EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of December 24, 1996, is between U.S. PLASTIC
LUMBER CORPORATION, a Nevada corporation (the "Company"), and XXXX XXXXXXXXX,
of 000 Xxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxxx 00000 ("Executive").
RECITALS
A. Executive has been employed as a principal executive officer of
the Company, and as such has made a unique contribution to the business of the
Company.
B. The Board of Directors of the Company believes that the continued
services of Executive would be of great value to the Company and desire
retaining his services for a number of years.
C. Executive is willing to accept employment by the Company upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and of the mutual benefits herein provided, the
Company and Executive hereby agree as follows:
SECTION 1. TERM OF EMPLOYMENT.
The Company shall employ Executive and Executive hereby accepts
employment by the Company, on the terms and conditions herein contained, for a
period commencing as of the date hereof and ending on the fifth (5th)
anniversary of the date hereof, subject to termination as hereinafter provided
(the period from the date hereof through the fifth (5th) anniversary of the
date hereof or the date of such termination, as the case may be, being the
("Employment Period").
SECTION 2. DUTIES.
(a) General Duties. During the Employment Period, Executive shall
serve the Company and its subsidiaries in a senior executive capacity with
such duties consistent therewith, and shall perform such other services for
the Company and its subsidiaries consistent with the position of a senior
executive officer, as may be reasonably assigned to him from time to time by
the Board of Directors of the Company. Executive's initial positions with the
Company shall be President and Chief Executive OtTtcer.
(b) Primary Activity. During the Employment Period, Executive shall
devote at least 75%, and shall be under no obligation to devote more than 75%,
of his working time and energy to the interests and business of the Company
and its subsidiaries; however, Executive shall be excused from performing any
services for the Company hereunder during periods of temporary illness or
incapacity and during reasonable vacations, and Executive may devote a
reasonable amount of time to the handling of his personal affairs, without
thereby in any way affecting the compensation to which he is entitled
hereunder. Although it is acknowledged that the duties of a senior executive
officer may require from time to time attention to business at times other
than normal business hours, it is intended by the parties hereto that
Executive shall perform his duties hereunder during normal business hours.
During the Employment Period, Executive shall, to the best of his skill and
ability, use his best efforts and endeavors to the extension and promotion of
the business of the Company and its subsidiaries, to the proper servicing of
such business and to the protection of the good will of such business, both as
now enjoyed and hereafter acquired.
(c) Location and Travel. During the Employment Period, Executive's
business office shall be located (and his duties shall generally be
performable) at the executive offices of the Company in Boca Raton, Florida,
and the sales offices of the Company in Blue Xxxx, Pennsylvania, unless
otherwise agreed to in writing by the Company and Executive. Executive agrees
to travel for business purposes in a reasonable amount for reasonable lengths
of time, commensurate with Executive's senior executive position.
SECTION 3. COMPENSATION.
