EXHIBIT 10 (i)
EMPLOYMENT AGREEMENT
By and Between
QUAKER CHEMICAL CORPORATION
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
August 14, 1995
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into August 14, 1995, by and
between QUAKER CHEMICAL CORPORATION, a Pennsylvania corporation (the
"Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Executive").
BACKGROUND:
The Company desires to employ Executive as its President and Chief
Executive Officer, and Executive desires to accept such employment. The
Company and Executive intend, by this Employment Agreement, to establish
the terms and conditions of Executive's employment.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and intending to be legally bound hereby, the Company and
Executive agree as follows:
1. Employment.
The Company hereby offers and Executive hereby accepts employment
as the President and Chief Executive Officer of the Company upon the terms
and conditions contained herein.
2. Duties.
(a) Executive shall perform all duties consistent with the
position of President and Chief Executive Officer of the Company, as well
as any other duties which are assigned to him by the Board of Directors of
the Company (the "Board") which are commensurate with his position.
Executive will devote his entire time and best efforts to fulfill
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faithfully, responsibly and satisfactorily those duties and to further the
Company's best interests.
(b) During his employment, Executive shall not engage in any
commercial activities which are in any way in competition with the
activities of the Company (provided, however, that this shall not restrict
Executive from holding up to 1% of the outstanding capital stock or other
securities of any publicly traded entity which conducts activities in
competition with the activities of the Company) or which may in any way
interfere with the performance of his duties or responsibilities to the
Company.
(c) Subject to the provisions of Paragraph 10 hereof, nothing
contained in this Employment Agreement shall restrict or prohibit Executive
from serving on boards of eleemosynary institutions or on the boards of up
to two publicly traded entities.
3. Term.
The initial term of Executive's employment shall commence on
October 2, 1995 (the "Starting Date") and shall end on December 31, 1998
(the "Term of Employment"). Thereafter, the Term of Employment shall
continue for successive one year periods unless either the Company or
Executive shall have given the other at least ninety days' notice of a
desire to terminate and intention not to renew at the expiration of the
then current period.
4. Base Salary and Bonuses.
In exchange for Executive's promises contained herein, the
Company shall compensate him in the following manner:
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(a) Base Salary. The Company shall compensate Executive at the
Base Salary of $350,000 per annum, payable in equal installments on the
same basis as other senior salaried officers of the Company. Said Base
Salary shall be reviewed and considered for increase as of January 1, 1999
and annually thereafter if Executive's employment is then in effect.
(b) Bonuses. Commencing in 1996, Executive will participate in
the Quaker Incentive Compensation Plan applicable to the Company's other
senior salaried officers. For the purposes of Executive's participation,
he will have a target award percentage of 80% of mid-point of range.
(c) The amounts set forth herein are subject to appropriate
withholdings and deductions as required by law.
5. Long-Term Performance Incentive Plan.
(a) Executive shall be eligible for participation in the 1995
through 1998 Performance Award Period under the Company's Long-Term
Performance Incentive Plan (the "Incentive Plan"), and in connection with
such participation has been awarded 25,000 Performance Incentive Units
which shall have the same percentages, if any, and the same amounts of
Stated Value and Performance Program Targets applicable to them as shall be
applicable to the Performance Incentive Units awarded to other senior
salaried officers under the Incentive Plan for said Performance Award
Period.
(b) Executive shall be eligible to participate in subsequent
Performance Award Periods under the Incentive Plan, and the
Compensation/Management Development Committee of the Board administering
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the Incentive Plan (the "Compensation Committee") may award and grant
Executive Performance Incentive Units and/or Stock Options under the
Incentive Plan in the Compensation Committee's discretion; provided,
however, that for the Performance Award Period covering 1997 through 2000,
Executive will be awarded and granted not less than 25,000 Performance
Incentive Units and Stock Options to purchase not less than 50,000 shares
of the Company's Common Stock, such awards and grants to be upon such terms
and subject to such conditions as are generally applicable to other awards
and grants under the Incentive Plan.
(c) Simultaneous with the execution and delivery of this
Employment Agreement (effective as of the Starting Date), Executive is,
pursuant to Paragraph 7, being granted Stock Options under the Incentive
Plan to purchase 200,000 shares of the Company's Common Stock.
6. Restricted Stock.
Attached hereto, made a part hereof and marked Exhibit A is the
Quaker Chemical Corporation 1995 Naples Restricted Stock Bonus Plan and
Agreement (the "Stock Bonus Plan") which has been approved and adopted by
the Company's Board and the Compensation Committee. The Stock Bonus Plan
provides for an Initial Stock Bonus to the Executive of 50,000 shares of
the Company's Common Stock, of which 5,000 shares will be paid to Executive
outright and the remaining 45,000 shares will be issued to Executive
subject to risk of forfeiture. The Stock Bonus Plan further grants to
Executive the right to earn up to an Additional Stock Bonus of up to 50,000
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shares of the Company's Common Stock based upon increases in earnings per
share of the Company's Common Stock for years commencing 1996 and
thereafter during the Term of Employment.
On the date of this Employment Agreement, effective as of the
Starting Date, the Company and Executive shall execute copies of the Stock
Bonus Plan, and the Stock Bonus Plan shall control over any inconsistent
provision contained in this Employment Agreement and contains all of the
terms relevant to Executive's right to receive the shares of the Company's
Common Stock thereunder.
7. Stock Options.
The Compensation Committee has granted to Executive Stock Options
under the Incentive Plan pursuant to which Executive may purchase up to an
aggregate of 200,000 shares of the Company's Common Stock. Attached
hereto, made a part hereof and marked Exhibit B is the Stock Option
Agreement which sets forth the terms and conditions of said grant,
including, but not limited to, the Option exercise prices, the dates of
exercise, whether such Options are incentive stock options or non-qualified
stock options, and the like.
On the date of this Employment Agreement, effective as of the
Starting Date, the Company and Executive shall execute copies of such Stock
Option Agreement, and the Stock Option Agreement shall control over any
inconsistent provision contained in this Employment Agreement and contains
all of the terms relevant to said Stock Options.
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8. Pension and Other Benefit Plans.
(a) During the Term of Employment, Executive shall be entitled
to participate in the Company's employee benefit plans as they are in
existence on the date of this Employment Agreement or as they may be
amended hereafter. At the present time, Executive is entitled to
participate in various plans, including, without limitation, the following
plans to the same extent as other senior salaried officers of the Company:
Group Medical Insurance Plan (including Major Medical and Dental), Group
Term Life Insurance, Defined Benefit Pension Plan, and Profit Sharing and
Retirement Income Plan.
(b) Attached hereto, made a part hereof and marked Exhibit C is
the Quaker Chemical Corporation 1995 Naples Supplemental Retirement Income
Program and Agreement (the "Naples SURP") which has been approved by the
Board and the Compensation Committee. The Naples SURP provides that
Executive shall receive supplemental retirement income benefits similar to
those in the Company's Supplemental Retirement Income Program ("Company
SURP"), as amended through May 5, 1993, with the exception that Executive
shall be immediately vested thereunder and that for purposes of calculating
benefits, he will only need fifteen years to receive the maximum benefits
thereunder. The Naples SURP may be amended in a manner consistent with any
amendments made to the Company SURP; provided, however, no such amendment
will reduce or limit any of the benefits thereunder. Executive hereby
waives any rights he may have to participate in or to receive benefits
under the Company SURP. Executive shall be fully vested in the benefits
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accrued under the Naples SURP and such benefits shall be nonforfeitable,
notwithstanding the termination of his employment with the Company prior to
his reaching normal retirement age.
On the date of this Employment Agreement, effective as of
the Starting Date, the Company and Executive shall execute copies of the
Naples SURP, and the Naples SURP shall control over any inconsistent
provision contained in this Employment Agreement and contains all of the
terms relevant to such supplemental retirement income benefits.
9. Other Benefits.
Executive shall be provided with the following additional
benefits:
(a) The Company shall reimburse Executive for the cost of his
membership in one country or business club and for his business-related use
thereof.
(b) The Company shall reimburse Executive, upon proper
accounting, for reasonable expenses and disbursements incurred by him in
the course of his performance of the duties hereunder.
(c) Executive shall be entitled to five weeks of vacation each
year this Employment Agreement is in effect without reduction in salary.
