EMPLOYMENT AND NON-COMPETITION AGREEMENT
THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT (this "Agreement") is
made as of this 31st day of December, 1997, by and between OUTSOURCING
SERVICES GROUP, INC., a Delaware corporation having its principal place of
business at 000 Xxxxx Xxxxx Xxxxxx, Xxxx xx Xxxxxxxx, Xxxxxxxxxx 00000-0000
(the "Company"), and its subsidiaries Aerosol Services Company, Inc.,
Piedmont Laboratories, Inc., Kolmar Laboratories, Inc. (the "Subsidiaries")
and XXXXXXXXXXX XXXXXX, whose address is __________________________________
(the "Employee").
W I T N E S S E T H:
WHEREAS, the Company is engaged or proposed to be engaged, through the
Subsidiaries, in the business of providing aerosol and liquid filling of
cosmetics, toiletries and skin care products and related packaging services
and has need for management personnel with experience in said business;
WHEREAS, the Employee is experienced in the business of providing
aerosol and liquid filling, packaging of cosmetics, toiletries and skin
care products, and related services and in the management of such business;
WHEREAS, the Company and the Subsidiaries desire to employ the
Employee an executive capacity upon the terms and conditions hereinafter
set forth; and
WHEREAS, the Employee is willing to enter into this Agreement with
respect to the Employee's employment and services upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing recitals and the
promises herein contained, the parties agree as follows:
1. TERM
SECTION 1.01. Employment. Subject to the provisions of Section 4.01
hereof, the Company hereby employs the Employee and the Employee hereby
accepts employment with the Company for a period of three (3) years
beginning on January 1, 1998 and terminating at the close of business on
December 31, 2000 (the "Employment Term") , including service at Company's
principal executive offices located in the Eastern United States. The
Employment Term may be extended by a mutual agreement in writing for
additional years on the same or mutually agreeable terms, but if no such
mutual agreement is executed prior to December 31, 2000 the Employment Term
shall expire. If the employment of Employee is terminated pursuant to
Article 4 of this Agreement or by reason of the death or disability of such
Employee, the time during which the Employee is actually employed shall be
referred to as the "Employee's Employment."
2. DUTIES
SECTION 2.01. General Duties. The Employee shall serve as the
President and Chief Executive Officer of the Company during the Employee's
Employment and as President and Chief Executive Officer of the Company's
Kolmar Division, including the Company's subsidiary Kolmar Laboratories,
Inc. Further, Employee shall serve as a member of the Board of Directors of
the Company, and its subsidiaries Aerosol Services Company, Inc., Piedmont
Laboratories, Inc. and Kolmar Laboratories, Inc. and, if requested by the
Board of Directors, of other subsidiaries. The Employee shall, during
Employee's Employment, subject to the policies of the Board of Directors of
the Company, manage and direct the business of the Company, being directly
responsible to manage and direct the Kolmar Division and to supervise the
persons managing the Aerosol Division, performing those acts and doing
those things customarily done by the Chief Executive Officer for companies
comparable to the Company. The Company shall indemnify the Employee for
such service to the maximum extent permitted by applicable law.
SECTION 2.02. Devotion of Time to the Company's Business. The Employee
agrees during Employee's Employment, to devote his best efforts to his
employment, and perform such duties consistent with his capacity as Chief
Executive Officer of the Company as shall be determined by the Board of
Directors of the Company. The Employee further agrees to (i) devote
substantially all his business time to fulfill the duties of his office to
the business and affairs of the Company, (ii) devote his time and resources
to the recruitment, training and development of a team of focused
professionals capable of managing and directing the business of the
Company, and (iii) faithfully observe his duties to preserve as
confidential all trade and other secrets of the Company. The Employee shall
not, during Employee's Employment, unless otherwise agreed to in advance
and in writing by the Company, seek or accept other employment, become
self-employed in any other capacity, or engage in any activities which are
detrimental to the business of the Company. Notwithstanding the foregoing,
the Employee may engage in personal investment activities which do not
interfere with the Employee's duties under this Agreement.
