Document:

exv10w1

 

EXHIBIT 10.1

Employment Agreement, effective as of June 27, 2005,

by and between Donald J. Hotz and Home Products International, Inc.

 

 

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of this 27th
day of June, 2005 by and between Home Products International, Inc., a Delaware corporation (the
“Company”), and Don Hotz (the “Executive”). Capitalized terms used and not otherwise defined
herein shall have the meanings ascribed to them in Part Five hereof.

RECITALS

     WHEREAS, the Company desires to employ Executive as the Chief Financial Officer of the
Company; and

     WHEREAS, Executive desires to be employed by the Company at the salary and benefits provided
for herein; and

     WHEREAS, Executive acknowledges and understands that during the course of his employment,
Executive will develop certain strategic business relationships and become familiar with certain
confidential information of the Company which are exceptionally valuable to the Company and vital
to the success of the Company’s business; and

     WHEREAS, the Company and Executive desire to protect such business relationships and such
confidential information from use to the detriment of the Company or disclosure to third parties.

     NOW THEREFORE, in consideration of the premises and of the mutual covenants and agreements
hereinafter set forth, the parties hereto acknowledge and agree as follows:

TERMS

PART ONE

EMPLOYMENT

     1.01 Employment. The Company hereby agrees to employ Executive, and Executive hereby
accepts such employment, as the Chief Financial Officer of the Company. Executive’s employment
will be on an at-will basis, terminable at any time by either party, in accordance with and subject
to Part Four hereof.

     1.02 Duties. The duties of Executive shall be as determined by the Chief Executive
Officer of the Company (the “CEO”), and Executive shall report to the CEO and shall be subject to
the CEO’s direction and control. Without limiting the generality of the foregoing, Executive shall
lead and manage the financial affairs of the Company on a day-to-day basis and shall report to and

 

 

advise the CEO and the Board of Directors of the Company (the “Board”) regarding the same.
Executive agrees to devote his full-time attention and energies to the diligent performance of his duties hereunder
and will not during his employment with the Company engage in, accept employment from or provide
services to any other person, firm, corporation, governmental agency or other entity; provided,
however, that subject to Part Three hereof, Executive may (a) devote a reasonable amount of
non-business time to civic activities, (b) maintain not more than two outside board positions (with
companies which do not compete directly or indirectly with the Company), in each case subject to
the prior consent of the Board, and (c) manage his own investments, provided that such activities
do not conflict with or detract from the Executive’s diligent performance of Executive’s duties
hereunder.

PART TWO

COMPENSATION AND BENEFITS

     2.01 Salary. During his employment, Executive shall receive a base salary at the rate
of $225,000 per annum (the “Base Salary”), subject to applicable deductions, payable in regular
installments in accordance with the Company’s general payroll practices for salaried employees. The
Base Salary is subject to review for increase by the Board annually beginning January, 2006.

     2.02 Bonus. In addition to his Base Salary, Executive may receive during his
employment, as determined annually at the discretion of the CEO and the Board, an annual incentive
cash bonus (“Incentive Bonus”) based upon Executive’s performance and the profitability of the
Company during such period in accordance with the Company’s executive bonus plan adopted by the
Board annually. The applicable level for this position under the plan approved by the Board is up
to 70% of base salary.

     2.03 Benefits. During Executive’s employment, the Company agrees to provide to
Executive such benefits as are provided to other employees of the Company from time to time,
including but not limited to, any health, disability, life, profit-sharing or other employee
benefit policies, programs or plans which the Company provides to its employees, all at levels
determined by the Board and commensurate with Executive’s position.

     2.04 Expenses. Executive shall be reimbursed by the Company for all ordinary and
necessary out-of-pocket expenses for travel, lodging, meals, entertainment expenses, or any other
similar reasonable expenses incurred by Executive in performing services for the Company in
accordance with the policies established by the Board.

     2.05 Vacations. Executive shall be entitled to a vacation of four (4) weeks during
each twelve month period of employment, provided, however, that Executive’s vacation shall be
scheduled at such times as shall least interfere with the Company’s business and shall otherwise be
in accordance with policies established by the Board. Fifty percent (50%) of any unused vacation
from a calendar year may be carried over and applied to the following calendar year;
provided, that, no more than four (4) weeks of vacation may be accrued and unused
at any one time.

 

 

     2.06 Stock Options. As soon as practical after the date hereof and no later than 90
days after the date hereof the Board shall issue to Executive options for 90,000 shares of the
Company’s
common stock, par value $0.01 per share (“Common Stock”) (or, in the event of a recapitalization of
the Company, reclassification of the Company’s capital stock or other similar event, shares of one
or more other classes or series of capital stock having in the aggregate no less favorable economic
rights than those attributable to Common Stock) at an exercise price of $2.25 per share (subject to
adjustment for recapitalizations, reclassifications, stock splits and similar events), pursuant to
a stock option plan consistent with the terms described on Exhibit A (the “Stock Option
Plan”). Such options shall vest at the rate of 30,000 shares on December 31, 2005, 30,000 shares
on December 31, 2006 and 30,000 shares on December 31, 2007, subject to the provisions of Part Four
hereof. The Board, in its discretion, from time to time, may issue additional options under the
Stock Option Plan to Executive with such vesting schedules and exercise prices as the Board shall
determine.

PART THREE

CONFIDENTIAL INFORMATION AND COMPETITION

     3.01 Definition of Confidential Information. For the purposes of this Agreement, the
term “Confidential Information” shall mean all information and all documents and other tangible
items which record information which is non-public, confidential or proprietary in nature with
respect to the Company or its customers, clients or investors and shall include, but shall not be
limited to: (a) all information, which at the time or times concerned is protectible as a trade
secret under applicable law; (b) business and growth plans and strategies; (c) marketing plans and
strategies; (d) customer and supplier information; and (e) proprietary software and business
records. The Company and Executive acknowledge and agree that the Confidential Information is
extremely valuable to the Company and the information referred to in subparagraphs (b) through (d)
inclusive of this Section 3.01 is especially sensitive and valuable.

