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EXHIBIT 10(k)
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of this 22nd day of January, 1996 (the
"Effective Date"), by and between DETREX CORPORATION, a Michigan corporation
(the "Company"), and XXXXXX XXXX, an individual residing at 22146 Metamora,
Xxxxxxx Xxxxx, Xxxxxxxx, 00000 ("Executive").
W I T N E S S E T H:
WHEREAS, the Company seeks to employ Executive and Executive
seeks to become employed by the Company;
WHEREAS, both parties desire that the terms and conditions of
Executive's employment with the Company be governed by the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. Employment and Duties.
(a) General. The Company hereby employs Executive,
effective as of the Effective Date, and Executive agrees upon the terms and
conditions herein set forth to serve, effective as of the Effective Date, as
President and Chief Operating Officer of the Company. In such capacities,
Executive shall report directly to the Chief Executive Officer of the Company
(the "CEO") and to the Board of Directors of the Company (the "Board").
Executive shall perform all of the duties accorded to the positions of
President and Chief Operating Officer as provided in the bylaws of the Company.
(b) Services. For so long as Executive is employed by the
Company, Executive shall devote his full business time to the performance of
his duties hereunder; shall faithfully serve the Company; shall in all respects
conform to and comply with the lawful and good faith directions and
instructions given to him by the CEO and the Board; and shall use his best
efforts to promote and serve the interests of the Company.
(c) No Other Employment. For so long as Executive is
employed by the Company, Executive shall not, directly or indirectly, render
services to any other person or organization for which he receives compensation
without the prior approval of the Board. No such approval will be required if
Executive seeks to perform inconsequential services without direct compensation
therefor in connection with the management of personal investments or in
connection with the performance of charitable and civic activities, provided
that such activities do not contravene the provisions of Section 5 hereof.
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2. Term of Employment. The term of Executive's employment
under this Agreement (the "Term") shall commence on the Effective Date and
continue until the day before the third anniversary date of the Effective Date.
On the first anniversary of the Effective Date (and on each subsequent
anniversary date thereafter), the Term shall automatically renew for an
additional year unless prior to the applicable anniversary date either party
shall have given the other party hereto written notice of the intention not to
so extend the Term; provided, however, that the Term shall not extend beyond
the last day of the month in which Executive attains age 65.
3. Compensation and Other Benefits. Subject to the
provisions of this Agreement, the Company shall pay and provide the following
compensation and other benefits to Executive during the Term as compensation
for all services rendered hereunder:
(a) Salary. The Company shall pay to Executive a salary
(the "Salary") at the initial rate of $238,000 per annum, payable to Executive
in accordance with the normal payroll practices of the Company for its
executive officers as are in effect from time to time. The amount of
Executive's Salary will be reviewed not less often than annually by the Board
and may be increased, but not decreased below such amount, on the basis of such
review.
(b) Signing Bonus. The Company shall pay Executive a
signing bonus of $40,000, less applicable withholding taxes, on or before June
30, 1996.
(c) Annual Bonus. During the Term, Executive shall be
eligible for each calendar year that begins within the Term to participate in
an annual incentive bonus program established by the Company in accordance with
terms and conditions as may be approved annually by the Compensation Committee
of the Board (the "Compensation Committee"). Under the terms of the annual
incentive bonus program, Executive will be afforded the opportunity to earn
from forty to sixty percent of his annual rate of Salary in effect for the
applicable calendar year if the Company achieves the performance targets
established by the Compensation Committee for that year. A minimum bonus amount
determined by the Compensation Committee for each year will be payable if 90%
of the targets established for that year have been achieved for that year 90%
of the target for a given year is achieved, (it being understood that if 90% of
the target for a given year is achieved, Executive will receive 40% of his
annual rate of Salary as an annual bonus for that year).
(d) Stock Options. Effective as of the Effective Date, the
Company shall grant Executive an option (the "Option") to purchase 75,000
shares of the common stock of the Company pursuant to the terms of the
Company's 1993 Stock Option Plan (the "Option Plan"). The per share exercise
price of the Option shall equal the fair market value of a share of Common
Stock on the Effective Date, as determined in accordance with the terms of the
Option Plan. The Option shall vest and become exercisable with respect to
twenty-five percent of the shares of common stock subject thereto on the
Effective Date and on each of
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the first through third anniversaries of the Effective Date, provided that
Executive has remained in the continuous full-time employment of the Company
through the applicable anniversary date. The Option shall become fully vested
and exercisable in the event of a Change in Control of the Company (as defined
in the Option Plan). The Option will be subject to the terms of the Option Plan
and to such other terms and conditions as may be specified by the Compensation
Committee in the form of an option agreement between the Company and Executive,
which is attached hereto as Exhibit A.
