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Exhibit 10.5
EMPLOYMENT AND NONCOMPETITION AGREEMENT
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THIS AGREEMENT is made as of March 25, 1997 by and between GEO
SPECIALTY CHEMICALS, INC., an Ohio corporation ("Company"), and XXXXXX X. XXXXXX
("Executive").
W I T N E S S E T H:
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WHEREAS, the Company desires to employ Executive, and Executive desires
to be employed by the Company to undertake such responsibilities as are
necessary to assist in running the businesses of the Company, all in accordance
with the provision of this Agreement; and
WHEREAS, Executive has been an Officer of the Company and a shareholder
of GEO Chemicals, Inc., the General Partner of Chemical Specialties Enterprises,
L.P. which is a shareholder of the Company and has valuable knowledge and
experience pertaining to the business of the Company, and the parties desire to
arrange for the continuation of his services to the Company; and
WHEREAS, as a condition to the performance of the obligations of
Charter Oak Partners, a Connecticut partnership, contemplated by that Share
Purchase Agreement between GEO Specialty Chemicals, Inc. and Charter Oak
Partners, dated March 25, 1997, and as a condition to the Closing referred to
therein; and
WHEREAS, as an inducement to the Company extending its employment
arrangement with Executive, the parties also desire to arrange for Executive's
undertaking not to compete with the Company;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is hereby agreed as follows:
1. EMPLOYMENT. Commencing as of the date hereof and continuing through
five (5) years following the date hereof (the "Initial Term"), the Company
hereby employs Executive as President and Chief Executive Officer of the Company
with responsibility for the performance of such executive services and duties as
shall be reasonably assigned to and requested of him by, and subject to the
direction and supervision of, the Board of Directors of the Company. In
addition, Executive shall be the Chairman of the Board of Directors during the
Employment Period (as hereinafter defined). Subject to the provisions of Section
11 hereof, commencing on March 25, 2002 and the 25th day of each March
thereafter, the term of this Agreement shall be automatically extended for
additional one (1) year period(s), on the same terms and conditions as contained
herein, unless either party gives written notice to the other party of his or
its intention not to extend the employment hereunder at least ninety (90) days
prior to March 25 of any year following the Initial Term of this Agreement (the
"Additional Term(s)") (the Initial Term and the Additional Term(s), if any, are
hereinafter referred to as the "Employment Period"). Executive hereby accepts
such employment and agrees that he will devote his full time and undivided
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efforts to the business and affairs of the Company and serve the Company in its
business and perform his duties to the best of his ability. Notwithstanding the
above, it is understood that Executive is a party to a certain consulting
agreement with a European affiliate of the Company and holds certain outside
directorships with non-competing businesses.
2. SALARY AND BONUS. (a) As a compensation for his services during the
Employment Period, Executive shall receive a base salary at the rate of Two
Hundred Fifty Thousand Dollars ($250,000) per year. The Company shall undertake
a salary survey on the first anniversary of Executive's employment and will make
a good faith effort to adjust Executive's salary to be consistent with the top
quartile of similarly situated executives. Such salary shall be subject to being
increased, but not decreased, based upon an annual review, although any increase
shall be at the sole discretion of the Board of Directors of the Company. Such
salary shall be payable no less frequently than in equal monthly installments.
In the event Executive's employment with the Company is terminated for any
reason prior to the expiration of the Employment Period, other than a discharge
without Cause, as defined in that certain Shareholders Agreement, dated March
25, 1997, entered into by and between the Company, Charter Oak Partners, a
Connecticut partnership, Chemical Specialties Enterprises, L.P., an Ohio limited
partnership, Executive and Xxxxxxx X. Xxxxxx, Executive's receipt of such salary
shall terminate immediately. In the event Executive is discharged without Cause,
such salary shall be payable for either the remainder of the Employment Period
or for one (1) year after the date of Executive's termination, whichever is
greater.
(b) In addition to the base salary referred to in Section 2(a) hereof,
and subject to the discretion of the Company's Board of Directors, Executive
will be eligible to receive bonus compensation as follows:
(i) Annual bonus compensation payable for 1997 shall be equal
to a fixed percentage of Executive's base salary determined on the
basis of the Company's annualized EBITDA according to the following
table:
Bonus of Dollar Amount Equal to
Annualized Ebitda Percentage of Base Salary
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$0 - $15 million 0%
over $15 million - $17.5 million 15%
over $17.5 million - $20 million 33%
over $20 million or more 50%
(ii) Annual bonus compensation payable for the years 1998 and
thereafter and performance targets established in connection therewith
shall be determined by the Company's Board of Directors based upon the
recommendation of Executive.
3. EXPENSES. The Company shall reimburse Executive for reasonable
expenses incurred by him on behalf of the Company in the performance of his
duties during the
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Employment Period. Executive shall furnish the Company with such documentation
as is requested by the Company in order for it to comply with the Internal
Revenue Code and regulations thereunder in connection with the proper deduction
of such expenses.