As full compensation to Executive for performance of his services
hereunder, the Company agrees to pay Executive and Executive agrees to accept
the following compensation during the Employment Period:
(a) If gross sales of the Company reach an aggregate of Five Million
($5,000,000.00) Dollars over any period of twelve (12) consecutive months
(including, without limitation, over a period of twelve (12) consecutive
months that fall within two calendar years or two fiscal years of the Company)
or if gross sales of the Company over any period of three (3) consecutive
months average Five Hundred Thousand ($5OO,000.00) Dollars per month,
whichever first occurs, then Executive shall have earned and the Company shall
promptly issue to Executive its stock warrants for two hundred thousand
(200,000) shares of the common voting stock of the Company exercisable at the
price per share for purchase of the stock set forth below. In addition, if
the gross sales of the Company reach an aggregate of Seven Million Five
Hundred Thousand ($7,500,000.00) Dollars over any period of twelve (12)
consecutive months (including, without limitation, over a period of twelve
(12) consecutive months that fall within two calendar years or two fiscal
years of the Company) or if gross sales of the Company over any period of
three (3) consecutive months average Seven Hundred Thousand ($700,000.00)
Dollars per month, whichever first occurs, then Executive shall have earned
and Company shall promptly issue to Executive its stock warrants, for four
hundred thousand (400,000) shares of the common voting stock of the Company
(less the warrants, if any, previously earned by Executive under the
immediately preceding sentence) exercisable at the price per share for
purchase of the stock set forth below. The initial exercise price per share
for purchase of stock, covered by the warrants shall be S2.25 per share and
every ninety (90) days after the issue date of the warrants hereunder, the
exercise price per share shall automatically adjust for all remaining shares
covered by the ts so that the exercise price per share equals the lower of
$2.25 per share or a price equal to $1.75 below the market price per share on
the then current adjustment date (provided, however, that the exercise price
shall in no event be less than $.Ol per share). The warrants shall have a
term of ten (1O) years and shall be exercisable from time to time, in whole or
in part, by Executive or his successors or assigns and the Company shall use
its best efforts to register the warrants under Federal Securities Law as soon
as feasible including, without limitation, the obligation to piggyback the
warrants on any other registration.
(b) Executive shall be paid the following compensation, which shall be
in addition to the stock warrants set forth in subparagraph 3(a), and which
additional compensation shall commence upon, and no later than, the expiration
of two (2) years from the date hereof, and provided, however, that the said
following additional compensation shall conunence earlier, upon and as soon as
the gross sales of the Company reach an aggregate of Seven Million Five
Hundred Thousand ($7,500,000.00) Dollars over any period of twelve (I 2)
consecutive months (including, without limitation, over a period of twelve
(12) consecutive months that fall within two calendar years or two fiscal
years of the Company) or as soon as gross sales of the Company over any period
of three consecutive months average Seven Hundred Thousand ($700,000-00)
Dollars per month, whichever first occurs:
(i) A base salary for the balance of the term of employment in
an amount then agreed upon by Executive and the Company. If Executive
and the Company are unable to agree, then the amount of the base salary
shall be determined by an arbitrator selected by the parties and if the
parties cannot agree on an arbitrator, then the arbitrator shall be
appointed by the Court of Common Pleas of Xxxxxxxxxx County, State of
Pennsylvania, upon the filing of a petition requesting appointment of
the arbitrator. The decision of the arbitrator shall be final and
binding on the parties. It is intended that the base salary shall be
commensurate with the position, performance and responsibility of the
Executive and shall be determined without taking into account any stock
warrants issued or to be issued to Employee under the terms of the
Employment Agreement.
(ii) Tbe Company shall issue additional stock warrants to
Executive for one hundred fifty thousand (150,000) of the common voting
stock of the Company, which warrants shall be issued over three (3)
consecutive years at a rate of fifty thousand (50,000) shares per year.
The initial exercise price per share for purchase of the stock covered
by the warrants shall be $3.50 per share and every ninety (90) days
after the issue date of the warrants hereunder, the exercise price per
share shall automatically adjust so that the price per share for all
remaining shares covered by the warrants equals the lower of $3.50, or
the adjusted price ftom the previous quarter, or the market price of the
shares on the then current adjustment date. The warrants shall have a
term of ten (10) years and shall be exercisable from time to time, in
whole or in part, by Executive or his successors or assigns and the
Company shall use its best efforts to register the warrants under
Federal Securities Law as soon as feasible including, without
limitation, the obligation to Piggyback the warrants on any other
registration.
(c) As an incentive to induce Executive to enter into this Agreement,
the Company agrees upon execution hereof to issue to Executive its stock
warrants for four hundred thousand (400,000) shares of the common voting stock
of the Company. The initial exercise price per share for purchase of stock
covered by the warrant shall be $4.00 per share, and every year thereafter on
the anniversary date of issuance of the warrants the exercise price per share
shall automatically adjust for all remaining shares covered by the warrants so
that the exercise price per share equals the lower of $4.00 per share or the
market price of the shares on the then current anniversary date. The warrants
shall have a term of ten (10) years and shall be exercisable, from time to
time, in whole or in part by Executive or his successors or assigns. The
Company agrees to register said warrants for one hundred fifty thousand
(150,000) of the shares under Federal Securities Laws as part of its SB-2
Registration which will be filed in February of 1997. Tbe Company agrees to
register the remainder of the warrants as soon as feasible.