(d) The Company shall reimburse Executive up to $5,000 per
calendar year for annual tax preparation and financial planning services.
(e) The Company shall reimburse Executive for the reasonable
counsel fees incurred by him in connection with the preparation, execution
and delivery of this Employment Agreement.
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10. Executive Covenants.
In order to induce the Company to enter into this Employment
Agreement, Executive hereby agrees as follows:
(a) Except for and on behalf of the Company and except with the
consent of or as directed by the Board, Executive will keep confidential
and shall not divulge to any other person or entity during the Term of
Employment or thereafter any of the business or trade secrets, names and
purchase histories of customers, formulae and processes of manufacture, or
other confidential information regarding the Company which has not
otherwise become public knowledge.
(b) All papers, books and records of every kind, and description
relating to the business and affairs of the Company, whether or not
prepared by Executive, shall be the sole and exclusive property of the
Company, and Executive shall surrender them to the Company at any time upon
the request by the Board.
(c) During the Term of Employment and for a period of two years
after the termination of Executive's employment, regardless of the reason
for such termination, Executive will not (i) participate, directly or
indirectly, as a director, stockholder or partner, or have any direct or
indirect financial interest as creditor, in any business which, directly or
indirectly, competes with the Company; provided, however, that this
paragraph shall not restrict Executive from holding up to 1% of the
outstanding capital stock or other securities of any publicly traded entity
which conducts activities in competition with the activities of the
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Company, or (ii) solicit any customers of the Company on behalf of himself
or any other person, firm or company; or (iii) within any place in the
world (the Company being global in nature and its business being
international), directly or indirectly, individually or jointly, as
employee or in any other capacity enter into or become engaged in the
exploitation, development, manufacture or sale of any products used or
capable of use in competition with the products of the Company or in any
process, method, or apparatus which would facilitate the manufacture or
sale of products used or capable of use in competition with the Company's
products.
(d) The Company shall, in addition to other remedies provided by
law, have the right and remedy to have the provisions of this Paragraph 10
specifically enforced by any court having equity jurisdiction. Executive
acknowledges that any breach or threatened breach of the provisions of this
Paragraph 10 will cause irreparable injury to the Company and that money
damages will not provide an adequate remedy. Nothing contained herein
shall be construed as prohibiting the Company from pursuing any other
remedies available to it for such breach or threatened breach, including
any recovery of damages from Executive.
11. Certain Events.
(a) Definitions. For the purposes of this Paragraph 11 (and,
except as otherwise provided in this Employment Agreement, not for any
other provisions of this Employment Agreement), the following definitions
shall apply:
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(i) "Act" means the Securities Exchange Act of 1934, as
amended. (This definition shall also be applicable in Paragraph 12).
(ii) "Company's Common Stock" means shares of Common Stock,
$1 par value, of the Company.
(iii) "First Event" means any of the following events:
(A) Shares of the Company's Common Stock are acquired
(other than directly from Company in exchange for cash or property) by any
person (as used in Sections 13 and 14 of the Act), other than a person who
is a present officer or director of the Company, who thereby becomes the
beneficial owner (as defined in Rule 13d-3 under the Act) of more than 10%
of the issued and outstanding shares of the Company's Common Stock.
(B) Any person, firm or corporation (including a
shareholder of the Company) makes a tender offer or exchange offer for, or
a request or invitation for tenders or exchanges of, shares of the
Company's Common Stock.
(iv) "Second Event" means any one of the following events
occurring after a First Event:
(A) A new director of the Company is elected in an
election in which the acquiror of the shares referred to in Paragraph
11(a)(iii)(A) or the offeror or requester referred to in Paragraph
11(a)(iii)(B) voted, in person or by proxy, and such new director was not
nominated as a candidate in a proxy statement forwarded to shareholders by
the Company's management prior to the occurrence of the First Event.
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(B) More than 20% of the issued and outstanding shares
of the Company's Common Stock are owned by one person (as used in Sections
13 and 14 of the Act) other than a person who is a present officer or
director of the Company.
(C) During any period of two consecutive calendar
years, individuals who at the beginning of such period constitute the Board
cease for any reason to constitute at least a majority thereof, unless the
election, or the nomination for election, by the Company's shareholders of
each new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of the
two year period.
(v) "Termination for Cause" means Executive's employment
with the Company shall have been terminated by the Company by reason of
either:
(A) The willful and continued neglect (after having
received notice thereof from the Board) by Executive of Executive's duties
under this Employment Agreement; or
(B) The willful engaging by Executive in a continued
course of misconduct (after having receive notice thereof from the Board)
which is materially injurious to the Company, monetarily or otherwise;
and Executive shall have been given notice thereof from the Board and an
opportunity (with counsel) to be heard by the Board and the Board shall
have made a reasonable and good faith finding that Executive was guilty of
the conduct set forth in clause (A) or (B) hereof.
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(b) The purpose of this Paragraph 11 is to reinforce and
encourage the continued dedication and attention of Executive to
Executive's assigned duties under this Employment Agreement without
distraction in the face of the potentially disturbing circumstances which
may arise from the possibility of a change of control or an attempt to
change the control of the Company.
(c) Upon the occurrence of a First Event, the Company will
deposit in an escrow account at CoreStates Bank, N.A. (or such other bank
as the Company may hereafter designate) (the "Bank") an amount equal to
300% of Executive's then current annual rate of Base Salary (the
"Termination Pay").
(d) If a Second Event shall occur and thereafter (but within
three years after date of the occurrence of the First Event) Executive's
employment with the Company shall terminate for a reason other than (i)
Executive's death, (ii) Executive's Disability (as hereafter defined),
(iii) by the Company as a Termination for Cause, or (iv) by Executive,
other than for Good Reason (as hereafter defined), Executive may demand
that the Bank pay Executive the Termination Pay (the "Demand").
(e) After the receipt of the Demand, the Bank will pay Executive
the Termination Pay in thirty-six equal consecutive monthly installments,
the first such installment to be paid within thirty days from the date of
the Demand. Executive shall not be required to mitigate the amount of any
payment provided in this Subparagraph (e) by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this
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Subparagraph (e) be reduced by any compensation earned by Executive as the
result of employment by another employer after the date of termination.
(f) The Company may withdraw the deposited Termination Pay if
three years elapse from the date of deposit thereof and if no Demand has
been made. If, prior to the expiration of said three year period, there
shall occur another First Event, Company will not be required to make an
additional deposit of Termination Pay (except to the extent necessary to
reflect an increase in Base Salary during said period), but the three year
period described herein shall be deemed to commence on the date of the
occurrence of the last such First Event.
(g) The Company shall pay the usual and customary charges of the
Bank for acting as escrow agent. The Company will be entitled to the
payment of any and all interest and other income earned by the Bank through
the investment of the deposited Termination Pay. Said interest shall be
paid to Company as earned. The escrow arrangement may be subject to the
Bank's usual rules and procedures, and Company will indemnify the Bank
against any loss or liability for any action taken by it in good faith as
escrow agent.
12. Termination and Severance Benefits.
(a) Executive's employment under this Employment Agreement shall
immediately terminate and all rights, benefits and obligations hereunder
shall cease in the event of Executive's death except for benefits accrued
to or accelerated at the date of death.
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(b) In the event that a mutually acceptable physician determines
that Executive, by reason of physical or mental disability, is and for a
period of six consecutive months has been permanently unable to perform
substantially his usual and customary duties under this Employment
Agreement ("Disability"), Executive's employment under this Employment
Agreement shall immediately terminate and all rights, benefits and
obligations hereunder shall cease except for benefits accrued to or
accelerated at the date of Disability.
(c) The Company shall have the right to terminate Executive's
employment under this Employment Agreement in the event of any of the
following (which shall constitute "Cause"):
(i) The willful and continued neglect (after having
received notice thereof from the Board) by Executive of Executive's duties
under this Employment Agreement; or
(ii) The willful engaging by Executive in a continued
course of misconduct (after having received notice thereof from the Board)
which is materially injurious to the Company, monetarily or otherwise;
and Executive shall have been given notice thereof from the Board and an
opportunity (with counsel) to be heard by the Board and the Board shall
have made a reasonable and good faith finding that Executive was guilty of
the conduct set forth in clause (i) or (ii) hereof.
