Exhibit M
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), dated the 2nd day of August,
1999, is by and between Stake Technology Ltd., a corporation incorporated under
the laws of Canada ("Company"), and Allan Routh, a Minnesota resident
("Employee").
WHEREAS, Employee desires to be employed by the Company, and Company
desires to employ the Employee, all as herein provided.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE 1. DEFINITIONS
Capitalized terms used in this Agreement shall have their defined meaning
throughout the Agreement. The following terms shall have the meanings set forth
below, unless the context clearly requires otherwise.
1.1 "Agreement" means this Employment Agreement, as from time to time
amended.
1.2 "Base Salary" means the total annual cash compensation payable on a
regular periodic basis, without regard to voluntary or mandatory deferrals, as
set forth at Section 3.1 of this Agreement.
1.3 "Board" means the Board of Directors of the Company.
1.4 "Bonus" means the bonus compensation payable as provided in Section
3.2 of this Agreement.
1.5 "Cause" means termination of Employee's employment by the Company
based on any one or more of the following:
(a) an act or acts of personal dishonesty taken by Employee and intended
to result in personal enrichment of Employee at the expense of the Company;
(b) violations by Employee of his obligations and duties under Section 2.2
which are demonstrably willful and deliberate on Employee's part and which are
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remedied within a reasonable period after Employee's receipt of notice of such
violations from the Company; or
(c) the willful engaging by Employee in illegal conduct that is injurious
to the Company.
No act, or failure to act, on Employee's part shall be considered
"dishonest," "willful" or "deliberate" unless done, or omitted to be done, by
Employee in bad faith and without reasonable belief that Employee's action or
omission was in, or not opposed to, the best interest of the Company. Any act,
or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by Employee in good
faith and in the best interests of the Company.
1.6 "Company" means Stake Technology Ltd., a corporation incorporated
under the laws of Canada and shall include its subsidiaries and divisions.
1.7 "Confidential Information" means information that is proprietary to
the Company or proprietary to others and entrusted to the Company, whether or
not trade secrets. Confidential Information includes, but is not limited to,
information relating to business plans and to business as conducted or
anticipated to be conducted, and to past or current or anticipated products.
Confidential information also includes, without limitation, information
concerning research, development, purchasing, accounting, marketing, selling and
services. All information that Employee has a reasonable basis to consider
confidential is Confidential Information, whether or not originated by Employee
and without regard to the manner in which Employee obtains access to this and
any other proprietary information.
1.8 "Disability" means the unwillingness or inability of Employee to
perform Employee's duties under this Agreement because of incapacity due to
physical or mental illness, bodily injury or disease for a period of 180
consecutive days.
1.9 "Disability Payment Date" shall mean the day which is twelve (12)
months following the 180 consecutive days of incapacity required under the
definition of "Disability."
1.10 "Dispute" means any claim, controversy or dispute arising between the
parties with respect to this Agreement.
1.11 "Employee" means Allan Routh, a Minnesota resident.
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1.12 "Good Reason" means termination of employment by Employee based on
any one or more of the following (which termination must occur within ninety
(90) days of such event):
(a) An adverse change in Employee's status or position with the Company,
including, without limitation, any adverse change in Employee's status or
position as a result of a material diminution in Employee's duties,
responsibilities or authority as of the date of this Agreement (or any status or
position to which Employee may be promoted after the date hereof) or the
assignment to Employee of any duties or responsibilities which are inconsistent
with Employee's status or position (except in connection with the termination of
Employee's employment for Cause, Disability or death, as herein provided);
(b) A reduction by the Company in Employee's Base Salary as the same may
be increased from time to time;
(c) The Company's requiring Employee to be based anywhere other than
where Employee's office is located as of the date of this Agreement, except for
required travel on the Company's business;
(d) Any purported termination by the Company of this Agreement or the
employment of the Employee by the Company which is not expressly authorized by
this Agreement or any breach of this Agreement by the Company other than an
isolated, insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company within a reasonable period of time after the
Company's receipt of notice thereof from the Employee; or
(e) A Successor succeeds to the interests of the Company.
1.13 "Plan" means any bonus or incentive compensation agreement, plan,
program, policy or arrangement sponsored, maintained or contributed to by the
Company, to which the Company is a party or under which employees of the Company
are covered, including, without limitation, any stock option, restricted stock
or any other equity-based compensation plan, annual or long-term incentive
(bonus) plan, and any employee benefit plan, such as a thrift, pension, profit
sharing, deferred compensation, medical, dental, disability, accident, life
insurance, automobile allowance, perquisite, fringe benefit, vacation, sick or
parental leave, severance or relocation plan or policy or any other agreement,
plan, program, policy or arrangement intended to benefit employees or officers
of the Company.