(e) Company Automobile. During the Term, the Company will provide
Executive with the use of a leased automobile and will reimburse Executive for
the business-related costs and expenses incurred by Executive in connection
with the use of that vehicle in accordance with the Company's policies and
practices in effect from time to time.
(f) Financial Planning Assistance. During the Term, the Company will
make available to Executive financial planning services; provided, however,
that the cost of providing such services to the Company shall not exceed $5,000
per annum.
(g) Expenses. The Company shall pay or reimburse Executive for all
reasonable out-of-pocket expenses incurred by Executive in connection with his
employment hereunder. Such expenses shall be paid upon the periodic submission
of invoices and shall be paid reasonably promptly after the date of such
invoice. The reimbursement of expenses under this Section 3(g) shall be subject
to Executive's providing the Company with such documentation of the expenses as
the Company may from time to time reasonably request. No expense payment or
reimbursement under this Section 3(g) shall be "grossed up" or increased to
take into account any tax liability incurred by Executive as a result of such
payment or reimbursement.
(h) Pension and Medical Benefits. During the Term, Executive shall be
eligible to participate in the Company's pension, medical, disability and life
insurance plans applicable to senior officers of the Company in accordance with
the terms of such plans as in effect from time to time.
(i) Supplemental Pension. Subject to the vesting and forfeiture
provisions set forth herein. Executive shall be entitled to receive a
supplemental monthly pension for life (the "Pension"). The amount of the
Pension shall be determined as follows:
(I) Termination Prior to the Fifth Anniversary of the Effective Date.
If Executive's employment with the Company ends prior to the fifth
anniversary of the Effective Date, the amount of the Pension payable in the
form of a straight life annuity commencing with the month following the
month in which Executive attains age 65 and shall be determined in
accordance with the benefit formula and actuarial factors and assumptions
set forth in the Detrex Corporation Employees Retirement
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Plan (the "Retirement Plan"), as in effect on the Effective Date, except
that, for purposes of calculating the amount of the Pension, the following
shall apply: (A) Executive shall be entitled to receive the Pension even
if, at the time of his termination of employment, he is not entitled to
receive a pension under the Retirement Plan; (B) for purposes of
determining eligibility for benefits and calculating the amount of the
Pension, Executive shall be credited with years of vesting and accrual
service equal to the sum of (x) the number of whole months elapsed from the
Effective Date to the date of Executive's termination of employment
hereunder divided by twelve plus (y) five; (C) the Pension shall be reduced
by (x) the amount of the pension payable to Executive at age 65 in the form
of a straight life annuity under the Retirement Plan or any successor plan
thereto and (y) the amount payable to Executive from any other qualified or
nonqualified retirement plan (other than a tax qualified defined
contribution plan subject to Section 401(k) of the Code) that the Company
may adopt (the "Reduction Amounts").
(II) Termination On or After the Fifth Anniversary of the Effective
Date. If the Executive's employment with the Company ends on or after the
fifth anniversary of the Effective Date, the provisions of Section 3(i)(I)
above shall not apply and no benefits will be payable thereunder. In
lieu of Section 3(i)(I) above, the amount of the Pension payable in the
form of a straight life annuity commencing with the month following the
month in which Executive attains age 65 and shall be fifty percent of
Executive's Final Average Salary (as hereinafter defined) reduced by the
Reduction Amounts. For purposes hereof. "Final Average Salary" means the
highest aggregate amount of Salary paid to Executive for any thirty-six
consecutive-month period during the Term divided by three.
(III) General Provisions Applicable to the Pension. The Pension shall
be paid in the form of a 50% qualified joint and survivor annuity, unless
Executive shall elect in writing prior to his termination of employment to
have the Pension paid in another form of payment that he may elect under
the Retirement Plan: provided, however, that the Company shall have the
right at any time following Executive's termination of employment to pay
the entire amount of the remaining Pension to Executive (or his surviving
spouse, if applicable) in a lump sum (regardless of the amount of such lump
sum) calculated in accordance with the actuarial factors specified in the
Retirement Plan applicable to involuntary cashouts; and provided further,
that the Pension shall be converted from a single life annuity to a
qualified joint and survivor annuity (or other form elected by Executive)
in accordance with the actuarial factors and assumptions in the Retirement
Plan. The monthly payments of the pension shall not commence until the
latest to occur of (A) the date Executive attains the earliest retirement
age under the Retirement Plan, (B) the date Executive is no longer entitled
to receive Severance Payments (as hereinafter defined), (C) the date of
Executive's termination of employment and (D) the date benefits commence
under
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the Retirement Plan (if Executive is eligible for benefits thereunder). If
Executive should die prior to the commencement of the Pension, his
surviving spouse, if any, shall be entitled to a death benefit for life
equal the amount that would otherwise have been payable to her if Executive
had died immediately after Pension payments to him had commenced on the
latest date specified in the previous sentence (the "Reference Date") in
the form of a 50% joint and survivor annuity prior to the date of his
death; provided however, that the death benefit payable to Executive's
surviving spouse shall not commence until the Reference Date. If the
payment of the Pension should commence prior to the time that Executive
attains age 65, the amount of the Pension shall be reduced in accordance
with the reduction factors set forth in the Retirement Plan. The Pension
payments to Executive shall terminate in the month in which Executive dies,
and the death benefit, if any, payable to his surviving spouse shall
terminate at the month of her death. No beneficiary may be elected to
receive the death benefit other than Executive's spouse.
