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EXHIBIT 10
XXXXXX XXXX E, PH.D.
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), is made and entered into
this 23rd day of July 1998, and shall be effective as of the 12th day of
January, 1998 (the "Effective Date"), by and between Fairmont Chemical Co.,
Inc., a New Jersey Corporation (the "Employer"), and Xxxxxx Xxxxx, Ph.D. (the
"Executive").
RECITALS
A. The Employer desires to employ the Executive as an officer of the
Employer and the Executive is willing to accept such employment upon the terms
and conditions hereinafter set forth.
B. The Employer recognizes that circumstances may arise in which a
change of control of the Employer through acquisition or otherwise may occur
thereby causing uncertainty of employment without regard to the competence or
past contributions of the Executive which uncertainty may result in the loss of
valuable services of the Executive and the Employer and the Executive wish to
provide reasonable security to the Executive against changes in the employment
relationship in the event of any such change of control.
NOW, THEREFORE, in consideration of the promises and of the covenants
and agreements hereinafter contained, it is covenanted and agreed by and between
the parties hereto as follows:
AGREEMENTS
1. POSITION AND DUTIES. The Employer hereby employs the Executive as
the President and Chief Executive Officer of the Employer or in such other
senior executive capacity as shall be mutually agreed between the Employer and
the Executive. During the period of the Executive's employment hereunder, the
Executive shall devote his best efforts and full business time, energy, skills
and attention to the business and affairs of the Employer. The Executive's
duties and authority shall consist of and include all duties and authority
customarily performed and held by persons holding equivalent positions with
business organizations similar in nature and size to the Employer, as such
duties and authority are reasonably defined, modified and delegated from time to
time by the Board of Directors of the Employer (the "Board"). The Executive
shall have the powers necessary to perform the duties assigned to him and shall
be provided such supporting services, staff, secretarial and other assistance,
office space and accouterments as shall be reasonably necessary and appropriate
in the light of such assigned duties.
2. COMPENSATION. As compensation for the services to be provided by the
Executive hereunder, the Executive shall receive the following compensation,
expense reimbursement and other benefits:
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(a) BASE COMPENSATION. The Executive shall receive an
aggregate annual base salary at the rate of One-Hundred and Forty-One Thousand
Five-Hundred Dollars ($141,500.00) payable in installments in accordance with
the regular payroll schedule of the Employer. Such base salary shall be subject
to review annually commencing in 1999 and may be adjusted from time to time by
the Board, but shall not be reduced unless the Employer experiences five (5)
consecutive calendar quarters with pre-tax operating losses.
(b) PERFORMANCE BONUS. The Executive shall be eligible to
receive an annual cash bonus, which for 1998 shall be fifteen percent (15%) of
his base annual salary if pre-tax annual profits of the Employer for such year
equal or exceed Five Hundred Thousand Dollars ($500,000). The annual cash bonus
amount and earning criteria shall be established by the Board for years after
1998. Nothing in this Agreement shall require the Board to provide a bonus in
any particular year.
(c) STOCK OPTIONS. The Executive shall have options to
purchase One Million (1,000,000) shares of common stock of the Employer at an
exercise price of eleven cents ($.11) per share subject to the following
schedule:
Exercise Date Exercisable Options
------------- -------------------
(i) January 12, 1999 334,000
(ii) January 12, 2000 333,000
(iii) January 12, 2001 333,000
Provided, however, that (A) upon an employment termination before
January 12, 1999 (other than a voluntary termination by the Executive or a
termination as defined herein under Section 5(c)) the option exercise under
Section 2(c)(i), shall be permitted within the ninety (90) days following the
date of such termination, and (B) in the event of a Change of Control (as
defined herein under Section 5(f)(iii)) at any time prior to January 12, 2001,
all of the unpurchased shares under this Section 2(c) for which the option
exercise date will have then passed may be purchased. The Executive must elect
to exercise any options to the extent then exercisable, within ninety (90) days
following termination of employment, or the options, shall lapse. All options
shall lapse upon the death of the Executive.
(d) REIMBURSEMENT OF EXPENSES. The Executive shall be
reimbursed, upon submission of appropriate vouchers and supporting
documentation, for all travel, entertainment and other out-of-pocket expenses
reasonably and necessarily incurred by the Executive in the performance of his
duties hereunder and shall be entitled to attend seminars, conferences and
meetings relating to the business of the Employer consistent with the Employer's
established policies in that regard.
