EMPLOYMENT AGREEMENT
AGREEMENT made on November 15, 1994, by and between Freedom Chemical
Company, a Delaware corporation (the "Company") and ▇▇▇▇ ▇. ▇▇▇▇▇ (the
"Executive").
WHEREAS, the Company has filed a Registration Statement on Form S-1
with the Securities and Exchange Commission relating to a public offering of
3,000,000 shares of the Company's Common Stock (the "Public Offering");
WHEREAS, the Executive is the President of the Company and has held
such position since May 4, 1992 under an Employment Agreement dated as of such
date (the "1992 Employment Agreement") between the Company and the Executive;
and
WHEREAS, the Company desires that the Executive continue to serve as
the President of the Company and the Executive desires to continue to hold such
position, under the terms and conditions of this Agreement, which shall
supersede and replace in all respects the 1992 Employment Agreement, effective
upon the consummation of the Public Offering; and
WHEREAS, the Board of Directors of the Company (the "Company Board")
has approved and authorized the Company to enter into this Agreement with the
Executive.
WHEREAS, the Company has entered into agreements with The Freedom
Group Partnership (the "Option Agreements") pursuant to which the Company
granted The Freedom Group Partnership options to purchase an aggregate of 11,318
shares of the Company's Common Stock (the "Options").
NOW, THEREFORE, intending to be legally bound hereby, the parties
agree as follows:
1. Employment. The Company hereby employs the Executive, and the
Executive hereby accepts employ-
ment with the Company upon the terms and subject to the conditions set forth
herein.
2. Term.
(a) Subject to Section 14 hereof, the term of this Agreement
(the "Term") is for an initial period commencing on the date the Public Offering
is consummated and terminating on May 4, 1997.
(b) Commencing on May 4, 1997 and each anniversary of such
date thereafter, the Term shall automatically be extended for one additional
year unless, not later than sixty (60) days prior to such date or any such
anniversary, as the case may be, either party hereto shall have notified the
other party hereto in writing that such extension shall not take effect.
3. Position. During the Term, the Executive shall serve as the
President and Chief Executive Officer of the Company, supervising the conduct of
the business and affairs of Company and its subsidiaries and performing such
other duties as the Company Board shall determine.
4. Duties and Reporting Relationship. During the Term, the Executive
shall, on a full time basis, use his skills and render services to the best of
his abilities in supervising the management and promoting the products, services
and business of the Company, provided, however, the foregoing shall not prevent
the Executive from devoting a portion of his time and efforts to his personal
business affairs or serving on the boards of other for profit and not for profit
corporations so long as such activities do not materially interfere with the
performance of his duties hereunder. The Executive shall report to, and be
subject to supervision by, the Company Board.
5. Place of Performance. The Executive shall perform his duties and
conduct his business at the principal executive offices of the Company, which
shall be in Philadelphia, Pennsylvania, except for required travel on the
Company's business.
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6. Salary and Bonus.
(a) In consideration of Executive's services to be rendered
pursuant hereto, the Company shall pay to the Executive a base salary (the "Base
Salary") of $400,000 per year. The Company Board or a committee thereof shall
review the Base Salary at least annually and shall make such adjustments from
time to time as it may deem advisable. In no event shall there be a reduction in
the Executive's Base Salary. The Base Salary shall be payable to the Executive
in substantially equally installments in accordance with the Company's normal
payroll practices.
(b) Commencing with the Company's fiscal year ended December
31, 1995, the Executive shall be eligible to receive an annual bonus of up to
one hundred and fifty percent (150%) of his Base Salary which shall be awarded
by the Company Board or a committee thereof based upon the Company's annual
performance as measured against a written set of reasonable performance criteria
to be established by the Company Board or a committee thereof, after reviewing
with the Executive the Company's operating budget for the relevant fiscal year
and the proposed performance criteria. Each such bonus shall be paid on or
before the March 31 of the year following the year to which the bonus relates.
The annual bonus may be awarded as part of a bonus plan or other incentive
compensation plan established by the Company Board for the Company's senior
management officers.
7. Vacation, Holidays and Sick Leave. During the Term, the Executive
shall be entitled to paid vacation, paid holidays and sick leave in accordance
with the Company's standard policies for its senior executive officers, which
policies shall provide the Executive with benefits no less favorable than those
provided to any other senior executive officer of the Company.
8. Business Expenses. The Executive will be reimbursed for all
ordinary and necessary business expenses incurred by him in connection with his
employment (including without limitation, expenses for travel and entertainment
incurred in conducting or promoting business for the Company) upon timely
submission by the Executive of receipts and other documentation as required
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by the Internal Revenue Code (the "Code") and in accordance with the Company's
normal procedures.