1.14 "Successor" means any corporation, individual, group, association,
partnership, firm, venture or other entity or person that, subsequent to the
date hereof,
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succeeds to the actual or practical ability to control (either immediately or
with the passage of time), all or substantially all of the Company's business
and/or assets, directly or indirectly, by merger, consolidation,
recapitalization, purchase, liquidation, redemption, assignment, similar
corporate transaction, operation of law or otherwise,
1.15 "Sunrich Division" means the division or subsidiary of the Company
which was Sunrich, Inc. prior to its merger with the Company.
1.16 "Sunrich, Inc." means Sunrich, Inc., the Minnesota corporation before
its merger with the Company.
ARTICLE II. EMPLOYMENT, DUTIES AND TERM
2.1 Employment. Upon the terms and conditions set forth in this Agreement,
the Company hereby employs Employee, and Employee accepts such employment, as
President of Sunrich Division.
2.2 Duties. During the term of this Agreement, and excluding any periods
of vacation, sick, disability or other leave to which Employee is entitled,
Employee agrees to devote his reasonable full-time attention during normal
business hours to the business and affairs of the Sunrich Division and, to the
extent necessary, to discharge the responsibilities assigned to Employee
hereunder and to use Employee's reasonable best efforts to perform faithfully
and efficiently such responsibilities. Employee's responsibilities and duties
shall be as mutually agreed upon from time to time by the Employee and the Board
but shall initially include those items listed on Exhibit A attached hereto.
Employee shall comply with the Company's policies and procedures; provided that
to the extent such policies and procedures are inconsistent with this
Agreement, the provisions of this Agreement shall control.
2.3 Certain Proprietary Information. If Employee possesses any proprietary
information of another person or entity as a result of prior employment or
relationship, Employee shall honor any legal obligation that Employee has with
that person or entity with respect to such proprietary information.
2.4 Term. Subject to the continuing provisions of Sections 5.1 and 6.1,
the term of employment of Employee under this Agreement shall be for two (2)
years and this Agreement shall automatically renew for one (1) year terms
unless one party gives written notice to the other of its intent to terminate
this Agreement at least thirty (30) days but not more than ninety (90) days
prior to the beginning of the next renewal term. In the event Employee elects
not to renew employment, such election shall be treated as an Employee
resignation and shall be subject to Section 4.5 hereof. In the
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event Company elects not to renew Employee's employment, such election shall be
treated as an Employee dismissal and shall be subject to Section 4.6 hereof.
2.5 Return of Proprietary Property. Employee agrees that all property in
Employee's possession belonging to Company, including without limitation, all
software, documents, reports, manuals, memoranda, computer print-outs, customer
lists, credit 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, even if Employee authored, created or
assisted in authoring or creating, such property, Employee shall return to the
Company all such documents and property immediately upon termination of
employment or at such earlier time as the Company may reasonably request.
ARTICLE III. COMPENSATION BENEFITS AND EXPENSES
3.1 Base Salary. During the term of Employee's employment under this
Agreement, the Company shall pay Employee a Base Salary at an annual rate that
is not less than $110,000.00 or such higher annual rate as may from time to time
be approved by the Board, such Base Salary to be paid in substantially equal
regular periodic payments in accordance with the Company's regular payroll
practices. If Employee's Base Salary is increased from time to time during the
term of Employee's employment under this Agreement, the increased amount shall
become the Base Salary for the remainder of the term and any extensions of
Employee's term of employment under this Agreement.
3.2 Performance Bonus, In addition to the remuneration to be paid to him
as set out in Section 3.1, Employee shall also be entitled to a Bonus of up to
50% of his Base Salary payable quarterly in arrears. Such Bonus shall follow the
same format of meeting and achieving budget and management goals as the bonus
plan of the Company.
3.3 Other Compensation and Benefits. During the term of Employee's
employment under this Agreement, the Company shall make available to Employee
all Plans in which Employee currently participates as an employee of Sunrich,
Inc. In addition to any existing Plans in which Employee currently participates,
Employee shall be entitled to participate in or receive benefits under any Plan
which is made available by the Company to other employees of the Company who are
similarly situated to Employee with respect to responsibility, grade level, or
other reasonable categorizations. Nothing paid to Employee under any Plan shall
be deemed to be in lieu of the Base Salary, Bonus, incentives or compensation of
any other nature otherwise payable to Employee.
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3.4 Vacation. For the 1999 fiscal year of the Company and for each
subsequent fiscal year that begins during the term of Employee's employment
under this Agreement, Employee shall be entitled to three (3) weeks paid
vacation (prorated for any partial fiscal year). Carryover of unused vocation
shall be in accordance with the then existing Company policy.
3.5 Business Expenses. During the term of Employee's employment under 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
business expenses incurred by Employee in performing Employee's duties as an
employee of the Company, including, without limitation, all travel and living
expenses while away from home on business in the service of the Company,
provided that Employee accounts promptly for such expenses to the Company in the
manner reasonably prescribed from time to time by the Company.