(d) Reimbursement of Expenses. The Company shall reimburse Executive
for all expenses properly incurred by him in the performwice of his duties
hereunder in accordance with policies established from time to time by the
Board of Directors of the Company. In addition to the foregoing, Executive
will be reimbursed all necessary business expenses including temporary living
expenses in the State of Florida. In the event that Executive purchases or
leases a residential unit in Florida, Company will pay Executive Three
Thousand ($3,000.00) Dollars per month as long as Executive owns or leases the
unit and is employed by Company, which sum is intended to take into account
all expenses or investments by Executive with regard to the residential unit
and is payable, however, without respect to the actual expenses or amount of
investment made by Executive with regard to the residential unit.
(e) Further Benefits. Executive shall be entitled to participate in
any health, accident, retirement or similar employee benefit plans provided by
the Company generally to its employees to the extent commensurate with the
participation therein of executives of the Company; provided, however, that
such employee benefit plans shall be no less favorable to Executive than those
provided by the Company to Executive immediately prior to the entering into of
this Agreement. Executive shall be entitled to participate in any present or
future bonus, insurance, pension, retirement, profit sharing or other
compensation or incentive plans adopted by the Company, for the general and
overall benefit of executives of the Company, the extent and manner of
participation to be determined by the Board of Directors of the Company. The
benefits provided in this subsection (c) shall be in addition to the
compensation and benefits provided in the other subsections of this Section 3.
(f) In the event that prior to exercise of all of the rights under the
warrants issued under this Agreement, the issued and outstanding shares of the
same class as the shares subject to the warrants are changed into or exchanged
for a different number or kinds of shares or securities of the Corporation or
of another corporation, whether by reason of reorganization, merger,
consolidation, recapitalization, reclassification, stock split, combination of
shares, or dividends payable in capital stock, appropriate adjustment shall be
made in the number of the shares covered by the warrants.
SECTION 4. CERTAIN COVENANTS.
In order to induce the Company to enter into this Agrccment, Executive
hereby acknowledges and agrees as follows:
(a) Proprietary Information. All documents, records, techniques,
business secrets and other information which have come into the possession of
or have been developed by Executive from time to time in the course and for
the business of the Company and its subsidiaries prior to the date hereof or
which may come into his possession or be developed by him during his
employment by the Company hereunder shall be deemed to be confidential and
proprietary to the Company. None of such Confidential Information, or any
copies thereof, shall be retained by Executive after termination of the
Employment Period. The foregoing does not apply to such documents, records,
techniques, business secrets and other infon-nation which have come into the
possession of or have been developed by Executive prior to the date hereof in
the course and for the business of any other company.
(b) Confidentiality. Executive shall keep confidential all, and shall
not divulge to any other party any, of the Conridential Information of the
Company and its subsidiaries including, but not limited to, Confidential
Information relating to such matters as their finances and operations, the
materials, processes, plans, designs, models, apparatus, equipment and
formulas used in their operations, the names of their customers and such
customers' requirements and the names of their suppliers, except for any such
disclosure (i) which Executive believes in good faith to be required by
applicable law or (ii) is now in the public domain, or hereafter enters the
public domain, through no violation by Executive of his obligations hereunder.
(c) Remedies. In the event of a breach or threatened breach by
Executive of the provisions of this Section 4, the Company shall be entitled
to an injunction restraining Executive from disclosing, in whole or in part,
confidential information described herein, or from rendering any services to
any person, firm, corporation, association or other entity to whom such
confidential information has been disclosed, or is threatened to be disclosed,
or from otherwise violating the provisions of this Section 4. Nothing herein
contained shall be construed as prohibiting the Company or any of its
subsidiaries from pursuing any other remedies available to them for such
breach or threatened breach, including recovery of damages from Executive.
