EXHIBIT 10.25
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("AGREEMENT") is made and entered into as of the 31st
day of October, 2002, by and between SOVEREIGN SPECIALTY CHEMICALS, INC., a
Delaware corporation (the "COMPANY"), and XXXXX X. XXXXX (the "EMPLOYEE").
The Company and the Employee are sometimes hereinafter collectively
referred to as the "PARTIES" and individually as a "PARTY." Certain
capitalized terms used in this Agreement are defined in Article VII hereof.
RECITALS
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A. The Company is and will be engaged in the manufacture of
adhesives, sealants and coatings. The Company wishes to employ the
Employee, and the Employee wishes to be employed by the Company, as the
Company's Vice President and Chief Financial Officer. As a condition of
that employment, the Company requires that an employment agreement be
entered into pursuant to which the Employee furnishes the Company with,
among other things, certain covenants of the Employee, including his
covenant not to compete with the businesses of the Company, its
Subsidiaries and their Affiliates.
B. In order to induce the Employee to enter into this Agreement,
and to incentivize and reward his effort, loyalty and commitment to the
Company, concurrent with the execution and delivery of this Agreement the
Company has granted to the Employee a certain stock option (the "OPTION")
to purchase shares of Common Stock of the Company ("SHARES") under and
pursuant to the terms of the "Sovereign Specialty Chemicals, Inc. Stock
Option Plan" (the "PLAN") and a Stock Option Agreement in the form of
Exhibit C attached hereto and by this reference made a part hereof (the
"STOCK OPTION AGREEMENT").
C. The Employee acknowledges that as a member of the Company's
management, he is one of the persons charged with primary responsibility
for the implementation of the Company's business plans, and that he will
have regular access to various confidential and/or proprietary information
relating to the Company, its Subsidiaries, their Affiliates and their
businesses. Further, the Employee acknowledges that his covenants to the
Company hereinafter set forth, specifically including but not limited to
the Employee's covenant not to engage in competition with the Company, its
Subsidiaries, their Affiliates and their businesses, are being made in
partial consideration of the Company's grant of the Option to the Employee.
AGREEMENT
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NOW, THEREFORE, in consideration of the foregoing recitals, and the
mutual agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby mutually
acknowledged, the parties hereby agree as follows:
ARTICLE I
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EMPLOYMENT RELATIONSHIP
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1.1 EMPLOYMENT. Subject to the terms and conditions of this
Agreement, the Company hereby agrees to employ the Employee to serve as the
Company's Vice President and Chief Financial Officer, and the Employee
hereby accepts such employment, and agrees to perform his duties and
responsibilities to the best of his abilities in a diligent, trustworthy,
businesslike and efficient manner, in accordance with the provisions of
Exhibit D attached hereto and by this reference made a part hereof.
1.2 DUTIES. The Employee shall have the normal and customary
duties, responsibilities and authority of a Vice President and Chief
Financial Officer and shall perform such other duties on behalf of the
Company, its Subsidiaries and their Affiliates as may be assigned to him by
the Chief Executive Officer of the Company. The Employee shall report to
the Chief Executive Officer of the Company in connection with the
Employee's performance of his duties.
1.3 EXCLUSIVE EMPLOYMENT. While he is employed by the Company
hereunder, the Employee covenants to the Company that he will devote his
entire business time, energy, attention and skill to the Company, its
Subsidiaries and their Affiliates (except for permitted vacation periods
and reasonable periods of illness or other incapacity), and use his good
faith best efforts to promote the interests of the Company, its
Subsidiaries and their Affiliates. The foregoing shall not be construed as
prohibiting the Employee from spending such time as may be reasonably
necessary to attend to his personal affairs and investments so long as such
activities do not conflict or interfere with the Employee's obligations
and\or timely performance of his duties to the Company, its Subsidiaries
and their Affiliates hereunder.
1.4 EMPLOYEE REPRESENTATIONS. The Employee hereby represents and
warrants to the Company that:
(a) the execution, delivery and performance by the Employee of this
Agreement and any other agreements contemplated hereby to which the
Employee 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 the Employee is a party or by which he is bound;
(b) the Employee is not a party to or bound by any employment
agreement, non-competition agreement or confidentiality agreement with any
other person or entity (or if a party to such an agreement, the Employee
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
(c) upon the execution and delivery of this Agreement by the Company,
this Agreement shall be the valid and binding obligation of the Employee,
enforceable in accordance with its terms.
