Exhibit 10.1
EMPLOYMENT AGREEMENT
--------------------
Agreement, dated as of August 1, 1997, by and between DISCAS, INC., a
Delaware corporation with offices at 567-1 South Leonard Street, Waterbury, CT
06708, and Patrick A. DePaolo, Sr., an individual residing at 300 Argyle Road,
Cheshire, CT 06410,(hereinafter referred to as the "Employee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and the Employee mutually desire to enter into
an Employment Agreement with respect to the Employee's employment by the
Company;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and for other good and valuable consideration the receipt of which
is hereby acknowledged, the Company and the Employee hereby agree as follows:
1. Term and Position.
-----------------
The Company agrees to employ the Employee as its President and Chief
Executive Officer for the period (the "Employment Period") commencing on the
date hereof and terminating July 31, 2002. The Employee accepts such
employment, agrees to perform the functions and duties incident to such
position, and further agrees to perform such other services consistent with
his position as shall from time to time be assigned to him by, or pursuant to
authorization of, the Board of Directors of the Company and agrees to devote
substantially all of his business time, skill and attention to such services.
All future employment of members of Employee's family who are hired by
Employee in his capacity as Chief Executive Officer shall be subject to the
prior approval of the Board of Directors.
2. Directorship.
------------
The Company agrees that the Employee shall be named by its Board of
Directors as one of the nominees to its Board of Directors at each meeting of
the stockholders of the Company during the Employment Period at which
directors are to be elected. The Employee shall act as a director of the
Company and/or any of its subsidiaries or affiliates without any additional
compensation except as otherwise provided by the Board of Directors of the
Company or such subsidiary or affiliate.
1
3. Compensation and Benefits.
-------------------------
a. The Company shall pay to the Employee, and the Employee
shall accept from the Company, for the Employee's services hereunder during
the Employment Period, (i) base compensation at the rate of $175,000 per annum
for each of the first, second and third years, base compensation at the rate
of $227,500 per annum for the fourth year and base compensation at the rate of
$250,000 per annum for the fifth year, payable in accordance with the
customary payroll policy of the Company and subject to such payroll deductions
as required by law, and in addition to the items set forth below; and (ii)
such cash bonus each year as shall be determined by the Board of Directors of
the Company or any appropriate committee thereof. The sum of base compensation
and cash bonus provided for herein and paid to Employee shall not exceed
$175,000 per annum during the first three years of the Employment Period,
except for bonuses determined by the Board of Directors or any appropriate
committee thereof, which are based upon the Company's achievement of specific
mutually agreed upon targets for revenues, net income and/or common stock
share price for each fiscal year, set at the beginning of each fiscal year.
The Board of Directors may also provide for the grant of stock options under
the Company's stock option plan and for deferred compensation arrangements in
the Board's sole discretion. Employee shall not participate in any Board
decisions which concern his compensation.
b. The Company agrees to reimburse the Employee for all reasonable
business expenses incurred by him during the Employment Period in connection
with the performance of his services hereunder, including expenses incurred in
connection with activities associated with promoting the business of the
Company that are authorized from time to time by the Board of Directors, upon
presentation by Employee of an accounting of such expenses in such detail as
may be required by then-applicable tax laws.
c. The Employee shall participate at the Company's expense on the
same basis, subject to the same qualifications, as other senior executives of
the Company in any pension, savings, life insurance, health insurance,
hospitalization, long-term disability, and other fringe benefit plans and
vacation policies (the "Fringe Benefits") in effect from time to time with
respect to senior executives of the Company. The Company agrees that each of
the Fringe Benefits in effect on the date hereof or at any time during the
Employment Period shall not be terminated or modified in any manner which
reduces the benefits of the Employee without the written consent of the
Employee. In addition, the Company agrees to provide the Employee with a car
allowance of up to $700 monthly, and to the extent that it obtains key man
life insurance on the life of Employee, to use its best efforts to provide
that such
2
policy be assignable to Employee upon termination of this Agreement.
4. Termination.
-----------
a. For Cause.
---------
This Agreement may be terminated immediately by the Company
for cause, which shall constitute and be limited to the occurrence of any of
the following events: (i) the death of Employee; (ii) Employee's loss of legal
capacity for any reason; (iii) willful breach of this Agreement or his duties
hereunder by Employee; (iv) any act committed by the Employee against the
Company, its subsidiaries or divisions constituting (A) fraud, (B)
misappropriation of corporate opportunity, (C) self-dealing without the
express prior approval of the Board of Directors of the Company, (D)
embezzlement of funds, or (E) felony conviction for conduct involving moral
turpitude or other criminal conduct materially and adversely affecting the
operations of the Company, its subsidiaries or divisions; (v) the breach or
default by Employee in the performance of any material covenant on the part of
the Employee to be performed under this Agreement, which breach or default
shall continue for a period of fourteen (14) days after receipt of written
notice from the Company; (vi) chronic alcoholism or any other form of drug
addiction which impairs the Employee's ability to perform his duties
hereunder; or (vii) disability of Employee, which prevents Employee from
performing any material amount of his duties hereunder, and such disability is
expected, in the opinion of a physician engaged by the Company for such
purpose, to continue in excess of 120 days. In the event of disability,
Employee shall be entitled to cause his own physician to make an examination
of Employee, and if such personal physician disagrees with the opinion of the
Company's doctor, then the two doctors shall together appoint a third
physician to examine Employee, and the determination of such third physician
shall be final. The fees of such third physician shall be paid by the Company.
b. Without Cause.
