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Exhibit 10.18
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of January 5, 1998, by and between Sovereign
Specialty Chemicals, L.P., a Delaware limited partnership (the "Parent
Partnership"), Sovereign Chemicals Corporation, a Delaware corporation (the
"Company"), and the general partner of the Parent Partnership, and Xxxxxx X.
Xxxxxxx ("Executive").
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Employment. The Company and the Parent Partnership shall employ
Executive, and Executive hereby accepts employment with the Company and the
Parent Partnership, upon the terms and conditions set forth in this Agreement
for the period beginning on the date hereof and ending as provided in paragraph
4 hereof (the "Employment Period").
2. Position and Duties.
(a) During the Employment Period, Executive shall serve as the Chief
Financial Officer of the Company and the Parent Partnership and shall have the
normal duties, responsibilities and authority of the Chief Financial Officer,
subject to the power of the Chief Executive Officer (the "CEO") of the Company
and the Partnership and the Board of Directors of the Company (the "Board") to
expand or limit such executive duties, responsibilities and authority and to
override actions of the Chief Financial Officer. During the Employment Period,
Executive shall render such adminis trative, financial and other executive and
managerial services which are consistent with Executive's positions to the
Company, the Parent Partnership and their Subsidiaries as the CEO or the Board
may from time to time direct.
(b) Executive shall report to the CEO and the Board, and Executive
shall devote his best efforts and his full business time and attention (except
for permitted vacation periods and reasonable periods of illness or other
incapacity) to the business and affairs of the Company, the Parent Partnership
and their Subsidiaries. Executive shall perform his duties and responsibilities
to the best of his abilities in a diligent, trustworthy, businesslike and
efficient manner.
3. Base Salary and Benefits.
(a) During the Employment Period, the Parent Partnership shall pay to
Executive a base salary equal to $170,000 (the "Base
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Salary"), subject to review by the CEO and the Board on an annual basis. The
Base Salary shall be payable in regular installments in accordance with the
Company's and the Parent Partnership's general payroll practices and shall be
subject to customary withholding. In addition, during the Employment Period,
Executive shall be entitled to participate in all of the Company's and the
Parent Partnership's employee benefit programs for which senior executive
employees of the Company and the Parent Partnership are generally eligible.
(b) The Company and the Parent Partnership shall reimburse Executive
for all reasonable expenses incurred by him in the course of performing his
duties under this Agreement which are consistent with the Company's policies in
effect from time to time with respect to travel, entertainment and other
business expenses, subject to the Company's and the Parent Partnership's
requirements with respect to reporting and documentation of such expenses.
(c) In addition to the Base Salary, Executive will be eligible to earn
a bonus (the "Bonus") of up to 60% of the Base Salary then in effect pursuant to
the Company's and the Parent Partnership's then existing bonus plan as adopted
by the Board from time to time. The Bonus with respect to each fiscal year
during the Employment Period shall be paid no later than the end of the first
fiscal quarter of the immediately following fiscal year.
(d) During the Employment Period, Executive shall be entitled to such
vacation time as the Company and the Parent Partnership customarily provide from
time to time to its senior executive employees (but in no event less than four
weeks per year), to be taken in accordance with the Company's and the Parent
Partnership's then current vacation policies.
(e) The Company and the Partnership shall reimburse Executive for all
reasonable expenses incurred by Executive resulting from his relocation to the
Chicago metropolitan area in connection with the commencement of his employment
with the Company and the Parent Partnership, including (i) any sales commissions
paid by Executive in connection with the sale of Executive's residence in
Holland, Ohio, (ii) all expenses associated with the physical movement of
Executive's family and Executive's possessions to the Chicago metropolitan area,
and (iii) the cost of temporary housing in the Chicago metropolitan area for a
period of time not to exceed three months. The payment of Executive's relocation
expenses pursuant to this paragraph (e) shall be subject to the Company and the
Parent Partnership receiving adequate documentation detailing such expenses and
shall in all events be subject to the Company's and the Parent Partnership's
approval.