SECTION 5. TERMINATION OF AGREEMENT.
(a) Events of Termination. The Employment Period shall cease and
terminate upon the earliest to occur of the events specified below:
(i) The close of business on the fifth anniversary of the date
hereof;
(ii) the death of Executive;
(iii) termination of Executive's employment for Cause. For the
purpose of this Agreement, the Company shall have "Cause" to terminate
Executive's employment hereunder upon (A) the conviction of Executive of
a felony crime involving moral turpitude; or (B) the intentional and
knowing violation by Executive of the provisions of Section 4 hereof,
which results in a substantial and material injury to the Company; or
(C) conduct by Executive with respect to the Company or its business in
breach of this Agreement which either (a) is intended to injure the
Company and does injure the Company in a substantial and material way or
(b) constitutes a course of grossly negligent conduct, done in bad faith
and not intended to benefit the Company, and which injures the Company
in a substantial and material way. If the Company has knowledge of the
conduct by Executive under (iii)(B) or (C) before substantial and
material in ury to the Company has occurred, then the Company shall not
have "Cause" to terminate Executive unless the Company promptly gives
written notice to Executive, making reference to this sub-paragraph, to
cure ihe conduct and the Company sustains substantial and material
injury because Executive failed to successfully cure the conduct.
(iv) the election by Executive to terminate his employment
hereunder;
(v) the election by the Company to terminate Executive's
employment hereunder; or
(vi) the permanent disability of Executive. For the purpose of
this Agreement the "permanent disability" of Executive shall mean
Executive's inability, because of his injury, illness, or other
incapacity (physical or mental), to perform the services to the Company
contemplated hereby for a continuous period of 150 days or for 180 days
out of a continuous period of 300 days. Such permanent disability shall
be deemed to have occurred on the 150th consecutive day or on the 180th
day within the specified period, whichever is applicable.
(b) Compensation Upon Termination. If the Employment Period shall
cease and terminate hereunder, Company agrees to pay or perform the following,
as an agreed severance benefit, without setoff or deduction, which payments or
performance shall not be subject to any principle of mitigation of damages:
(i) If the employment period ceases and terminates for Cause in
compliance with 5(a)(iii), or if Executive elects to terminate under
5(a)(iv) and the Company at the time of such election by Executive is
not in breach of any of its obligations under this Agreement, or if
termination occurs on the fifth (Sth) anniversary date hereof under
5(a)(i), then all unissued warrants under paragraph 3 hereof for which
the conditions of issuance have otherwise been met shall issue and shall
be fully enforceable according to their terms. All issued and
unexercised warrants shall remain in full force and effect and be fully
enforceable according to their terms. All accrued and unpaid salary, if
any, including under paragraph 3(b)(i), accrued and unpaid expenses and
other payments under paragraph 3(d) and all benefits under paragraph
3(e), including interest iii any retirement or employee benefit plan
shall be promptly paid, or delivered to Executive or to the person
designated by Executive.