(IV) Forfeiture. Executive shall forfeit all rights to the Pension
if (A) his employment is terminated at any time for Cause (as hereinafter
defined) or (B) he resigns his employment from the Company for any reason
other than Good Reason (as hereinafter defined) prior to the third
anniversary of the Effective Date.
4. Termination of Employment. Subject to the notice and other
provisions of this Section 4, the Company shall have the right to terminate
Executive's employment hereunder, and Executive shall have the right to resign,
at any time for any reason or for no stated reason.
(a) Termination for Cause; Resignation Without Good Reason. (i) If,
prior to the expiration of the Term, Executive's employment is terminated by
the Company for Cause or if Executive resigns from his employment hereunder
other than for Good Reason, Executive shall be entitled to payment of the pro
rata portion of Executive's Salary through and including the date of
termination or resignation as well as any unreimbursed expenses. Except to the
extent required by the terms of any applicable grant to Executive in accordance
with Section 3(d) above, by the terms of Section 3(h), Section 3(i) or
applicable law, Executive shall have no right under this Agreement or otherwise
to receive any other compensation or to participate in any other plan, program
or arrangement after such termination or resignation of employment with respect
to the year of such termination or resignation and later years.
(ii) Termination for "Cause" shall mean termination of Executive's
employment with the Company because of (A) his refusal (other than by reason of
the incapacity of Executive due to physical or mental illness) to perform his
duties hereunder, (B) the commission by Executive of a felony, or the
perpetration by Executive of a dishonest act or fraud against the Company or
any affiliate or subsidiary thereof, (C) any act or
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omission by Executive which is the result of Executive's willful misconduct or
gross negligence and which, in the good faith opinion of the Board, is
injurious in any material respect to the financial condition, business or
reputation of the Company or any of its affiliates or subsidiaries or (D) a
material breach by Executive of this Agreement; provided, however, that upon
written notification by the Company pursuant to Section 4(a)(iii) below of any
proposed termination for Cause under parts (A) and (D) of this Section
4(a)(ii), Executive shall have 15 days to cure the circumstances that
constitute Cause and, upon such cure thereof by Executive to the reasonable
satisfaction of the Company, such circumstances will no longer constitute Cause
for purposes of this Agreement.
(iii) Termination of Executive's employment for Cause shall be
communicated by delivery to Executive of a written notice from the Company
stating that Executive has been terminated for Cause, specifying the
particulars thereof and the effective date of such termination. The date of a
resignation by Executive without Good Reason shall be the date specified in a
written notice of resignation from Executive to the Company. Executive shall
provide at least 90 days' advance written notice of resignation without Good
Reason.
(b) Involuntary Termination. (i) If, prior to the expiration of
the Term, the Company terminates Executive's employment for any reason other
than Disability or Cause or Executive resigns from his employment hereunder for
Good Reason (such a resignation or termination being hereinafter referred to as
an "Involuntary Termination"), the Company shall pay to Executive his Salary
accrued up to and including the date of such Involuntary Termination as well as
any unreimbursed expenses. In addition, in the event of Executive's Involuntary
Termination, the Company shall pay to Executive as severance (the "Severance
Payments") his Salary prorated on a monthly basis, at the rate in effect
immediately prior to such Involuntary Termination, for the six-month period
beginning immediately following the date of such Involuntary Termination (the
"Initial Severance Period"). If, after the expiration of the Initial Severance
Period, Executive is not employed or otherwise engaged to perform professional
services for a third-party ("Other Employment"), the Company shall continue to
pay Severance Payments to Executive on a month-by-month basis for up to an
additional eighteen months, but in no event beyond the last day of the month in
which Executive obtains Other Employment. The Severance Payments shall be paid
in payroll installments in accordance with the Company's payroll practices in
effect from time to time; provided, however, that the Company, in its sole
discretion, may at any time during the Initial Severance Period pay to
Executive the then remaining portion of Severance Payments due during the
Initial Severance Period in a cash lump sum. Anything in this Agreement to the
contrary notwithstanding, no amounts shall be payable under this Section 4(b)
if Executive's employment with the Company ends at the expiration of the Term
in accordance with Section 2.