     3.02 Non-Disclosure of Confidential Information. Executive will not either during
Executive’s employment, or after termination of Executive’s employment for any or no reason, in any
form or manner, directly or indirectly, divulge, disclose or communicate to any person, entity,
firm, corporation or any other third party, or utilize for the Employee’s personal benefit of for
the benefit of any person, entity, firm or corporation (other than the Company), any Confidential
Information.

     3.03 Delivery Upon Termination. Upon termination of Executive’s employment with the
Company for any or no reason, Executive will promptly deliver to the Company all correspondence,
manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or
any other documents or media concerning the Company and/or which contains Confidential Information,
and Executive hereby acknowledges that all such materials are the property of the Company.

 

 

     3.04 Covenant-Not-To-Compete. Executive will not during his employment, and for a
period of eighteen (18) months following termination of Executive’s employment for any or no
reason, in any form or manner, directly or indirectly, on his own behalf or in combination with
others, engage in or become interested in (as an individual, partner, member, stockholder,
director, officer, principal, agent, independent contractor, employee, trustee, or in any other
relation or capacity whatsoever, except as a holder of securities of a corporation whose securities
are publicly traded and which is
subject to the reporting requirements of the Securities Exchange Act of 1934, and then only to the
extent of owning less than five percent (5%) of the issued and outstanding securities of such
corporation) any business which is competitive with the business of the Company or any the
Affiliate of the Company, as conducted or proposed to be conducted as of the date of termination of
Executive’s employment.

     3.05 Restriction Against Employing the Company Employees. Executive will not, for a
period of (1) one year after termination of Executive’s employment for any or no reason, directly
or indirectly, whether individually, as a director, stockholder, partner, member, owner, employee
or agent of any business, or in any other capacity, employ or engage, or solicit for employment or
engagement, any person who is employed or otherwise engaged by the Company or any Affiliate of the
Company on, or within 180 days prior to such termination of Executive; provided, however, that the
foregoing prohibition shall apply to a person who ceases to be employed or engaged by the Company
or any Affiliate of the Company after such termination of Executive only until the later of (a) 180
days after the termination of such person’s employment or engagement by the Company or any
Affiliate of the Company or (b) the date on which such person ceases to be entitled to receive
compensation, if any, from the Company or any Affiliate of the Company.

     3.06 Continuing Obligation. The obligations, duties and liabilities of Executive
pursuant to Part Three of this Agreement are continuing, absolute and unconditional and shall
remain in full force and effect as provided therein despite any termination of Executive’s
employment with the Company for any or no reason.

PART FOUR

TERMINATION

     4.01 Termination Notice and Termination Date. Either the Company or Executive may
terminate Executive’s employment at any time by delivery to the other party of a written notice
(the “Termination Notice”) specifying the effective date of termination of Executive’s employment
(the “Termination Date”) (except in the case of termination as a result of Executive’s death, in
which case, termination shall be automatic and the Termination Date shall be the date of death).
If Executive terminates his employment for any reason other than Good Reason, the Termination Date
specified by Executive in his Termination Notice shall be no less than 30 days after the date the
Company receives the Termination Notice, but the Company may elect, in its sole discretion, upon
written notice to Executive, to change the specified Termination Date to any earlier date which is
on or after the date of receipt of the Termination Notice.

 

 

     4.02 Termination by the Company without Cause or by Executive for Good Reason. If the
Company terminates Executive’s employment other than for Cause, Executive’s Disability or
Executive’s death, or Executive terminates his employment for Good Reason:

     (a) the Company shall pay to Executive Executive’s Base Salary accrued and unpaid up to
the Termination Date;

     (b) the Company shall pay to Executive Executive’s Incentive Bonus to the extent earned
and unpaid for the fiscal year ended prior to the Termination Date;

     (c) upon execution and delivery by Executive of the form of Release attached hereto as
Exhibit B, and the expiration of the seven-day revocation period provided in said
Release, without revocation of said Release by Executive:

     (i) the Company shall pay to Executive a severance payment equal to one hundred
fifty percent (150%) of Executive’s annual Base Salary as of the Termination Date,
payable over eighteen (18) months beginning on the Termination Date in regular
installments in accordance with the Company’s general payroll practices for salaried
employees;

     (ii) the Company shall pay to Executive an additional severance payment equal
to Executive’s Incentive Bonus, to the extent earned, for the fiscal year during
which the Termination Date occurs, pro-rated for that fiscal year based on the
portion of Executive’s active employment for that fiscal year, payable when the
Company generally pays Incentive Bonuses for other salaried employees; and

     (iii) if Executive elects COBRA continuation coverage, the Company shall
maintain for Executive and his eligible family members, until the earlier of (A)
the eighteen (18) month anniversary of the Termination Date or (B) such time as
Executive shall obtain employment or other engagement offering comparable or better
medical insurance coverage, medical insurance coverage that is the same as or
comparable to the coverage to which he was entitled immediately preceding the
Termination Date, at a cost to Executive no greater than the normal active employee
premiums at such time;

     (d) notwithstanding anything to the contrary in the Stock Option Plan, all unvested
options granted to Executive under the Stock Option Plan will automatically vest and become
immediately exercisable for the total number of shares purchasable thereunder.
Notwithstanding anything to the contrary in the Stock Option Plan, such options will expire
on the earlier of (A) the expiration date of such options under the Stock Option Plan and
(B) six (6) months from the Termination Date;

 

 

     (e) if the Put/Call Option is exercised, the Company shall pay, or cause to be paid, to
Executive and his Permitted Transferees the Put/Call Payment in accordance with Section
4.06;

     (f) the Company shall reimburse Executive for his reimbursable out-of-pocket business
expenses in accordance with Section 2.04 to the extent incurred prior to the Termination
Date and not previously reimbursed; and

     (g) except as set forth in this Section 4.02, Executive shall not be entitled to
receive any other severance, benefits or compensation of any kind whatsoever.