4. BENEFITS. During the Employment Period, Executive shall be entitled
to participate in any employee benefit plans which are maintained or established
by the Company for its senior executives generally, subject, however, to all of
the terms and conditions thereof, including any eligibility requirements
therefor. In any event, the Company agrees to provide (i) medical insurance
coverage equal to that provided for other senior executives of the Company; (ii)
life insurance coverage equal to 1.6 times Executive's base salary; and (iii)
participation in the Company's 401(k) plan or other standard retirement plan
maintained by the Company. In the event Executive's employment with the Company
is terminated for any reason prior to the expiration of the Employment Period,
other than a discharge without Cause, Executive's receipt of such benefits shall
immediately cease. In the event Executive is discharged without Cause, such
Executive shall receive such benefits for either the remainder of the Employment
Period or for one (1) year after the date of Executive's termination, whichever
is greater.
5. VACATIONS. During the Employment Period, Executive shall be entitled
to four (4) weeks of paid vacation.
6. NONDISCLOSURE. Except for information which is already in the public
domain, which is publicly disclosed by persons other than Executive, or which is
required by law to be disclosed, Executive shall at all times during and after
his employment with the Company hold in strictest confidence any and all
confidential information within his knowledge (whether acquired prior to or
during his employment with the Company) concerning the products, processes,
services, business, suppliers and customers of the Company. Such confidential
information includes, without limitation, financial information, sales and
distribution information, price lists, the identity and lists of actual and
potential customers and technical information, all to the extent that such
information is not intended by the Company for public dissemination.
7. NONCOMPETITION. Commencing as of the date hereof and continuing
through the date of the expiration of the Employment Period, or, one (1) year
after the termination of his employment with the Company, whichever is later,
Executive shall not, without the prior written consent of the Company, (a)
solicit business from or compete with the Company for the business of any
customer of the Company as reflected on the books of the Company either as of
the date hereof or as of the date of Executive's termination of employment with
the Company or (b) either directly or indirectly operate or perform any advisory
or consulting services for, invest in (other than stock in a publicly-held
corporation which is traded on a recognized securities exchange or in an
established over-the-counter market, provided that the ownership of such equity
interest does not give Executive the right to control or substantially influence
the policy or operational decisions of such corporation), or otherwise become
associated with in any capacity, any company, partnership, organization,
proprietorship or other entity which develops, manufactures, prepares, sells or
distributes products or performs services then in competition with the products
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developed, manufactured, prepared, sold or distributed or services rendered by
the Company anywhere in the markets in which the Company competes at any time
during such period.
8. NONINTERFERENCE. Executive shall not, at any time during the
Employment Period, or, within one (1) year after the termination of his
employment with the Company, whichever is later, without the prior written
consent of the Company, directly or indirectly, induce or attempt to induce any
employee, agent or other representative or associate of the Company to terminate
its relationship with the Company, or in any way directly or indirectly
interfere with such a relationship or any relationship between the Company and
any of its suppliers or customers.
9. DISCLOSURE OF PROPRIETARY INFORMATION. Executive will promptly
disclose in writing to the Board each improvement, discovery, idea and invention
relating to the business of the Company made or conceived by Executive, either
alone or in conjunction with others, while employed by the Company or during the
Employment Period, or, one (1) year after the termination of his employment with
the Company, whichever is later, if such improvement, discovery, idea or
invention results from or was suggested by such employment. Executive will not
disclose any such improvement, discovery, idea or invention to any person,
except the Company. Each such improvement, discovery, idea or invention shall be
the sole and exclusive property of, and is hereby assigned to, the Company and
at the request of the Company, Executive will assist and cooperate with the
Company and any person or persons from time to time designated by the Company to
obtain for the Company the grant of any letters patent in the United States
and/or any foreign country, covering any such improvement, discovery, idea or
invention, and will in conjunction therewith execute such applications,
statements, assignments or other documents, furnish such information and data
and take all such other action (including without limitation the giving of
testimony) as the Company may from time to time reasonably request. Should
Executive not be an employee of the Company at the time such cooperation and
assistance is rendered, he shall be reimbursed for all reasonable and related
out-of-pocket expenses incurred by him.
10. REMEDIES. Executive acknowledges that Sections 6, 7, 8 and 9 hereof
were negotiated at arms' length, with the advice of counsel and are required for
the fair and reasonable protection of the Company. In the event of an alleged
breach by Executive of his obligations under Sections 6, 7, 8 and 9, the Company
shall give Executive written notice thereof, and Executive shall have thirty
(30) days to cease such activities to the satisfaction of the Company before the
Company may file any legal action pursuant to this Section 10. Executive and the
Company further acknowledge and agree that a continued breach of any of those
obligations and agreements will result in irreparable and continuing damage to
the Company for which there will be no adequate remedy at law, and therefore,
Executive and the Company agree that, in the event of any breach of said
obligations and agreements, the Company and its successors and assigns shall be
entitled to injunctive relief and such other and further relief, including
monetary damages, as is proper in the circumstances. It is further agreed that
the running of the periods provided above in Sections 7, 8 and 9, respectively,
shall be tolled during any period during which Executive shall be adjudged to
been in violation of any of his obligations under such Sections.
