Contract
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EXHIBIT 10.4
This Transition Agreement (this “
Agreement
”), dated as of April 22, 2021 is made between Xxxxxxx X. Xxxxx (“
Executive
”)
and Quaker Chemical Corporation (“
Quaker
” or the “
Company
”).
WHEREAS, Executive and Quaker are parties to the Employment Agreement dated July 1, 2008 regarding Executive’s
employment as the Company’s Chief Executive Officer and President (the “
Employment Agreement
”);
Executive Officer and President and will continue to serve on the Board of Directors of the Company (the “
Board
”) as a non-
executive director;
WHEREAS, as used in this Agreement, any reference to Executive shall include Executive and, in their capacities as such,
Executive’s heirs, administrators, representatives, executors, legatees, successors, agents and assigns; and
WHEREAS, all capitalized terms used but not defined in this Agreement shall have the meanings ascribed to such terms in the
Employment Agreement;
In consideration of the mutual promises, agreements and representations contained herein, the parties agree as follows:
1.
Transition
. Executive shall continue to serve as President and Chief Executive Officer of the Company, at his current level of
compensation (including the full amount of his Annual Incentive Plan (
“AIP”
) bonus earned with respect to calendar year 2021)
and benefits (with such increases as may be approved by the Board) through December 31, 2021. Effective January 1, 2022,
Executive shall resign as an employee of the Company, and from such positions and from all positions as an officer or director of
any Company subsidiary (but, for the sake of clarity, he shall not be expected to resign as a director of the Company). However,
with the approval of the Board, Executive may resign from such positions prior to January 1, 2022, and in that event may also, if
he desires, resign as an employee prior to January 1, 2022. In either event, Executive shall make himself reasonably available to
the Board to provide strategic advice and counsel through December 31, 2021 and shall continue to receive, through December
31, 2021 the same level of compensation and benefits to which he was entitled as of the date of his resignation as President and
Chief Executive Officer (including the full amount of his AIP bonus earned with respect to calendar year 2021). If the Board
requests, and Executive provides his written consent, Executive’s employment may be extended beyond December 31, 2021 at his
current level of compensation and benefits, or upon such other terms and conditions that the Board and Executive may mutually
agree. The date of Executive’s resignation as President and Chief Executive Officer of the Company is referred to in the
Agreement as the “
Resignation Date.
” Following his resignation as President and Chief Executive Officer, Executive shall,
subject to further action by the Board, continue to serve as Chair of the Board, in the capacity as non-executive Chair.
2.
Compensation.
December 31, 2021 as provided in Section 1 above. From and after January 1, 2022 and continuing for as long as Executive
serves as a director, the Company shall compensate Executive for his services as a director on the same basis as it compensates
the non-management members of the Board and shall pay him additional compensation of $100,000 per annum (or such greater
amount as may be approved by the Board) for his services as non-executive Chair. Such compensation shall be paid on the same
basis as the compensation payable to the Lead Director (if there is one, otherwise on the same basis as for those directors serving
as chairs of Board committees), pro-rated in the event of a partial year; provided that Executive’s compensation for serving as
non-executive Chair shall, if paid in cash, shall be paid in monthly installments. The Company shall reimburse Executive for all
reasonable business expenses incurred by him in the performance of duties as a director and non-executive Chair in accordance
with the Company’s business expense reimbursement policies. While serving as non -executive Chair, the Company shall provide
Executive with support services as Executive may reasonably request, including computer and telephone access, IT support and
support from an administrative assistant.
3.
Non-Executive Chair of the Board.
all meetings of the Board and at all meetings of shareholders of the Company, and together with the President and Chief
Executive Officer and (if there is one) the Lead Director, set the agenda for meetings of the Board. In addition, Executive shall,
upon request, provide his advice and counsel with respect to the transition of management, new business opportunities, strategic
planning, customer and investor relations and such other matters as the Company’s Chief Executive Officer or the Board may
reasonably request.
4.
No Termination of Service
. Executive and the Company hereby acknowledge that the Compensation and Human Resources
Committee of the Board (or such other committee described in the LTIP) has provided that Executive will not be considered to
have had a “
Termination of Service
” as defined in the LTIP for so long as Executive is a director or employee of the Company.
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Any further amendment to the interpretation of Termination of Service will be considered an amendment to an outstanding award
pursuant to section 2.6 of the LTIP and may only be made with the Executive’s consent.
5.
Company’s Obligations
.
a.
The Company will pay Executive for any amounts of Executive’s accrued salary payable under the Employment Agreement
and reimbursement for any reasonable business expenses and other amounts to which Executive is entitled thereunder. Such
payment will be made in accordance with the Company’s regular payroll practices.
b.
Executive shall receive any incentive cash bonus amount accrued or earned by Executive in accordance with the terms of an
award granted under the AIP or LTIP prior January 1, 2022 in accordance with the terms of the AIP or LTIP, as applicable.
Any such amount shall be paid to Executive as provided under the AIP or LTIP, as applicable.
c.