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(ii) In the event of Executive's Involuntary Termination, Executive shall
continue to participate on the same terms and conditions as are in effect
immediately prior to such termination or resignation in the Company's health
and medical plans provided to Executive pursuant to Section 3(h) above at the
time of such Involuntary Termination until the last day in respect of which the
Company is obligated to make Severance Payments in accordance with Section
4(b)(i) above (the "Continuation Period"). Anything herein to the contrary
notwithstanding, the Company shall have no obligation to continue to maintain
during the Continuation Period any plan or program solely as a result of the
provisions of this Agreement.
(iii) In the event of Executive's death prior to the end of the Initial
Severance Period, the balance of the Severance Payments for such Initial
Severance Period, shall continue to be paid in periodic installments to
Executive's Beneficiary (as hereinafter defined) for the balance of the Initial
Severance Period; provided, however, that the Company, in its sole discretion,
may at any time pay such Beneficiary the then remaining Severance Payments in a
cash lump sum.
(iv) If, following an Involuntary Termination, Executive materially
breaches the provisions of Section 5 hereof, Executive shall not be eligible,
as of the date of such breach, for the payments and benefits described in this
Section 4(b), and any and all obligations and agreements of the Company with
respect to such payments and benefits shall thereupon cease.
(v) Resignation for "Good Reason" shall mean resignation by Executive
because of a material breach by the Company of its obligations to Executive
under this Agreement. Unless Executive provides written notification of his
intention to resign within 90 business days after Executive knows or has reason
to know of the occurrence of any such material breach, Executive shall be
deemed to have consented thereto and such material breach shall no longer
constitute Good Reason for purposes of this Agreement. If Executive provides
such written notice to the Company, the Company shall have 30 business days
from the date of receipt of such notice to effect a cure of the material breach
described therein (which cure shall be retroactive with respect to any monetary
matter) and, upon cure thereof by the Company to the reasonable satisfaction of
Executive, such material breach shall no longer constitute Good Reason for
purposes of this Agreement.
(vi) The date of termination of employment without Cause shall be the date
specified in a written notice of termination to Executive. The date of
resignation for Good Reason shall be the date specified in a written notice of
resignation from Executive to the Company; provided, however, that no such
written notice shall be effective unless the cure period specified in Section
4(b)(v) above has expired without the Company having corrected, to the
reasonable satisfaction of Executive, the event or events subject to cure.
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(c) Termination Due to Disability. In the event of Executive's
Disability (as hereinafter defined), the Company shall be entitled to terminate
his employment. In the case that the Company terminates Executive's employment
due to Disability, Executive shall be entitled to payment of the pro rata
portion of Executive's Salary through and including the date of termination as
well as any unpaid expense reimbursements. Notwithstanding anything contained
in this Agreement to the contrary, if Executive's employment should terminate
due to Disability, the Company shall continue to pay Executive his annual
salary until the earliest to occur of (i) the end of the six-month period
following the date of such termination, (ii) the date of Executive's death,
(iii) the date Executive's Pension payments commence and (iv) the first day on
which Executive is entitled to benefits under the Company's long-term
disability plan. For purposes of this Agreement, the term "Disability" shall
mean a physical or mental incapacity that substantially prevents him from
performing his duties hereunder and that has continued for at least 60 days and
that can reasonably be expected to continue indefinitely. Any dispute as to
whether or not Executive is disabled within the meaning of the preceding
sentence shall be resolved by a physician reasonably satisfactory to Executive
and the Company, and the determination of such physician shall be final and
binding upon both Executive and the Company.
(d) Death. Except as provided in Sections 3(i), 4(b)(iii) and this
Section 4(d), no Salary or benefits shall be payable under this Agreement
following the date of Executive's death. In the event of Executive's death, any
Salary earned by Executive up to the date of death, as well as any unreimbursed
expenses, plus any amount earned and unpaid under Section 3(c) shall be paid to
Executive's Beneficiary within 30 days of such termination. Executive's
Beneficiary shall also be entitled to any death benefits which are provided
under the terms of any plan, program or arrangement referred to in Section 3(h)
applicable to Executive at the time of death.