9. Pension and Welfare Benefits. During the Term, the Executive
shall be eligible to participate in the pension and retirement plans described
on Schedule A, attached hereto, and participate fully in all other health
benefits, insurance programs, retirement plans and other employee benefit
arrangements available to officers of the Company generally.
10. Automobile; Membership Dues. During the Executive's employment
under this Agreement, the Company shall (i) provide the Executive with the use
of an automobile appropriate for his position with the Company, and shall pay
for all repairs and maintenance, insurance coverage and operating expenses
associated therewith and (ii) reimburse the Executive for membership dues in
business or athletic clubs and dues for business and professional associations
provided, however, that the cost of all such expenses, shall not be reimbursed
by the Company to the extent that they exceed, in the aggregate, $25,000 per
year.
11. Disability Benefits. In the event that this Agreement is
terminated by the Company pursuant to Section 14(c) hereof, (i) the Company
shall pay to the Executive, within ninety (90) days of such termination, a lump
sum amount equal to the product of two (2) multiplied by the amount of the
Executive's Average Final Compensation , and (ii) the Options shall become
exercisable with respect to the ▇▇▇▇▇ Shares (as defined in the Option
Agreements) and shall remain exercisable for a period of one year following such
termination of employment. As used in this Agreement, the Executive's "Average
Final Compensation" shall mean, at the time of termination, the average of the
Executive's annual compensation for the three (3) calendar years ended prior to
the date of such termination. For this purpose, the Executive's annual
compensation for any year shall be the sum of his base salary for such year plus
any bonus earned by him pursuant to Section 6(b) hereof or otherwise in respect
of such year.
12. Death Benefits. In the event the Executive dies at any time
during the Term hereof, (i) the Company shall pay a death benefit to the
Executive's
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spouse or, if no spouse is living, to the heirs of the Executive, within ninety
(90) days of the Executive's death, in a lump sum payment equal to the product
of two (2) multiplied by the amount of the Executive's Average Final
Compensation, and (ii) the Options shall become exercisable with respect to the
▇▇▇▇▇ Shares and shall remain exercisable for a period of one year following
such termination of employment.
13. Severance Benefits.
(a) In the event that this Agreement is terminated by the
Company without Cause pursuant to Section 14(e) hereof or by the Executive for
Good Reason pursuant to Section 14(f) hereof, (i) the Executive shall be
entitled to the severance benefits set forth below, and (ii) the Option shall
become exercisable with respect to the ▇▇▇▇▇ Shares and shall remain exercisable
for a period of one year following such termination of employment.
(i) At the time of such termination, the Executive shall
become entitled to receive a severance benefit equal to the product of two (2)
multiplied by the amount of the Executive's Average Final Compensation, payable
in substantially equal monthly installments over a period of two years.
(ii) In addition, the Company shall continue to maintain
and pay for all health care benefits for the Executive that were in effect at
the time of termination until the later of (A) the end of the then current Term
of this Agreement, and (B) eighteen (18) months after the date of termination.
At the request of the Executive, and at the Executive's sole cost and expense,
the Company shall thereafter maintain such health care benefits for the
Executive.
(b) Notwithstanding anything to the contrary contained herein,
if any severance payments (including benefits) made by the Company hereunder to
or for the benefit of the Executive would not be deductible by the Company as a
result of Section 280G of the Code, then the Executive may elect, by giving
written notice of such
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election to the Company promptly after his termination, to reduce his severance
benefits to the maximum amount of severance benefits that can be paid to or for
his benefit without making any part thereof not deductible by reason of Section
280G.
14. Termination of Agreement. This Agreement shall not be terminated
prior to the end of the then current Term hereof except as set forth in this
Section 14. In the event of such early termination, the Executive shall be
entitled to receive (i) all compensation and benefits to be paid or provided to
the Executive under this Agreement through the date of such termination, and
(ii) such additional compensation and benefits as are expressly set forth in
this Agreement.
(a) By Mutual Consent. This Agreement may be terminated at any
time by the mutual written agreement of the Company and the Executive.
(b) Death. This Agreement shall be terminated upon the death
of the Executive, in which event the Executive's spouse or heirs shall receive
the death benefits set forth in Section 12 hereof.
(c) Disability. This Agreement may be terminated at the option
of the Company in the event that (i) the Executive becomes unable to perform his
normal duties by reason of physical or mental illness or accident for any six
(6) consecutive month period, or (ii) the Company receives written opinions from
both a physician for the Company and a physician for the Executive that the
Executive will be so disabled, in which event the Executive and his spouse or
heirs shall receive the disability benefits set forth in Section 11 hereof.