4. Term.
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(a) Except as otherwise provided in the following sentence, the
Employment Period shall end on the third anniversary of the date hereof;
provided that (i) the Employment Period shall terminate prior to such date upon
Executive's resignation, death or Disability and (ii) the Employment Period may
be terminated by the Company and the Parent Partnership at any time prior to
such date for Cause (as defined below) or without Cause. Executive shall notify
the Company and the Parent Partnership at least 90 days prior to the effective
date of Executive's resignation. The Employment Period shall be automatically
renewed and extended for successive one year terms beginning on the third
anniversary of the date hereof and on each anniversary date thereafter unless
the Company and the Parent Partnership or Executive receives within 60 days
prior to such anniversary date written notice of an election not to renew the
Employment Period as of such anniversary date.
(b) If the Employment Period is terminated as a result of a nonrenewal
pursuant to paragraph 4(a) above or by the Company and the Parent Partnership
without Cause or by Executive with Good Reason, Executive shall be entitled to
receive his Base Salary, payable in accordance with the Company's and the Parent
Partner ship's normal payroll practices, and to continue to participate in the
Company's and the Parent Partnership's health, insurance and disability plans
and programs during the one year period immediately following the termination of
the Employment Period (the "Severance Period"); provided that Executive shall be
entitled to receive such compensation and benefits during the Severance Period
if and only if Executive has complied with and continues to comply with the
provisions of paragraphs 5, 6 and 7 hereof. The amounts payable pursuant to this
paragraph 4(b) shall be reduced by the amount of any compensation Executive
earns with respect to any other employment during the Severance Period. Upon
reasonable request from time to time, Executive shall furnish the Company and
the Parent Partnership with a true and complete certificate specifying any such
compensation due to or received by him during the Severance Period.
(c) If the Employment Period is terminated by the Company and the
Parent Partnership for Cause or as a result of Executive's Disability, Executive
shall be entitled to receive the Base Salary through the date of termination and
accrued but unpaid vacation in accordance with the policy of the Company and the
Parent Partnership and to continue to participate in the Company's health,
insurance and disability plans and programs through the date of termination and
thereafter only to the extent permitted under the terms of such plans and
programs.
(d) If the Employment Period is terminated by the Company and the
Parent Partnership as a result of Executive's death, Executive (or Executive's
designated beneficiary) shall be
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entitled to receive the Base Salary through the date of termination, a pro rata
portion of the Bonus (based on the number of days Executive was employed during
the applicable fiscal year), and accrued but unpaid vacation in accordance with
the policy of the Company and the Parent Partnership and to continue to
participate in the Company's health, insurance and disability plans and programs
through the date of termination and thereafter only to the extent permitted
under the terms of such plans and programs.
(e) Except as otherwise expressly provided herein, all of Executive's
rights to salary, employee benefits, fringe benefits and bonuses hereunder (if
any) which accrue after the termination of the Employment Period shall cease
upon such termination. The Company, the Parent Partnership and their
Subsidiaries may offset any loans, cash advances or fixed amounts which
Executive owes the Company, the Parent Partnership or their Subsidiaries against
any amounts it owes Executive.
5. Trade Secret Information. Executive acknowledges that the
information, observations and data obtained by him while employed by the Company
and the Parent Partnership concerning the business or affairs of the Company,
the Parent Partnership or any of their Subsidiaries which the Company, the
Parent Partnership or any such Subsidiary considers to be confidential and which
is proprietary to the Company, the Parent Partnership or any such Subsidiary
("Trade Secret Information") are the property of the Company, the Parent
Partnership or any such Subsidiary. Therefore, Executive agrees that he shall
not disclose to any unauthorized Person (except (i) to any entity which shall
succeed to the business of the Company, the Parent Partnership or any such
Subsidiary, (ii) as may be required in the regular course of business of the
Company, the Parent Partnership or any such Subsidiary or (iii) as required by
law) or use for his own purposes any Trade Secret Information without the prior
written consent of the Board, unless and to the extent that the aforementioned
matters become generally known to and available for use by the public or Persons
knowledgeable in the Company's industry other than as a result of Executive's
acts or omissions which constitute a breach hereof. Executive shall deliver to
the Company at the termination of the Employment Period, or at any other time
the Company may request, all memoranda, notes, plans, records, reports, computer
tapes, printouts and software and other documents and data (and copies thereof)
relating to the Trade Secret Information, Work Product (as defined below) or the
business of the Company, the Parent Partnership or any such Subsidiary which he
may then possess or have under his control.
