EMPLOYMENT
AGREEMENT (the “Agreement”) dated as of July 6,
2005 by and between Polypore International, Inc. ,
headquartered in Charlotte, North Carolina (the
“Company”) and Robert B. Toth (the
“Executive”), and as acknowledged by PP Holding, LLC
(the “LLC”).
The Company
desires to employ Executive and to enter into an agreement
embodying the terms of such employment; and
Executive desires
to accept such employment and enter into such an agreement;
therefore
In consideration
of the premises and mutual covenants herein and for other good and
valuable consideration, the parties agree as follows:
1. Term
of Employment . Subject to Section 8 of this Agreement,
Executive shall be employed by the Company for a period commencing
on July 6, 2005 (the “Commencement Date”) and
ending on July 6, 2008 (the “Employment Term”), on
the terms and subject to the conditions set forth in this
Agreement; provided , however , that commencing upon
July 6, 2008 and on each anniversary thereafter (each an
“Extension Date”), the Employment Term shall be
automatically extended for an additional one-year period, unless
the Company or Executive provides the other party hereto at least
120 days prior written notice before the next Extension Date
that the Employment Term shall not be so extended. For the
avoidance of doubt, the term “Employment Term” shall
include any extension that becomes applicable pursuant to the
preceding sentence.
a.
For so long as Executive is employed by the Company pursuant to
this Agreement, Executive shall serve as the Company’s Chief
Executive Officer and President. In such positions, Executive shall
have such duties and authority as shall be determined from time to
time by the Board of Directors of the Company (the
“Board”) and Executive shall report solely to the
Board. Executive also agrees to serve, without additional
compensation, as a member of the Board, and the Company shall take
all actions necessary to cause Executive to be appointed as a
member of the Board. The Company shall provide Executive with
Directors and Officers (“D&O”) and Errors and
Omissions (“E&O”) insurance in limits provided to
other directors and officers of the Company. The Company also
agrees to indemnify and defend Executive to the fullest extent
permitted by law and the Company’s corporate bylaws (the
“By-Laws”), with respect to any and all claims, which
arise from or relate to Executive’s duties as an officer,
member of the Board, if applicable, or employee of the
Company.
b.
For so long as Executive is employed by the Company pursuant to
this Agreement, Executive will devote Executive’s full
business time and best efforts to the performance of
Executive’s duties hereunder and will not engage in any other
business, profession or occupation for compensation or otherwise
which would conflict or interfere with the rendition of such
services either directly or indirectly, without the prior written
consent of the Board. Notwithstanding the foregoing, nothing herein
shall preclude Executive from serving as
a member of the
board of directors or advisory boards (or their equivalents in the
case of a non-corporate entity) of (i) not-for-profit and/or
charitable organizations, and (ii) with the prior written
consent of the Board, which consent shall not be unreasonably
withheld, non-competing businesses.
3. Base
Salary . For so long as Executive is employed by the Company
pursuant to this Agreement, the Company shall pay Executive a base
salary (the “Base Salary”) at the annual rate of
$450,000, payable in regular installments in accordance with the
Company’s usual payment practices; provided, however, that on
January 1, 2006, the Company shall increase Executive’s
Base Salary by five percent (5%). Notwithstanding the foregoing,
(a) at least once every twelve (12) months and
(b) upon the occurrence of a material corporate event of the
Company (including, without limitation, a merger, recapitalization,
acquisition, consolidation of the Company or other similar event),
the Board shall review Executive’s rate of Base Salary.
Executive’s Base Salary shall not be reduced by the Company
at any time during the Employment Term.
4. Annual
Bonus . With respect to each full fiscal year of the Company
(each a “Fiscal Year”) during the Employment Term (for
so long as Executive is employed during such Term), Executive shall
be eligible to earn an annual bonus award (an “Annual
Bonus”). Such Annual Bonus shall be based upon the
achievement of certain performance targets to be established by the
Board after consultation with Executive and the eligibility amount
shall not be less than Executive’s Base Salary (the
“Target Annual Bonus”); provided ,
however , that Executive’s Annual Bonus in respect to
the current fiscal year shall be guaranteed to be $225,000 (50% of
Executive’s Base Salary) (the “Guaranteed
Bonus”). Annual Bonuses shall, to the extent earned, be paid
to Executive no later than March 31 each year.
a.
On the Commencement Date, subject to the terms of the
Company’s 2004 Stock Option Plan (the “Plan”),
the Company shall grant Executive Options (as defined in the Plan)
representing 2.25% of the Company’s Common Stock, determined
on a fully diluted basis, with an exercise price per share equal to
the Fair Market Value (as defined in the Plan). The Options shall
be vested as to 25% on the date of grant, and subject to
Executive’s continued employment with the Company, the
remainder of the Options shall be eligible to vest upon the
achievement of the annual and/or cumulative performance targets for
2006, 2007 and 2008, in accordance with the terms of the Plan. The
Options shall otherwise be subject to the terms of an option
agreement, the form of which is attached hereto as Exhibit A.
The parties hereto shall execute such option agreement
contemporaneously with the execution of this Agreement.
b.
During the one (1) year period following the Commencement
Date, Executive shall be given the opportunity to make one or more
cash investments in the LLC, pursuant to which he may purchase
Class A Common Units of the LLC, subject to the terms of a
subscription agreement in substantially the same form executed by
other members of the Company’s management team who have
invested in the LLC. As a condition of such purchase, Executive
shall be required to execute and become a party to the LLC’s
LLC Agreement, as amended and restated from time to time. The
purchase price of Common Units of the LLC
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purchased
hereunder shall be at $875 per Common Unit. The parties hereto
acknowledge that (i) the LLC shall not engage in any new
valuation of the Common Units prior to the sixtieth (60
th ) day following the Commencement Date,
(ii) the Company and the LLC represent that the purchase price
set forth above accurately represents the fair market value of a
Common Unit, as determined in good faith and upon reasonable belief
by the LLC, and (iii) to the extent Executive makes a purchase
hereunder at a time where the purchase price is less than the fair
market value of such Common Units on the date of such purchase,
such purchase may result in taxable income to Executive.