The Employee hereby acknowledges and represents that 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.
ARTICLE II
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PERIOD OF EMPLOYMENT
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2.1 EMPLOYMENT PERIOD. The Employee's employment hereunder shall
commence on the date hereof and shall continue hereunder until the date
fixed by the provisions of Section 2.2 hereof, subject to the early
termination provisions of Article V hereof (the "EMPLOYMENT PERIOD"), it
being acknowledged that the Company's fiscal year ends on December 31, and
that the Employment Period shall therefore be denominated in calendar
years.
2.2 INITIAL TERM OF EMPLOYMENT PERIOD AND EXTENSION TERMS. The
Employment Period shall initially continue for a term commencing on the
date hereof and ending on December 31, 2005 (the "INITIAL TERM"). The
Employment Period shall be automatically extended for successive calendar
years of the Company following the expiration of the Initial Term (each
such one year period being hereinafter referred to as an "EXTENSION TERM")
upon the same terms and conditions provided for herein unless either party
provides the other party with advance written notice of its or his
intention not to extend the Employment Period; provided, however, that such
notice must be delivered by the non-extending party to the other party not
later than ninety (90) days prior to the expiration of the Initial Term or
any Extension Term, as the case may be.
ARTICLE III
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COMPENSATION
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3.1 ANNUAL BASE COMPENSATION. During the Employment Period the Company
shall pay to the Employee an annual base salary (the "ANNUAL BASE
COMPENSATION") in the amount of $240,000.00. The Annual Base Compensation
shall be paid in regular installments in accordance with the Company's
general payroll practices, and shall be subject to all required federal,
state and local withholding taxes. The Employee's Annual Base Compensation
shall be reviewed by the Board annually, and may, in the discretion of the
Board be increased, provided that there shall be no obligation on the part
of the Company to increase the Employee's Annual Base Compensation, further
provided that in no event shall the Employee's Annual Base Compensation be
less than the greater of (i) the amount indicated in the first sentence of
this Section 3.1 or (ii) the highest amount such Annual Base Compensation
may have been increased to by the Board subsequent to the date of this
Agreement in its discretion.
3.2 POTENTIAL ANNUAL TARGET BONUSES. In respect of each calendar year
falling within the Employment Period after December 31, 2002, the Employee
shall be eligible to earn an annual bonus, depending upon the results of
operation of the Company, its Subsidiaries and their Affiliates and the
personal performance of the Employee, of up to fifty-eight and one-third
percent (58.333%) of the Employee's Annual Base Compensation for that
calendar year (the "POTENTIAL ANNUAL TARGET BONUS") in accordance with the
terms of a bonus plan which shall be adopted and maintained in effect by
the Board for that calendar year. The amount of the Potential Annual Target
Bonus, if any, which is earned by the Employee (the "BONUSABLE AMOUNT")
shall be paid by the Company to the Employee no later than seventy-five
(75) days following the close of the Company's calendar year, provided that
unless expressly provided otherwise herein, it shall be a condition
precedent to the Employee's right to receive any Bonusable Amount that the
Employee be employed by the Company on the last day of that calendar year.
3.3 DISCRETIONARY BONUSES. In respect of each calendar year falling
within the Employment Period, the Company may pay a discretionary annual
bonus to the Employee (a "DISCRETIONARY BONUS") to be determined by the
Board, in its sole discretion. Any Discretionary Bonus shall be paid by the
Company to the Employee within seventy-five (75) days following the close
of the Company's calendar year, provided that unless expressly provided
otherwise herein, it shall be a condition precedent to the Employee's right
to receive any Discretionary Bonus that the Employee be employed by the
Company on the last day of that calendar year.