(d) By the Company for Cause. This Agreement may be terminated
by the Company upon the occurrence of any of the following events (each of which
shall constitute "Cause" for termination): (i) the Executive commits any act of
fraud or dishonesty causing material harm to the Company; (ii) the conviction of
the Executive of a felony; (iii) habitual drunkenness or narcotic drug use by
the Executive; or (iv) any material breach by the Executive of his duties
hereunder, which breach remains uncorrected for a period of thirty (30) days
after receipt by the Executive of written notice
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from the Company setting forth the breach, if the Company suffers a material
loss as a result of such material breach.
(e) By the Company Without Cause. This Agreement may be
terminated by the Company at any time without Cause (as defined in Section 14(d)
hereof) upon written notice to the Executive, in which event the Executive shall
receive the severance benefits set forth in Section 13 hereof.
(f) By the Executive for Good Reason. This Agreement may be
terminated by the Executive at any time within twelve (12) months after (unless
otherwise agreed to in writing by the Executive) any of the following events
(each of which shall constitute "Good Reason" for termination): (i) there is a
Change in Control of the Company (as hereinafter defined); (ii) the Company
sells, leases or otherwise transfers all or substantially all of its assets to
an entity which has not entered into an employment contract which is mutually
satisfactory to the Executive and such entity; (iii) a material change occurs in
the duties or responsibilities of the Executive (e.g., the Executive is placed
in a reporting relationship to anyone other than the Company Board); (iv) the
Executive is employed by the Company in a capacity other than as President; (v)
the Executive is not elected or appointed continually as a director of the
Company; (vi) the principal executive offices of the Company are moved to a
location other than the general Philadelphia, Pennsylvania vicinity; or (vii) a
liquidation or dissolution of the Company occurs. In the event of termination
for Good Reason, the Executive shall receive the severance benefits set forth in
Section 13 hereof.
(g) By the Executive Without Good Reason. This Agreement may
be terminated by the Executive at any time without Good Reason (as defined in
Section 14(f) hereof) upon the Executive's giving the Company sixty (60) days
prior written notice of his resignation.
(h) Change in Control. For purposes of this Agreement, a
"Change in Control" shall be deemed to have occurred if:
(i) (x) any "person," as such term is used in Sections
13(d) and 14(d) of the Exchange
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Act (other than (1) the Company, (2) any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of
its subsidiaries, (3) any corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as
their ownership of common stock of the Company, (4) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ &
Levy or any affiliate thereof ("JLL"), (5) The Freedom Group Partnership
or any affiliate thereof, or (6) the officers, directors or employees of
the Company and its Subsidiaries (collectively, the "Permitted Holders")),
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing more than 30% of the combined voting power of the Company's
then outstanding voting securities, (y) the Permitted Holders
"beneficially own" (as so defined), directly or indirectly, in the
aggregate a lesser percentage of the combined voting power of the
Company's then outstanding voting securities than such other person and
(z) a majority of the members of the Company Board are no longer nominees
or designees of the Permitted Holders, or
(ii) during any period of 24 consecutive months,
individuals who at the beginning of such period constituted the Company
Board (together with any new directors whose election by such Board or
whose nomination for election by the shareholders of the Company was
approved by a vote of a majority of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved or who were nominated
and elected by the Permitted Holders) cease for any reason to constitute a
majority of the Company Board then in office.
15. Representations.
(a) The Company represents and warrants that this Agreement
has been authorized by all necessary corporate action of the Company and is a
valid and binding agreement of the Company enforceable against it in accordance
with its terms.
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(b) The Executive represents and warrants that he is not a
party to any agreement or instrument which would prevent him from entering into
or performing his duties in any way under this Agreement.
16. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
has taken place.
(b) This Agreement is a personal contract and the rights and
interests of the Executive hereunder may not be sold, transferred, assigned,
pledged, encumbered, or hypothecated by him, except as otherwise expressly
permitted by the provisions of this Agreement. This Agreement shall inure to the
benefit of and be enforceable by the Executive and his personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amount would still
be payable to him hereunder had the Executive continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to his devisee, legatee or other designee or, if there
is no such designee, to his estate.
17. No-Competition Covenants. (a) During the Term, the Executive
shall not be permitted to invest, directly or indirectly, in any business or
entity which operates within the chemical industry without the express written
consent of the Company Board. Notwithstanding anything herein to the contrary,
this Section 17(a) shall not prevent the Executive from acquiring securities
representing not more than 10% of the outstanding equity of any business
enterprise, provided that the Executive does not take an active role in the
management of such business enterprise.