6. Inventions and Patents. Executive acknowledges that all
inventions, innovations, improvements, developments, methods, designs, analyses,
drawings, reports and all similar or related
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information (whether or not patentable) which (i) relate to the Company's, the
Parent Partnership's or any of their Subsidiaries' actual or anticipated
business, research and development or existing or future products or services or
(ii) result from any work performed by Executive for the Company, the Parent
Partnership and their Subsidiaries, and which are conceived, developed or made
by Executive while employed by the Company and the Parent Partnership ("Work
Product") belong to the Company, the Parent Partnership or such Subsidiaries;
provided that this Section of this Agreement regarding the Company's, the Parent
Partnership's and their Subsidiaries' ownership of Work Product does not apply
to any invention for which no equipment, supplies, facilities or trade secret
information of the Company, the Parent Partnership or any of their Subsidiaries
was used and which was developed entirely on Executive's own time, unless (i)
the invention relates to the business of the Company, the Parent Partnership or
any of their Subsidiaries or to the Company's, the Parent Partnership's or any
of their Subsidiaries' actual or demonstrably anticipated research or
development or (ii) the invention results from any work performed by Executive
for the Company, the Parent Partnership or any of their Subsidiaries. Executive
shall promptly disclose such Work Product to the Board and perform all actions
reasonably requested by the Board (whether during or after the Employment
Period) to establish and confirm such ownership (including, without limitation,
assignments, consents, powers of attorney and other instruments).
7. Non-Compete, Non-Solicitation.
(a) In further consideration of the compensation to be paid to
Executive hereunder and his exposure to or involvement in the Trade Secret
Information, Executive acknowledges that in the course of his employment with
the Company and the Parent Partnership, he shall become familiar with trade
secrets and other Trade Secret Information concerning the Company, the Parent
Partnership and their Subsidiaries and that his services have been and shall be
of special, unique and extraordinary value to the Company, the Parent
Partnership and their Subsidiaries. Therefore, Executive agrees that, during the
Employment Period and for two years thereafter (the "Noncompete Period"), he
shall not directly or indirectly own any interest in, manage, control,
participate in, consult with, render services for, or in any manner engage in
any business competing with the businesses of the Company, the Parent
Partnership or their Subsidiaries, as such businesses exist or are in process on
the date of the termination of Executive's employment, within any states or
geographical regions in which the Company, the Parent Partnership or their
Subsidiaries engage or plan to engage in such businesses on the date of the
termination of Executive's employment; provided that nothing herein shall
prohibit Executive from being a passive owner of not more than 2%
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of the outstanding stock of any class of a corporation which is publicly traded,
so long as Executive has no active participation in the business of such
corporation.
(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company, the Parent Partnership or any of their Subsidiaries to leave the
employ of the Company, the Parent Partnership or such Subsidiaries, or in any
way interfere with the relationship between the Company, the Parent Partnership
or any of their Subsidiaries and any employee thereof, (ii) hire any person who
was a management employee of the Company, the Parent Partnership or any of their
Subsidiaries at any time during the one year period prior to the termination of
the Employment Period or (iii) induce or attempt to induce any customer,
supplier, licensee, licensor, franchisee or other business relation of the
Company, the Parent Partnership or any of their Subsidiaries to cease doing
business with the Company, the Parent Partnership or such Subsidiaries, or in
any way materially interfere with the relationship between any such customer,
supplier, licensee or business relation and the Company, the Parent Partnership
or any of their Subsidiaries (including, without limitation, making any negative
statements or communications about the Company, the Parent Partnership or their
Subsidiaries).