(e) BENEFITS. The Executive shall be entitled to all benefits
specifically established for him and, when and to the extent he is eligible
therefor, to participate in all plans and benefits generally accorded to senior
executives of the Employer, which may
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include, but not be limited to, pension, profit-sharing, supplemental
retirement, incentive compensation, bonus, disability income, split-dollar life
insurance, group life, medical and hospitalization insurance, and similar or
comparable plans, and also to perquisites extended to similarly situated senior
executives, provided, however, that such plans, benefits and perquisites shall
be no less than those made available to all other employees of the Employer.
(f) VACATIONS. The Executive shall be entitled to an annual
vacation in accordance with the vacation policy of the Employer which vacation
shall be taken at a time or times mutually agreeable to the Employer and the
Executive.
(g) WITHHOLDING. The Employer shall be entitled to withhold
from amounts payable to the Executive hereunder, any federal, state or local
withholding or other taxes or charges which it is from time to time required to
withhold. The Employer shall be entitled to rely upon the opinion of its legal
counsel with regard to any question concerning the amount or requirement of any
such withholding.
3. CONFIDENTIALITY AND LOYALTY. The Executive acknowledges that
heretofore or hereafter during the course of his employment he has produced and
may hereafter produce and have access to material, records, data, trade secrets
and information not generally available to the public (collectively,
"Confidential Information") regarding the Employer and its subsidiaries and
affiliates. Accordingly, during and subsequent to termination of this Agreement,
the Executive shall hold in confidence and not directly or indirectly disclose,
use, copy or make lists of any such Confidential Information, except to the
extent that such information is or thereafter becomes lawfully available from
public sources, or such disclosure is authorized in writing by the Employer,
required by a law or any competent administrative agency or judicial authority,
or otherwise as reasonably necessary or appropriate in connection with
performance by the Executive of his duties hereunder. The Executive must provide
written notice, within seven (7) days of receipt, to the Employer of any request
by an administrative agency or judicial authority to provide Confidential
Information. All records, files, documents and other materials or copies thereof
relating to the Employer's business which the Executive shall prepare or use,
shall be and remain the sole property of the Employer, shall not be removed from
the Employer's premises without its written consent, and shall be promptly
returned to the Employer upon termination of the Executive's employment
hereunder. The Executive agrees to abide by the Employer's reasonable policies,
as in effect from time to time, respecting avoidance of interests conflicting
with those of the Employer.
4. INVENTIONS. Any invention, process, discovery, software development
or improvement (whether patentable or not) made, invented, discovered, acquired,
suggested or reduced to practice by the Executive in the course of his
employment under this Agreement, or within twelve (12) months thereafter as a
result of any idea conceived during such employment, and related in any manner
to the work, tests, experiments or other activities carried on by the Employer
or any of its subsidiaries shall be the absolute property of the Employer and
the Executive will promptly execute and deliver all documents and do all other
things necessary and proper to make all such inventions, processes, discoveries,
software, and improvements the absolute property of the
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Employer. The Executive will not reveal to anyone (otherwise than in the regular
course of the business of the Employer or of its subsidiaries) any information
concerning any such inventions, processes, discoveries, software or
improvements. The obligations of the Executive under this Section 4 will survive
any termination of employment and this Agreement.
5. TERM AND TERMINATION.
(a) BASIC TERM. The Executive's employment hereunder shall be
at the pleasure of the Board commencing as of the Effective Date, and shall
continue unless terminated by either party upon thirty (30) days' written
notice, or as provided herein under this Section 5.
(b) PREMATURE TERMINATION.
(i) In the event of the termination of this Agreement
by the Employer for any reason other than a termination in
accordance with the provisions of paragraph (c) of this
Section 5, then notwithstanding any mitigation of damages by
the Executive, the Employer shall pay the Executive an amount
equal to six (6) month's annual base salary.
(ii) Payment to the Executive will be made in a
single lump sum. Such payment shall not be reduced in the
event the Executive obtains other employment following the
termination of employment by the Employer.