(b) The Executive agrees that he will not at any time during
the Term and, if this Agreement is terminated by the Company for Cause pursuant
to Section
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14(d) hereof or by the Executive without Good Reason pursuant to Section 14(g)
hereof, for a period of two (2) years following such termination (i) induce any
employee of the Company or it subsidiaries to terminate his or her employment by
the Company or its subsidiaries in order to obtain employment by any person,
firm or corporation affiliated with the Executive, or (ii) directly or
indirectly, own any interest in, operate, join, control or participate as a
partner, director, principal, officer, or agent of, enter into the employment
of, act as a consultant to, or perform any services for any entity which has
material operations which directly compete with the Company in the sale of any
products sold by the Company at the time of the Executive's termination of
employment. Notwithstanding anything herein to the contrary, this Section 17(b)
shall not prevent the Executive from acquiring securities representing not more
than 5% of the outstanding voting securities of any publicly held corporation.
18. Confidentiality Covenant. The Executive agrees that he will not
at any time during the Term at any time thereafter, directly or indirectly, use
for his own account, or disclose to any person, firm or corporation, other than
authorized officers, directors and employees of the Company or its subsidiaries,
Confidential Information (as hereinafter defined) of the Company. As used
herein, "Confidential Information" of the Company means information of any kind,
nature or description which is disclosed to or otherwise known to the Executive
as a direct or indirect consequence of his association with the Company, which
information is not generally known to the public or in the businesses in which
the Company is engaged or which information relates to specific investment
opportunities within the scope of the Company's business which were considered
by the Company during the term of this Agreement.
19. Entire Agreement. This Agreement contains all the understandings
between the parties hereto pertaining to the matters referred to herein, and
supersedes the 1992 Employment Agreement and any other undertakings and
agreements, whether oral or in writing, previously entered into by them with
respect thereto. The Executive represents that, in executing this Agreement, he
does not rely and has not relied upon any representation or statement not set
forth herein made by the Company with regard
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to the subject matter or effect of this Agreement or otherwise.
20. Amendment or Modification, Waiver. No provision of this
Agreement may be amended, or waived unless such amendment or waiver is agreed to
in writing, signed by the Executive and by a duly authorized officer of the
Company. No waiver by any party hereto of any breach by another party hereto of
any condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar condition or provision at
the same time, any prior time or any subsequent time.
21. Notices. Any notice to be given hereunder shall be in writing
and shall be deemed given when delivered personally, sent by courier or telecopy
or registered or certified mail, postage prepaid, return receipt requested,
addressed to the party concerned at the address indicated below or to such other
address as such party may subsequently give notice hereunder in writing:
To the Executive at:
▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
To the Company at:
Freedom Chemical Company
Mellon Center
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chairman
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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Any notice delivered personally or by courier under this Section 21
shall be deemed given on the date delivered and any notice sent by telecopy or
registered or certified mail, postage prepaid, return receipt requested, shall
be deemed given on the date telecopied or mailed.
22. Effectiveness Conditioned Upon Public Offering. This Agreement
shall become effective upon the consummation of the Public Offering. In the
event the Public Offering is not consummated by March 31, 1995, this Agreement
shall terminate, be null and void and of no further force or effect.
23. Severability. If any provision of this Agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this Agreement or the application
of such provision to such person or circumstances other than those to which it
is so determined to be invalid and unenforceable, shall not be affected thereby,
and each provision hereof shall be validated and shall be enforced to the
fullest extent permitted by law.
24. Survivorship. The respective rights and obligations or the
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
25. Governing Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York, without regard to its
conflicts of laws principles.
26. Headings. All descriptive headings of sections and paragraphs in
this Agreement are intended solely for convenience, and no provision of this
Agreement is to be construed by reference to the heading of any section or
paragraph.
27. Obligations Absolute; Withholding.
(a) The obligations of the Company hereunder shall be absolute
and unconditional and shall not be affected by any circumstances, including
without limitation (i) the Executive's receipt of compensation
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and benefits from another employer in the event that the Executive accepts new
employment following the termination of his employment under this Agreement, or
(ii) any set-off, counterclaim, recoupment, defense or other right which the
Company may have against the Executive or anyone else.
(b) All payments to the Executive under this Agreement shall
be reduced by all applicable withholding required by federal, state or local
law.
28. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
FREEDOM CHEMICAL COMPANY
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------
Title: Executive Chairman
---------------------
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
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