Following the Resignation Date, Executive shall not be eligible to participate in the Company’s benefit plans except as
provided below with respect to Executive’s participation in the Company’s existing medical plan, as such plan may be
changed by the Company from time to time for its senior employees generally (“
Medical Coverage
”) and the Company’s
existing short-term disability plan and long-term disability plan as such plans may be changed by the Company from time to
time for its senior employees generally (“
Disability Coverage
”):
i.
Subject to approval from the applicable insurance provider, if any, the Company shall, until April 30, 2023, permit
Executive to elect Medical Coverage (including medical, vision and dental coverage) for himself and his family as
follows:
1.
Executive shall pay the premium cost of the Medical Coverage he elects at the rate provided to active employees of
the Company, and on an after-tax basis. In addition, the Company will pay the portion of the premium cost paid by
the Company for active employees for such Medical Coverage and the portion of the premium cost paid by the
Company will be includable in Executive’s taxable income.
2.
Upon the termination of the Medical Coverage, Executive and if applicable, his family may be eligible to elect
COBRA continuation coverage in accordance with the terms of the Medical Coverage and applicable law.
3.
If at any time during such period Executive is not eligible to participate in the Medical Coverage, the Company will
pay to Executive additional compensation in an amount necessary to purchase coverage similar to the Medical
Coverage.
ii.
For as long as Executive is entitled to elect Medical Coverage from the Company, Executive will continue to be eligible
for Disability Coverage under the same terms and conditions as active employees, subject to approval from the applicable
insurance provider, if any.
d.
Executive’s outstanding equity awards as of December 31, 2021 shall be administered according to the terms of the
applicable award agreements (the “
Award Agreements
”) and the terms of the LTIP.
e.
In the event of the death of Executive, any payments due to Executive under this Agreement or the Award Agreements and
not paid prior to Executive’s death shall be made to the personal representative of Executive’s estate.
f.
The Company shall withhold from any payments under this Agreement any federal, state and local taxes that the Company is
required to withhold pursuant to any law or governmental rule or regulation. Executive shall be responsible for all Executive
taxes applicable to amounts payable under this Agreement.
g.
Executive shall not be entitled to any severance amounts under any severance plans of the Company or the Employment
Agreement.
6.
Restrictive Covenants
. Executive shall comply with the Restrictive Covenants set forth in Section 6 of the Employment
Agreement (the “
Restrictive Covenants
”) for the applicable periods set forth therein; provided that, notwithstanding anything to
the contrary in the Employment Agreement, Executive shall comply with the Restrictive Covenants set forth in Section 6.2 of the
Employment Agreement regarding non-competition and non-solicitation for so long as he is a member of the Board, and for a
period of 18 months following the end of Executive’s Board service.
7.
Return of Property
.
Executive agrees to return all Company property to the Company on or before the Resignation Date (other
than as relates to his services as a director, including his computer, cellphone and email access) and not retain any property of the
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Company (other than his cellphone, computer and any other items that the Company expressly permits Executive to keep). To the
extent that Executive retains any such items, or if he made use of his own personal computing devices (e.g., cellphone, laptop,
thumb drive, etc.), Executive will, upon request, deliver such items to the Company for review and will permit the Company to
delete all Company property and information therefrom, and/or permit the Company to remotely delete all Company property and
information from such items. For the avoidance of doubt, notwithstanding anything to the contrary, Executive shall be permitted
to retain his contacts (in electronic and paper form). The Company shall pack and ship at its expense the personal items of
Executive that are in his office at the Company following the Resignation Date.
8.
Cooperation
. Executive agrees that, upon the Company’s reasonable notice to Executive and taking into consideration
Executive’s other commitments and obligations, Executive shall fully cooperate with the Company in investigating, defending,
prosecuting, litigating, filing, initiating or asserting any actual or potential claims or investigations that may be made by or against
the Company to the extent that such claims or investigations relate to any matter in which Executive was involved (or alleged to
have been involved) while employed with the Company, or during his service as a director, of which Executive has knowledge by
virtue of Executive’s employment with the Company or Executive’s capacity as a director of the Company. The Company will
advance to Executive the reasonable out-of-pocket expenses incurred in rendering such cooperation.
9.
Permitted Conduct
. Nothing in this Agreement or the Employment Agreement shall prohibit or restrict Executive from initiating
communications directly with, or responding to any inquiry from, or providing testimony before, the Equal Employment
Opportunity Commission, the Department of Justice, the Securities and Exchange Commission, or any other federal, state or local
regulatory authority. To the extent permitted by law, upon receipt of any subpoena, court order, or other legal process compelling
the disclosure of any confidential information and trade secrets of the Company, Executive agrees to give prompt written notice to
the Company so as to permit the Company to protect its interests in confidentiality to the fullest extent possible. Please take notice
that federal law provides criminal and civil immunity to federal and state claims for trade secret misappropriation to individuals
who disclose a trade secret to their attorney, a court, or a government official in certain, confidential circumstances that are set
forth at 18 U.S.C. §§ 1833(b)(1) and 1833(b)(2), related to the reporting or investigation of a suspected violation of the law, or in
connection with a lawsuit for retaliation for reporting a suspected violation of the law.
