Exhibit 10.7
EMPLOYMENT
AGREEMENT
THIS AGREEMENT is made effective as
of the 10 th day of May 2005, 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” ), and Mike Kapuscinski (
“Executive” ).
RECITALS
WHEREAS, Executive is currently
employed by the Employers; and
WHEREAS, Compression Polymers
Holdings II LP (the “Purchaser” ), a
Delaware limited partnership, has purchased all of the shares of
capital stock of CPC and Vycom pursuant to a Stock Purchase
Agreement, dated March 12, 2005, among Compression Polymers
Holdings LLC, a Delaware limited liability company, the Purchaser,
CPC, Vycom, CPCapitol Acquisition Corp., a Delaware corporation,
and North Keyser Partners, LLC, a Delaware limited liability
company; and
WHEREAS, Employers desire continue
to employ the Executive and to utilize his management services as
indicated herein, and Executive has agreed to provide such
management services to Employers; and
WHEREAS, as a condition precedent
and a material inducement for Employers to continue to employ and
pay Executive, Executive has agreed to execute this Agreement and
be bound by the provisions herein; and
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
as the Vice President of Operations of each of Employers commencing
on the date hereof and continuing for a period of three (3) years
(the “Initial
Term” ) or until terminated in
accordance with this Section 1 or 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” ) until terminated by written
notice delivered at least thirty (30) days prior to the expiration
of the Subsequent Term. 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 its interests
consistent with and subject to the direction and control of the
Board of Directors of each of Employers (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.
2.
Compensation During Term .
(a)
Base Compensation . In consideration of the services to be
rendered by Executive during the Term of this Agreement, Employers
shall pay to Executive, in the aggregate, $175,000 per year
( “Base
Compensation” ), payable bi-weekly and
prorated for any partial employment period.
(b)
Bonus . Subject only to the limitations set forth in this
Agreement, 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 the Chief Executive
Officer of the Employer (the “CEO” ). For the 2005 fiscal year,
(i) the maximum Incentive Bonus shall be $150,000, and (ii) at
least 75% of the Incentive Bonus shall be based on EBITDA
performance goals. Exhibit A demonstrates the potential 2005
Incentive Bonus payment if the Compensation Committee determines
that the Incentive Bonus shall be based entirely (100%) on EBITDA
performance goals. Each Incentive Bonus shall be paid no later than
2½ months following the end of the fiscal year to which it
relates.
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; (ii) ten (10) days of paid sick leave
during each annual period, which shall be cumulative and (iii) four
(4) weeks of paid vacation leave during each annual
period.
2
(c)
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 the date hereof Executive is purchasing class A units and class
B units of Compression Polymers Holding I LP (
“CPH I”
) pursuant to and
in accordance with the terms of the subscription agreements between
Executive and CPH I entered into on the date hereof.
5.
Termination . Executive’s employment shall terminate
upon the first to occur of the following (each a
“Termination
Date” ) :
(a)
The expiration of the Term;
(b)
Executive’s death or disability (mentally, physically or
emotionally), so that Executive cannot substantially perform his
duties hereunder for a period of ninety (90) consecutive days or
for one hundred eighty (180) days during any 365 day period during
the Term;
(c)
Executive’s voluntary termination of his employment for any
reason, upon not less than 10 business days’ written notice
to Employers; provided, however, that any termination by Executive
pursuant to Section 5(e) shall not be treated as a voluntary
termination under this Section 5(c);
(d)
Employers’ termination of Executive’s employment for
Cause (as hereinafter defined); or
(e)
Executive’s termination of his employment for Good Reason (as
hereinafter defined) .
6.
Termination Payments .
(a) &nb
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