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11. TERMINATION. This Agreement shall terminate and, except for the
obligations of the Company set forth in Sections 2 and 4 hereof and the
obligations of Executive set forth in Sections 6, 7, 8 and 9, which shall
survive such termination, all rights and obligations of the Company and
Executive hereunder shall be completely void upon the earliest to occur of the
following:
(a) expiration of the Employment Period;
(b) voluntary termination by Executive of his employment with
the Company, a right reserved to Executive hereunder;
(c) discharge of Executive with or without good cause;
(d) the death of Executive; and
(e) at the election of the Company, the disability of
Executive, which, for purposes hereof, shall mean the inability of
Executive for a continuous period of six (6) months to perform the
essential functions of his position hereunder on an active full time
basis, with or without reasonable accommodations, by reason of
disability or impairment of health. A certificate from a physician
acceptable to both the Company and Executive to the effect that
Executive is or has been disabled and incapable of performing the
essential functions of his position with or without reasonable
accommodations for the Company as previously performed shall be
conclusive of the fact that Executive is incapable of performing such
reasonable services and is or has been disabled for the purposes of
this Agreement.
12. REFORMATION OF AGREEMENT; SEVERABILITY. In the event that any of
Sections 6, 7, 8 or 9 shall be found by a court of competent jurisdiction to be
invalid or unenforceable as against public policy, such court shall exercise its
discretion in reforming such provision to the end that Executive shall be
subject to such restrictions and obligations as are reasonable under the
circumstances and enforceable by the Company. In the event that any other
provision or term of this Agreement is found to be void or unenforceable to any
extent for any reason, it is the agreed upon intent of the parties hereto that
all remaining provisions or terms of the Agreement shall remain in full force
and effect to the maximum extent permitted and that the Agreement shall be
enforceable as if such void or unenforceable provision or term had never been a
part hereof.
13. ASSIGNMENT. This Agreement shall inure to the benefit of, and shall
be binding upon, the Company, its successors and assigns. Executive shall not
assign this Agreement without the written consent of the Company, but this
Agreement shall be binding upon Executive and his heirs, estate and personal
representatives.
14. ARBITRATION. In the event a dispute concerning the terms and
operation of this Agreement arises, and if the Company and Executive do not come
to an agreement with respect to such dispute within thirty (30) days after the
notice of said dispute is provided by either party under Section 15 hereof, the
Company and Executive shall submit the dispute to arbitration in
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Cleveland, Ohio, under the commercial rules of the American Arbitration
Association then in effect. Such arbitration shall be final and binding upon the
parties and enforceable in a court of competent jurisdiction. Judgment on such
arbitration award, from which no appeal or review may be taken, may be entered
in any court having jurisdiction and enforced accordingly.
15. NOTICE. Any notice required to be given under the terms of this
Agreement shall be in writing, and mailed to the recipient's last known address
or delivered in person. If sent by registered or certified mail, such notice
shall be effective when mailed; otherwise, it shall be effective upon delivery.
(i) If to the Company, to:
GEO Specialty Chemicals, Inc.
c/o Charter Oak Partners
00 Xxxxxx Xxxxxx
Xxxxxxxx X
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx
Telecopier: (000) 000-0000
With a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxx XXX
0000 XxXxxxxx Xxxxxxxxxx Center
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
(ii) If to Executive, to:
Xxxxxx X. Xxxxxx
0000 Xxxxxxxxxx Xxxxx Xxxxx
Xxxxxxx, Xxxx 00000
With a copy to:
Xxxxxxxx, Xxxx & Xxxxx LLP
0000 Xxxxxxx Xxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxx X. Xxxxxxxx
16. ENTIRE AGREEMENT; AMENDMENTS; WAIVERS. This Agreement contains the
entire agreement between the parties with respect to the subject matter hereof.
It may not be changed orally but only by a written agreement signed by Executive
and an officer of the Company
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specifically designated by the Board of Directors of the Company to execute such
amendment. The terms or covenants of this Agreement may be waived only by a
written instrument specifically referring to this Agreement and executed by the
party waiving compliance. The failure of the Company at any time or from time to
time to require performance of any of Executive's obligations under this
Agreement shall in no manner affect the Company's right to enforce any
provisions of this Agreement at a subsequent time; and the waiver by the Company
of any right arising out of any breach shall not be construed as a waiver of any
right arising out of any subsequent breach.
17. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
GEO SPECIALTY CHEMICALS, INC.
(the "Company")
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
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XXXXXX X. XXXXXX Its: Executive Vice President
("Executive")
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