secrets, know-how or other secret data, of any
technical, commercial or other nature which pertains to any of the present or
future business of the Company or of any of its subsidiaries or affiliates, and
which is acquired by the Employee during the period of his employment with the
Company, except to the extent that such disclosure or use is necessary in the
ordinary course of the Employee's performance of his duties as an employee of
the Company.
7.03 Return of Materials. Upon termination of the Employee's employment
with the Company, the Employee shall deliver to the Company all drawings,
blueprints, manuals, letters, reports, notes, memoranda, notebooks, records,
and any other documents and reproductions thereof kept by the Employee or in
the possession of the Employee whether or not prepared by the Employee, which
have been used in or pertain to any activities of the Company, including but
not limited to the work done by the Employee during the course of his
employment, and which are concerned with confidential proprietary information,
including devices, machines, products, processes, methods, compositions,
formulas, customer lists, business techniques and methods, and purchasing and
sales information and operations of the Company.
7.04 Restrictions. If the Company has trade secrets or other confidential
data of any third party under an agreement including restrictions on
disclosure, which restrictions are known to the Employee, the Employee shall
not, without the written consent of such third party and the Company, at any
time infringe such restrictions.
7.05 Prior Skills and Knowledge. It is understood that the provisions of
paragraphs 7.01 through 7.04 of this Agreement do not, in any way, restrict the
Employee from using either the skills and knowledge which the Employee brought
with him to the Company, or the general knowledge publicly known in the
Company's industry or related industries, which the Employee acquires during
his employment with the Company.
NON-COMPETITION
8.01 During his employment with the Company and for a period of two (2)
years thereafter, the Employee shall not become employed by or act on behalf of
any other person,
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corporation or firm which is engaged in any business or activity similar to or
competitive with that of the Company, unless such employment or activity has
been approved in advance in writing by the Chairman of the Board of the
Company.
8.02 During his employment with the Company and for a period of two (2)
years thereafter, the Employee shall not acquire or retain, either directly or
indirectly, any conflicting interest in or in connection with any person,
corporation or firm with which the Company does business, or any person,
corporation or firm which seeks to do business with the Company, or any person,
corporation or firm with which the Company competes, unless prior written
authorization therefor is given by the Chairman of the Board of the Company.
For purpose of this paragraph, "conflicting interest" shall mean:
(a) any financial interest in a person, corporation or firm;
(b) any interest had, directly or indirectly, in any contract or other
business transaction to which the Company is a party, which may result in
monetary value to the Employee or, to the extent known by the Employee, to
any member of his family; or
(c) performing work or rendering services for, or serving as a director
or officer of or consultant to, or permitting the Employee's name to be
used in any fashion that would tend to indicate a business connection
with, any person, corporation or firm, outside the normal course of the
Employee's employment with the Company.
The Employee shall notify the Company in writing within three (3) days of
his acquisition of any conflicting interest.
SEVERANCE BENEFITS
9.01 Termination Following A Change of Control. If the Employee's
employment terminates at any time within 12 months after a Change of Control,
then the Employee shall be entitled to receive severance benefits as follows:
(a) Voluntary Resignation; Termination For Cause. If the Employee's
employment terminates by reason of the Employee's voluntary resignation (and is
not an Involuntary Termination), or if the Employee is terminated for Cause,
then the Employee shall not be entitled to receive severance or other benefits
except for those (if any) as may then be established under the Company's then
existing severance and benefits plans and policies at the time of such
termination.
(b) Involuntary Termination. If the Employee's employment is
terminated as a result of Involuntary Termination other than for Cause, then
the Employee shall be entitled to receive severance pay in an amount equal to
the Employee's Base Compensation for the twenty-four-calendar month period
immediately preceding the Termination Date. Any
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severance payments to which the Employee is entitled pursuant to this section
shall be paid in a lump sum within thirty (30) days of the Termination Date.