(e) Beneficiary. For purposes of this Agreement, except as provided in
section 3(i), "Beneficiary" shall mean the person or persons designated in
writing by Executive to receive benefits under a plan, program or arrangement
or to receive the balance of the Severance Payments, if any, in the event of
Executive's death, or, if no such person or persons are designated by
Executive, Executive's estate. No Beneficiary designation shall be effective
unless it is in writing and received by the Company prior to the date of
Executive's death.
5. Protection of the Company's Interests.
(a) No Competing Employment. For so long as Executive is employed by the
Company and continuing for one year after the termination of such employment
or resignation therefrom (such period being referred to hereinafter as the
"Restricted Period"), Executive shall not, unless he receives after the
Effective Date the prior written consent of the Board, directly or indirectly,
own an interest in, manage, operate, join, control, lend
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money or render financial or other assistance to or participate in or be
connected with, as an officer, employee, partner, stockholder, consultant or
otherwise, any individual, partnership, firm, corporation or other business
organization or entity that competes with the Company; provided, however, that
this Section 5(a) shall not proscribe Executive's ownership, either directly or
indirectly, of less than five percent of any class of securities which are
listed on a national securities exchange or quoted on the automated quotation
system of the National Association of Securities Dealers, Inc.
(b) No Interference. During the Restricted Period, Executive shall not,
whether for his own account or for the account of any other individual,
partnership, firm, corporation or other business organization (other than the
Company), intentionally solicit, endeavor to entice away from the Company, or
otherwise interfere with the relationship of the Company with, any person who
is employed by or otherwise engaged to perform services for the Company or any
person or entity who is, or was within the then most recent twelve-month
period, a customer, client or supplier of the Company.
(c) Secrecy. Executive recognizes that the services to be performed by
him hereunder are special, unique and extraordinary in that, by reason of his
employment hereunder, he may acquire confidential information and trade secrets
concerning the operation of the Company or its affiliates or subsidiaries, the
use or disclosure of which could cause the Company or its affiliates or
subsidiaries substantial losses and damages which could not be readily
calculated and for which no remedy at law would be adequate. Accordingly,
Executive covenants and agrees with the Company that he will not at any time,
except in performance of Executive's obligations to the Company hereunder or
with the prior written consent of the Board, directly or indirectly disclose to
any person any secret or confidential information that he may learn or has
learned by reason of his association with the Company, or any of its
subsidiaries and affiliates. The term "confidential information" means any
information not previously disclosed to the public or to the trade by the
Company's management with respect to the Company's, or any of its affiliates' or
subsidiaries', products, facilities and methods, trade secrets and other
intellectual property, systems, procedures, manuals, confidential reports,
product price lists, customer lists, financial information (including the
revenues, costs or profits associated with any of the Company's products),
business plans, prospects or opportunities.
(d) Exclusive Property. Executive confirms that all confidential
information is and shall remain the exclusive property of the Company. All
business records, papers and documents kept or made by Executive relating to
the business of the Company, its affiliates and subsidiaries shall be and
remain the property of the Company. Upon the termination of his employment with
the Company or upon the request of the Company at any time, Executive shall
promptly deliver to the Company, and shall not without the consent of the Board
retain copies of, any written materials not previously made available to the
public, or records and documents made by Executive or coming into his
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possession concerning the business or affairs of the Company or any of its
affiliates or subsidiaries; provided, however, that subsequent to any such
termination, the Company shall provide Executive with copies (the cost of which
shall be borne by Executive) of any documents which are requested by Executive
and which Executive has determined in good faith are (i) required to establish
a defense to a claim that Executive has not complied with his duties hereunder
or (ii) necessary to Executive in order to comply with applicable law.
(e) Injunctive Relief. Without intending to limit the remedies
available to the Company, Executive acknowledges that a breach of any of the
covenants contained in this Section 5 may result in material irreparable injury
to the Company or its affiliates or subsidiaries for which there is no adequate
remedy at law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of such a breach or threat thereof,
the Company shall be entitled to obtain a temporary restraining order and/or a
preliminary or permanent injunction restraining Executive from engaging in
activities prohibited by this Section 5 or such other relief as may be required
to specifically enforce any of the covenants in this Section 5. Without
intending to limit the remedies available to Executive, Executive shall be
entitled to seek specific performance of the Company's obligations under this
Agreement.
6. General Provisions.
(a) Source of Payments. All payments provided under this Agreement,
other than payments made pursuant to a plan which provides otherwise, shall be
paid in cash from the general funds of the Company, and no special or separate
fund shall be established, and no other segregation of assets made, to assure
payment. Executive shall have no right, title or interest whatever in or to any
investments which the Company may make to aid the Company in meeting its
obligations hereunder. To the extent that any person acquires a right to
receive payments from the Company hereunder, such right shall be no greater
than the right of an unsecured creditor of the Company; provided, however, that
this provision shall not be deemed to waive or abrogate any preferential or
other rights to payment accruing to Executive under applicable bankruptcy laws
by virtue of Executive's status as an employee of the Company.