(c) TERMINATION FOR CAUSE. This Agreement may be terminated
for cause as hereinafter defined. "Cause" shall mean: (i) the Executive's death
or his permanent disability, which shall mean the Executive's inability, as a
result of physical or mental incapacity, substantially to perform his duties
hereunder for ninety (90) days within a period of six (6) consecutive months;
(ii) a material violation by the Executive of any applicable material law or
regulation respecting the business of the Employer; (iii) the Executive being
found guilty of a felony or an act of dishonesty in connection with the
performance of his duties as an officer of the Employer, or which disqualifies
the Executive from serving as an officer or director of the Employer; or (iv)
the willful or negligent failure of the Executive to perform his duties
hereunder in any material respect. The Executive shall be entitled to at least
thirty (30) days' prior written notice of the Employer's intention to terminate
his employment for any cause (except the Executive's death) specifying the
grounds for such termination, a reasonable opportunity to cure any conduct or
act, if curable, alleged as grounds for such termination, and a reasonable
opportunity to present to the Board his position regarding any dispute relating
to the existence of such cause.
(d) TERMINATION UPON DEATH. In the event payments are due and
owing under this Agreement at the death of the Executive, payment shall be made
to such beneficiary as the Executive may designate in writing, or failing such
designation, to the executor of his estate, in full settlement and satisfaction
of all claims and demands on
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behalf of the Executive. Such payments shall be in addition to any other death
benefits of the Employer for the benefit of the Executive and in full settlement
and satisfaction of all payments provided for in this Agreement.
(e) TERMINATION UPON DISABILITY. The Employer may terminate
the Executive's employment after the Executive is determined to be disabled
under the current Employer program or by a physician engaged by the Employer. In
the event of a dispute regarding the Executive's disability, each party shall
choose a physician who together will choose a third physician to make a final
determination. The Executive shall be entitled to the compensation and benefits
provided for under this Agreement for any period during the term of this
Agreement and prior to the establishment of the Executive's Disability during
which the Executive is unable to work due to a physical or mental infirmity.
Notwithstanding anything contained in this Agreement to the contrary, until the
date specified in a notice of termination relating to the Executive's
Disability, the Executive shall be entitled to return to his positions with the
Employer as set forth in this Agreement in which event no Disability of the
Executive will be deemed to have occurred.
(f) TERMINATION UPON CHANGE OF CONTROL.
(i) In the event of a Change in Control (as defined
below) of the Employer and the termination of the Executive's
employment under either A or B below, the Executive shall be
entitled to payments specified herein under Section 5(b), and
shall be entitled to an additional amount equal to his annual
base salary as in effect on the date of the Change of Control.
The following shall constitute termination under this
paragraph:
A. The Executive terminates his employment
under this Agreement by a written notice to that
effect delivered to the Board within one (1) year
after the Change in Control.
B. The Agreement is terminated by the
Employer or its successor either in contemplation of
or after the Change in Control.
(ii) It is the intention of the Employer and the
Executive that no portion of any payment under this Agreement,
or payments to or for the benefit of the Executive under any
other agreement or plan, be deemed to be an "Excess Parachute
Payment" as defined in Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), or its successors. It
is agreed that the present value of and payments to or for the
benefit of the Executive in the nature of compensation,
receipt of which is contingent on the Change of Control of the
Employer, and to which Section 280G of the Code applies (in
the aggregate "Total Payments") shall not exceed an amount
equal to one dollar less than the maximum amount which the
Employer may pay without loss of deduction under Section
280G(a) of the Code. Present value for purposes of this
Agreement shall be calculated in accordance with Section
280G(d)(4) of the Code. Within thirty (30) days following the
earlier of (A) the giving of the notice of
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termination or (B) the giving of notice by the Employer to the
Executive of its belief that there is a payment or benefit due
the Executive which will result in an excess parachute payment
as defined in Section 280G of the Code, the Executive and the
Employer, at the Employer's expense, shall obtain the opinion
of such legal counsel and certified public accountants as the
Executive may choose (notwithstanding the fact that such
persons have acted or may also be acting as the legal counsel
or certified public accountants for the Employer), which
opinions need not be unqualified, which sets forth (A) the
amount of the Base Period Income of the Executive, (B) the
present value of Total Payments and (C) the amount and present
value of any excess parachute payments. In the event that such
opinions determine that there would be an excess parachute
payment, the payment hereunder or any other payment determined
by such counsel to be includable in Total Payments shall be
modified, reduced or eliminated as specified by the Executive
in writing delivered to the Employer within thirty (3) days of
his receipt of such opinions or, if the Executive fails to so
notify the Employer, then as the Employer shall reasonably
determine, so that under the bases of calculation set forth in
such opinions there will be no excess parachute payment. The
provisions of this subparagraph, including the calculations,
notices and opinions provided for herein shall be based upon
the conclusive presumption that (A) the compensation and
benefits provided for in Section 2 hereof and (B) any other
compensation earned by the Executive pursuant to the
Employer's compensation programs which would have been paid in
any event, are reasonable compensation for services rendered,
even though the timing of such payment is triggered by the
Change of Control; provided, however, that in the event such
legal counsel so requests in connection with the opinion
required by this subparagraph, the Executive and the Employer
shall obtain, at the Employer's expense, and the legal counsel
may rely on in providing the opinion, the advice of a firm of
recognized executive compensation consultants as to the
reasonableness of any item of compensation to be received by
the Executive. In the event that the provisions of Sections
280G and 4999 of the Code are repealed without succession,
this subparagraph shall be of no further force or effect.