3.4 EXPENSES. During the Employment Period, the Employee shall be
entitled to reimbursement of all travel, entertainment and other business
expenses reasonably incurred in the performance of his duties for the
Company, upon submission of all receipts and accounts with respect thereto,
and approval by the Company thereof, in accordance with the business
expense reimbursement policies of the Company from time to time adopted by
the Board. In addition, in recognition of the fact that the Employee
resides in Ohio, and will, like several other executives of the Company, be
required to commute to the Company's corporate offices, the following
arrangements shall govern travel and living costs incurred by the Employee:
(i) as the Company determines useful, the Company may secure housing
accommodations to be used by its officers, in which case the Employee shall
use such accommodations; (ii) the Employee's ordinary and reasonable travel
costs and other expenses related to the Employee's travel and residence in
the Chicagoland area not otherwise covered pursuant to clause (i), shall be
reimbursed to the Employee by the Company; (iii) the Employee shall be
entitled to a "gross-up" payment on all amounts paid or deemed paid to the
Employee pursuant to clauses (i) and (ii) such that there is no after-tax
cost to the employee in connection with the receipt of the amounts
described in clauses (i), (ii) and this clause (iii); and (iv) none of the
foregoing amounts shall be considered part of the Employee's Annual Base
Compensation, and shall, in any event, be paid in regular installments in
accordance with the Company's regular payroll practices, and shall be
subject to all required federal, state and local income taxes.
3.5 VACATION. In respect of each calendar year falling within the
Employment Period, the Employee shall be entitled to such vacation time as
the Company customarily provides to its senior executives holding positions
with the Company comparable to the Employee's position, provided that
unused vacation may be used by the Employee in the following calendar year
only in accordance with and as permitted by the Company's then current
vacation policies in effect from time to time.
3.6 OTHER FRINGE BENEFITS. During the Employment Period, the Employee
shall be entitled to receive such of the Company's other fringe benefits as
are being provided to other employees of the Company holding positions
comparable to the Employee's position, including but not limited to health
insurance benefits, disability benefits and retirement benefits.
3.7 GRANT OF STOCK OPTION. Concurrently with the parties' execution
and delivery of this Agreement the Company has granted to the Employee the
Option to purchase an aggregate of 25,000 Shares pursuant to the terms of
the Stock Option Agreement as part consideration for the Employee's
execution and delivery of this Agreement to the Company.
3.8 SPECIAL BONUS. The Company shall pay to the Employee a bonus in
the amount of $50,000 (the "SPECIAL BONUS"), less any employment or
withholding taxes, if any, required by law to be withheld by the Company
thereon, on or before March 15, 2003. If, prior to that Special Bonus
payment date, the Employee's employment shall have terminated, the Company
shall nonetheless pay the Special Bonus to the Employee when due without
regard to the reason for the Employee's termination of employment, unless
the Employee shall have breached any of his covenants to the Company
created by the provisions of Article IV hereof, in which case, the Company
shall have no liability to pay the Special Bonus to the Employee.
ARTICLE IV
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COVENANTS OF THE EMPLOYEE
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4.1 PROPRIETARY RIGHTS. The Employee hereby expressly agrees that all
research, discoveries, inventions and innovations (whether or not reduced
to practice or documented), improvements, developments, methods, designs,
analyses, drawings, reports and all similar or related information (whether
patentable or unpatentable, and whether or not reduced to writing), trade
secrets (being information about the business of the Company, its
Subsidiaries and their Affiliates which is considered by the Company or any
such Subsidiary or Affiliate to be confidential and is proprietary to the
Company or any such Subsidiary or Affiliate) and confidential information,
copyrightable works, and similar and related information (in whatever form
or medium), which (x) either (i) relate to the Company's, its Subsidiaries'
or their Affiliates' actual or anticipated business, research and
development or existing or future products or services or (ii) result from
any work performed by the Employee for the Company, its Subsidiaries or any
of their Affiliates and (y) are conceived, developed, made or contributed
to in whole or in part by the Employee during the Employment Period ("WORK
PRODUCT") shall be and remain the sole and exclusive property of the
Company, such Subsidiary or such Affiliate. The Employee shall communicate
promptly and fully all Work Product to the Company.