(b) No Other Severance Benefits. Except as specifically set forth in
this Agreement, Executive covenants and agrees that he shall not be entitled to
any other form of severance benefits from the Company, including, without
limitation, benefits otherwise payable under any of the Company's regular
severance policies, in the event his employment hereunder ends for any reason
and, except with respect to obligations of the Company expressly provided for
herein, Executive unconditionally releases the Company and its subsidiaries and
affiliates, and their respective directors, officers, employees and
stockholders, or any of them, from any and all claims, liabilities or
obligations under this Agreement or under any severance or termination
arrangements of the Company or any of its
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subsidiaries or affiliates for compensation or benefits in connection with his
employment or the termination thereof.
(c) Tax Withholding. Payments to Executive of all compensation
contemplated under this Agreement shall be subject to all applicable tax
withholding.
(d) Notices. Any notice hereunder by either party to the other shall
be given in writing by personal delivery, or certified mail, return receipt
requested, or (if to the Company) by telex or facsimile, in any case delivered
to the applicable address set forth below:
(i) To the Company: Detrex Corporation
00000 Xxxxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Secretary
With a copy to:
Xxxxxxx X. Xxxx
00000 Xxxxx Xxxxx
Xxxxxx Xxxxxxx, Xxxxxxx 00000
(ii) To Executive: Xxxxxx Xxxx
22146 Metamora
Xxxxxxx Xxxxx, Xxxxxxxx 00000
or to such other persons or other addresses as either party may specify to the
other in writing.
(e) Representation by Executive. Executive represents and warrants
that his entering into this Agreement does not, and that his performance under
this Agreement and consummation of the transactions contemplated hereby will
not, violate the provisions of any agreement or instrument to which Executive
is a party, or any decree, judgment or order to which Executive is subject, and
that this Agreement constitutes a valid and binding obligation of Executive in
accordance with its terms. Breach of this representation will render all of the
Company's obligations under this Agreement void ab initio.
(f) Limited Waiver. The waiver by the Company or Executive of a
violation of any of the provisions of this Agreement, whether express or
implied, shall not operate or be construed as a waiver of any subsequent
violation of any such provision.
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(g) Assignment; Assumption of Agreement. No right, benefit or
interest hereunder shall be subject to assignment, encumbrance, charge, pledge,
hypothecation or setoff by Executive in respect of any claim, debt, obligation
or similar process. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company to assume expressly
and to 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
had taken place.
(h) Amendment; Actions by the Company. This Agreement may not be
amended, modified or cancelled except by written agreement of Executive and the
Company. Any and all determinations, judgments, reviews, verifications,
adjustments, approvals, consents, waivers or other actions of the Company
required or permitted under this Agreement shall be effective only if
undertaken by the Company pursuant to authority granted by a resolution duly
adopted by the Board; provided, however, that by resolution duly adopted in
accordance with this Section 6(h), the Board may delegate its responsibilities
hereunder to one or more of its members other than Executive.
(i) Severability. If any term or provision hereof is determined to be
invalid or unenforceable in a final court or arbitration proceeding, (i) the
remaining terms and provisions hereof shall be unimpaired and (ii) the invalid
or unenforceable term or provision shall be deemed replaced by a term or
provision that is valid and enforceable and that comes closest to expressing
the intention of the invalid or unenforceable term or provision.
(j) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Michigan (determined without regard
to the choice of law provisions thereof).
(k) Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties hereto with respect to the matters covered
hereby and supersedes all prior agreements and understandings of the parties
with respect to the subject matter hereof.
(l) Headings. The headings and captions of the sections of this
Agreement are included solely for convenience of reference and shall not
control the meaning or interpretation of any provisions of this Agreement.
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(m) Counterparts. This Agreement may be executed by the parties
hereto in counterparts, each of which shall be deemed an original, but both
such counterparts shall together constitute one and the same document.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the day and year first written above.
DETREX CORPORATION
By: Xxxxxxx X. Xxxx
------------------------------
Name: Xxxxxxx X. Xxxx
Title: Chairman
EXECUTIVE
Xxxxxx Xxxx
------------------------------
Xxxxxx Xxxx
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EXHIBIT A
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated January 22, 1996, by and between DETREX
CORPORATION, a Michigan corporation (the "Company"), and Xxxxxx Xxxx
("Participant").