(iii) For purposes of this paragraph, the term
"Change in Control" shall mean: (A) any event which would
require the filing of a Form 13D under the Securities Exchange
Act of 1934, as amended, (whether or not such Form is filed)
by any person or group of persons stating that such person or
group is the beneficial owner or has voting control or proxies
for fifty percent (50%) or more of the voting securities of
the Employer and/or can elect a majority of the Board (unless
such group shall include at least two residual beneficiaries,
as defined below); or (B) the election, at any meeting of the
stockholders of the Employer of a majority of members of the
Board by a majority of the voting securities of the Employer,
which majority does not include the voting securities of the
Employer owned by at least two of the residual beneficiaries;
or (C) a
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complete liquidation or dissolution or an agreement for the
sale or other disposition of all or substantially all of the
assets of the Employer. For purposes of this Section, residual
beneficiaries shall mean any of the beneficiaries of the
Xxxxxx Xxxxxxxx, Xxxx Xxxxxxx and/or Xxxxxxx Xxxxxxxx
Irrevocable Grantor Trust, or any issue of any such
beneficiary or spouse of any such beneficiary or issue
thereof.
6. NON-COMPETITION COVENANT.
(a) RESTRICTIVE COVENANT. As an essential ingredient of and in
consideration of this Agreement and the payment of the amounts described in
Section 2, the Executive hereby agrees that, except with the express prior
written consent of the Employer, for a period of one (1) year after the
termination of the Executive's employment with the Employer (the "Restrictive
Period"), he will not directly or indirectly compete with the business of the
Employer, including, but not by way of limitation, by directly or indirectly
owning, managing, operating, controlling, financing, or by directly or
indirectly serving as an employee, officer or director of or consultant to, or
by soliciting or inducing, or attempting to solicit or induce, any employee or
agent of Employer to terminate employment with Employer and become employed by
any person, firm, partnership, corporation, trust or other entity which owns or
operates a business similar to that of the Employer (the "Restrictive
Covenant"). If the Executive violates the Restrictive Covenant and the Employer
brings legal action for injunctive or other relief, the Employer shall not, as a
result of the time involved in obtaining such relief, be deprived of the benefit
of the full period of the Restrictive Covenant. Accordingly, the Restrictive
Covenant shall be deemed to have the duration specified in this Section 6(a)
computed from the date the relief is granted but reduced by the time between the
period when the Restrictive Period began to run and the date of the first
violation of the Restrictive Covenant by the Executive. The foregoing
Restrictive Covenant shall not prohibit the Executive from owning directly or
indirectly capital stock or similar securities which are listed on a securities
exchange or quoted on the National Association of Securities Dealers Automated
Quotation System which do not represent more than one percent (1%) of the
outstanding capital stock of any Corporation.
(b) REMEDIES FOR BREACH OF RESTRICTIVE COVENANT. The Executive
acknowledges that the restrictions contained in Sections 3 and 6(a) of this
Agreement are reasonable and necessary for the protection of the legitimate
business interests of the Employer, that any violation of these restrictions
would cause substantial injury to the Employer and such interests, that the
Employer would not have entered into this Agreement with the Executive without
receiving the additional consideration offered by the Executive in binding
himself to these restrictions and that such restrictions were a material
inducement to the Employer to enter into this Agreement. In the event of any
violation or threatened violation of these restrictions, the Employer, in
addition to and not in limitation of, any other rights, remedies or damages
available to the Employer under this Agreement or otherwise at law or in equity,
shall be entitled to preliminary and permanent injunctive relief to prevent or
restrain any such violation by the Executive and any and all persons directly or
indirectly acting for or with him, as the case may be.