(A) WORK MADE FOR HIRE. The Employee acknowledges that, unless
otherwise agreed in writing by the Company, all Work Product eligible
for any form of copyright protection made or contributed to in whole
or in part by the Employee within the scope of the Employee's
employment by the Company during the Employment Period shall be deemed
a "work made for hire" under the copyright laws and shall be owned by
the Company, its Subsidiaries or their Affiliates, as applicable.
(B) ASSIGNMENT OF PROPRIETARY RIGHTS. The Employee hereby
assigns, transfers and conveys to the Company, and shall assign,
transfer and convey to the Company, all right, title and interest in
and to all inventions, ideas, improvements, designs, processes,
trademarks, service marks, trade names, trade secrets, trade dress,
data, discoveries and other proprietary assets and proprietary rights
in and of the Work Product (the "PROPRIETARY RIGHTS") for the
Company's exclusive ownership and use, together with all rights to xxx
and recover for past and future infringement or misappropriation
thereof, provided that if a Subsidiary or Affiliate of the Company is
the owner thereof, such assignment, transfer and conveyance shall be
made to such Subsidiary or Affiliate, which shall enjoy exclusive
ownership and use, together with all rights to xxx and recover for
past and future infringement or misappropriation thereof.
(C) FURTHER INSTRUMENTS. At the request of the Company (its
Subsidiaries or their Affiliates, as the case may be), at all times
during the Employment Period and thereafter, the Employee will
promptly and fully assist the Company (its Subsidiaries or their
Affiliates, as the case may be) in effecting the purpose of the
foregoing assignment, including but not limited to the further acts of
executing any and all documents necessary to secure for the Company
(its Subsidiaries or their Affiliates, as the case may be) such
Proprietary Rights and other rights to all Work Product and all
confidential information related thereto, providing cooperation and
giving testimony.
(D) INAPPLICABILITY OF SECTION 4.1 IN CERTAIN CIRCUMSTANCES. The
Company expressly acknowledges and agrees that, and the Employee is
hereby advised that, this Section 4.1 does not apply to any invention
for which no equipment, supplies, facilities or trade secret
information of the Company, its Subsidiaries or any of their
Affiliates was used and which was developed entirely on the Employee's
own time, unless (i) the invention relates to the business of the
Company, its Subsidiaries or any of their Affiliates or to the
Company's, its Subsidiaries' or any of their Affiliates' actual or
demonstrably anticipated research or development or (ii) the invention
results from any work performed by the Employee for the Company, its
Subsidiaries or any of their Affiliates.
4.2 OWNERSHIP AND COVENANT TO RETURN DOCUMENTS, ETC. The Employee
agrees that all Work Product and all documents or other tangible materials
(whether originals, copies or abstracts), including without limitation,
price lists, quotation guides, outstanding quotations, books, records,
manuals, files, sales literature, training materials, customer records,
correspondence, computer disks or print-out documents, contracts, orders,
messages, phone and address lists, invoices and receipts, and all objects
associated therewith, which in any way relate to the business or affairs of
the Company, its Subsidiaries and their Affiliates either furnished to the
Employee by the Company, its Subsidiaries or any of their Affiliates or are
prepared, compiled or otherwise acquired by the Employee during the
Employment Period, shall be the sole and exclusive property of the Company,
such Subsidiaries or such Affiliates. The Employee shall not, except for
the use of the Company, its Subsidiaries or any of their Affiliates, use,
copy or duplicate any of the aforementioned documents or objects, nor
remove them from the facilities of the Company or such Subsidiaries or such
Affiliates, nor use any information concerning them except for the benefit
of the Company, its Subsidiaries and their Affiliates, either during the
Employment Period or thereafter. The Employee agrees that he will deliver
all of the aforementioned documents and objects that may be in his
possession to the Company on the termination of his employment with the
Company, or at any other time upon the Company's request, together with his
written certification of compliance with the provisions of this Section 4.2
in the form of Exhibit A to this Agreement in accordance with the
provisions of Section 5.3 hereof.