W I T N E S S E T H:
WHEREAS, the Company has adopted the 1993 Stock Option Plan of Detrex
Corporation (the "Plan") for the purpose of providing an incentive to certain
officers, senior management and key employees of the Company to remain in the
employ of the Company; and
WHEREAS, the Employment Agreement, dated as of January 22, 1996,
between the Participant and the Company (the "Employment Agreement")
contemplates that the Company will award Participant a non-qualified stock
option to purchase up to an aggregate of 75,000 shares of the common stock, par
value $2.00 per share, of the Company (the "Common Stock"); and
WHEREAS, Participant is eligible for awards of stock options under the
Plan; and
WHEREAS, the Compensation Committee (the "Committee") of the Board of
Directors of the Company has determined to award Participant, under the terms
and provisions of the Plan, the stock option contemplated under the Employment
Agreement, and Participant desires to accept such award in accordance with the
terms and provisions hereinafter set forth;
NOW, THEREFORE, in consideration of the covenants herein contained and
for other good and valuable consideration, the parties hereto hereby agree
as follows:
1. Grant of Option.
(a) The Award. Pursuant to the terms of the Plan, which are
incorporated herein by reference, the Company hereby confirms its grant to
Participant, effective as of January 22, 1996 (the "Date of Grant"), an option
(the "Option") to purchase all or any portion of 75,000 shares of Common Stock
at a per share exercise price of $5.75 (the "Option Price"). The grant of the
Option is subject to the terms and provisions of this Agreement and the terms
and provisions of the Plan which shall constitute a part of this
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Agreement. In the event of any conflict between the terms and provisions of the
Plan and the other terms and provisions of this Agreement, the terms and
provisions of the Plan shall govern.
(b) Acknowledgments Related to the Option Award. The parties
acknowledge and agree that the Option is the stock option contemplated by the
Employment Agreement. The Option is not intended to qualify, and shall not be
treated, as an "incentive stock option" within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code").
2. Vesting; Exercise.
(a) Service Vesting. The Option shall vest and become
exercisable with respect to 18,750 shares of Common Stock on the Date of Grant
and with respect to 18,750 shares of Common Stock on each of the first through
third anniversaries of the Date of Grant, provided that Participant has
remained in the Full-Time Employment (as hereinafter defined) of the Company on
such date.
(b) Change in Control Vesting. In the event of a Change in
Control of the Company (as such term is defined in the Plan), the Option shall
vest and become immediately exercisable in full as of the date of such Change
in Control of the Company.
(c) Vesting Following Termination of Full-Time Employment. No
portion of the Option shall vest following Participant's termination of
Full-Time Employment with the Company. For purposes of this Agreement, the
portion of the Option which has vested as of a given date in accordance with
this Section 2 is hereinafter referred to as the "Vested Portion of the Option".
3. Option Exercise Period. The Option shall not be exercisable,
and shall expire and be of no further force and effect, immediately following
the tenth anniversary of the Date of Grant. In the event of Participant's
termination of Full-Time Employment with the Company, the Vested Portion of the
Option (determined as of the date of such termination) shall be exercisable
following such termination of Full-Time Employment as follows:
(i) If Participant's Full-Time Employment terminates by reason of
Retirement or Disability (as such terms are hereinafter defined), the Vested
Portion of the Option shall be exercisable by Participant for one year
following the date of such termination;
(ii) If Participant's Full-Time Employment terminates by reason of
Participant's death, the Vested Portion of the Option shall be exercisable
by
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Participant's Beneficiary (as hereinafter defined) for one year
following the date of death;
(iii) If Participant's Full-Time Employment is terminated by
the Company for cause (as hereinafter defined), the Option (including,
without limitation, the Vested Portion of the Option) shall immediately
terminate and cease to be exercisable as of the date of such
termination; and
(iv) If Participant's Full-Time Employment terminates for any
other reason not specified above in this Section 3, the Vested Portion
of the Option shall be exercisable by Participant for ninety days
following the date of such termination.
The Committee may, in its sole discretion, provide for a longer
post-termination exercise period than the applicable period specified above.
The portion of the Option which does not constitute the Vested Portion of the
Option as of the date of Participant's termination of Full-Time Employment with
the Company shall terminate and be of no further force and effect as of the
date of such termination. Following the expiration of the applicable
post-termination exercise period set forth above, the Vested Portion of the
Option, to the extent not previously exercised, shall terminate and be of no
further force and effect.
For purposes of this Section 3, the following terms shall
have the meanings set forth below:
"Beneficiary" means the person designated by Participant in
writing to the Company as having the right to exercise the Vested
Portion of the Option in the event of Participant's death or, if no such
person is designated, Participant's estate; provided, however, that no
such written designation shall be effective unless it is received by the
Company prior to the date of death of Participant.