(ii) If the employment period ceases or terminates under
paragraph 5(a)(ii), (a)(v), (a)(vi), or if Executive elects to terminate
employment under 5(a)(iv) at a time when the Company is in breach of any
of its obligations hereunder, or if the employment period shall cease
and terminate for any other reason or on any other basis other than set
forth in 5(b)(i), then, Company shall pay and perform all of the items
set forth in paragraph 5(b)(i) and, in addition, the following shall
apply:
(1) If the employment period ceases or terminates within
two (2) years after the date of this Agreement, then the balance
of the warrants for four hundred thousand (400,000) shares of the
common voting stock of the Company that have not been issued under
paragraph 3(a) because the conditions for issuance have not been
met, shall be issued to Executive without regard to performance of
the conditions for issuance set forth in paragraph 3(a). If the
employment period shall cease and terminate more than two (2)
years after the date hereof, then the balance of the warrants for
four hundred thousand (400,000) shares of the common voting stock
of the Company that have not been issued under paragraph 3(a)
because the conditions for issuance have not been met, shall be
issued to Executive without regard to performance of the
conditions for issuance set forth in paragraph 3(a), and, in
addition thereto, Company shall thereupon promptly make a lump sum
cash payment to Executive in an amount equal to two (2) years of
base salary. For purposes of the immediately preceding sentence,
base salary shall mean the highest level of Executive's base
salary that was in effect at any time prior to termination of the
Employment Period, projected over a twelve (12) month period.
(iii) Within twelve (12) months after the Employment Period ceases
or terminates, whether under paragraph 5(a) or otherwise, Company shall
cause all warrants held by Executive to be registered under Federal
Securities Law.
(c) Effect of Termination. This Agreement and all liabilities and
obligations of the parties hereto hereunder shall cease and terminate
effective upon any termination of the Employment Period permitted by this
Agreement; provided, however, that Executive's obligations under Section 4
hereof shall survive any such termination.
(d) Remedies. Nothing herein contained shall be construed as
prohibiting any party hereto from pursuing any other remedies available to it
for any breach of any provision hereof. In addition to any other remedies
available to Executive, Executive shall have the right to specifically enforce
in equity the provisions of paragraph 5(b) hereof.
SECTION 6. ASSIGNMENT.
This Agreement shall not be assigned by either party hereto, except that
the Company shall have the right to assign its rights hereunder to any direct
or indirect subsidiary of the Company, any successor in interest of the
Company whether by merger, consolidation, purchase of assets or otherwise, and
any person controlling or which controls or is under conunon control with the
Company, any such subsidiary or any such successor, provided, however, that
any such assignment shall not relieve the Company of any of its obligations
hereunder.
SECTION 7. NOTICES.
All notices requests, demands and other communications hereunder must be
in writing and shall be deemed to have been given if delivered by hand or
mailed by first class, registered mail, return receipt requested, postage and
registry fees prepaid and addressed as follows:
(a) If to the Company:
U.S. Plastic Lumber Corp.
0000 Xxxxxx Xx., Xxxxx 00XX
Xxxx Xxxxx, XX 00000
Attention:
Copies to:
Proskauer, Rose, Xxxxx & Xxxxxxxxxx
0000 Xxxxxx Xx., Xxxxx 000 Xxxx
Xxxx Xxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxxxx
(b) If to the Executive:
Xx. Xxxx Xxxxxxxxx
000 Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Copies to:
Fox, Differ, Xxxxxxxx, Xxxxxxxx & X'Xxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxxx,, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esquire
Addresses may be changed by notice in writing signed by the addressee.
SECTION 8. MISCELLANEOUS.
This Agreement embodies the entire understanding between the parties
hereto respecting the subject matter hereof and no change, alteration or
modification hereof may be made except in writing signed by both parties
hereto. Any prior employment agreement between the Company and Executive
shall be deemed to be superseded for all purposes by this Agreement and, upon
the execution and delivery of this Agreement by Executive and the Company, any
such prior employment agreement shall be deemed to be cancelled and of no
further force or effect. The headings in this Agreement are for convenience
of reference only and shall not be considered as part of this Agreement or to
limit or otherwise effect the meaning hereof. If any provisions of this
Agreement shall be held invalid, illegal or unenforceable in whole or in part,
neither the validity of the remaining part of such provisions nor the validity
of any other provisions of this Agreement shall in any way be affected
thereby. This Agreement shall in all respects be governed by and construed in
accordance with the laws of the State of Pennsylvania.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
U.S. PLASTIC LUMBER CORP.
By:
Name:
(SEAL)
Executive: Xxxx Xxxxxxxxx