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7. INTERCORPORATE TRANSFERS. If the Executive shall be voluntarily
transferred to an affiliate of the Employer, such transfer shall not be deemed
to terminate or modify this Agreement and the employing corporation to which the
Executive shall have been transferred shall, for all purposes of this Agreement,
be construed as standing in the same place and stead as the Employer as of the
date of such transfer. For purposes hereof, an affiliate of the Employer shall
mean any corporation directly or indirectly controlling, controlled by, or under
common control with the Employer.
8. INTEREST IN ASSETS. Neither the Executive nor his estate shall
acquire hereunder any rights in funds or assets of the Employer, otherwise than
by and through the actual payment of amounts payable hereunder; nor shall the
Executive or his estate have any power to transfer, assign, anticipate,
hypothecate or otherwise encumber in advance any of said payments; nor shall any
of such payments be subject to seizure for the payment of any debt, judgment,
alimony, separate maintenance or be transferable by operation of law in the
event of bankruptcy, insolvency or otherwise of the Executive.
9. INDEMNIFICATION. The Employer shall hold harmless and indemnify the
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under applicable law against all expenses and liabilities reasonably
incurred by him in connection with or arising out of any action, suit or
proceeding in which he may be involved by reason of his having been an officer
of the Employer (whether or not he continues to be an officer at the time of
incurring such expenses or liabilities), such expenses and liabilities to
include, but not be limited to, judgments, court costs and attorneys' fees and
the cost of reasonable settlements. Such indemnification may be provided through
the purchase of a standard directors' and officers' liability insurance policy
at the expense of the Employer.
10. GENERAL PROVISIONS.
(a) SUCCESSORS; ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Executive, the Employer and his and its
respective personal representatives, successors and assigns, and any successor
or assign of the Employer shall be deemed the "Employer" hereunder. The Employer
shall require any successor to all or substantially all of the business and/or
assets of the Employer, whether directly or indirectly, by purchase, merger,
consolidation, acquisition of stock, or otherwise, by an agreement in form and
substance satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent as the Employer
would be required to perform if no such succession had taken place.
(b) ENTIRE AGREEMENT; MODIFICATIONS. This Agreement
constitutes the entire agreement between the parties respecting the subject
matter hereof, and supersedes all prior negotiations, undertakings, agreements
and arrangements with respect thereto, whether written or oral. Except as
otherwise explicitly provided herein, this Agreement may not be amended or
modified except by written agreement signed by the Executive and the Employer.
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(c) ENFORCEMENT AND GOVERNING LAW. The provisions of this
Agreement shall be regarded as divisible and separate; if any of said provisions
should be declared invalid or unenforceable by a court of competent
jurisdiction, the validity and enforceability of the remaining provisions shall
not be affected thereby. This Agreement shall be construed and the legal
relations of the parties hereto shall be determined in accordance with the laws
of the State of New Jersey without reference to the law regarding conflicts of
law.
(d) ARBITRATION. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators in New York City, in accordance
with the rules of the American Arbitration Association then in effect. Judgment
may be entered on the arbitrator's award in any court having jurisdiction;
provided, however, that the Executive shall be entitled to seek specific
performance of his right to be paid through the date of termination during the
pendency of any dispute or controversy arising under or in connection with this
Agreement.
(e) LEGAL FEES. All reasonable legal fees paid or incurred by
the prevailing party pursuant to any dispute or question of interpretation
relating to this Agreement shall be paid or reimbursed by the other party.
(f) WAIVER. No waiver by either party at any time of any
breach by the other party of, or compliance with, any condition or provision of
this Agreement to be performed by the other party, shall be deemed a waiver of
any similar or dissimilar provisions or conditions at the same time or any prior
or subsequent time.
(g) NOTICES. Notices pursuant to this Agreement shall be in
writing and shall be deemed given when received; and, if mailed, shall be mailed
by United States registered or certified mail, return receipt requested, postage
prepaid; and if to the Employer, addressed to the principal headquarters of the
Employer, attention: Chairman; or, if to the Executive, to the address set forth
below the Executive's signature on this Agreement, or to such other address as
the party to be notified shall have given to the other.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
FAIRMONT CHEMICAL CO., INC.
/S/Xxxxxx Xxxxx
XXXXXX XXXXX, PH. D.
By:/S/ Xxxxxx Xxxxxxxxxxx
Name: Xxxxxx Moshitsky
Title: Vice-President Research
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