(c) If, at the time of enforcement of this paragraph 7, a court shall
hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law. Executive agrees that the restrictions
contained in this paragraph 7 are reasonable.
(d) In the event of any breach or threatened breach by Executive of
any of the provisions of this paragraph 7, the Company, the Parent Partnership
and their Subsidiaries, in addition and supplementary to other rights and
remedies existing in its favor, may apply to any court of competent jurisdiction
for specific performance and/or injunctive or other relief in order to enforce
or prevent any violations of the provisions hereof (without posting a bond or
other security). In addition, in the event of an alleged breach or violation by
Executive of this paragraph 7, the Noncompete Period shall be tolled until such
breach or violation has been duly cured.
8. Executive's Representations. Executive hereby represents and
warrants to the Company and the Parent Partnership that (i) the execution,
delivery and performance by Executive of
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this Agreement, the Investors Agreement and all other agreements contemplated
hereby and thereby to which Executive is a party do not and shall not conflict
with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which Executive is a party or by which
he is bound, (ii) Executive is not a party to or bound by any employment
agreement, noncompete agreement or confidentiality agreement with any other
person or entity (or if a party to such an agreement, Executive has disclosed
the material terms thereof to the Board prior to the execution hereof and
promptly after the date hereof shall deliver a copy of such agreement to the
Board), and (iii) upon the execution and delivery of this Agreement by the
Company and the Parent Partnership, this Agreement shall be the valid and
binding obligation of Executive, enforceable in accordance with its terms.
Executive hereby acknowledges and represents that (i) he has consulted with
independent legal counsel regarding his rights and obligations under this
Agreement and that he fully understands the terms and conditions contained
herein and (ii) subject to change by the Board at any time, the Company's and
the Parent Partnership's headquarters are in, and substantially all of the
services to be performed by Executive for the Company, the Parent Partnership
and their Subsidiaries shall be performed in, the State of Illinois.
9. Definitions.
"Cause" means (i) the commission of a felony or a crime involving
moral turpitude or the commission of any other act or omission involving
dishonesty, disloyalty or fraud with respect to the Company, the Parent
Partnership or any of their Subsidiaries, (ii) conduct which brings the Company,
the Parent Partnership or any of their Subsidiaries into substantial public
disgrace or disrepute (including abuse of drugs or alcohol), (iii) substantial
and repeated failure to perform duties as reasonably directed by the Board, (iv)
gross negligence or willful misconduct with respect to the Company, the Parent
Partnership or any of their Subsidiaries, (v) any other material breach of this
Agreement which is not cured within 15 days after written notice thereof to
Executive; provided that a termination of Executive's employment by the Company
and the Parent Partnership shall not be deemed a termination for Cause unless
and until there shall have been delivered to Executive a copy of a resolution
duly adopted by the affirmative vote of not less than a majority of the entire
membership of the Board at a meeting of the Board called and held for that
purpose (after reasonable notice to and an opportunity for Executive to be heard
before the Board) finding that in the good faith opinion of the Board, Executive
was guilty of the conduct set forth in any one or more of such clauses.
"Common Units" has the meaning set forth in the Partnership Agreement.
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"Disability" means Executive's inability, because of injury, illness
or other incapacity to perform the services to the Company, the Parent
Partnership or their Subsidiaries contemplated hereby (as determined by the
Board in its good faith judgment) for a continuous period of 90 days or for 120
days out of a continuous period of 360 days. Such Disability shall be deemed to
have occurred on the 90th consecutive day or the 120th day within the specified
period, as applicable.
"First Chicago Investors" has the meaning set forth in the Investors
Agreement.