     4.03 Termination by the Company for Cause or by Executive without Good Reason. If the
Company terminates Executive’s employment for Cause or Executive terminates his employment other
than for Good Reason:

     (a) the Company shall pay to Executive Executive’s Base Salary accrued and unpaid up to
the Termination Date;

     (b) the Company shall pay to Executive Executive’s Incentive Bonus to the extent earned
and unpaid for the fiscal year ended prior to the Termination Date;

     (c) notwithstanding anything to the contrary in the Stock Option Plan, all unvested
options granted to Executive under the Stock Option Plan will automatically be forfeited
without any payment or other consideration to Executive, and all vested options granted to
Executive under the Stock Option Plan will expire on the earlier of (i) the expiration date
of such options under the Stock Option Plan and (ii) the date ninety (90) days following the
Termination Date;

     (d) if the Put/Call Option is permitted to be, and is, exercised, the Company shall
pay, or cause to be paid, to Executive and his Permitted Transferees the Put/Call Payment in
accordance with Section 4.06;

     (e) the Company shall reimburse Executive for his reimbursable out-of-pocket business
expenses in accordance with Section 2.04 to the extent incurred prior to the Termination
Date and not previously reimbursed;

     (f) except as set forth in this Section 4.03, Executive shall not be entitled to
receive any other severance, benefits or compensation of any kind whatsoever.

     4.04 Termination upon Death. Upon Executive’s death during his employment:

     (a) the Company shall pay to Executive’s representatives Executive’s Base Salary
accrued and unpaid up to the Termination Date;

 

 

     (b) the Company shall pay to Executive’s representatives Executive’s Incentive Bonus to
the extent earned and unpaid for the fiscal year ended prior to the Termination Date;

     (c) upon execution and delivery by Executive’s representatives of the form of Release
attached hereto as Exhibit B, and the expiration of the seven-day revocation period
provided in said Release, without revocation of said Release by Executive’s representatives:

     (i) the Company shall pay to Executive’s representatives a severance payment
equal to fifty percent (50%) of Executive’s annual Base Salary as of Executive’s
death, payable over six (6) months beginning on the Termination Date in regular
installments in accordance with the Company’s general payroll practices for salaried
employees; and

     (ii) the Company shall pay to Executive an additional severance payment equal
to Executive’s Incentive Bonus, to the extent earned, for the fiscal year during
which the Termination Date occurs, pro-rated for that fiscal year based on the
portion of Executive’s active employment for that fiscal year, payable when the
Company generally pays Incentive Bonuses for other salaried employees;

     (d) notwithstanding anything to the contrary in the Stock Option Plan, all unvested
options granted to Executive under the Stock Option Plan will automatically vest and become
immediately exercisable for the total number of shares purchasable thereunder.
Notwithstanding anything to the contrary in the Stock Option Plan, such options will expire
on the earlier of (i) the expiration date of such options under the Stock Option Plan and
(ii) six (6) months from the Termination Date;

     (e) if the Put/Call Option is exercised, the Company shall pay, or cause to be paid, to
Executive’s representatives and Permitted Transferees the Put/Call Payment in accordance
with Section 4.06;

     (f) the Company shall reimburse Executive’s representatives for Executive’s
reimbursable out-of-pocket business expenses in accordance with Section 2.04 to the extent
incurred prior to the Termination Date and not previously reimbursed; and

     (g) except as set forth in this Section 4.04 neither Executive nor his representatives
shall be entitled to receive any other severance, benefits or compensation of any kind
whatsoever.

     4.05 Termination upon Disability. If the Company terminates Executive’s employment as
a result of his Disability:

 

 

     (a) the Company shall pay to Executive his Base Salary accrued and unpaid up to the
Termination Date;

     (b) the Company shall pay to Executive Executive’s Incentive Bonus to the extent earned
and unpaid for the fiscal year ended prior to the Termination Date;

     (c) upon execution and delivery by Executive of the form of Release attached hereto as
Exhibit B, and the expiration of the seven-day revocation period provided in said
Release, without revocation of said Release by Executive:

     (i) Executive shall be entitled to continue to receive his Base Salary, as a
severance payment, in accordance with the Company’s general payroll practices for
salaried employees, until the earlier of (A) the commencement of payments under
Executive’s long-term disability insurance policy or (B) the six (6) month
anniversary of the Termination Date; and

     (ii) the Company shall pay to Executive an additional severance payment equal
to Executive’s Incentive Bonus, to the extent earned, for the fiscal year during
which the Termination Date occurs, pro-rated for that fiscal year based on the
portion of Executive’s active employment for that fiscal year, payable when the
Company generally pays Incentive Bonuses for other salaried employees;

     (d) notwithstanding anything to the contrary in the Stock Option Plan, all unvested
options granted to Executive under the Stock Option Plan will automatically vest and become
immediately exercisable for the total number of shares purchasable thereunder.
Notwithstanding anything to the contrary in the Stock Option Plan, such options will expire
on the earlier of (i) the expiration date of such options under the Stock Option Plan and
(ii) six (6) months from the Termination Date;

     (e) if the Put/Call Option is exercised, the Company shall pay, or cause to be paid, to
Executive and his Permitted Transferees the Put/Call Payment in accordance with Section
4.06;

     (f) the Company shall reimburse Executive for his reimbursable out-of-pocket business
expenses in accordance with Section 2.04 to the extent incurred prior to the Termination
Date and not previously reimbursed; and

     (g) except as set forth in this Section 4.05, Executive shall not be entitled to
receive any other severance, benefits or compensation of any kind whatsoever.