(d) Executive shall have the right to terminate his employment
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under this Employment Agreement for "Good Reason." For the purposes of this
Paragraph 12(d) the following definitions apply:
(i) "Significant Transaction" means (a) the closing of a
transaction involving a transfer of all or substan tially all of the
Company's assets and business (whether structured as an acquisition, sale
of assets, merger, consolidation or otherwise, and whether or not the
Company is the surviving entity of the transaction) or an exchange of
equity securities of the Company for assets or stock of another entity or
person, after which transaction less than 50% of the equity (regardless of
the form of the equity interests) of the Company (or the surviving entity,
as the case may be) is owned by the persons and entities who were the
shareholders of the Company immediately prior to the closing of the
transaction, or (b) following the occurrence of a First Event (as defined
in Paragraph 11), the acquisition by a person (as used in Sections 13 and
14 of the Act) of more than 50% of the issued and outstanding shares of the
Company's Common Stock.
(ii) "Company" includes Quaker Chemical Corporation and the
entity surviving a Significant Transaction if it is other than Quaker
Chemical Corporation.
(iii) "Good Reason" means:
(A) The failure of Executive to be elected as a
director of the Company or the failure of Executive to be elected the
President of the Company or the failure of the Company to elect Executive
as, or to permit Executive to perform the duties of, the Chief Executive
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Officer of the Company, which failure is not remedied within thirty days
after the receipt by the Company of notice thereof from Executive; or
(B) A breach by the Company of any material provision
of this Employment Agreement, which breach is not remedied within thirty
days after the receipt by the Company of notice thereof from Executive;
(C) An amendment of the Company's By-Laws (which
amendment is not approved by Executive), the effect of which is a material
change in the duties and responsibilities of the Company's Chief Executive
Officer;
(D) The relocation of the principal executive offices
of the Company (including the principal office of Executive) to a location
outside the continental United States, which relocation is not initiated or
proposed by Executive;
(E) A determination to terminate employment for any
reason whatsoever is made by Executive during the period commencing twenty
four and ending thirty months after the occurrence of a Significant
Transaction as defined in clause (a) of Paragraph 12(d)(i); or a
determination to terminate employment for any reason whatsoever is made by
Executive during the period commencing twelve and ending eighteen months
after the occurrence of a Significant Transaction as defined in clause (b)
of Paragraph 12(d)(i); or
(F) The Company is not or ceases to be a corporation
with its common stock registered pursuant to Section 12(g) of the Act.
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(e) In the event of the termination of Executive's employment
under this Employment Agreement for any reason other than Executive's death
or Disability, or by the Company for Cause, or by reason of Executive
having given the Company a notice of intention not to renew pursuant to
Paragraph 2 (a "Severance Event"), (i) the Company shall pay to Executive a
severance benefit in an amount equal to 250% of Executive's then current
annual rate of Base Salary if the Severance Event occurs prior to five
years from the Starting Date or 300% of Executive's then current annual
rate of Base Salary if the Severance Event occurs after five years from the
Starting Date, which severance benefit shall be paid to Executive in thirty
(if the Severance Event occurs prior to five years from the Starting Date)
or thirty-six (if the Severance Event occurs on or after five years from
the Starting Date) equal consecutive monthly installments commencing one
month after the date of the termination of employment, (ii) the medical
insurance coverage (or coverage similar thereto) being provided Executive
immediately prior to the date of termination of employment shall be
continued in effect, at the Company's expense for a period ending on the
sooner of five years from the date of termination of employment or the date
on which Executive obtains new employment which provides him with such
coverage, (iii) the Company shall pay to Executive the present value of the
amount, if any, which would have been contributed by the Company on
Executive's behalf to the Company's Defined Benefit Pension Plan for the
period from the date of termination of employment through the end of the
then Term of Employment, and (iv) for the purposes of the Naples SURP,
Naples shall be deemed to have been employed by the Company through the end
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of the then Term of Employment. Notwithstanding anything contained in this
Paragraph 12(e) to the contrary, if the Severance Event occurs after
Executive shall have reached 62 years of age, the amount payable to
Executive pursuant to clause (i) hereof shall be reduced by 1/36th for each
full month after Executive's 62nd birthday that Executive shall have been
employed hereunder, so that if the Severance Event occurs after Executive
shall have reached 65 years of age no amount shall be payable to Executive
pursuant to said clause (i).
13. Indemnification.
The Company shall defend and hold Executive harmless to the
fullest extent permitted by applicable law in connection with any claim,
action, suit, investigation or proceeding arising out of or relating to
performance by Executive of services for, or action of Executive as a
director, officer or employee of the Company or any parent, subsidiary or
affiliate of the Company, or of any other person or enterprise at the
Company's request. Expenses incurred by Executive in defending a claim,
action, suit or investigation or criminal proceeding shall be paid by the
Company in advance of the final disposition thereof upon the receipt by the
Company of an undertaking by or on behalf of Executive to repay said amount
unless it shall ultimately be determined that Executive is entitled to be
indemnified hereunder; provided, however, that this shall not apply to a
non- derivative action commenced by the Company against Executive.
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14. Conflicting Agreements.
Each party hereto hereby represents and warrants to the other
party that the entering into this Employment Agreement, and the obligations
and duties undertaken by such party hereunder, will not conflict with,
constitute a breach of, or otherwise violate the terms of, any other
employment or other agreement to which he or it is a party.
15. Successors and Assigns.
This Employment Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns,
heirs and personal representatives.
16. Notices.
All notices, requests, demands and other communications hereunder
must be in writing and shall be deemed to have been duly given if delivered
by hand or mailed within the continental United States by first class
certified mail, return receipt requested, postage prepaid, to the other
party, addressed as follows:
If to the Company: Quaker Chemical Corporation
▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chairman of the Board
If to Executive: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Addresses may be changed by written notice sent to the other party at the
last recorded address of that party.
17. Severability.
If any provision of this Employment Agreement shall be adjudged
by any court of competent jurisdiction to be invalid or unenforceable for
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any reason, such judgment shall not affect, impair or invalidate the
remainder of this Agreement.
18. Prior Understandings.
This Employment Agreement (including the Exhibits hereto)
embodies the entire understanding of the parties hereof, and supersedes all
other oral or written agreements or understandings between them regarding
the subject matter hereof. No change, alteration or modification hereof may
be made except in a writing, signed by the parties hereto. The headings in
this Employment Agreement are for convenience and reference only and shall
not be construed as part of this Employment Agreement or to limit or
otherwise affect the meaning hereof.
19. Execution in Counterparts.
This Employment Agreement may be executed by the parties hereto
in counterparts, each of which shall be deemed to be original, but all such
counterparts shall constitute one and the same instrument, and all
signatures need not appear on any one counterpart.
20. Choice of Laws.
Jurisdiction over disputes with regard to this Employment
Agreement shall be exclusively in the courts of the Commonwealth of
Pennsylvania, and this Employment Agreement shall be construed and
interpreted in accordance with and governed by the laws of the Commonwealth
of Pennsylvania.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Employment Agreement as of the day and year first above written.
QUAKER CHEMICAL CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Attest: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Chairman of the Board
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
Secretary
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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QUAKER CHEMICAL CORPORATION
1995 NAPLES RESTRICTED STOCK PLAN AND AGREEMENT
1. Background
Quaker Chemical Corporation (the "Company") desires to retain the
services of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Naples"), as the President and Chief
Executive Officer of the Company, and to provide him with increased
motivation and incentive to exert his best efforts on behalf of the Company
through the payment of restricted stock. The Company expects that it will
benefit from the added interest which Naples will have in the welfare of
the Company as a result of his proprietary interest in the Company's
success.
2. Administration
This Plan and Agreement shall be administered by the Company's
Compensation/Management Development Committee (the "Committee") whose
determinations shall be final, binding and conclusive. In the exercise of
this power, the Committee shall generally determine all questions of policy
and expediency that may arise and may correct any defect, omission, or
inconsistency in this Plan and Agreement in a manner and to the extent it
shall deem necessary to make this Plan and Agreement fully effective.