4.3 NON-DISCLOSURE COVENANT. During the Employment Period and at all
times thereafter, the Employee shall not, either directly or indirectly,
disclose to any "unauthorized person" or use for the benefit of the
Employee or any person or entity other than the Company, its Subsidiaries
or their Affiliates any Work Product or any knowledge or information which
the Employee may acquire while employed by the Company (whether before or
after the date of this Agreement) relating to (i) the financial, marketing,
sales and business plans and affairs, financial statements, analyses,
forecasts and projections, books, accounts, records, operating costs and
expenses and other financial information of the Company, its Subsidiaries
and their Affiliates, (ii) internal management tools and systems, costing
policies and methods, pricing policies and methods and other methods of
doing business, of the Company, its Subsidiaries and their Affiliates,
(iii) customers, sales, customer requirements and usages, distributor
lists, of the Company, its Subsidiaries and their Affiliates, (iv)
agreements with customers, vendors, independent contractors, employees and
others, of the Company, its Subsidiaries and their Affiliates, (v) existing
and future products or services and product development plans, designs,
analyses and reports, of the Company, its Subsidiaries and their
Affiliates, (vi) computer software and data bases developed for the
Company, its Subsidiaries or their Affiliates, trade secrets, research,
records of research, models, designs, drawings, technical data and reports
of the Company, its Subsidiaries and their Affiliates and (vii)
correspondence or other private or confidential matters, information or
data whether written, oral or electronic, which is proprietary to the
Company, its Subsidiaries and their Affiliates and not generally known to
the public (individually and collectively "CONFIDENTIAL INFORMATION"),
without the Company's prior written permission. For purposes of this
Section 4.3, the term "UNAUTHORIZED PERSON" shall mean any person who is
not (i) an officer or director of the Company or an employee of the Company
for whom the disclosure of the knowledge or information referred to herein
is necessary for his performance of his assigned duties, or (ii) an
employee, officer or director of a Subsidiary or Affiliate of the Company
for whom the disclosure of the knowledge or information referred to herein
is necessary for his performance of his assigned duties, or (iii) a person
expressly authorized by the Company to receive disclosure of such knowledge
or information. The Company expressly acknowledges and agrees that the term
"Confidential Information" excludes information which is (A) in the public
domain or otherwise generally known to the trade, or (B) disclosed to third
parties other than by reason of the Employee's breach of his
confidentiality obligation hereunder or (C) learned of by the Employee
subsequent to the termination of his employment hereunder from any other
party not then under an obligation of confidentiality to the Company, its
Subsidiaries and their Affiliates. Further, the Employee covenants to the
Company that in the Employee's performance of his duties hereunder, the
Employee will violate no confidentiality obligations he may have to any
third persons.
4.4 ANTI-PIRATING AND NON-INTERFERENCE COVENANTS. The Employee
covenants to the Company that while the Employee is employed by the Company
hereunder and for the two (2) year period thereafter (the "NON-SOLICITATION
PERIOD"), he will not, for any reason, directly or indirectly: (a) solicit,
hire, or otherwise do any act or thing which may induce any other employee
of the Company, its Subsidiaries or their Affiliates to leave the employ or
otherwise interfere with or adversely affect the relationship (contractual
or otherwise) of the Company, its Subsidiaries and their Affiliates with
any person who is then or thereafter becomes an employee of the Company,
its Subsidiaries and their Affiliates; or (b) do any act or thing which may
interfere with or adversely affect the relationship (contractual or
otherwise) of the Company, its Subsidiaries and their Affiliates with any
customer or vendor of the Company, its Subsidiaries and their Affiliates or
induce any such customer or vendor to cease doing business with the
Company, its Subsidiaries and their Affiliates.