     4.06 Put/Call Option.

 

 

     (a) Subject to Section 4.06(b), in the event of the termination of Executive’s
employment for any reason other than for Cause, Executive shall have the option to sell, or
cause to be sold, to the Company all shares of Common Stock (and other capital stock of the
Company, if any) held by Executive and his Permitted Transferees, if any, and cancel all
unexercised options issued under the Stock Option Plan held by Executive. In the event of
the termination of Executive’s employment for any or no reason, the Company shall have the
option to purchase from Executive and his Permitted Transferees, if any, all shares of
Common Stock (and other capital stock of the Company, if any) held by any of them and cancel
all unexercised options issued under the Stock Option Plan held by Executive. The options
to sell and purchase referred to in this Section 4.06(a) are hereinafter collectively
referred to as the “Put/Call Option.”

     (b) Provided Executive has not terminated his employment without Good Reason and the
Company has not terminated Executive’s employment for Cause, Executive may exercise the
Put/Call Option, at his discretion, at any time after the Termination Date and until the
date which is 180 calendar days after the Termination Date, by delivery of written notice to
the Company within such 180-day period. In the event Executive has terminated his
employment without Good Reason, Executive may exercise the Put/Call Option, at his
discretion, but only during the first 30 calendar days after the first anniversary of the
Termination Date, by delivery of written notice to the Company within such 30-day period.
Executive may not exercise the Put/Call Option at any time in the event his employment is
terminated by the Company for Cause. The Company may (but shall not be obligated to)
exercise the Put/Call Option, at its discretion, at any time after the Termination Date
(irrespective of the reason for termination) and until the date which is 180 calendar days
after the Termination Date, by delivery of written notice to the Executive within such
180-day period. No Permitted Transferee shall be entitled to exercise the Put/Call Option,
but any exercise of the Put/Call Option by Executive or the Company shall be binding on each
of Executive’s Permitted Transferees, if any. Executive agrees that his and his Permitted
Transferees’ stock certificates shall bear an appropriate legend referencing the Put/Call
Option.

     (c) Promptly after exercise of the Put/Call Option by Executive or the Company,
Executive and his Permitted Transferees, if any, shall execute and deliver to the Company
the form of Release attached hereto as Exhibit C. Within thirty (30) days after
exercise of the Put/Call Option, the Company shall pay, or cause to be paid, to Executive
and/or his Permitted Transferees, if any, as applicable, an aggregate amount in cash equal
to the Put/Call Payment (payable among Executive and his Permitted Transferees, if any, pro
rata according to the number of shares and options held by them), provided (i) Executive and
his Permitted Transferees, if any, have executed and delivered to the Company the form of
Release attached hereto as Exhibit C, and (ii) Executive and his Permitted
Transferees, if any, have surrendered to the Company all stock certificates representing
Common Stock and/or other capital stock of the Company to be sold, together with executed
stock powers therefor, and all stock option agreements for cancellation by the Company, and
all other transfer or cancellation documents reasonably requested by the Company. Upon
payment

 

 

of the Put/Call Payment, none of Executive, his Permitted Transferees, if any, or
his or their respective representatives, heirs, executors, administrators, successors or
assigns, shall have any ownership or other interest of any kind in, or rights of any kind in
respect of, any Common Stock, other capital stock of the Company, or options under the Stock
Option Plan, or otherwise in respect of, or any claims or demands of any kind (whether known
or unknown, vested or contingent, suspected or unsuspected, concealed or hidden) against,
the Company, except for any payments and benefits, if any, which are owed to Executive under
this Agreement in connection with the termination of his employment with the Company.

     4.07 Sole Remedy. The amounts payable to Executive or his representatives or
Permitted Transferees, if any, under the applicable provisions of this Part Four in connection with
the termination of Executive’s employment, voluntarily or involuntarily, for any or no reason,
shall be the only remedy, legal or equitable, available to Executive and his representatives and
Permitted Transferees in connection with such termination and/or the exercise of the Put/Call Option in connection
therewith, and such amounts shall constitute liquidated damages, excluding any remedies which by
law cannot be waived.

PART FIVE

CERTAIN DEFINITIONS

     5.01 Certain Definitions. As used in this Agreement, the following terms have the
following meanings unless the context otherwise requires:

“Affiliate” means with respect to any Person, any Person that directly or indirectly
controls, is controlled by, or is under common control with such Person. For purposes of this
definition, “control” shall mean the power to direct, or cause the direction of, the
management of policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.

“Cause” means:

	 	(i)  	fraud, embezzlement or conviction of a felony;
	 
	 	(ii)  	misappropriation of any money, proprietary information or other assets or
properties of the Company or any Affiliate of the Company other than (A) an isolated,
insubstantial and unintentional misappropriation which is promptly remedied by
Executive after he learns of the same or (B) any good faith dispute regarding
reimbursement of expenses or other similar good faith dispute;
	 
	 	(iii)  	willful or material breach by Executive of the terms of this Agreement; or

 

 

	 	(iv)  	any other verifiable misconduct of Executive materially and adversely affecting
the Company.

“Change in Control” means:

	 	(i)  	a merger or acquisition involving the Company in which 50% or more of the
Company’s voting stock outstanding after the merger or acquisition is held by holders
different from those who held the Company’s voting stock immediately prior to such
merger or acquisition; or
	 
	 	(ii)  	the sale, transfer or other disposition of all or substantially all of the
assets of the Company.

“Disability” means, in the reasonable opinion of the Board, Executive has become physically
or mentally disabled, whether totally or partially, so that Executive is unable substantially
to perform his employment duties for a period of ninety (90) consecutive days, or for shorter
periods aggregating one hundred and eighty (180) days during any three hundred and sixty
(360) day period.