(c) Disability; Death. If the Company terminates the Employee's
employment as a result of the Employee's Disability, or Employee's employment
is terminated due to the death of the Employee, then such termination shall be
treated as if it were an voluntary resignation and severance and other
benefits, if any, shall be provided in accordance with paragraph (a) above.
9.02 Termination Apart from Change of Control. In the event the
Employee's employment is terminated for any reason either prior to the
occurrence of a Change of Control or after the 12-month period following a
Change of Control, then the Employee shall be entitled to receive severance and
any other benefits only as may then be established under the Company's existing
severance and benefit plans and policies at the time of such termination.
9.03 Options. Upon a Change of Control the unvested portion of any stock
option held by the Employee under the Plan shall automatically be accelerated
and the Employee or the Employee's representative, as the case may be, shall
have the right to exercise all or any portion of such stock option, in addition
to any portion of the option exercisable prior to the Change of Control.
9.04 Definitions. The following terms referred to in this Section 10
shall have the following meanings:
(a) Change of Control. "Change of Control" shall mean that the six
members of the Company's Board of Directors as of the date of this Agreement
cease for any reason to constitute a majority of the Company's Board of
Directors; provided, however, that if a Director dies or voluntarily resigns or
retires from the Board of Directors and a successor director is chosen by the
Board of Directors, the successor so chosen shall be deemed for purposes of
this Section 9.04(a) to have been a director on the date of this Agreement.
(b) Involuntary Termination. "Involuntary Termination" shall mean
(i) without the Employee's express written consent, the assignment to the
Employee of any duties or the reduction of the Employee's duties, either of
which results in a significant diminution in the Employee's position or
responsibilities with the Company in effect immediately prior to such
assignment, or the removal of the Employee from such position and
responsibilities; (ii) without the Employee's express written consent, a
substantial reduction, without good business reasons, of the facilities and
perquisites (including office space and location) available to the Employee
immediately prior to such reduction; (iii) a reduction by the Company in the
Base Compensation of the Employee as in effect immediately prior to such
reduction, other than a bonus reduction resulting from application of a bonus
formula or plan on a basis that is consistent with prior practice; (iv) a
material
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reduction by the Company in the kind or level of employee benefits to which
the Employee is entitled immediately prior to such reduction with the result
that the Employee's overall benefits package is significantly reduced; (v) the
relocation of the Employee to a facility or a location more than 25 miles from
the Employee's then present location, without the Employee's express written
consent; (vi) any purported termination of the Employee by the Company which is
not effected for Disability or for Cause, or any purported termination for
which the grounds relied upon are not valid; (vii) the failure of the Company
to obtain the assumption of this Agreement by any successors contemplated in
Section 12.0 below; or (viii) any purported termination of the Employee's
employment by the Company which is not effected pursuant to a notice of
termination satisfying the requirements of Section 11.01 below, and for
purposes of this Agreement, no such purported termination shall be effective
unless it complies with Section 10.02 below.
(c) Cause. "Cause" shall mean (i) any act of personal dishonesty
taken by the Employee in connection with his responsibilities as an employee
and intended to result in substantial personal enrichment of the Employee;
(ii) the conviction of a felony; (iii) a willful act by the Employee which
constitutes gross misconduct and which is injurious to the Company; and (iv)
continued violations by the Employee of the Employee's obligations under
Section 2 of this Agreement which are demonstrably willful and deliberate on
the Employee's part after there has been delivered to the Employee a written
demand for performance from the Company which describes the basis for the
Company's belief that the Employee has not substantially performed his duties.
(d) Disability. "Disability" shall mean that the Employee has been
unable to perform the essential functions of his job under this Agreement
after reasonable accommodations as the result of his incapacity due to physical
or mental illness, and such inability, at least 26 weeks after its
commencement, is determined to be total and permanent by a physician selected
by the Company or its insurers and acceptable to the Employee or the Employee's
legal representative (such agreement as to acceptability not to be unreasonably
withheld). Termination resulting from Disability may only be effected after at
least 30 days' written notice by the Company of its intention to terminate the
Employee's employment. In the event that the Employee resumes the performance
of the essential functions of his job hereunder before the termination of his
employment becomes effective, the notice of intent to terminate shall
automatically be deemed to have been revoked.