4.5 COVENANT NOT TO COMPETE. The Employee expressly acknowledges that
(i) the Company is and will be engaged in the manufacture of adhesives,
sealants and coatings; (ii) the Employee is one of a limited number of
persons who has extensive knowledge and expertise relevant to the
businesses of the Company, its Subsidiaries and their Affiliates; (iii) the
Employee's performance of his services for the Company hereunder will
afford him full and complete access to and cause him to become highly
knowledgeable about the Company's, its Subsidiaries' and their Affiliates'
Confidential Information; (iv) the agreements and covenants contained in
this Section 4.5 are essential to protect the business and goodwill of the
Company, its Subsidiaries and their Affiliates because, if the Employee
enters into any activities competitive with the businesses of the Company,
its Subsidiaries and their Affiliates, he will cause substantial harm to
the Company or its Subsidiaries and Affiliates; and (v) his covenants to
the Company, its Subsidiaries and their Affiliates set forth in this
Section 4.5 are being made in partial consideration of the Company's grant
of the Option to him. Accordingly, the Employee hereby agrees that while he
is employed by the Company hereunder and for the one (1) year period
thereafter (the "NON-COMPETITION PERIOD"), he shall not directly or
indirectly own any interest in, invest in, lend to, borrow from, manage,
control, participate in, consult with, become employed by, render services
to, or in any other manner whatsoever engage in, any business which is
competitive with any business actively being engaged in by the Company, its
Subsidiaries and their Affiliates or actively (and demonstrably) being
considered by the Company, its Subsidiaries and their Affiliates for entry
into on the date of the termination of the Employment Period, within any
states or geographical regions in which any such business is being
conducted or in which the Company, its Subsidiaries and their Affiliates is
or are actively (and demonstrably) considering engaging in on the date of
the termination of the Employment Period. The preceding to the contrary
notwithstanding, the Employee shall be free to make investments in the
publicly traded securities of any corporation, provided that such
investments do not amount to more than 1% of the outstanding securities of
any class of such corporation.
4.6 REMEDIES FOR BREACH. If the Employee commits a breach, or
threatens to commit a breach, of any of the provisions of this Article IV,
the Company and its Subsidiaries shall have the right and remedy, in
addition to any other remedy that may be available at law or in equity, to
have the provisions of this Article IV specifically enforced by any court
having equity jurisdiction, together with an accounting therefor, it being
expressly acknowledged and agreed by the Employee that any such breach or
threatened breach will cause irreparable injury to the Company and its
Subsidiaries and that money damages will not provide an adequate remedy to
the Company and its Subsidiaries. Such injunction shall be available
without the posting of any bond or other security, and the Employee hereby
consents to the issuance of such injunction. The Employee further agrees
that any such injunctive relief obtained by the Company or its Subsidiaries
shall be in addition to, and not in lieu of, monetary damages and any other
remedies to which the Company or its Subsidiaries may be entitled. Further,
in the event of an alleged breach or violation by the Employee of any of
the provisions of Sections 4.4 or 4.5 hereof, the Non-Solicitation Period
and\or the Non-Competition Period, as the case may be, shall be tolled
until such breach or violation has been cured. The parties agree that in
the event of the institution of any action at law or in equity by either
party to enforce the provisions of this Article IV, the losing party shall
pay all of the costs and expenses of the prevailing party, including
reasonable legal fees, incurred in connection therewith. If any covenant
contained in this Article IV or any part thereof is hereafter construed to
be invalid or unenforceable, the same shall not affect the remainder of
such covenant or any other covenants, which shall be given full effect,
without regard to the invalid portions, and any court having jurisdiction
shall have the power to modify such covenant to the least extent necessary
to render it enforceable and, in its modified form, said covenant shall
then be enforceable.
ARTICLE V
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TERMINATION OF EMPLOYMENT
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5.1 TERMINATION AND TRIGGERING EVENTS. Notwithstanding anything to the
contrary elsewhere contained in this Agreement, the Employment Period shall
terminate at the expiration of the Initial Term or any Extension Term, or
prior to the expiration of the Initial Term or any Extension Term upon the
occurrence of any of the following events (hereinafter referred to as
"TRIGGERING Events"): (a) the Employee's death; (b) the Employee's Total
Disability; (c) the Employee's Resignation; (d) the Employee's Resignation
with Good Grounds; (e) a Termination by the Company for Cause; or (f) a
Termination by the Company Without Cause.
5.2 RIGHTS UPON OCCURRENCE OF A TRIGGERING EVENT. Subject to the
provisions of Section 5.3 hereof, the rights of the parties upon the
occurrence of a Triggering Event prior to the expiration of the Initial
Term or any Extension Term shall be as follows:
(A) RESIGNATION AND TERMINATION BY THE COMPANY FOR CAUSE: If the
Triggering Event was the Employee's Resignation or a Termination by
the Company for Cause, the Employee shall be entitled to receive his
Annual Base Compensation and accrued but unpaid vacation through the
date thereof in accordance with the policy of the Company, and to
continue to participate in the Company's health, insurance and
disability plans and programs through that date and thereafter, only
to the extent permitted under the terms of such plans and programs.