“EBITDA” means the Company’s aggregate consolidated net income, exclusive of non-recurring
income items, plus tax expense, net interest expense, depreciation, amortization expense and
non-recurring expenses, for the four full fiscal quarters immediately preceding the date of
exercise of the Put/Call Option, determined by the Board in good faith in accordance with
accounting practices and policies consistently applied by the Company prior to the exercise of
the Put/Call Option.

“Enterprise Value” means the product of applicable Enterprise Value Multiple multiplied by
the applicable EBITDA, less the Company’s consolidated indebtedness for borrowed money and
obligations under capital leases; provided, however, that, in the event of the occurrence of a
material change in the business, financial condition or prospects of the Company which is not
fully reflected in the amount of EBITDA otherwise to be used in calculating Enterprise Value,
Executive and the Board will negotiate an appropriate adjustment in good faith to reflect the
expected impact of such material adverse change; provided, further, however, that, in the
event Executive and the Board fail to reach agreement on whether an adjustment is required or
the amount thereof within sixty (60) days after either party gives written notice to the other
party that it believes an adjustment is required, the parties shall initiate a voluntary,
nonbinding mediation conducted by a mutually agreed upon mediator in Chicago, Illinois, with
each of the parties bearing his or its own costs and expenses (including attorneys’ and
experts’ fees and expenses) and his or its proportionate share of any other costs, fees or
expenses associated with this mediation and endeavoring in good faith to resolve their
differences. If, within thirty (30) days after the first day of mediation, the parties shall
not have reached agreement as to the dispute in question, then each party shall be entitled to
file suit to resolve the dispute, subject to Section 6.08 and Section 6.09.

 

 

“Enterprise Value Multiple” means:

	 	(i)  	Six (6), in the event the Company terminates Executive’s employment for any
reason other than Cause, including his death or Disability, or Executive terminates his
employment for Good Reason; and
	 
	 	(ii)  	Five (5), in the event the Company terminates Executive’s employment for Cause,
or Executive terminates his employment without Good Reason.

“Good Reason” means Executive’s termination of his employment with the Company within one
year following a Change of Control if:

	 	(i)  	Executive is assigned any duties inconsistent in any respect with Executive’s
position (including status, offices, titles and reporting requirements), authority,
duties, or responsibilities, or there is a material diminution of such position,
authority, duties or responsibilities, but excluding for this purpose an isolated, insubstantial or
inadvertent action not taken in bad faith and which is remedied promptly after
receipt of notice thereof given by Executive; or
	 
	 	(ii)  	Executive is required, without his consent, to be based at any office or
location outside of a 75 mile radius of Cook County, Illinois; or
	 
	 	(iii)  	there is a material diminution in Executive’s Base Salary or percentage of
Base Salary potentially awardable as Incentive Bonus; or
	 
	 	(iv)  	the acquirer is for any reason not bound by any material term of this Agreement
to the same extent as the Company immediately prior to such Change in Control.

“Permitted Transferee” means any initial or subsequent transferee of Common Stock or other
capital of the Company originally held by Executive, except as otherwise determined by the
Board in its sole discretion; it being understood that Executive is not entitled to make any
such transfer except as otherwise expressly permitted by any other written agreement with, or
written permission from, the Company, which permission shall not be unreasonably withheld or
delayed for transfers of issued and outstanding Common Stock or other capital stock of the
Company from Executive to either (i) family trusts or partnerships for the benefit of
Executive and his family members, provided Executive retains voting and dispositive power over
the transferred shares and the transferee executes an agreement with the Company restricting
further transfer, or (ii) other senior management shareholders of the Company who at the time
of transfer are employed and in good standing with the Company.

“Person” means any individual, corporation, association, partnership, limited liability the
Company, estate, trust and any other entity or organization, governmental or otherwise.

 

 

“Put/Call Payment” means the sum of (i) the product of the Put/Call Price multiplied by the
number of share of Common Stock held by Executive and his Permitted Transferees as of the date
of exercise of the Put/Call Option, plus (ii) for each vested option issued under the Stock
Option Plan, the excess, if any, of the Put/Call Price over the exercise price of the option,
multiplied by the number of shares covered by the vested option (options, to the extent not
vested, shall be excluded); provided, however, that, notwithstanding the foregoing, in the
event the Company terminates Executive’s employment for Cause, the Put/Call Payment shall not
exceed the aggregate cash amount (including any option exercise price) paid by Executive for
Common Stock held by Executive and/or his Permitted Transferees, as applicable.

“Put/Call Price” means the applicable Enterprise Value divided by the sum of the number of
fully diluted shares of Common Stock outstanding or issuable upon exercise of outstanding
stock options, warrants, convertible debt or equity or other rights to acquire Common Stock,
as of the date of exercise of the Put/Call Option. In the event of the recapitalization of
the Company, reclassification of the Common stock into one or more classes or series of
capital stock, stock split or similar event, the Board shall adjust the Put/Call Price in good
faith, so that the aggregate Put/Call Payment is no smaller or larger as a result of such
event than it would have been had such event not occurred.

PART SIX

MISCELLANEOUS

     6.01 Assignment. Executive and the Company acknowledge and agree that the covenants,
terms and provisions contained in this Agreement constitute a personal employment contract and the
rights of the parties thereunder cannot be transferred, sold, assigned, pledged or hypothecated,
excepting that the rights and obligations of the Company under this Agreement may be assigned or
transferred by operation of law pursuant to a merger, consolidation, share exchange, sale of
substantially all of the Company’s assets, or other reorganization, or through liquidation,
dissolution or otherwise, whether or not the Company is the continuing entity, provided that the
assignee or transferee is the successor to all or substantially all of the assets of the Company
and such assignee or transferee assumes the rights and duties of the Company, if any, as contained
in this Agreement, either contractually or as a matter of law.