3. Initial Stock Bonus
(a) The Company shall issue and pay to Naples as an Initial Stock
Bonus (the "Initial Stock Bonus") an aggregate of 50,000 shares of the
Company's Common Stock, $1.00 par value per share, ("Common Stock"), which
shares may be either authorized and unissued shares of Common Stock or
authorized and issued shares of Common Stock purchased or acquired by the
Company for any purpose, upon the terms and subject to the conditions of
this Plan and Agreement.
(b) Upon the execution of this Plan and Agreement, the Company shall
pay and deliver to Naples, as part of the Initial Stock Bonus, 5,000 shares
of Common Stock, free of all restrictions (except as otherwise provided in
this Plan and Agreement), registered in his name. Stock Certificates
representing the 45,000 share balance of the Initial Stock Bonus shall be
registered in Naples' name but shall be deposited with the Company,
together with stock powers endorsed by Naples in blank, to be held in
custody by the Company for Naples' account
EXHIBIT A
(the "Restricted Shares"). The Restricted Shares shall also bear the
following legend: "The transferability of this Certificate and the shares
of stock represented hereby are subject to the terms and conditions of the
Quaker Chemical Corporation 1995 Naples Restricted Stock Plan and
Agreement. Copies of such Plan and Agreement are on file in the offices of
Quaker Chemical Corporation."
(c) The Company shall deliver the Restricted Shares to Naples, free
of the aforesaid legend and of all restrictions (except as otherwise
provided in Paragraph 9 of this Plan and Agreement), in three equal
installments of 15,000 shares each on October 2, 1996, 1997 and 1998 (each,
a "Lapse Date") if Naples is still employed by the Company on such Lapse
Date. During the period the Restricted Shares are held in custody by the
Company, Naples shall generally have the rights and privileges of a
shareholder as to such Restricted Shares, including the right to all cash
or stock dividends paid with respect to such shares and the right to vote
the Restricted Shares except that none of the Restricted Shares may be
sold, transferred, assigned, pledged or otherwise encumbered or disposed of
except by will or the laws of descent and distribution. Subject to
Paragraph 3(d) of this Plan and Agreement, all of the Restricted Shares
remaining in the custody of the Company shall be forfeited to the Company
and all rights of Naples to such Restricted Shares shall terminate without
further obligation on the part of the Company upon the termination of
Naples' employment with the Company. Upon the forfeiture of any Restricted
Shares, such forfeited shares shall be transferred to the Company without
further action by Naples or the Company.
(d) Notwithstanding anything contained herein to the contrary, if
prior to October 2, 1998 Naples' employment with the Company shall
terminate by reason of his death or by reason of his disability or if the
Company shall terminate Naples' employment with the Company without "Cause"
(as defined in Paragraph 12(c) of Naples' Employment Agreement with the
Company dated August 14, 1995 (the "Employment Agreement")), or Naples
shall terminate his employment with the Company for "Good Reason" pursuant
to Paragraph 12(d) of the Employment Agreement, or there shall occur a
"Change of Control" (hereafter defined) then, and in any such event, the
Company shall, within thirty days after the occurrence of such event, pay
and deliver to Naples or his personal representative, as the case may be,
free of all restrictions (except as otherwise provided in Paragraph 9 of
this Plan and Agreement), the remaining Restricted Shares in the custody of
the Company which have not been delivered to Naples.
(e) For the purposes of this Agreement and Plan, "Change of Control"
means the occurrence of a "First Event" or a "Significant Transaction" (as
said terms are defined in the Employment Agreement).
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4. Additional Stock Bonus
(a) The Company shall issue and pay to Naples as an additional stock
bonus (the "Additional Stock Bonus") up to an aggregate of 50,000
additional shares of Common Stock on the following terms: Commencing for
the year 1996, and for each year thereafter during the term of Naples'
employment with the Company, the Company will pay and deliver to Naples,
free of all restrictions (except as otherwise provided in Paragraph 9 of
this Plan and Agreement), 1,000 shares of Common stock for each $.01 per
share increase, on a cumulative basis, in net income per share as reported
to shareholders ("EPS"), starting from a base equal to the greater of 1995
EPS or $1.10 per share. Notwithstanding anything contained herein to the
contrary, for the purposes of calculating the Additional Stock Bonus,
extraordinary and non-recurring gains and losses will be excluded from the
determination of EPS. Shares of the Additional Stock Bonus will be deemed
to have been earned by Naples as of the last day of the year in question
(provided Naples is employed by the Company on the last day of the year),
shall be issued not later than April 15 of the following year and shall be
issued even if Naples is not employed by the Company on the date of payment
and delivery of such shares.
The application of the preceding paragraph may be illustrated as
follows: If for 1995, EPS is $1.15 and for 1996 EPS is $1.35 per share, an
Additional Stock Bonus of 20,000 shares will be paid; if for 1997 EPS is
$1.33, no shares will be paid; and if for 1998 EPS is $1.45, an Additional
Stock Bonus of 10,000 shares will be paid.
(b) Notwithstanding anything contained herein to the contrary, if the
Company shall terminate Naples' employment with the Company without "Cause"
(as defined in Paragraph 12(c) of the Employment Agreement), or Naples
shall terminate his employment with the Company for "Good Reason" pursuant
to Paragraph 12(d) of the Employment Agreement, or there shall occur a
Change of Control, then, and in any such event, the Company shall,
effective immediately prior to the occurrence of such event, pay and
deliver to Naples, free of all restrictions (except as otherwise provided
in Paragraph 9 of this Plan and Agreement), the balance of the Additional
Stock Bonus (i.e., the difference between 50,000 shares and the number of
shares theretofore paid or payable to Naples pursuant to Paragraph 4(a)
hereof).
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5. Withholding and Additional Tax Loans
The Company shall determine the appropriate amount of Federal, state
and local withholding taxes or charges due as a result of the payment of
the Stock Bonuses under this Plan and Agreement, which amount the Company
shall transmit to the appropriate taxing authority (the "Withholding
Amount"). Naples may satisfy any such withholding tax obligation by any of
the following means or by a combination of such means: (a) authorizing the
Company to deduct from the number of shares of Common Stock otherwise
deliverable hereunder, such number of shares as shall have a fair market
value equal to the Withholding Amount; (b) delivering to the Company such
number of unencumbered shares of Common Stock as shall have an aggregate
fair market value equal to the Withholding Amount; or (c) tendering a cash
payment. To facilitate the payment of any Withholding Amount and to cover
any additional Federal and state income taxes of Naples due as a result of
the payment of the Stock Bonuses under this Plan and Agreement in excess of
the Withholding Amount ("Additional Taxes"), at the request of Naples, the
Company shall make loans to Naples in any amount up to the Withholding
Amount and the Additional Taxes. Such loans shall require the payment of
interest only on a quarterly basis, bear interest at a rate equal to the
lowest rate necessary to avoid the imputation of interest income under the
Internal Revenue Code of 1986, as amended, shall have a term of ten (10)
years (or such shorter term as Naples shall designate), shall be subject to
mandatory prepayment to the extent of 50% of the after-tax proceeds
realized by Naples on the sale of any of the Common Stock received under
this Plan and Agreement, and shall be memorialized by a promissory note in
the form attached hereto as Exhibit "1." When a loan shall have been made,
shares of Common Stock having a fair market value at least equal to 125% of
the principal amount of the loan shall be pledged by Naples to the Company
as security for payment of the unpaid balance of the loan pursuant to a
stock pledge agreement in the form attached hereto as Exhibit "2."
6. Adjustments Upon Changes in Capitalization
In the event of a change in the outstanding shares of Common Stock
through reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend, stock consolidation or
otherwise, or in the event of a sale of all or substantially all of the
assets of the Company, an appropriate and proportionate adjustment shall be
made in the number and kind of shares of Common Stock to be paid by the
Company and in the EPS targets under this Plan and Agreement. Adjustments
or changes under this Paragraph 6 shall be made by the Committee.
-4-
7. No Right to Employment
Neither the adoption of this Plan and Agreement nor its operation, nor
any document describing or referring hereto, or any part hereof, shall
confer upon Naples any right to continue in the employ of the Company, or
shall in any way affect the right and power of the Company to terminate his
employment to the same extent as might have been done if this Plan and
Agreement had not been adopted.