6.
Employee Benefits . For so long as Executive is employed by
the Company pursuant to this Agreement, Executive shall be entitled
to participate in the Company’s employee benefit plans, such
as but not limited to life insurance, medical, dental, disability,
pension and retirement plans, as in effect from time to time
(collectively “Employee Benefits”). Commencing upon
Executive’s first day of employment, Executive shall be
entitled to participate in the medical and all other Employee
Benefits on an equivalent basis to those benefits that are
generally made available to other senior executives of the
Company.
7.
Business Expenses, Vacation, Automobile Allowance, Educational
Expenses, Temporary Housing and Relocation Expenses and Attorneys
Fees .
a.
Business Expenses . For so long as Executive is employed by
the Company pursuant to this Agreement, reasonable business
expenses incurred by Executive in the performance of
Executive’s duties hereunder shall be reimbursed by the
Company in accordance with Company policies as in effect from time
to time.
b.
Vacation . Executive shall be entitled to four
(4) weeks of vacation for each Fiscal Year (including two
(2) weeks for the first partial fiscal year) during the
Employment Term (for so long as Executive is employed by the
Company pursuant to this Agreement), to be taken at such times and
at such periods as to not interfere with the duties required to be
rendered by Executive under this Agreement. Executive shall be
compensated, on a pro-rata basis, for any unused vacation remaining
upon the termination of Executive’s employment with the
Company pursuant to Section 8 of this Agreement.
c.
Automobile Allowance . Executive shall be entitled to a
monthly car allowance equal to $1,000 to cover all expenses
relating to the provision and maintenance of a vehicle of
Executive’s choice.
d.
Educational Expenses . To the extent Executive is not
reimbursed for tuition already paid or contracted to be paid by
Executive for private educational expenses for any child of
Executive for education in the St. Louis, Missouri area for the
2005-2006 academic year, Executive shall be reimbursed by the
Company for any such expenses.
e.
Temporary Housing and Relocation Expenses . The Company
shall reimburse Executive or pay directly for any temporary housing
expenses incurred by Executive until Executive is able to relocate
into a permanent residence in the Charlotte, North Carolina
Metropolitan area. In addition, all relocation expenses, also
including trips for obtaining appropriate housing in Charlotte,
North Carolina, shall be paid by the Company. Without
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limitation,
Executive shall be promptly reimbursed for any brokerage
commissions paid on the sale of his current residence. All of the
foregoing shall be grossed-up for taxes incurred in respect of such
reimbursement.
f.
Attorney Fees . The Company shall reimburse Executive for
any attorneys’ fees incurred by Executive with respect to the
negotiation and preparation of this Agreement.
a.
By the Company For Cause or Resignation By Executive
.
(i) The
Employment Term and Executive’s employment hereunder may be
terminated by the Company for Cause (as defined below) and shall
terminate automatically upon Executive’s resignation, which
Executive shall be permitted to do at any time upon at least thirty
(30) days’ written notice.
(ii) For
purposes of this Agreement, “Cause” shall mean:
(A) gross negligence or willful misconduct by Executive in
connection with Executive’s employment duties or
responsibilities hereunder; (B) a material and continued
failure by Executive to perform in any material respect his duties
or responsibilities after notice and reasonable opportunity to
cure; (C) misappropriation by Executive of the assets or
business opportunities of the Company or its affiliates; (D)
embezzlement or other financial fraud committed against the Company
or its affiliates by Executive or at his direction, or with his
prior personal knowledge; (E) Executive’s conviction of,
admission to, or entry of pleas of no contest to any
(I) felony, or (II) any crime involving moral turpitude
that materially interferes with the performance of
Executive’s duties; (F) Executive’s abuse of
alcohol and/or any use of illegal drugs that materially interferes
with the performance of Executive’s duties; or
(G) Executive’s breach of any material provision of this
Agreement. In the event the Company determines that Cause exists,
it shall notify Executive, and termination of Executive’s
employment for Cause shall be effected by at least a majority vote
of the Board (excluding Executive for such purpose) at a meeting
occurring at least ten (10) business days after the Company
provides Executive with written notice that the Company intends to
terminate Executive’s employment for Cause, at which meeting
Executive shall have the opportunity to be heard with respect to
the conduct giving rise to the termination for Cause.
(iii) If
Executive’s employment is terminated by the Company for
Cause, or if Executive resigns, Executive shall be entitled to
receive:
(A) the Base
Salary through the date of termination, to be paid in a lump sum
within ten (10) business days after any
termination;
(B) reimbursement
for any unreimbursed business expenses properly incurred by
Executive in accordance with Company policy prior to the date of
Executive’s termination, to be paid in a lump sum within ten
(10) business days after any termination; and
(C) such Employee
Benefits, if any, as to which Executive may be entitled (or may
have accrued) as of the date of termination under the employee
benefit
Page 4 of 12
plans of the
Company, to be paid in accordance with the terms thereof (the
amounts and benefits described in clauses (A) through
(C) hereof, being hereinafter referred to as the
“Accrued Rights”).
Following any
termination of Executive’s employment by the Company for
Cause or resignation by Executive, except as set forth in
Section 5 and this Section 8(a)(iii), Executive shall
have no further rights to any compensation or any other benefits
under this Agreement.
(i) The
Employment Term and Executive’s employment hereunder shall
terminat
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