     6.02 Capacity. Executive hereby represents and warrants that, in entering into this
Agreement, he is not in violation of any contract or agreement, whether written or oral, with any
other Person to which he is a party or by which he is bound and will not violate or interfere with
the rights of any other Person. In the event that such a violation or interference does occur, or
is alleged to occur, notwithstanding the representation and warranty made hereunder, Executive
shall indemnify the Company from and against any and all manner of expenses and liabilities
incurred by

 

 

the Company or any Affiliate of the Company of the Company in connection with such
violation or interference or alleged violation or interference.

     6.03 Severability. If any phrase, clause or provision of this Agreement is declared
invalid or unenforceable by a court of competent jurisdiction, such phrase, clause or provision
shall be deemed severed from this Agreement, but will not affect any other provisions of this
Agreement, which shall otherwise remain in full force and effect. If any restriction or limitation
in this Agreement is deemed to be unreasonable, onerous and unduly restrictive by a court of
competent jurisdiction, it shall not be stricken in its entirety and held totally void and
unenforceable, but shall remain effective to the maximum extent permissible within reasonable
bounds.

     6.04 Notices. Any notice, request or other communication required to be given
pursuant to the provisions hereof shall be in writing and shall be deemed to have been given when
delivered in person, one (1) day after being sent by overnight courier, or five (5) days after
being deposited in the United States mail, certified or registered, postage pre-paid, return
receipt requested and addressed to the party at its or his last known addresses. The address of
any party may be changed by notice in writing to the other parties duly served in accordance
herewith.

     6.05 Waiver. The waiver by the Company or Executive of any breach of any term or
condition of this Agreement shall not be deemed to constitute the waiver of any other breach of the
same or any other term or condition hereof.

     6.06 Executive Acknowledgment/Injunctive Relief. Executive acknowledges and agrees
that Executive’s covenants set forth in this Agreement are reasonable and necessary for the
protection of the Company’s business interests, that such covenants will not result in undue
economic hardship to Executive, that irreparable injury will result to the Company if Executive
breaches any of the terms of Executive’s covenants in this Agreement, and that in the event of
Executive’s actual or threatened breach of any of his covenants, the Company will have no adequate
remedy at law. Executive accordingly agrees that in the event of any actual or threatened breach
by him of any of his covenants in this Agreement, the Company shall be entitled to immediate
injunctive and other equitable relief, without bond and without the necessity of showing, any
actual monetary damages, and Executive shall pay the Company any and all of the Company’s, costs
and expenses in enforcing Executive’s covenants in this Agreement (including court costs and
reasonable attorney’s, accountant’s, financial advisor’s and expert witness’s fees). Nothing
herein shall be construed as prohibiting the Company from pursuing any other remedies available to
it for any breach or threatened breach by Executive of any of his covenants contained in this
Agreement, including the recovery of any damages which it is able to prove.

     6.07 Governing Law. This Agreement and the enforcement thereof shall be governed and
controlled in all respects by the laws of the State of Illinois (applicable to agreements to be
performed wholly within such state), without regard to conflicts of law principles.

     6.08 Jurisdiction and Service of Process. EXECUTIVE AND THE COMPANY HEREBY CONSENT TO
THE JURISDICTION OF ANY STATE OR FEDERAL COURT

 

 

LOCATED WITHIN COOK COUNTY, ILLINOIS, AND IRREVOCABLY AGREE THAT, SUBJECT TO THE OTHER PROVISIONS OF THIS AGREEMENT, ALL ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT WHICH MAY BE LITIGATED SHALL BE LITIGATED
IN SUCH COURTS. EACH OF EXECUTIVE AND THE COMPANY ACCEPTS FOR SUCH PARTY AND IN CONNECTION WITH
SUCH PARTY’S PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. ALL PROCESS IN ANY SUCH PROCEEDINGS
IN ANY SUCH COURT SHALL BE MAILED BY REGISTERED MAIL TO THE APPLICABLE PARTY, SUCH SERVICE BEING
HEREBY ACKNOWLEDGED BY EACH SUCH PARTY TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.
NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

     6.09 TRIAL. EACH OF EXECUTIVE AND THE COMPANY HEREBY WAIVES SUCH PARTY’S RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY
DEALINGS BETWEEN THE PARTIES HERETO RELATING TO THE SUBJECT MATTER HEREOF. EACH OF EXECUTIVE AND THE COMPANY ALSO
WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED
OF ANY PARTY TO THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
AGREEMENT. EACH OF EXECUTIVE AND THE COMPANY ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO AN EMPLOYMENT AND BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON
THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN
THEIR RELATED FUTURE DEALINGS. EACH OF EXECUTIVE AND THE COMPANY FURTHER WARRANTS AND REPRESENTS
THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH SUCH PARTY’S LEGAL COUNSEL, AND THAT SUCH PARTY
KNOWINGLY AND VOLUNTARILY WAIVES SUCH PARTY’S JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first hereinabove written.

	 	 	 	 	 
	 	HOME PRODUCTS INTERNATIONAL, INC.

 	 
	 	By:  	 	 
	 	 	Douglas Ramsdale, Chief Executive Officer 	 
	 	 	 	 
	 
	 	EXECUTIVE:

 	 
	 	By:  	 	 
	 	 	Don Hotz 	 
	 	 	 	 
	 

 

 

EXHIBIT A

STOCK OPTION PLAN TERM SHEET

	•  	Aggregate of 10% of Common Stock (or approximately 800,000 shares) available for a
combination of options to Hassert, Ramsdale, Chambers and Owens, Hotz and other employees.

	•  	All options expire on fifth anniversary of issuance.