8. Exclusion from Pension Computations
None of the Stock Bonuses provided for herein nor any income realized
by Naples upon the receipt thereof or upon the disposition of Common Stock
received by him hereunder shall be taken into account as "base
remuneration", "wages", "salary" or "compensation" in determining the
amount of any contribution to or payment or any other benefit under any
pension, retirement, incentive, profit-sharing, deferred compensation or
similar plan of the Company.
9. Compliance with Law
(a) Common Stock will not be paid and delivered to Naples hereunder
except in compliance with all applicable Federal and state laws and
regulations including, without limitation, compliance with all Federal and
state securities laws, withholding tax requirements and the rules of all
stock exchanges, if any, on which the Common Stock may be listed.
(b) Naples represents and warrants to the Company that he is and will
be acquiring the Common Stock to be paid and delivered to him hereunder for
investment for his own account and not with a view to the resale,
distribution or public offering thereof. Naples acknowledges that he has
been informed and is aware that the Common Stock to be paid and delivered
to him hereunder is not and may not be registered under the Securities Act
of 1933 and applicable state securities laws (and that the Company has no
obligation to effect such registration) and must be held indefinitely until
they are subsequently registered under said Act or an exemption from such
registration is available; and that routine sales of securities made in
reliance upon SEC Rule 144 can be made only in limited amounts in
accordance with the terms and conditions of that Rule and subject to
compliance with Section 16 of the Securities Exchange Act of 1934.
(c) Any share certificate delivered to Naples hereunder may also bear
such legends and statements as the Company shall deem advisable to assure
compliance with Federal and state laws and regulations. The Company may
-5-
require Naples to execute and deliver to the Company an agreement or other
instrument evidencing Naples's acceptance of the terms and conditions
hereof or as may be deemed necessary to effectuate the provisions of this
Plan and Agreement.
10. Interpretation of this Plan and Agreement
Headings are given to the Paragraphs of this Plan and Agreement solely
as a convenience to facilitate reference. Such headings, numbering and
paragraphing shall not in any case be deemed in any way material or
relevant to the construction of this Plan and Agreement or any provisions
hereof. The use of the singular shall also include within its meaning the
plural and vice versa.
11. Construction of this Plan and Agreement
The place of administration of this Plan and Agreement shall be in the
Commonwealth of Pennsylvania and the validity, construction,
interpretation, administration and effect of this Plan and Agreement, and
rights relating to this Plan and Agreement shall be determined solely in
accordance with the laws of the Commonwealth of Pennsylvania.
Agreed to August 14, 1995, effective as of October 2, 1995
QUAKER CHEMICAL CORPORATION
By:________________________ ________________________(SEAL)
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman of the Board
-6-
PROMISSORY NOTE
$___________________ ____________, 199_
FOR VALUE RECEIVED AND INTENDING TO BE LEGALLY BOUND, the undersigned,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Maker"), does hereby promise to pay to the order of
QUAKER CHEMICAL CORPORATION, a Pennsylvania corporation ("Holder"), the
principal sum of Dollars ($ ) in lawful money of the
United States of America, plus interest on the unpaid principal balance
thereof upon the following terms:
1. Payment of Principal. The principal amount hereof, together with
accrued but unpaid interest thereon shall be due and payable in full on
, 200_. This Promissory Note is executed and delivered by Maker pursuant
to the 1995 Naples Restricted Stock Plan and Agreement, dated August 14,
1995 (the "Restricted Stock Plan").
2. Interest. Interest on the unpaid balance hereof shall accrue
from the date hereof at the Long-Term Applicable Federal Rate, compounded
monthly, as published by the Internal Revenue Service for the month during
which this Note is executed. Interest shall be due and payable monthly on
the first day of January, April, July, and October, commencing on the first
day of the first of such months following the date hereof.
3. Prepayment. The principal amount hereof may be prepaid by Maker
in whole or in part at any time without penalty. In the event that Maker
sells any shares of Common Stock of Holder received by Maker pursuant to
the Restricted Stock Plan (the "Stock Sale"), prepayment of the principal
hereof, together with accrued but unpaid interest thereon, shall be
required to the extent of fifty percent (50%) of the excess of (i) the
proceeds from such Stock Sale, over (ii) the amount of any Federal, state
and local taxes due with respect to the Stock Sale.
4. Default Interest. Interest shall accrue on the outstanding
principal balance hereof following the occurrence of an Event of Default or
after the due date for the payment of principal hereunder until paid at a
rate per annum which is two percent (2%) in excess of the rate payable
under Paragraph 2 above (the "Default Rate"). Any judgment obtained for
sums due hereunder shall accrue interest at the Default Rate until paid.
5. Place of Payment. Payments of principal and interest shall be
made to Holder at ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇
Exhibit 1 to Exhibit A
19428, or such other address as Holder shall notify Maker of in writing.
6. Events of Default. In the event of the occurrence of any of the
following events with respect to Maker ("Events of Default"), Holder shall
have the option to declare Maker to be in default on this Note and shall
have the power to declare the unpaid balance of this Note to be immediately
due and payable, without demand, notice or presentment of any kind: (a)
Maker's failure to make payment required hereunder when due or under any
other promissory note executed and delivered by Maker to Holder pursuant to
the Restricted Stock Plan, which failure continues for ten (10) days after
notice thereof from Holder; (b) Maker ceases to be an employee of Holder or
an affiliate of Holder, provided, however, if any of the shares of Common
Stock of Holder received by Maker pursuant to the Restricted Stock Plan are
not freely transferable by Maker, either pursuant to Rule 144 under the
Securities Act of 1933 (the "'33 Act") or pursuant to an effective
registration statement under the '33 Act, no Event of Default shall arise
under this clause (b) until 30 days after all such shares become freely
transferable; or (c) the occurrence of any of the following events with
respect to Maker: (i) the making of an assignment for the benefit of
creditors, (ii) the appointment of a receiver or trustee for all or any
substantial portion of Maker's assets, or (iii) the commencement of
proceedings in bankruptcy or any other proceedings for arrangement or
reorganization of Maker's debts under any State or Federal law, which
proceedings are not dismissed within sixty (60) days from their
commencement date.
7. Waivers. Maker hereby waives presentment for payment, demand,
notice of demand, notice of nonpayment or dishonor, protest and notice of
protest of this Note, and all other demands and notices in connection with
the delivery, acceptance, performance. default or enforcement of this Note.
Any failure of Holder to exercise any rights hereunder shall not be
construed as waiver of the rights to exercise the same or any other right
at any other time or times.
8. Miscellaneous. This Note shall be construed and governed by the
laws of the Commonwealth of Pennsylvania. The provisions of this Note are
severable and the invalidity or unenforceability of any provision shall not
alter or impair the remaining provisions of this Note. This Note shall be
binding upon and inure to the benefit of Maker, Holder and their respective
successors and assigns.
IN WITNESS WHEREOF, and intending to be legally bound hereby, Maker
has duly executed this Note as of the day and year first above written.
WITNESS:
__________________________ ______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT dated as of , 199_ (the
"Pledge Agreement") made by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Pledgor") and
QUAKER CHEMICAL CORPORATION, a Pennsylvania corporation ("Pledgee").
W I T N E S S E T H :
WHEREAS, Pledgor and Pledgee have entered into a certain 1995 Naples
Restricted Stock Plan and Agreement dated August 14, 1995 (the "Restricted
Stock Plan") in connection with the employment of Pledgor as the President
and Chief Executive Officer of Pledgee and pursuant to which Pledgor is
entitled to the receipt of shares of restricted Common Stock of Pledgor
subject to the terms and conditions of the Restricted Stock Plan; and
WHEREAS, pursuant to Paragraph 5 of the Restricted Stock Plan, Pledgee
has agreed to make loans to Pledgor in amounts equal to the Federal, state
and local withholding taxes or charges due with respect to the issuance of
shares of Common Stock under the Restricted Stock Plan (the "Withholding
Tax Loans"); and
WHEREAS, Pledgee has made one or more Withholding Tax Loans to Pledgor
which have been memorialized in promissory notes the terms of which are
described more particularly in Schedule "A" hereto and made a part hereof,
which Schedule "A" shall be amended from time to time to reflect any
additional Withholding Tax Loans made pursuant to the Restricted Stock Plan
(such promissory notes are collectively referred to herein as the "Notes");
and
WHEREAS, one of the conditions for Pledgee making the Withholding Tax
Loans to Pledgor is that Pledgor enter into this Pledge Agreement to pledge
shares of Common Stock of Pledgee owned by Pledgor with a fair market value
equal to 125% of the principal amount of the Notes to secure the repayment
of the Notes.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, the parties hereto, intending to be legally
bound hereby agree as follows:
Exhibit 2 to Exhibit A
1. Pledge and Assignment.
1.1 Pledged Collateral. As collateral security for the payment
and satisfaction of the principal and interest under
the Notes, Pledgor, subject to Section 6.1 hereof, hereby assigns,
transfers, grants, pledges, hypothecates, sets over and delivers to Pledgee
a security interest under the Uniform Commercial Code of the Commonwealth
of Pennsylvania in:
(a) the shares of Common Stock of Pledgee which are described in
Schedule "B" attached hereto and made a part hereof (collectively the
"Pledged Shares") and the certificates representing the Pledged Shares, and
all cash, securities, dividends, rights, and other property at any time and
from time to time declared or distributed in respect of, or in exchange
for, any or all of the Pledged Shares; and
(b) all other property hereafter delivered to Pledgee in
substitution for any of the foregoing, all certificates and instruments
representing or evidencing such property an all cash, securities, interest,
dividends, rights and other property at any time and from time to time
declared or distributed in respect of, or in exchange for, any or all
thereof; and
(c) all profits and proceeds of any of the foregoing.
All such Pledged Shares, certificates, notes, instruments, cash,
securities, interest, dividends, rights, property, profits and proceeds
referred to in this Section 1 are herein collectively referred to as the
"Pledged Collateral."
1.2 Additional Withholding Tax Loans. Whenever Pledgee makes
additional Withholding Tax Loans to Pledgor after the execution of this
Pledge Agreement, Pledgor shall, contemporaneous with the execution of the
Notes memorializing such Withholding Tax Loans, transfer to Pledgee shares
of Common Stock of Pledgee with a fair market value at such time which is
equal to 125% of the principal amount of such Notes. Such shares of Common
Stock shall be subject to the pledge and security interest created
hereunder and shall constitute Pledged Collateral subject to all the terms
and restrictions of this Pledge Agreement.
1.3 Maintenance of Collateral Ratio. In the event that the fair
market value of the Pledged Collateral falls below an amount equal to 110%
of the aggregate outstanding principal amount of the Notes, Pledgor shall
transfer to Pledgee additional shares of Common Stock of Pledgee or such
other property as shall be acceptable to Pledgee ("Additional Collateral),
with a fair market value sufficient to increase the aggregate fair market
value of all of the Pledged Collateral hereunder to 110% of aggregate the
outstanding principal amount of the Notes. Such Additional Collateral
shall be subject to the pledge and security interest created hereunder and
-2-
shall constitute Pledged Collateral subject to all the terms and
restrictions of this Pledge Agreement.
2. Rights in Pledged Collateral.
Notwithstanding anything herein to the contrary, it is expressly
understood and agreed that Pledgee shall not exercise any of the rights,
remedies or powers herein conferred upon it until an Event of Default (as
defined in Section 7 hereof) shall occur and be continuing, but upon the
occurrence and during the continuance of any such Event of Default, Pledgee
shall have the right, at any time at its discretion and without notice to
Pledgor, to exercise and enjoy all of Pledgor's rights, benefits and
privileges in the Pledged Collateral.
3. Delivery of Pledged Shares.
All certificates or instruments now or at any time hereafter
representing or evidencing the Pledged Collateral, shall be delivered to
Pledgee, or if already delivered to Pledgee then retained by Pledgee,
accompanied by duly executed instruments of transfer or assignment in
blank, and held by Pledgee hereunder. Upon the occurrence and during the
continuance of an Event of Default hereunder, Pledgee shall have the right,
at any time at its discretion and without notice to Pledgor, to transfer
to, or register in the name of, Pledgee or any of its nominees any or all
of the Pledged Collateral. All such instruments and documents shall be in
form and substance satisfactory to Pledgee. In addition, Pledgee shall have
the right at any time to exchange certificates or instruments representing
or evidencing the Pledged Shares for certificates or instruments of smaller
or larger denominations representing the same number of Pledged Shares.
4. Representations and Warranties.
Pledgor hereby represents and warrants the following:
(a) All of the Pledged Collateral is owned by Pledgor free and
clear of any and all options, claims, security interests, liens, pledges
and encumbrances, except those created hereby or under the Restricted Stock
Plan;
(b) Pledgor has the full power and legal authority to enter into
this Pledge Agreement and to consummate the transactions contemplated
hereby, and this Pledge Agreement constitutes the authorized valid and
legally binding obligation of Pledgor, enforceable in accordance with its
terms;
(c) The execution and delivery of this Pledge Agreement, the
consummation of the transactions provided for herein, and the fulfillment
of he terms hereof, will not result in the breach of any of the terms,
conditions or provisions of, or constitute a default under, or conflict
with, or cause any acceleration of any obligation under, any agreement or
-3-
other instrument to which Pledgor is a party or by which he is bound or any
judgment, decree, order or award of any court, governmental body or
arbitrator or any applicable law, rule or regulation.
5. Further Assurances. Pledgor agrees that at any time and from
time to time, at his expense, he will promptly execute and delivery all
further instruments, documents, and assignments, including without
limitation financing statements and continuation statements, and take all
further action as Pledgee may reasonably request, including without
limitation delivering additional documentation, certificates or instruments
evidencing any Pledged Collateral, in order to carry out the terms of this
Pledge Agreement or to perfect and protect any security interest granted or
purported to be granted hereby or to enable Pledgee to exercise and enforce
its rights and remedies hereunder with respect to the Pledged Collateral.
6. Voting Rights, Consensual Rights, Dividends and Distributions.
6.1 As long as no Event of Default shall have occurred or be
continuing:
(a) Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Collateral or any part
thereof for any purpose not inconsistent with the terms of this Agreement,
the Notes and the Restricted Stock Plan;
(b) Pledgor shall be entitled to receive and retain any and all
cash distributions or dividends paid on the pledged Collateral which he is
otherwise entitled to receive, notwithstanding the assignment and transfer
of the Pledged Collateral and the grant of a security interest in Section 1
of this Pledge Agreement, but any and all stock dividends, liquidating
dividends, distributions in property, returns of capital or other
distributions made on, or in respect of, any of the Pledged Collateral,
whether resulting from a subdivision, combination or reclassification of
the outstanding capital stock of any issuer of the Pledged Collateral or
received in exchange for the Pledged Collateral or any part thereof or as a
result of any merger, consolidation, acquisition or other exchange of
assets or to which any issuer of any Pledged Collateral may be a party or
otherwise and any and all cash and other property received in exchange for
any of the Pledged Collateral shall be and become part of the Pledged
Collateral hereunder and, if received by Pledgor, shall forthwith be
delivered to Pledgee; and
(c) Pledgee shall execute and deliver (or cause to be executed
and delivered) to Pledgor all such proxies and other instruments as he may
reasonably request for the purpose of enabling him to exercise the voting
consensual and other rights which he is entitled to exercise pursuant to
-4-
Subparagraph 6.1(a) above, and to receive such distributions and dividends
which he is authorized to receive and retain pursuant to Subparagraph
6.1(b) above.
6.2 Upon the occurrence and during the continuance of an Event of
Default:
(a) All rights of Pledgor to exercise the voting and other
consensual rights which he would otherwise be entitled to exercise pursuant
to Subsection 6.1(a) above and to receive and retain the distributions and
dividends which he would otherwise be authorized to receive and retain
pursuant to Section 6.1(b) above shall become vested in Pledgee, which
shall thereupon have the sole right to exercise such voting and other
consensual rights and to receive and hold as Pledged Collateral such
distributions and dividends (whether or not the Pledged Collateral shall
have been transferred into the name of Pledgee or any of its nominees,
Pledgor hereby irrevocably appointing and constituting Pledgee as proxy and
attorney-in-fact of Pledgor, which appointment is coupled with an interest,
with full power of substitution, to act as if Pledgee were the outright
owner thereof); and
(b) All distributions and dividends which are received by
Pledgor contrary to the provisions of Subsection 6.2(a) above shall be
received in trust for the benefit of Pledgee, shall be segregated from
other funds of Pledgor and shall be paid over to Pledgee forthwith as
Pledged Collateral in the same form as so received (with any necessary
endorsement).