10.
Indemnification.
The Company shall defend and hold Executive harmle ss to the fullest extent permitted by applicable law in
connection with any claim, action, suit, investigation or proceeding arising out of or relating to performance by Executive of
services for, or action of Executive hereunder or as a director, officer, employee or executive of the Company or of any parent,
subsidiary or affiliate of the Company, or of any other person or enterprise at the Company’s request. Expenses incurred by
Executive in defending such a claim, action, suit or investigation or criminal proceeding shall be paid by the Company in advance
of the final disposition thereof upon the receipt by the Company of an undertaking by or on behalf of Executive to repay said
amount unless it shall ultimately be determined that Executive is entitled to be indemnified hereunder; provided, however, that
this shall not apply to a nonderivative action commenced by the Company against Executive. This indemnification obligation is in
addition to the obligations of the Company pursuant to its articles of incorporation and bylaws.
11.
Controlling Law
.
This Agreement and all matters arising out of, or relating to it, shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Pennsylvania.
12.
Jurisdiction
.
Any action arising out of, or relating to, any breach of the Restrictive Covenants shall be brought and prosecuted
only in the United States District Court for the Eastern District of Pennsylvania, or if such court does not have jurisdiction or will
not accept jurisdiction, in any court of general jurisdiction in Philadelphia, Pennsylvania, and the jurisdiction of such court in any
such proceeding shall be exclusive. Executive also irrevocably and unconditionally consents to the service of any process,
pleadings, notices or other papers.
13.
Amendment
.
The parties agree that this Agreement may not be altered, amended or modified, in any respect, except by a writing
duly executed by both Parties.
14.
Entire Agreement
.
The parties understand that no promise, inducement or other agreement not expressly contained herein has
been made conferring any benefit upon them, and that this Agreement contains the entire agreement between the parties with
respect to the subject matter hereof, and that the terms of this Agreement are contractual and not recitals only. Prior to the
Resignation Date, the Employment Agreemen t shall apply to any termination of Executive’s employment with the Company,
provided, however, that in the event of a Separation from Service prior to the Resignation Date, by action of the Company for any
reason other than Cause or the death or Disability of the Executive, Executive shall receive the same compensation and benefits
that he would receive in the event of a resignation prior to January 1, 2022, as set forth in Section 1 of this Agreement, in lieu of
any payment under Section 4.4 of the Employment Agreement. Following the Resignation Date, the provisions of this Agreement
shall govern Executive’s service as a director other than those provisions of the Employment Agreement that by their terms apply
following termination of Executive’s employment as Chief Executive Officer and President of the Company (including without
limitation Section 6 and 7.7), which shall continue to apply to Executive.
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15.
Section 409A
.
a.
This Agreement is intended to comply with Code section 409A, or an exemption, and the provisions of this Subsection shall
apply notwithstanding any provisions of this Agreement to the contrary. For purposes of section 409A of the Code, the right
to a series of payments under this Agreement shall be treated as a right to a series of separate payments and each payment
shall be treated as a separate payment. With respect to any payments that are subject to section 409A of the Code, in no event
shall Executive, directly or indirectly, designate the calendar year of a payment and if a payment could be made in more than
one taxable year, based on timing of the execution of this Agreement, payment shall be made in the later taxable year. Any
reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the
requirements of section 409A of the Code.
b.
Notwithstanding any provision of this Agreement to the contrary, any payment or benefit under this Agreement that
constitutes deferred compensation subject to section 409A of the Code and for which the payment event is a Separation from
Service shall not be made or provided before the date that is six months after the date of Executive’s Separation from Service.
Any payment or benefit that is delayed pursuant to this Subsection shall be made or provided on the first business day of the
seventh month following the month in which Executive’s Separation from Service occurs. With respect to any cash payment
delayed pursuant to this Subsection, the first payment shall include interest, at the Wall Street Journal Prime Rate published
in the Wall Street Journal on the date of Executive’s Separation from Service (or the previous business day if such date is not
a business day), for the period from the date the payment would have been made but for this Subsection through the date
payment is made. The provisions of this Subsection shall apply only to the extent required to avoid Executive’s incurrence of
any additional tax or interest under section 409A of the Code.
For purposes of this Subsection, a “
Separation from Service
”
shall mean Executive’s separation from service with the Company and its affiliates within the meaning of Treas. Reg.
§1.409A-1(h) or any successor thereto.
16.
Agreement Severability
.
If any provision of this Agreement is construed to be invalid, unlawful or unenforceable, then the
remaining provisions hereof shall not be affected thereby and shall be enforceable without regard thereto.
IN WITNESS WHEREOF, and intending to be legally bound, the parties agree to the terms of this Agreement.
Quaker Chemical Corporation
Date: 4/22/2021
By:
/s/ Xxxxxx X. Xxxxx
Name:
Xxxxxx X. Xxxxx
Title:
Sr. VP, General Counsel and Corporate Secretary
Date: 4/22/2021
By:
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