	•  	All options vest 1/3 on each of the first three anniversaries of issuance.

	•  	Accelerated vesting on change of control.

	•  	Initial grant of 150,000 options with an exercise price of $2.25 per share to each of
Hassert, Ramsdale and Chambers, and 90,000 to Owens and Hotz.

	•  	The Board will determine subsequent grants and the exercise prices therefor.

 

 

EXHIBIT B

SEVERANCE RELEASE

     1. In consideration for the payments and, if applicable, benefits to be provided to me
pursuant to Section 4.0___of my Employment Agreement with Home Products International, Inc., a
Delaware corporation (the “Company”), dated ___, ___, I, Don Hotz, on behalf of myself
and my heirs, executors, administrators, assigns, and attorneys (hereinafter collectively referred
to as the “Releasing Parties”) do hereby fully and forever waive, release, relieve and discharge
the Company, its direct and indirect parent corporation(s), subsidiaries and affiliates and its and
their respective directors, officers, employees, members, partners, shareholders, attorneys and
agents, past, present and future, and each of their respective successors and assigns (hereinafter
collectively referred to as the “Released Parties”) of and from any and all actions, causes of
action, claims, judgments, orders, attorneys’ fees, damages, controversies, lawsuits, demands or
liabilities of any kind of nature, known or unknown, vested or contingent, suspected or
unsuspected, concealed or hidden, and all other claims and demands whatsoever in law or in equity
which any Releasing Parties have had or now have against any Released Party from the beginning of
the world to the date of this Agreement, as a result of, arising from or in any way pertaining to,
my employment, or the termination of my employment, with the Company or any direct and indirect
parent corporation(s), subsidiaries and affiliates of the Company, including, for purposes of
illustration and not limitation:

	 	(a)  	claims, actions, causes of action, demands, or liabilities arising under Title
VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment
Act, as amended, the Employee Retirement Income Security Act, as amended, the
Rehabilitation Act of 1973, as amended, the Americans with Disabilities Act, and/or any
other federal, state, municipal or local employment discrimination statues (including,
but not limited to, claims based on age, sex, attainment of benefit plan rights, race,
religion, marital status, national origin, handicap, retaliation, and veteran status);
and/or
	 
	 	(b)  	claims, actions, causes of action, demands, or liabilities under any other
federal, state, municipal or local statute, common law, order, ordinance or regulation;
and/or
	 
	 	(c)  	any other claim whatsoever, including, but not limited to, claims based upon
breach of contract (express or implied), tort, public policy, wrongful termination,
claims for compensatory or punitive damages, defamation, intentional infliction of
emotional distress, personal injury claims, negligence and/or any other common law,
statutory, or other claim,

but excluding any claims which by law cannot be waived.

     2. I UNDERSTAND THAT THIS RELEASE AND SETTLEMENT AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND
UNKNOWN CLAIMS AGAINST THE

 

 

COMPANY AND THE OTHER RELEASED PARTIES AS A RESULT OF, ARISING FROM OR
IN ANY WAY PERTAINING TO, MY EMPLOYMENT, OR THE TERMINATION OF MY EMPLOYMENT, WITH THE COMPANY OR
ANY DIRECT AND INDIRECT PARENT CORPORATION(S), SUBSIDIARIES AND AFFILIATES OF THE COMPANY TO THE
DATE OF THIS AGREEMENT.

     3. I also agree that I have been paid for all hours worked, all pay earned and owed, not
suffered any on-the-job injury for which I have not already filed a claim, and have received all of
the sick pay and vacation pay that I am owed.

     4. I covenant and agree never to institute any suit, charge, complaint, proceeding or action
at law, in equity, or otherwise in any court of the United States or any state thereof or in any
administrative agency of either the United States or any state, county or municipality thereof or
before any other tribunal, public or private, against the Company or any other Released Party, or
in any way voluntarily aid in the institution or prosecution of any suit, action, or claim of any
kind, or any other kind of relief, in any way against the Company or any other Released Party as a
result of, arising from or in any way pertaining to, my employment, or the termination of my
employment, with the Company or any direct and indirect parent corporation(s), subsidiaries and
affiliates of the Company.

     5. I understand that neither I nor the Company shall reveal the contents of this Agreement and
both expressly agree that if asked about my separation from the Company, both I and the Company
will say nothing more than that I have left the Company to pursue other interests. In addition, I
shall not in any manner make any defamatory, derogatory, disparaging or denigrating statements
about the Company or its products or services. I acknowledge that the absolute confidentiality of
this Agreement and compliance with the non-disparagement terms of this Agreement are of utmost
importance to the Company and without the unequivocal commitment by myself regarding these
provisions, the Company would not have entered into this Agreement or my Employment Agreement. As
such, if I breach this Paragraph 5, I shall, in addition to any other relief, return all moneys
paid to me by the Company.

     6. I have been given at least twenty-one (21) days to consider this Agreement, and understand
that I may revoke this Agreement within seven (7) days after its signing and that any revocation
must be made in writing and submitted within such seven (7) day period to the Company. I further
understand that if I revoke this Agreement, I will not be entitled to the payments and benefits
otherwise to be provided to me pursuant to Section 4.0___of my Employment Agreement.

     7. I acknowledge and agree that I have carefully read and fully understand all of the
provisions of this Agreement and that I voluntarily and knowingly enter into this Agreement.

     8. I understand that neither this Agreement nor any of the events which have led to its
execution may be used as evidence in any proceedings of any kind between the parties (except for a

 

 

claim of breach of this Agreement) and that this Agreement does not constitute an admission by the
Company of any wrongdoing or liability.

     9. This Agreement constitutes the complete Agreement between myself and the Company. No other
promises or agreement, either express or implied, shall be binding upon myself or the Company
unless signed in writing by myself and the Company. Each of the Released Parties is an intended
third party beneficiary of this Release and may enforce this Release against any Releasing Party.