7. Event of Default.
The term Event of Default as used herein shall include any of the
following:
(a) The occurrence of an Event of Default as defined in the
Notes;
(b) If any representation or warranty made by Pledgor in this
Pledge Agreement shall be false or misleading in any material respect; or
(c) An occurrence of a default in the due performance or
observance of any term, covenant or agreement required to be performed or
observed pursuant hereto which is not cured within thirty (30) days after
the delivery of written notice to Pledgor of such default.
8. Power of Attorney.
Pledgee is hereby appointed by Pledgor as his attorney-in- fact,
irrevocably to do any and all acts and things which Pledgee may deem
necessary to perfect and continue perfected the security interest hereby
created and to protect and preserve the Pledged Collateral including,
-5-
without limitation, the execution on behalf of Pledgor of any continuation
statement, and in the event Pledgor changes his principal residence, any
financing statement, with respect to the security interest created hereby
and the endorsement of any drafts or orders which may be payable to Pledgor
in respect of, arising out of, or relating to any or all of the Pledged
Collateral.
9. Termination of Security Interest.
At such time as (a) the entire aggregate principal amounts and accrued
interest under the Notes have been paid and satisfied in full; and (b) such
satisfaction of the entire aggregate principal and interest due under the
Notes is not the subject to any filed claim, contest, voidance or offset of
any type whatsoever or any written threat thereof, the security interest
provided herein shall terminate. Upon the occurrence of such event
Pledgee shall return to Pledgor all of the Pledged Collateral then held by
Pledgee, if any, and upon written request of Pledgor, Pledgee shall
execute, in form for filing, termination statements of the security
interest herein granted and, thereafter, no party hereto shall have any
further rights or obligations hereunder.
10. Miscellaneous.
10.1 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have ben given if delivered or
mailed, first class, registered or certified mail, postage prepaid;
(a) To Pledgor: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(b) To Pledgee: Quaker Chemical Corporation
▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Chairman of the Board
10.2 Waiver of Set-Off. Pledgor hereby waives the right to
interpose any set-off in connection with any litigation or dispute under
this Pledge Agreement or any instrument or document delivered pursuant to
this Pledge Agreement irrespective of the nature of such set-off.
10.3 No Waiver. No failure or delay on the part of Pledgee in
exercising any right, power or privilege hereunder and no course of dealing
between Pledgor and Pledgee shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power of privilege. The rights and remedies herein expressly
-6-
provided are cumulative and not exclusive of any rights or remedies which
Pledgee would otherwise have. No notice to, or demand on, Pledgor in any
case shall entitle Pledgor to any other or further notice or demand in
similar or other circumstances or shall constitute a waiver of the right of
Pledgee to take any other or further action in any circumstances without
notice or demand.
10.4 Entire Agreement and Amendments. This Pledge Agreement
represents the entire agreement between the parties hereto with respect to
the transactions contemplated hereunder and, except as expressly provided
herein, shall not be affected by reference to any other documents. Neither
this Pledge Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, but such may be accomplished only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.
10.5 Assignment. This Pledge Agreement shall be binding upon and
inure to the benefit of Pledgor and his heirs and personal representatives
and the to Pledgee and its successors or assigns. Without the prior
written consent of Pledgee, Pledgor may not assign any of his rights or
delegate any of his duties or obligations hereunder.
10.6 Governing Law. This Pledge Agreement and the rights and
obligations of the parties hereto shall be construed in accordance with and
shall be governed by the laws of the Commonwealth of Pennsylvania.
10.7 Severability. Every provision of this Pledge Agreement is
intended to be severable, and if any term or provision hereof shall be
invalid, illegal or unenforceable for any reason, the validity, legality
and enforceability of the remaining provisions hereof shall not be affected
or impaired thereby, and any invalidity, illegality or unenforceability in
any jurisdiction shall not affect the validity, legality or enforceability
of any such term or provision in any other jurisdiction.
10.8 Descriptive Headings. The descriptive headings of the
several sections of this Pledge Agreement are inserted for convenience only
and shall not affect the meaning or construction of any of the provisions
hereof.
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IN WITNESS WHEREOF, the parties hereto have executed or caused this
Pledge Agreement to be duly executed as of the day and year first above
written.
WITNESS: PLEDGOR:
__________________________ ______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ATTEST: PLEDGEE:
QUAKER CHEMICAL CORPORATION
__________________________ By:___________________________
Secretary ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Chairman of the Board
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
STOCK OPTION AGREEMENT
1. A STOCK OPTION (the "Option") for a total of 200,000 shares of
Common Stock (the "Stock"), par value of $1 per share, of Quaker Chemical
Corporation, a Pennsylvania corporation (the "Company") is hereby granted
to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Naples") subject to the terms and provisions of the
Quaker Chemical Corporation 1993 Long-Term Performance Incentive Plan (the
"Plan") insofar as the same are applicable to Stock Options granted
thereunder. The terms and provisions of the Plan are incorporated herein
by reference.
2. The Option Price(s) as determined by the Compensation/Management
Development Committee (the "Committee") which has the authority for
administering the Plan for the Company are:
As to 100,000 shares -- $[the "Fair Market Value (as
defined in the Plan) on
October 2, 1995]
As to 50,000 shares -- $[the lesser of (i) 120% of
the aforesaid Fair Market
Value or (ii) the greater of
$19.25 or the aforesaid Fair
Market Value]
As to 50,000 shares -- $[the lesser of (i) 140% of
the aforesaid Fair Market
Value or (ii) the greater of
$22.50 or the aforesaid Fair
Market Value]
having been determined pursuant to Section 3.2 of the Plan, which are equal
to or greater than 100% of the Fair Market Value (as defined in the Plan)
of the Stock on the date of the grant of the Option.
3. Subject to the provisions of Paragraphs 4, 5 and 6 hereof, the
Option may be exercised in whole at any time or in part from time to time
on or after the date the Option, or any portion thereof, first becomes
exercisable. The Option terminates on the earlier of the date when fully
exercised under the provisions of the Plan, the date fixed pursuant to
Section 3.8(a), 3.8(b), or 3.8(c) of the Plan, or October 1, 2005, unless
the term shall be restricted by other applicable law.
4. The Option may not be exercised if the issuance of the Stock upon
such exercise would constitute a violation of any
Exhibit B
applicable federal or state securities or other law or valid regulation.
If required by the Committee, the Naples, as a condition to his exercise of
this Option, shall represent to the Company that the Stock which he
acquires upon exercise of the Option is being acquired by the Naples for
investment and not with a present view to distribution or resale thereof.
Naples agrees to accept certificate(s) representing the Stock issued upon
the exercise of the Option bearing a legend referring to the fact that the
Stock represented by that certificate(s) has not been registered under the
Securities Act of 1933 or applicable state "Blue Sky" laws and indicating
that transfers thereof are restricted if the same shall be determined by
the Committee to be necessary. Further, exercise of an Option granted
pursuant to this Agreement shall be under and subject to Paragraph 3.4 of
the Plan.
5. This Option consists of Incentive Stock Options as to
_________ shares and Non-Qualified Options as to __________
shares and shall be exercisable in accordance with the following Schedule:
INCENTIVE STOCK OPTIONS:
Number of Shares Exercisable on or after
* ___________ One year from date of this Agreement
** ___________ Two years from date of this Agreement
*** ___________ Three years from date of this Agreement
NON-QUALIFIED OPTIONS:
Number of Shares Exercisable on or after
* ___________ One year from date of this Agreement
** ___________ Two years from date of this Agreement
*** ___________ Three years from date of this Agreement
[Breakdown between Incentive Stock Options and Non-
Qualified Options will be based on IRS $100,000 Rule]
* will aggregate 135,000 shares; ** will aggregate 35,000
shares; and *** will aggregate 30,000 shares
6. Notwithstanding anything contained in Paragraph 5 hereof to the
contrary, if, prior to October 2, 1998, Naples' employment with the Company
shall terminate by reason of his death or by reason of his disability or
the Company shall terminate Naples' employment with the Company without
"Cause" as defined in Paragraph 12(c) of Naples' Employment Agreement with
the Company dated August 14, 1995 (the "Employment Agreement"), or Naples
shall terminate his employment with the Company for "Good Reason" pursuant
to Paragraph 12(d) of the Employment Agreement, or there shall occur a
"Change of Control" (hereafter defined), then and in such event the Option
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shall, on the date of the occurrence of such event, become immediately
exercisable in full.