-------------
This Agreement may be terminated by the Company at any time
without cause, subject to the payments set forth in subsection 4.c below. In
the event that this Agreement is terminated by the Company at any time
following a change in control of the Company (as defined in Section 203 of the
Delaware General Corporation Law), it shall be rebuttably presumed that
termination has been without cause.
3
c. Compensation Upon Termination.
-----------------------------
In the event that Employee is terminated with cause, as set
forth in Section 4.a above, then the obligation of the Company to compensate
Employee shall cease with the payment of all amounts accrued (including
reimbursement of expenses properly incurred by Employee prior to termination)
as of such date. In the event that Employee is terminated without cause, as
set forth in Section 4.b above, then the Company shall be obligated to pay
Employee his regular salary and benefits (but not including any discretionary
bonuses in the event termination occurs prior to the seventh month of any
contract year) through the normal term of this Agreement, without setoff for
new employment by Employee.
5. Breach, Notice.
--------------
The Company and the Employee agree that neither party shall have the
right to terminate this Employment Agreement by reason of any breach by the
other party of the provisions hereof unless written notice specifying such
breach shall have been given to the other party and unless the other party
shall continue such breach for at least fourteen days after the receipt of
such notice.
6. Non-Competition.
---------------
a. During the period of Employee's actual employment by the
Company, (such period hereinafter the "Non-Competition Period"), Employee
agrees that he will not, anywhere in the United States, directly or indirectly
enter into or participate (whether as owner, partner, shareholder, officer,
director, salesman, consultant, employee or otherwise) in any business which
designs, develops, manufactures, markets, distributes and/or otherwise sells
any Products (as defined below) or which is otherwise in competition with any
substantial business conducted by the Company during any period in which the
Employee is employed by the Company, without first having obtained the consent
of the Company, in writing; provided, that the Employee may own up to five
(5%) percent of the outstanding equity securities of any entity that is
subject to the public reporting requirements of the Securities Exchange Act of
1934 and provided further, that Employee's existing membership interest in
J-Von Group, L.L.C. shall not be deemed a breach of this Agreement. As used
herein, the term "Products" means any and all goods and/or products of the
type at any time sold by the Company, including but not limited to a broad
range of plastic and rubber compounds and goods manufactured therefrom using a
variety of recycled and prime materials, and any functionally similar goods
and/or products. The Non-Competition Period shall continue until July 31, 2002
in the event that Employee voluntarily leaves the employment of the Company
for any reason. If the Employee is terminated without cause, as set forth in
Section 4(b),
4
the Non-Competition Period shall end on the date of such termination, except
that the Company shall have the right, but not the obligation, to extend the
Non-Competition Period for twelve months from such date of termination by
paying to Employee his base salary pursuant to this Agreement for such
prospective twelve month period in advance. Such payment shall be in addition
to the payments due Employee under Section 4(c). If the Employee is terminated
with cause, as set forth in Section 4(a), the Non- Competition Period shall
end on the date of such termination, except that the Company shall have the
right, but not the obligation, to extend the Non-Competition Period for twelve
months from such date of termination by paying to Employee his base salary
pursuant to this Agreement for such prospective twelve month period in
advance. If Employee discontinues his employment as a result of a change in
control of the Company subsequent to the date of this Agreement (as
contemplated by Section 203 of the Delaware General Corporation Law), then the
Non-Competition Period shall expire at the time od such discontinuance of
employment.
b. During the Non-Competition Period, the Employee shall
not, without the prior written consent of the Company, directly or indirectly
(i) solicit, request, cause or induce any person who is at the time, or three
months prior thereto had been, an employee of or a consultant to the Company,
to leave the employ of or terminate his relationship with the Company, (ii)
employ, hire, engage or be associated with, or endeavor to entice away from
the Company, any such person or (iii) induce any customers of the Company to
discontinue doing business with the Company.