3. COMPENSATION
SECTION 3.01. Base Salary. As compensation for his services hereunder,
during the Employment Term, the Employee shall receive an annual base
salary of Two Hundred Fifty Thousand Dollars ($250,000). Such base salary
shall be payable in cash at the times and in the installments consistent
with the Company's payroll practices. Company shall review such salary on
at least an annual basis with a view to consider increases considering,
among other factors, Company performance and cost-of-living increases.
SECTION 3.02. Bonus Plans.
(a) The Employee shall be a full participant in any performance bonus
plan made available to senior executives of the Company. It is intended for
such plans to include a stock ownership/purchase plan and an annual cash
bonus plan. Attached as Exhibit A is an outline of the proposed plan
submitted to the Company's board. Company intends to adopt a plan on or
prior to June 30, 1998.
(b) Upon effectiveness of this Agreement, as described in
Article VII, Employee shall receive options (the "Options") to purchase
eighty-five thousand (85,000) shares of Company's common stock at the price
of $10 per share. The Options shall be exercisable on the earlier of (A)
the third anniversary of the Effective Date described below and (B) the
date, if any, prior to such third anniversary on which (i) the Company's
common stock becomes publicly traded on a national securities exchange or
the Nasdaq stock market, (ii) the Company completes an initial public
offering of its common stock with proceeds in excess of $15,000,000, (iii)
the Company, or its assets or business, is sold substantially as an
entirety. The Options are further subject to the terms and conditions set
forth in the Stock Option Agreement by and between Employee and the Company
dated of even date (the "Option Agreement").
(c) For each of the first five years after the Effective Date,
Employee shall participate, along with other executives, in a stock option
program providing for the annual award, to all such participants in the
aggregate, of options to purchase up to 50,000 shares of Company stock.
(d) Company shall assume, if legally permissible, Employee's
current pension benefits plan and, if that is not legally possible, shall
provide for Employee a pension program providing the same economic
benefits.
(e) Company shall continue in effect the terms of its current
certificate of incorporation and bylaws which provide for indemnification
of officers and directors to the maximum extent provided by law. Company
currently carries directors' and officers' liability insurance with a
deductible of $100,000 and a maximum coverage of $5 million but reserves
the right to change such coverage if Company's directors so determine.
SECTION 3.03. Continuation of Salary. If the Employee dies or becomes
disabled during the Employment Term so that he is unable to perform his
duties hereunder, if Company terminates this Agreement for any reason
except as specified in Section 4.01, or if Employee resigns for "good
reason" as described in Section 4.02, the Company agrees to continue to pay
the Employee or his estate his base salary monthly, but not beyond the end
of the Employment Term, and to continue to provide the benefits described
in Section 3.04.
SECTION 3.04. Benefits. During the Employment Term, the Employee shall
be entitled to insurance benefits substantially similar to those now
provided under the Kolmar Laboratories, Inc. employee health benefit plan
as now in effect, and may continue such benefits after any termination of
this Agreement by paying the applicable premium to the extent allowed by
applicable law. However, the Company may cease providing such benefits if
any law or regulation prohibits making benefits available except on an
equal basis for all employees and if the benefits now provided Employee are
not so available.
4. TERMINATION
SECTION 4.01. Termination by the Company. Any of the following acts or
omissions shall constitute grounds for the Company to terminate this
Agreement:
(a) Employee's failure to perform the duties of his office or
to conduct and manage the Business of the Company in a manner reasonably
consistent with the criteria established by the Board of Directors;
(b) Conduct on the part of the Employee which constitutes the
breach of any statutory or common law duty of loyalty to the Company which
has a material adverse effect on Company;
(c) Any illegal act by the Employee (as evidenced by a
conviction) which materially and adversely affects the business of the
Company; or
(d) Intentional wrongful engagement in any competitive
activity prohibited by Section 5.01 or 5.02 hereof or employment in another
business in a manner not permitted by Section 2.02.
It shall be presumed that the Employee's participation in a business
enterprise other than the Company (except for service on boards of
directors approved by the Company) constitutes cause for termination under
clause (d) of this section. Termination by the Company shall be
accomplished by written notice to the Employee and, if pursuant to
paragraph (a) above, shall be preceded by a written notice providing a
reasonable opportunity for the Employee to correct his conduct, if the
conduct in question can be corrected.