For the purposes of the preceding paragraph, "Change of Control" means
the occurrence of a "First Event" or a "Significant Transaction" (as said
terms are defined in the Employment Agreement).
7. The Option may not be transferred in any manner other than by
will or the laws of descent or distribution and may be exercised during the
lifetime of the Naples only by him. The terms of the Option shall be
binding upon the executors, administrators, heirs, successors, and assigns
of the Naples.
8. The Option may be exercised only upon payment of the appropriate
amount and delivery of the completed "Notice of Exercise," attached hereto,
to the Secretary of the Company. Any attempted exercise of the Option
without such delivery of the "Notice of Exercise" may be disregarded by the
Company. Payment and delivery for the purposes hereof may also be
accomplished by making payment and delivery to an agent duly appointed by
the Company for the purposes of accepting payment and notice of exercise.
Where any such appointment is made, the Company shall so advise Naples, and
Naples may rely upon such notice until such notice is revoked or amended.
9. Naples shall have none of the rights of a shareholder with
respect to any shares of Stock subject to the Option, except as to the
shares with respect to which Naples has validly exercised the Option
granted herein and tendered to the Company the full price therefor.
10. All notices required to be given hereunder shall be mailed by
registered or certified mail to the Company to the attention of its
Secretary, at Elm and ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and to
Naples at Naples's address as it appears on the Company's books and records
unless either of said parties has duly notified the other in writing of a
change in address.
QUAKER CHEMICAL CORPORATION
By:_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Chairman of the Board
Dated: August 14, 1995, effective as of October 2, 1995
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Naples acknowledges receipt of a copy of the Plan, and represents that
he is familiar with the terms and provisions thereof, and hereby accepts
the Option subject to the terms and provisions of the Plan insofar as they
relate to Incentive Stock Options granted thereunder. Naples agrees hereby
to accept as binding, conclusive, and final all decisions or
interpretations of the Committee upon any questions arising under the Plan
or the Option. Naples authorizes the Company to withhold in accordance
with applicable law from any compensation payable to him any taxes required
to be withheld by federal, state, or local law as a result of the exercise
of the Option.
NAPLES REPRESENTS THAT, AT THE TIME THE OPTION IS GRANTED, HE DOES NOT
OWN DIRECTLY OR INDIRECTLY (AS DETERMINED UNDER SECTION 424(d) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED), STOCK POSSESSING MORE THAN 10%
OF THE TOTAL COMBINED VOTING POWER OF ALL CLASSES OF STOCK OF QUAKER
CHEMICAL CORPORATION OR ANY OF ITS SUBSIDIARIES.
______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
QUAKER CHEMICAL CORPORATION
1995 NAPLES SUPPLEMENTAL RETIREMENT INCOME PROGRAM AND AGREEMENT
1. Background
The purpose of the 1995 Naples Supplemental Retirement Income Program
and Agreement (the "Program") is to provide ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Naples"),
the President and Chief Executive Officer of Quaker Chemical Corporation
(the "Company"), with an improved retirement program that will enhance the
Company's ability to retain the services of Naples as well as to reflect
Naples' achievements and valued contributions to the Company.
2. Administration
The Program shall be a non-qualified and unfunded plan of deferred
compensation for Federal income tax purposes, administered by the Company's
Compensation/Management Development Committee whose determinations shall be
final, binding and conclusive. As the Program contemplates payment of
benefits on a post-retirement basis, the Company will establish on the
Company's books and records an accrual of the benefits earned pursuant to
the Program according to Generally Accepted Accounting Principles.
3. Basic Program Concept
The benefits payable under the Program are based on a formula which
will provide the maximum supplemental retirement income benefit to Naples
if he shall remain employed by the Company for 15 or more years. If
Naples' employment with the Company is less than 15 years, the retirement
income benefit will be reduced by 2.667% for each full and fractional year
less than 15 years of employment with the Company. For purposes of the
Program, employment with any corporation, partnership or other entity of
which 40% or more of the voting power is held, directly or indirectly, by
the Company, shall be deemed employment with the Company. Naples' rights
to benefits under the Program shall be fully vested and nonforfeitable.
4. Benefit Calculation
The supplemental retirement income benefit payable under the Program
shall be determined as follows:
First Calculation
Salary Plus Bonus (hereinafter defined)
Exhibit C
less Actual Social Security taxes paid on Salary Plus Bonus,
less Applicable state income tax on Salary Plus Bonus at the
rate in effect on the Payment Commencement Date,
less Federal income tax on Salary Plus Bonus, calculated at
the tax rate for a joint return with no dependents in
effect on the Payment Commencement Date,
less Local taxes on Salary Plus Bonus, where applicable, at
the rate in effect on the Payment Commencement Date.
Computation of the above will generate the "Net Pre- Retirement
Income."
Second Calculation
Projected benefits
payable from the
Company's qualified
Defined Benefit
Pension Plan, based
on the "Life Only"
option commencing
at age 65 (the
"Pension"), plus Social Security benefit payable to
Naples at age 65, assuming that he is
married and that he and his spouse are
the same age.
less State income taxes on Pension and Social
Security benefits at the actual rate.
less Federal income taxes on Pension and
Social Security benefits based on tax
rate for a joint return with no
dependents.
less Applicable local taxes on Pension and
Social Security benefits at the actual
rate.
Computation of the above will generate the "Net After- Retirement
Income."
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Third Calculation
The benefit payable hereunder will be equal to the amount (if any) by
which the Net After-Retirement Income is less than 80% of the Net Pre-
Retirement Income. As indicated above, the benefit shall be further
reduced by 2.667% for each full and fractional year of employment with
the Company less than 15.
For purposes of the Program, Salary Plus Bonus means the higher of (a)
the final year of base salary prior to the termination of Naples'
employment with the Company or the commencement of benefits under Section 5
hereof, whichever comes first, plus the average of the highest three of the
last five years of annual incentive bonuses earned prior to such date; or
(b) the three highest consecutive years of base salary and annual incentive
bonuses during the period of Naples' employment with the Company.
Contributions made to the Company's Profit-Sharing and Retirement Savings
Plan (or any other plan of deferred compensation sponsored by the Company)
other than elective pre-tax contributions by Naples shall not be included
within the definition of Salary Plus Bonus. Moreover, none of the income
realized by Naples pursuant to his participation in the 1995 Restricted
Stock Plan and Agreement or in any stock option plan sponsored by the
Company shall be included in the definition of Salary Plus Bonus.
5. Payments and Term
Benefits payable under the Program shall be made in equal monthly
installments, shall be made for Naples' life only, and shall terminate on
the first day of the month following Naples' death. The payment of
benefits under this Program shall commence on the first day of the month
(the "Payment Commencement Date") subsequent to the later of: (a) the
termination of Naples' employment with the Company; or (b) Naples'
attainment of age 65; provided, however, in the event Naples elects to
terminate his employment with the Company pursuant to any early retirement
provision of any qualified retirement plan sponsored by the Company, the
benefits payable under this Program shall commence on the first day of the
month subsequent to the date of early retirement. In the event the payment
of benefits under the Program shall commence either prior to or subsequent
to Naples' attainment of age 65, such benefits shall be adjusted in
accordance with the actuarial assumptions utilized in the administration of
the Company's defined benefit pension plan as in existence on the date of
benefit commencement.
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6. Successors and Assigns
The benefits payable under the Program shall be a binding contractual
obligation of the Company and such obligation shall be binding on any
successor company resulting from any acquisition, merger, reorganization,
or amalgamation of the Company with or into any other company or juridical
entity.
7. Construction
The place of administration of this Program shall be in the
Commonwealth of Pennsylvania and the validity, construction,
interpretation, administration and effect of this Program, and rights
relating to this Program shall be determined solely in accordance with the
laws of the Commonwealth of Pennsylvania.
Agreed to August 14, 1995, effective as of October 2, 1995
QUAKER CHEMICAL CORPORATION
_________________________(SEAL) By:__________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Chairman of the Board