7. Non-Disclosure of Confidential Information.
------------------------------------------
a. The Employee acknowledges that it is the policy of the
Company to maintain as secret and confidential all valuable and unique
information heretofore or hereafter acquired, developed or used by the Company
relating to the business, operations employees and customers of the Company,
which information gives the Company a competitive advantage in its industry,
and which information includes technical knowledge, know-how or trade secrets
and information concerning the operations, sales, personnel, suppliers,
customers, costs, profits, markets, pricing policies, "Confidential Material"
(as hereinafter defined), and the results of any investigations or experiments
of the Company (as such information is hereinafter referred to as
"Confidential Information"). The Employee recognizes that the services to be
performed by the Employee are special and unique, and that by reason of his
duties he will acquire Confidential Information. The Employee recognizes that
all such Confidential Information is the sole and exclusive property of the
Company. In consideration of the Company's entering into this Agreement, the
Employee agrees that:
5
i. he shall never for so long as such information
is valuable and unique (but in no case for longer than five years following
the termination of Employee's employment by the Company), directly or
indirectly, use, publish, disseminate or otherwise disclose any Confidential
Information obtained during his employment by the Company without the prior
written consent of the Company's Board of Directors, it being understood that
this subparagraph shall survive the term of this Agreement;
ii. the parties hereto agree that the Employee,
during the course of his employment, may be directed to perform services for
the benefit of a customer of the Company, such customer shall be deemed a
third party beneficiary of the provisions of this Agreement and, in addition
to the proscriptions contained in subparagraph (i) above, shall not disclose
any "confidential information" which relates to the customer (defined with
respect to such customer in the same manner as for the Company) to any person,
firm or enterprise without the prior written consent of the Company and such
customer;
iii. during the term of his employment by the
Company, he shall exercise all due and diligent precautions to protect the
integrity of the Company's customer lists, mailing lists and sources thereof,
statistical data and compilations, Agreements, contracts, manuals or other
documents and any and all other materials embodying any Confidential
Information (the "Confidential Materials") and, upon termination of his
employment hereunder, or at such earlier time as the Company may so request,
he shall immediately return to the Company all such Confidential Materials
(and copies thereof) then in his possession or control;
iv. the Employee agrees that he will at all times
comply with all security regulations (a) in effect from time to time at the
Company's or its customers' premises and (b) in effect for materials belonging
to the Company or its customers; and
v. the Employee agrees that the provisions of this
subsection (a) are reasonably necessary to protect the proprietary rights of
the Company in the Confidential Information and its trade secrets, goodwill
and reputation.
b. The Employee acknowledges that any breach of the
provisions of this Section 7 can cause irreparable harm to the Company for
which the Company would have no adequate remedy at law. In the event of a
breach or threatened breach by the Employee of any of such provisions, in
addition to any and all other rights and remedies it may have under this
Agreement or otherwise, the Company may immediately seek any judicial action
deemed necessary, including, without limitation, temporary and preliminary
injunctive relief.
6
8. Arbitration.
-----------
Any controversy or claim arising out of or in connection
with this Employment Agreement or any breach of this Employment Agreement or
any default under this Employment Agreement shall be settled by arbitration in
the State of Connecticut in accordance with the rules of the American
Arbitration Association and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction.
9. Successors and Assigns.
----------------------
This Employment Agreement shall be binding upon and inure to
the benefit of the parties hereto, their respective heirs, administrators,
executors, successors and assigns; provided, however, that this Employment
Agreement may not be assigned by either party hereto.
10. Governing Law.
-------------
This Employment Agreement shall be governed by, and construed in
accordance with, the laws of the State of Connecticut.
11. Notice.
------
Any notice required hereunder shall be delivered by hand, sent by
telecopy, or sent by registered or certified mail, addressed to the other
party hereto at its address set forth above or at such other address as notice
thereof shall have been given in accordance with the provisions of this
Section 11. Any such notice shall become effective (a) when mailed, three days
after having been deposited in the mails, postage prepaid, and (b) in the case
of delivery by hand or telecopy, upon delivery.
12. Agreement; Amendment.
--------------------
This Agreement supersedes any prior Agreements or understandings,
oral or written, between the parties hereto and represents their entire
understanding and Agreement with respect to the subject matter hereof, and
this Agreement can be amended, supplemented or changed, and any provision
hereof can be waived, only by written instrument making specific reference to
this Agreement which is signed by the party against whom enforcement of any
such amendment, supplement, modification or waiver is sought.
7
13. Severability.
------------
In the event of the invalidity or unenforceability of any one or more
provisions of this Agreement, such illegality or unenforceability shall not
affect the validity or enforceability of the other provisions hereof and such
other provisions shall be deemed to remain in full force and effect. The
Employee specifically acknowledges and agrees that the provisions of Sections
6 and 7 hereof are reasonable and valid in all respects. If any tribunal
having jurisdiction determines that any of the provisions of either Section 6
or Section 7 or any part or parts thereof, is invalid or unenforceable because
of the duration or scope of such provision, such tribunal shall have the power
to reduce the duration or scope of such provision, and in its reduced form,
such provision shall then be enforceable.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Employment Agreement the day and year first above written.
DISCAS, INC.
By:________________________
Ron Pettirossi, Chief
Financial Officer and
Secretary
EMPLOYEE:
---------------------------
Patrick A. DePaolo, Sr.
8