"Good Reason" means (i) a Qualified Sale of the Parent Partnership (as
defined in the Investors Agreement), (ii) a Qualified Sale of the Company (as
defined in the Investors Agreement), (iii) the time at which the First Chicago
Investors and their Permitted Transferees own less than 20% of the outstanding
Common Units, (iv) the removal without Cause of Executive as the Chief Financial
Officer of the Company or the Parent Partnership, or its imposition upon him of
substantial additional or different duties which are inconsistent with such
position, (v) either the reduction of Executive's salary or a material reduction
of other benefits under any employee benefit plan, program or arrangement of the
Company and the Parent Partnership (other than a change that affects all senior
executives of the Company and the Parent Partnership) from the level in effect
upon Executive's commencement of participation therein or (vi) the relocation of
the executive offices of the Company or the Parent Partnership from the Chicago,
Illinois metropolitan area.
"Investors Agreement" means that certain Investors Agreement, dated as
of the date hereof, by and among the Parent Partnership, the Company and certain
partners and stockholders thereof, as amended or modified from time to time.
"Partnership Agreement" means that certain Agreement of Limited
Partnership of Sovereign Specialty Chemicals, L.P., dated as of March 31, 1996,
by and among the Company, as general partner, and the limited partners listed on
Schedule I attached thereto, as amended and modified from time to time.
"Permitted Transferees" has the meaning set forth in the Investors
Agreement.
"Subsidiaries" means, with respect to any person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
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controlled, directly or indirectly, by such person or entity or one or more of
the other Subsidiaries of such person or entity or a combination thereof, or
(ii) if a limited liability company, partnership, association or other business
entity, a majority of the partnership or other similar ownership interest
thereof is at the time owned or controlled, directly or indirectly, by any
person or entity or one or more Subsidiaries of such person or entity or a
combination thereof. For purposes hereof, a person or persons shall be deemed to
have a majority ownership interest in a limited liability company, partnership,
association or other business entity if such person or persons shall be
allocated a majority of limited liability company, partnership, association or
other business entity gains or losses or shall be or control any managing
director or general partner of such limited liability company, partnership,
association or other business entity.
10. Survival. Paragraphs 4 through 18 shall survive and continue in
full force in accordance with their terms notwithstanding any termination of the
Employment Period.
11. Notices. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, sent by first class mail,
return receipt requested, or sent by reputable overnight courier service
(charges prepaid) to the recipient at the address indicated below:
Notices to Executive:
Xxxxxx X. Xxxxxxx
000 Xxxx Xxxxx Xxxxx
Xxxxxxx, Xxxx 00000
with copies to:
Notices to the Company and the Parent Partnership:
Sovereign Chemicals Corporation
Suite 2200
000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Chief Executive Officer
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with copies to:
First Capital Corporation of Chicago
Three First Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
and
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxx
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or, if mailed, three days after deposit in the U.S. mail and one day after
deposit with a reputable overnight courier service.
12. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
13. Complete Agreement. This Agreement embodies the complete agreement
and understanding among the parties and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
14. No Strict Construction. The language used in this Agreement shall
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
party.
15. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
16. Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Execu-
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tive, the Company, the Parent Partnership and their respective heirs,
successors and assigns, except that Executive may not assign his rights or
delegate his obligations hereunder without the prior written consent of the
Company and the Parent Partnership.
17. Choice of Law. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by, and construed in accordance with, the laws of the State of
Illinois, without giving effect to any choice of law or conflict of law rules or
provisions (whether of the State of Illinois or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State
of Illinois.
18. Amendment and Waiver. The provisions of this Agreement may be
amended or waived only with the prior written consent of the Company, the Parent
Partnership and Executive, and no course of conduct or failure or delay in
enforcing the provisions of this Agreement shall affect the validity, binding
effect or enforceability of this Agreement.
* * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first written above.
SOVEREIGN CHEMICALS CORPORATION
By /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx
Its: Chief Executive Officer
SOVEREIGN SPECIALTY CHEMICALS, L.P.
By Sovereign Chemicals Corporation
Its General Partner
By /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx
Its: Chief Executive Officer
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
XXXXXX X. XXXXXXX
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