SECTION 4.02. Resignation for Good Reason. Employee may resign for
"good reason" and thereby terminate Employee's Employment (but not his
other obligations hereunder) as a result of the following:
(a) Without the Employee's prior written consent, a reduction
in his current salary;
(b) The taking of any action by the Company that would
substantially diminish the aggregate value of the benefits provided to the
Employee under the Employee's medical, health, accident, disability, life
insurance, thrift and retirement plans in which he was participating on the
date of this Agreement, other than any such reduction which is (i) required
by law, (ii) implemented in connection with a general concessionary
arrangement affecting all employees or affecting the group of employees
(senior management) of which the Employee is a member or (iii) generally
applicable to all beneficiaries of such plans;
(c) An involuntary relocation of the Employee's place of
employment to a place other than the general Toronto, Ontario or New York,
New York areas;
(d) Resignation as a result of unlawful discrimination or
other unlawful acts committed against employee, as evidenced by a
settlement, arbitration award or final court order; or
(e) A reduction in duties and responsibilities which results
in the Employee no longer having the customary duties of a chief executive
officer.
Provided Company continues to make the payments provided for in Section
3.03, none of the actions specified in clauses (a) through (e) above shall
constitute a breach of this Agreement.
SECTION 4.03. Damages for Breach of Contract. In the event of a breach
of this Agreement by either the Company or the Employee resulting in
damages to the other party, that party may recover from the party breaching
this Agreement any and all damages that may be sustained, excluding
incidental, consequential and punitive damages.
SECTION 4.04. Arbitration. With the exception of suits for specific
enforcement of the provisions of Sections 5.01 and 5.02, any controversy,
dispute or claim arising out of, relating to, or concerning this Agreement,
the breach of this Agreement, the employment of the Employee, or the
termination of the Employee's employment will be resolved pursuant to this
Section 4.04. This includes all claims, whether arising in tort or
contract, and whether arising under statute or common law. Any such
controversy, dispute or claim will be submitted to the American Arbitration
Association ("AAA") in New York, New York for final and binding arbitration
in accordance with its Employment Dispute Rules then existing; provided
that, if the rules of the AAA differ from those in this section, the
provisions of this section will control. Any demand for resolution of such
a matter must be sent to the AAA and served on the other party within the
period covered by the applicable statute of limitations. No arbitrator will
have any authority to extend, modify, or suspend any of the terms of this
Agreement. The arbitrator must make his award in writing and must accompany
it with an opinion discussing the evidence and setting forth the reasons
for the award. The decision of the arbitrator within the scope of the
submission will be final and binding on both parties, and any right to
judicial action on any matter subject to resolution by arbitration
hereunder hereby is waived unless otherwise required by applicable law,
except suit to enforce an award by the arbitrator or in the event
resolution by an arbitrator is not available for any reason. This Section
4.04 will be specifically enforceable. Judgment upon any award rendered by
the AAA and/or any other arbitrator may be entered in any court having
jurisdiction.
SECTION 4.05. Attorneys' Fees and Costs. If any action in law or in
equity is necessary to enforce or interpret the terms of this Agreement,
the prevailing party or parties shall be entitled to reasonable attorneys'
fees, costs and necessary disbursements in addition to any other relief to
which such party may be entitled, to the extent awarded or allocated by the
court or arbitrator.
5. RESTRICTIVE COVENANTS
The following restrictive covenants shall apply to this Agreement:
SECTION 5.01. Confidentiality. Employee acknowledges and agrees that
the Company's formulas, sources of supply, cost and financial data,
customer arrangements, marketing plans and other non-public data have a
unique nature and value, derived in part from their status as non-public
and proprietary information. Employee agrees, during the Employment Term
and thereafter, to preserve and protect the confidential nature of said
information, and not to disclose to any third parties, or use for anyone's
benefit except the benefit of the Company, any non-public information about
the Company or its business.
SECTION 5.02. No Adverse Acts. During the Employment Term and
continuing for two (2) years after the date of the expiration of Employee's
Employment, the Employee will not directly or indirectly, solicit, take
away, or attempt to solicit or take away any customer or employee of the
Company either on the Employee's behalf or on behalf of any other person or
entity which competes with Company. If the Company terminates this
Agreement on a basis not specified in Section 4.01, or on a basis described
in Section 4.01(a), Employee shall not be required to honor this Section
5.02 unless Company continues to pay Employee's salary and benefits for the
balance of the Term even if such payments would not otherwise be required.