(e) Termination Date. "Termination Date" shall mean (i) if this
Agreement is terminated by the Company for Disability, 30 days after
notice of termination is given to the Employee (provided that the Employee
shall not have returned to the performance of the Employee's duties on a
full-time basis during such 30-day period), (ii) if the Employee's employment
is terminated by the Company for any other reason, the date on which a notice
of termination is given, provided that if within 30 days after the Company
gives the Employee notice of termination, the Employee notifies the Company
that a dispute exists concerning the termination, the Termination Date shall be
the date on which the dispute is finally determined, either by mutual written
agreement of the parties, by final
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judgment, order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been perfected), or
(iii) if the Agreement is terminated by the Employee, the date on which the
Employee delivers the notice of termination to the Company.
NOTICES
10.01 All notices, offers and acceptances hereunder shall be in writing
and shall be deemed to be communicated when delivered in person or deposited in
the United States mail, postage prepaid, by certified or registered mail,
addressed to the party concerned at the address appearing in the stock records
of the Company or at such other or additional place as such party may designate
by notice given in accordance with the provisions hereof to the other party
hereto.
10.02 Notice of Termination. Any termination by the Company for
Disability or Cause, or by the Employee as a result of a voluntary resignation
or an Involuntary Termination shall be communicated by a notice of termination
to the other party hereto given in accordance with this Section 10. Such
notice shall indicate the specific termination provision in this Agreement
relied upon, shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination under the provisions so indicated,
and shall specify the termination date (which shall be not more than 30 days
after the giving of such notice). The failure by the Employee to include in
the notice any fact or circumstance which contributes to a showing of
Involuntary Termination shall not waive any right of the Employee hereunder or
preclude the Employee from asserting such fact or circumstance in enforcing his
rights hereunder.
11.0 Assignment. Neither this Agreement nor any rights or obligations of
any party hereunder shall be assignable without the prior written consent of
the other party hereto, except that the Company may assign this Agreement upon
the transfer of substantially all its assets to an affiliated company.
12.0 Benefit. This Agreement shall be binding upon and inure to the
benefit of the parties, their heirs, personal representatives, successors and
assigns.
13.0 Invalid or Unenforceable Provisions. The invalidity or
unenforceability of any particular provision or provisions of this Agreement
shall not affect the other provisions hereof and this Agreement shall be
construed in all respects as if such invalid or unenforceable provision or
provisions were omitted.
14.0 Limitation on Payments. In the event any payments or benefits
payable to the Employee under this Agreement or otherwise are determined by the
Company to constitute "parachute payments" within the meaning of Section
280G(b)(2)(A) of the Code, then the Company shall reduce the total payments and
benefits payable under this Agreement until the Company determines that the
total of all "parachute payments" (as defined in Section 280G(b)(2)(A) of the
Code but without regard to clause (ii) thereof) payable to the Employee are no
more than 2.99 times the Employee's "base amount" (as defined in Section
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280G(b)(3) of the Code). The determination as to whether a payment constitutes
a "parachute payment" and the computation of the 2.99 limitation shall be
purely within the discretion of the Company and shall be conclusive and binding
on the Company and the Employee; provided, however, that the Employee may
specify by written notice which payments or benefits under this Agreement shall
be reduced so as to meet the requirements of this Section 14.0.
15.0 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of Illinois.
IN WITNESS WHEREOF, the parties have affixed their signatures the day and
year first above written.
XXXXXXXX X. XXXX DONLAR CORPORATION
XXXXXXXX X. XXXX By: /s/
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Employee Employer
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