3.6 Automobile. During the term of Employee's employment under this
Agreement, the Company shall furnish Employee with the use of an automobile for
business purposes in accordance with the Company's automobile policy.
3.7 Options. The Employee shall also be granted an option to purchase up
to 200,000 common shares of the capital stock of the Company in accordance with
the provisions of the 1999 Stake Stock Option Plan to be submitted to and
approved by the shareholders of the Company at the forthcoming annual and
special meeting. The exercise price shall be the price of the Company stock at
market close the trading day immediately prior to the date upon which the merger
between Sunrich, Inc. and the Company occurs ("Closing Date"). Such option shall
vest as to the right to purchase up to 50,000 shares immediately upon the
Closing Date and the remaining 150,000 shares at the rate of 30,000 shares per
year.
SECTION IV. TERMINATION
4.1 Cause. The Company may terminate the Employee's employment with the
Company for Cause. In the event of such termination, the Company shall pay all
Base Salary and benefits (but not Bonus), to Employee prorated through the date
of termination. Such payments shall be made according to the normal payroll
practices of the Company. Employee shall forfeit any of his unexercised stock
options at the date of termination for Cause.
4.2 Good Reason. The Employee may terminate employment with the Company
under this Agreement for Good Reason. In the event of such termination, the
Company shall pay all Base Salary, Bonus and benefits to Employee prorated
through a date which is twelve (12) months after the date of Employee's
termination
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for Good Reason. Such payments shall be made according to the normal payroll
practices of the Company. All Employee's stock options shall remain effective
subsequent to Employee's termination for Good Reason.
4.3 Death. This Agreement shall immediately terminate upon the death of
Employee, In the event of such termination, the Company shall pay all Base
Salary, Bonus and benefits to the Employee's estate prorated to the date of
Employee's death. Such payments shall be made according to the normal payroll
practices of the Company. Employees estate shall only have those rights to
exercise any vested and unexercised stock options as are provided in the
relevant stock option Plan.
4.4 Disability. The Company may terminate the Employee or the Employee may
terminate his employment for Disability. In the event of such termination, the
Company shall pay all Base Salary, Bonus and benefits to the Employee prorated
through the Disability Payment Date, Such payments shall be made according to
the normal payroll practices of the Company. Employee shall forfeit any vested
and unexercised stock options on the Disability Payment Date.
4.5 Employee Resignation. In the event the Employee resigns from
employment with the Company for other than Good Reason, death or Disability,
then the Company shall pay all Base Salary and benefits (but not Bonus) to the
Employee through the date of resignation. Such payments shall be made according
to the normal payroll practices of the Company. Employee shall forfeit any
unexercised stock options on the date of Employee's resignation for other than
for Good Reason, death or Disability.
4.6 Employee Dismissal. In the event the Employee's employment is
terminated by the Company for other than Cause, death or Disability, then the
Company shall pay all Base Salary, Bonus and benefits to Employee prorated
through a date which is twelve (12) months after the date of Employee's
termination. Such payments shall be made according to the normal payroll
practices of the Company, All Employee's stock options shall remain effective
subsequent to Employee's dismissal for other than Cause, death or Disability.
ARTICLE V. CONFIDENTIAL INFORMATION
5.1 Prohibitions Against Use. Employee will not during or subsequent to
the termination of Employee's employment under this Agreement use or disclose,
other than in connection with Employee's 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 the
prior written consent of the Company. Employee will use reasonable and prudent
care to safeguard and
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protect and prevent the unauthorized use and disclosure of Confidential
Information. The obligations contained in this Section 5.7 will survive for as
long as the Company in its sole judgment considers the information to be
Confidential Information. The obligations under this Section 5.1 will not apply
to any Confidential Information that is now or becomes generally available to
the public through no fault of Employee and will not apply to Employee's
disclosure of any Confidential Information required by law or judicial or
administrative process.
ARTICLE VI. NON-COMPETITION
6.1 Non-Competition.
(a) As further consideration for this Agreement, Employee covenants and
agrees that during the term of this Agreement and for a period of one (1) year
thereafter, Employee shall not directly or indirectly:
(i) Accept other employment or any other engagement, appointment or
association of any nature whatsoever with, or become an investor or
otherwise interested or concerned in or with, any individual person,
proprietorship, partnership, limited partnership, joint venture,
corporation, association or other entity of any nature which is a
competitor, directly or indirectly, with the business of the Company as
now conducted or which hereafter may in any way be conducted or engaged in
by Company; or
(ii) Engage in any other activity whatsoever (whether on his own
account or for another) which is competitive with Company during the term
of this Agreement.
SECTION VII. INJUNCTION.