6. MISCELLANEOUS
SECTION 6.01. Notices. Any notices to be given hereunder by either
party to the other shall be in writing and may be effected by personal
delivery, by courier, or by mail (registered or certified), postage prepaid
with return receipt requested, or by facsimile confirmed by mail. Mailed
notices shall be addressed to the parties at the addresses appearing in the
introductory paragraph. Mailed notices shall be deemed communicated as of
four (4) calendar days after mailing. Notices delivered personally or by
courier shall be deemed delivered when actually received.
Section 6.02. Entire Agreement. This Agreement supersedes any and all
other agreements (other than the Option Agreement), either oral or in
writing, between the parties hereto with respect to the employment of the
Employee by the Company and contains all of the covenants and agreements
between the parties with respect to such employment in any manner
whatsoever. Each party to this Agreement acknowledges that no
representations, inducements, promises or agreements, orally or otherwise,
have been made by any party, which are not embodied herein, and that no
other prior agreement, statement or promise not contained in this Agreement
shall be valid and binding. Any modification of this Agreement, statement
or promise not contained in this Agreement shall not be valid or binding.
Any modification of this Agreement will be effective only if it is in
writing signed by the party to be charged.
Section 6.03. Partial Invalidity. If any provision in this Agreement
is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions shall nevertheless continue in full
force without being impaired or invalidated in any way.
Section 6.04. Law Governing Agreement. This Agreement shall be
governed by and construed in accordance with the law of the State of New
York.
Section 6.05. Currency. All amounts described in this Agreement are in
United States Dollars.
Section 6.06. Successors and Assigns. The rights and obligations of
the Company and the Employee under this Agreement shall inure to the
benefit of and shall be binding upon the successors and assigns of the
Company.
Section 6.07 Work Permit. The Company shall, at its expense, assist
Employee to file all forms and take all other actions needed to apply for a
permit or visa permitting him to work in the United States.
Section 6.08. No Conflict. The Company hereby represents and warrants
to Employee that this Agreement and the Company's obligations hereunder do
not violate or conflict with the terms, conditions or covenants of the
Company's (and certain of its subsidiaries') financing agreements entered
into on or about the Effective Date.
Section 6.09. Waiver. Either party's failure to enforce any provision
or provisions of this Agreement shall not in any way be construed as a
waiver of any such provision or provisions, nor prevent that party
thereafter from enforcing each and every other provision of this Agreement.
The rights granted both parties herein are cumulative and shall not
constitute a waiver of either party's right to assert all other legal
remedies available to it under the circumstances.
7. EFFECTIVE DATE
Section 7.01. This Agreement shall become effective upon the closing
contemplated by the Share and Asset Purchase Agreement among CCL
Industries, Inc., CCL Industries Corporation and Outsourcing Services
Group, Inc. dated October 28, 1997. Provided such closing occurs, the
"Effective Date" for purposes of this Agreement shall be December 31, 1997.
[SIGNATURES ON FOLLOWING PAGE]
[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
on the day and year first above written.
AEROSOL SERVICES COMPANY, INC. "Company"
By: /s/ Xxxxxx Xxxxxxx OUTSOURCING SERVICES GROUP, INC.
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Name: Xxxxxx Xxxxxxx
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Title: Chief Financial Officer
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PIEDMONT LABORATORIES, INC. By: /s/ Xxxxxx Xxxxxxx
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By: /s/ Xxxxxx Xxxxxxx Name: Xxxxxx Xxxxxxx
---------------------------- ----------------------------
Name: Xxxxxx Xxxxxxx Title: Chief Financial Officer
-------------------------- ---------------------------
Title: Chief Financial Officer "Employee"
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/s/ Xxxxxxxxxxx Xxxxxx
--------------------------------
KOLMAR LABORATORIES, INC. XXXXXXXXXXX XXXXXX
By: /s/ Xxxxxx Xxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxx
--------------------------
Title: Chief Financial Officer
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