	 	 	 
	Signed:
	 	 
	 
	 	 
	EXECUTIVE:
	 	 
	 
	 	 
	 

	 	 
	Don Hotz

	 	date
	 
	 	 
	HOME PRODUCTS INTERNATIONAL, INC.
	 	 
	 
	 	 
	By
	 	 
	 

	 	 
	

	 	Date

 

 

EXHIBIT C

PUT/CALL PAYMENT RELEASE

     KNOW ALL MEN BY THESE PRESENTS, that the undersigned, ___(the “Releasing
Party”), for and in consideration of the sum of $[applicable Put/Call Payment Amount], which has
been paid, or caused to be paid, to the Releasing Party by Home Products International, Inc., a
Delaware corporation (the “Company”), the Releasing Party has remised, released and forever
discharged, and by these presents does, for both himself and his respective representatives,
successors and assigns, remise, release, and forever discharge the Company, its direct and indirect
parent corporation(s), subsidiaries and affiliates and its and their respective directors,
officers, employees, members, partners, shareholders, attorneys and agents, past, present and
future), and each of their respective successors and assigns (collectively the “Released Parties”),
of and from any and all actions, causes of action, claims, judgments, orders, attorneys’ fees,
damages, controversies, lawsuits, demands or liabilities of any kind of nature, known or unknown,
vested or contingent, suspected or unsuspected, concealed or hidden, and all other claims and
demands whatsoever in law or in equity, that the Releasing Party may have as a result of, arising
from or in any way pertaining to, the Releasing Party’s direct or indirect ownership of Common
Stock or other capital stock of the Company, options to acquire Common Stock or other capital stock
of the Company, or membership or other equity interests in direct and indirect parent corporation
of the Company, which the Releasing Party may now have against the Released Parties, or any of
them, or which he ever had, or which he, his respective representatives, successors or assigns
hereafter can, shall or may have, for, upon, or by reason of any matter, cause or thing whatsoever
which shall have arisen at any time prior to the date of these presents.

     The Releasing Party covenants and agrees never to institute any suit, charge, complaint,
proceeding or action at law, in equity, or otherwise in any court of the United States or any state
thereof or in any administrative agency of either the United States or any state, county or
municipality thereof or before any other tribunal, public or private, against the Company or any
other Released Party, or in any way voluntarily aid in the institution or prosecution of any suit,
action, or claim of any kind, or any other kind of relief, in any way against the Company or any
other Released Party as a result of, arising from or in any way pertaining to, the Releasing
Party’s direct or indirect ownership of Common Stock or other capital stock of the Company, options
to acquire Common Stock or other capital stock of the Company, or membership or other equity
interests in direct and indirect parent corporation of the Company.

     THE RELEASING PARTY FURTHER STATES THAT HE HAS READ AND UNDERSTANDS THIS RELEASE AND THAT HE
INTENDS TO BE LEGALLY BOUND BY IT. EACH OF THE RELEASED PARTIES IS AN INTENDED THIRD PARTY
BENEFICIARY OF THIS RELEASE AND MAY ENFORCE THIS RELEASE AGAINST ANY RELEASING PARTY.

     IN WITNESS WHEREOF, this Release is made as of ___, ___, ___.<PAGE>
                                                                               .
                                                                               .
                                                                               .
                                                                 EXHIBIT 10.1

                   HCA 2006 DIRECTOR FEES/COMPENSATION POLICY

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------
          HCA BOD PAY ELEMENT                          RECOMMENDATIONS
-----------------------------------------------------------------------------------
<S>                                       <C>
Annual Retainer                           -  $55,000 base value
                                          -  Choice of cash, restricted stock (RS),
                                             or restricted share units (RSUs)
                                               - 25% premium for RS or RSUs with
                                                 2-year cliff vesting
                                               - Pro-rata acceleration upon death
                                                 or disability
                                               - Immediate forfeiture of RS or
                                                 RSUs upon voluntary or involuntary
                                                 termination
-----------------------------------------------------------------------------------
Board Meeting Fees                        -  $2,000 per meeting
                                               - Paid in cash
-----------------------------------------------------------------------------------
Committee Member Retainer (annual)        -  $3,000 per Committee
                                               - Same choices as annual retainer
-----------------------------------------------------------------------------------
Committee Meeting Fees                    -  $1,500 per meeting
(all members)                                  - Paid in cash
-----------------------------------------------------------------------------------
Committee Chair Retainer (annual)
    -  Audit                              -  $20,000
                                               - Same choices as annual retainer
    -  All Other                          -  $10,000
                                               - Same choices as annual retainer
-----------------------------------------------------------------------------------
Presiding Director Retainer (annual)      -  $10,000
                                               - Same choices as annual retainer
-----------------------------------------------------------------------------------
Long-Term Incentives (ongoing)            -  $100,000 Black-Scholes value delivered
                                             in stock options upon re-election to
                                             the Board
                                               - 10-year term
                                               - Vest 20% per year, with 1st year
                                                 vesting immediately
                                               - Immediate vesting upon
                                                 termination due to change in
                                                 control, death, disability, or
                                                 retirement
                                               - Immediate forfeiture of vested
                                                 and unvested options upon
                                                 termination due to cause
                                               - Immediate forfeiture of unvested
                                                 options at voluntary or
                                                 involuntary termination
                                               - Ability to exercise options
                                                 within 1 year of termination due
                                                 to death or disability and within
                                                 3 years of retirement
-----------------------------------------------------------------------------------
Long-Term Incentives (initial)            -  5,000 Restricted Shares, upfront
                                             grant for new Directors only
                                               - 3-year ratable vesting
-----------------------------------------------------------------------------------

</TABLE>

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