7.1 Injunction. Employee agrees that a breach or imminent breach of
Sections 5.1 or 6.1 above shall constitute a material breach of this Agreement
for which Company will have no adequate remedy at law. Employee agrees,
therefore, that Company's remedies upon a breach or imminent breach of Sections
5.1 or 6.1 above includes, but is not limited to, the right to preliminary and
permanent injunctive relief restraining Employee from further violation of said
Sections, as well as an equitable accounting of all profits or benefits arising
out of such breach, in addition to any other remedies available at law or in
equity or otherwise to Company or its affiliates.
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ARTICLE VIII. GENERAL PROVISIONS
8.1 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of any
Successor of the Company and any such Successor shall absolutely and
unconditionally assume all of the Company's obligations hereunder.
(b) This Agreement and all rights of Employee hereunder shall inure to
the benefit of and be enforceable by Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Employee should die while any amounts would still be
payable to Employee hereunder if Employee had continued to live, all such mounts
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to Employee's devisee, legatee, or other designee or, if there be
no such designee, to Employee's estate. Employee may not assign this Agreement,
in whole or in any part, without the prior written consent of the Company.
8.2 Notices. 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 its address set forth on the last page of this Agreement.
Either party may, by notice hereunder, designate a changed address. 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.
8.3 Withholding. To the extent required by any applicable law, including,
without limitation, any federal or state income tax or excise tax law or laws,
the Federal Insurance Contributions 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 Employee under this
Agreement as the Company deems necessary.
8.4 Captions. The various headings or captions in this Agreement are for
convenience only and shall not affect the meaning or interpretation of this
Agreement.
8.5 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 Minnesota (without regard to the conflict of
laws rules or statutes of any jurisdiction), and any and every legal proceeding
arising out of or in connection with this Agreement shall be brought in the
appropriate courts of the State of Minnesota,
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each of the parties hereby consenting to the exclusive jurisdiction of said
courts for this purpose.
8.6 Construction. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
8.7 Waivers. No failure on the part of either party to exercise, and no
delay in exercising, any right or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right or remedy granted hereby or by any related document or by law.
8.8 Modification. This Agreement may not be modified or amended except by
written instrument signed by the parties hereto.
8.9 Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties hereto in reference to all the matters herein
agreed upon.
8.10 Counterparts. This Agreement may be executed in one (1) or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one (1) and the same instrument.
8.11 Survival. The parties expressly acknowledge and agree that the
provisions of this Agreement which by their express or implied terms extend
beyond the termination of Employee's employment hereunder shall continue in full
force and effect notwithstanding Employee's termination of employment hereunder
or the termination of this Agreement, respectively.
8.12 Disputes. To the maximum extent allowed by applicable law, any
Dispute shall be submitted to and finally resolved by, binding arbitration. Any
party may file a written Demand for Arbitration with the American Arbitration
Association, and shall send a copy of the Demand for Arbitration to the other
party. The arbitration shall be conducted pursuant to the terms of the Federal
Arbitration Act and the Commercial Arbitration Rules of the American Arbitration
Association pursuant to the expedited procedures of the commercial rules then in
effect. To the extent such rules are not inconsistent with the terms and
conditions of this Section, the venue for the arbitration shall be Minneapolis,
Minnesota. The arbitration shall be conducted before one
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arbitrator selected as follows: within ten business days after the filing of a
Demand for Arbitration, each party shall designate a representative and, within
ten business days after the end of such ten-day period, such representatives
shall select an arbitrator who will serve as the sole arbitrator of the Dispute.
If the representatives of the parties are in good faith unable to agree upon an
arbitrator during the latter ten-day period, the arbitrator shall be selected
through the American Arbitration Association's arbitrator selection procedures.
The arbitrator shall promptly fix the time, date and place of the hearing and
notify the parties accordingly. The arbitration shall be held and the decision
of the arbitrator shall be provided as quickly as is reasonably possible and the
arbitrator's decision may include an award of legal fees, costs of arbitration
and interest. The arbitrator shall promptly transmit an executed copy of its
decision to the parties. The decision of the arbitrator shall be final, binding
and conclusive upon the parties. Each party shall have the right to have the
decision enforced by any court of competent jurisdiction. Notwithstanding any
other provision of this Section, any Dispute in which a party seeks equitable
relief may be brought in any court having competent jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
EMPLOYEE COMPANY
STAKE TECHNOLOGY LTD., a corporation
incorporated under the laws of Canada
/s/ Allan Routh By: /s/ Jeremy N. Kendall
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Allan Routh Title: Chairman CEO
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Address: Address:
50 Kirk Place NE Stake Technology
Owatonna, MN 55060 2838 Highway 7
Norval, Ontario
CANADA LOP 1KO
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EXHIBIT A
EMPLOYEE'S DUTIES AND RESPONSIBILITIES
Employee shall devote his best efforts to manage and promote the interests and
goodwill of Sunrich Division.