"Cause" means, subject to the cure provisions in the Employment
Agreement, termination of Participant's Full-Time Employment because of
(A) his refusal (other than by reason of the incapacity of Participant
due to physical or mental illness) to perform the duties incident to the
offices of President and Chief Operating Officer of the Company, (B) the
commission by Participant of a felony, or the perpetration by
Participant of a dishonest act or fraud against the Company or any
affiliate or subsidiary thereof, (C) any act or omission by Participant
which is the result of Participant's willful misconduct or gross
negligence and which, in the good faith opinion of the Board, is
injurious in any material respect to the financial condition, business
or reputation of the Company or any of its affiliates or subsidiaries or
(D) a material breach by Participant of the Employment Agreement.
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"Disability" means permanent disability, as such term or a
similar term is defined in the long-term disability policy of the
Company applicable to Participant at the time of termination of
Full-Time Employment.
"Full-Time Employment" with the Company means regular and
continuing full-time employment as an salaried employee of the Company
or a subsidiary (as defined in the Plan) of the Company for at least
forty hours per week.
"Retirement" means termination of Full-Time Employment with the
Company under circumstances under which Executive is entitled to an
immediate pension benefit under the terms and provisions of the Detrex
Corporation Employees Retirement Plan (or any successor thereto).
4. Method of Exercise.
(a) General Method of Exercise. Subject to Sections 3
and 6 hereof, Participant may exercise the Vested Portion of the Option by
notifying the Company in writing of the number of shares of Common Stock in
respect of which the Option has been exercised and by tendering to the Company
the aggregate Option Price for such shares of Common Stock, together with an
amount determined by the Company to be necessary to satisfy any applicable
federal, state or local tax or other withholding in connection with such
exercise. The Option Price may be paid (i) in cash (including a certified
check, teller's check or wire transfer of funds), (ii) with shares of Common
Stock previously owned by the Participant for at least six months prior to
exercise having a fair market value equal to the aggregate Option Price on the
date of exercise of the Option or (iii) in any combination thereof. The date of
exercise of the Option shall be the date the written notice of exercise from
Participant is received by the Company. As soon as practicable following
receipt of the written notice of exercise and payment of the aggregate Option
Price (together with the amount required to be withheld for tax or other
purposes), the Company will issue share certificates for the number of shares
for which the Option has been duly exercised in the name of Participant, unless
Participant has specified in the written notice of exercise that such share
certificates should be issued in some other name.
(b) Additional Method of Exercise. Subject to the prior
written approval of the Committee, the Vested Portion of the Option may be
exercised by Participant in a "cashless exercise" in accordance with Section
5(e)(ii) of the Plan.
5. Nontransferable. The Option shall be
nontransferable other than by will or the laws of descent and distribution and,
during the life of Participant, shall be exercisable only by Participant;
provided, however, that this Section 5 shall not preclude Participant from
designating in writing to the Company a Beneficiary who shall be entitled to
exercise the Vested Portion of the Option in the event of Participant's death.
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6. Securities Act Registration or Exemption. Anything in this
Agreement to the contrary notwithstanding, the Option shall not be exercisable
and no transfer of the shares of Common Stock underlying the Option (the
"Underlying Shares") may be made to Participant, and any attempt to exercise
the Option or to transfer the underlying Shares to Participant shall be void
and of no effect, unless and until (i) a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), has been duly filed
and declared effective pertaining to the Underlying Shares and the Underlying
Shares have been duly qualified under applicable state securities or blue sky
laws or (ii) the Committee, in its sole discretion after securing the advice of
counsel, determines, or Participant provides an opinion of counsel satisfactory
to the Committee, that such registration or qualification is not required as a
result of the availability of an exemption from registration or qualification
under such laws.
7. Miscellaneous
(a) No Right to Continued Employment. Neither the Plan, the grant of
the Option or this Agreement shall be construed as giving Participant any right
to be retained in the employ of the Company or any of its Subsidiaries.
(b) No Stockholder Rights. Participant shall have no rights as a
stockholder with respect to the Underlying Shares until a certificate or
certificates evidencing such shares have been issued to Participant, and no
adjustment shall be made for dividends or distributions or other rights in
respect of any share for which the record date is prior to the date upon which
Participant shall become the holder of record thereof.
(c) Titles. The titles of the sections and subsections hereof are
included solely for convenience of reference and shall not affect the meaning
or interpretation of any such section or subsection.
(d) Governing Law. This Agreement and the grant of the Option shall
be governed by, and construed in accordance with, the laws of the State of
Michigan.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year first set forth above.
DETREX CORPORATION
By: Xxxxxxx X. Xxxx
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Xxxxxx Xxxx
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Xxxxxx Xxxx
