Exhibit 10.5
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective as
of the 1st day of January, 2006, by and among Compression Polymers
Holding Corporation, a Delaware Corporation (
“CPH” ), and its wholly owned
subsidiaries, Compression Polymers Corp., a Delaware corporation (
“CPC” ), and Vycom Corp., a Delaware
corporation ( “Vycom” ) (CPC and
Vycom, collectively, the “Employers” and
individually an “Employer” ), John R.
Loyack ( “Executive” ) and, solely with
respect to Section 4, Compression Polymers Holding I LP, a
Delaware limited partnership ( “CPH I”
).
RECITALS
WHEREAS, Executive and the Employers
have previously entered into an Employment Agreement dated
August 2, 2005 (the “Original
Agreement” ), pursuant to which Executive agreed to
serve as the Executive-Vice President – Finance and
Administration and Chief Financial Officer of the Employers
commencing on September 6, 2005; and
WHEREAS, on September 6, 2005,
Executive was appointed as the Chief Financial Officer and Chief
Operating Officer of the Employers;
WHEREAS, Employers now desire to
provide for Executive’s transition to the positions of
President and Chief Executive Officer of the Employers and to amend
and restate the Original Agreement to provide for such
transition;
WHEREAS, as a condition precedent
and a material inducement for Employers to employ and pay
Executive, Executive has agreed to execute this Agreement and be
bound by the provisions herein; and
WHEREAS, the parties hereto intend
this Agreement to cancel and supercede in all respects the Original
Agreement.
NOW, THEREFORE, in consideration of
the mutual covenants contained herein, the parties hereto agree as
follows:
PROVISIONS
1.
Term and
Duties . Employers hereby agree to
employ Executive for the three-year period commencing on
January 1, 2006 and ending December 31, 2008 (the
“Initial
Term” ) or until terminated in
accordance with this Section 1or Section 5. Unless
terminated by written notice delivered at least thirty (30) days
prior to the expiration of the Initial Term, Executive’s
employment shall continue for successive one (1) year terms
(each one (1) year term hereinafter referred to as a
“Subsequent
Term” and
together with the Initial
Term, the “Term” ). For the period commencing
on January 1, 2006 and continuing until February 9, 2006
(the date on which the Employers designate Executive as successor
Chief Executive Officer of the Employers) (the “Designation
Date”), Executive shall serve as the Chief Financial Officer
and Chief Operating Officer of the Employers. For the period
commencing on the Designation Date and continuing until
December 31, 2006 (or such earlier date as the Employers shall
determine), Executive shall serve as the President and Chief
Operating Officer of the Employers. For the period commencing on
January 1, 2007 (or such earlier date as the Employers shall
determine) and continuing until the expiration of the Term,
Executive shall serve as the President and Chief Executive Officer
of the Employers and as a non-compensated member of the Board of
Directors of each Employer (the “Board”). Subject to
the provisions of this Agreement, during the Term, Executive shall
devote his best efforts and abilities to the performance of
Executive’s duties on behalf of Employers and to the
promotion of their interests consistent with Executive’s
offices and positions with the Employers and subject to the
direction and control of the Board. Executive shall devote
substantially all of his business time, energies, attention and
abilities to the operation of the business of Employers and shall
not be actively involved in any other trade or business or as an
employee of any other trade or business; provided, however, that
Executive is permitted to serve on one outside Board of Directors
of Executive’s choosing provided that such service is not in
any way competitive with the Employers and does not materially
interfere with the performance of Executive’s duties to
Employers.
2.
Compensation
During Term .
(a)
Base
Compensation . In consideration of the
services to be rendered by Executive during the Term, Employers
shall pay to Executive, (i) subject to subparagraph (ii), for
the period January 1, 2006 through December 31, 2006 a
base salary of $300,000 per year, payable bi-weekly and prorated
for any partial employment period, and (ii) beginning
January 1, 2007, a base salary of $400,000 per year, payable
bi-weekly and prorated for any partial employment period ($300,000
or $400,000, as the case may be, the “Base Compensation”
).
(b)
Bonus . Subject only to the
limitations set forth in this Agreement, commencing with the fiscal
year beginning January 1, 2006, Executive shall be entitled to
receive an annual incentive bonus ( the “Incentive Bonus”
)
based upon the
achievement of certain budget performance goals related to
Employers’ (i) EBITDA, (ii) working capital,
(iii) capital expenditures and/or (iv) such other
performance criteria as the Compensation Committee of the Board
(the “Compensation
Committee” ) shall determine. Such
annual goals shall be determined by the Compensation Committee in
consultation with Executive. For the 2006 fiscal year, Executive
shall be eligible to receive a target Incentive Bonus of $275,000.
The EBITDA target for such year shall be $53.8
million (i.e., 102.5% of the $52.5 million budgeted EBITDA for such
year),
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inclusive of the Incentive
Bonus as an expense. The Compensation Committee in consultation
with Executive shall establish other mutually agreeable performance
targets and Incentive Bonus payout ranges for 2006. For the 2007
fiscal year and thereafter during the Term, Executive’s
target Incentive Bonus shall be $375,000 and performance targets
shall be established by the Compensation Committee in consultation
with Executive. Payout ranges shall be established in a similar
manner to the establishment of ranges for the 2006 Incentive Bonus.
Each Incentive Bonus shall be paid no later than 2½ months
following the end of the fiscal year to which it relates and will
be no less than $50,000 for fiscal year end 2006.
3.
Benefits
.
(a)
Subject to
Section 3(b) below, Executive shall be eligible to
participate in such benefit programs offered by each Employer
(other than bonus plans), such as health, dental, life insurance,
vision, vacations and 401(k), as are offered to similarly-situated
employees (except in the case of equity-based incentive plans where
awards are subject to Board (or committee thereof) approval) and in
each case no more favorable than the terms of benefits generally
available to the employees of Employers (based on seniority and
salary level), subject in each case to the generally applicable
terms and conditions of the plan, benefit or program in
question.
(b)
Notwithstanding
the foregoing, Executive shall be entitled, at a minimum, to the
following: (i) major medical insurance coverage comparable to
the insurance coverage currently provided by Employers for
executive officers; (ii) ten (10) days of paid sick leave
during each full annual period, which shall be cumulative and
(iii) four (4) weeks of paid vacation leave during each
annual period.
(c)
For each full
fiscal year of the Employers during the Term, the Employers shall
reimburse the Executive for up to $12,000 of expenses he
may incur for life, disability, automobile, liability and/or
homeowners insurance upon submission of written
receipts.
(d)
Unless otherwise
determined by the Board, during the Term, Executive shall be
authorized to incur necessary and reasonable travel, entertainment
and other business expenses in connection with his duties
hereunder. Employers shall reimburse Executive for such expenses
upon presentation of an itemized account and appropriate supporting
documentation, all in accordance with the generally applicable
policies; provided the Board’s written approval shall be
required prior to Executive’s incurring $10,000 of expenses
in any one instance or $20,000 of expenses in the
aggregate.
4.
Equity
Participation . On August 2, 2005,
Executive purchased 1,000 class B units of CPH I pursuant to
and in accordance with the terms of the subscription agreement
between Executive and CPH I entered into on such date. If he is
then
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employed by the Employers,
on February 9, 2006 Executive shall purchase and CPH I shall
sell 1,000 class B units of CPH I pursuant to and in
accordance with the terms of the subscription agreement between
Executive and CPH I in the form attached hereto as
Exhibit A . The
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