(B) DEATH OR TOTAL DISABILITY: If the Triggering Event was the
Employee's death or Total Disability, the Employee (or the Employee's
designated beneficiary) shall be entitled to receive the Employee's
Annual Base Compensation and accrued but unpaid vacation through the
date thereof plus a pro rata portion of the Employee's Potential
Annual Target Bonus for the calendar year in which such death or Total
Disability occurred (based on the number of days the Employee was
employed during the applicable calendar year), in accordance with the
policy of the Company, 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.
(C) TERMINATION BY COMPANY WITHOUT CAUSE OR RESIGNATION BY
EMPLOYEE WITH GOOD GROUNDS: If the Triggering Event was a Termination
by the Company Without Cause or a Resignation by the Employee With
Good Grounds, the Employee shall be entitled to receive his Annual
Base Compensation and accrued but unpaid vacation through the date
thereof plus, in the case of either (i) Resignation by the Employee
with Good Grounds or (ii) a Termination By the Company Without Cause
in the discretion of the Chief Executive Officer of the Company, a pro
rata portion of the Employee's Potential Annual Target Bonus for the
calendar year in which such Triggering Event occurred (based on the
number of days the Employee was employed during the applicable
calendar year), payable in accordance with the Company's normal
payroll practices, provided that in addition, the Employee shall also
be paid, in equal monthly installments over the "Severance Period"
hereinafter referred to, an aggregate amount equal to his then current
Annual Base Compensation, payable in accordance with the Company's
normal payroll practices, and to continue to participate in the
Company's health, insurance and disability plans and programs to the
extent such coverage is available thereunder ("ADDITIONAL SEVERANCE
BENEFITS") during the one (1) year period immediately following the
date of the termination of the Employment Period (the "SEVERANCE
PERIOD"); provided that the Employee shall be entitled to receive such
Additional Severance Benefits during the Severance Period if and only
if the Employee has executed and delivered to the Company the General
Release substantially in form and substance as set forth in Exhibit B
to this Agreement and only so long as the Employee has not breached
any of his covenants to the Company set forth in Article IV of this
Agreement.
(D) CESSATION OF ENTITLEMENTS AND COMPANY RIGHT OF OFFSET. Except
as otherwise expressly provided herein, all of the Employee's rights
to salary, employee benefits, fringe benefits and bonuses hereunder
(if any) which would otherwise accrue after the termination of the
Employment Period shall cease upon the date of such termination. The
Company may offset any loans, cash advances or fixed amounts which the
Employee owes the Company or its Affiliate against any amounts it owes
the Employee under this Agreement.
5.3 SURVIVAL OF CERTAIN OBLIGATIONS AND TERMINATION CERTIFICATE. The
provisions of Articles IV, VI and VIII shall survive any termination of the
Employment Period, whether by reason of the occurrence of a Triggering
Event or the expiration of the Initial Term or any Extension Term.
Immediately following the termination of the Employment Period, the
Employee shall promptly return to the Company all property required to be
returned to the Company pursuant to the provisions of Section 4.2 hereof
and execute and deliver to the Company the Termination Certificate attached
hereto as Exhibit A and by this reference made a part hereof.
ARTICLE VI
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ASSIGNMENT
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6.1 PROHIBITION OF ASSIGNMENT BY EMPLOYEE. The Employee expressly
agrees for herself and on behalf of his executors, administrators and
heirs, that this Agreement and his obligations, rights, interests and
benefits hereunder shall not be assigned, transferred, pledged or
hypothecated in any way by the Employee, his executors, administrators or
heirs, and shall not be subject to execution, attachment or similar
process. Any attempt to assign, transfer, pledge, hypothecate or otherwise
dispose of this Agreement or any such rights, interests and benefits
thereunder contrary to the foregoing provisions, or the levy of any
attachment or similar process thereupon shall be null and void and without
effect and shall relieve the Company of any and all liability hereunder.
6.2 RIGHT OF COMPANY TO ASSIGN. This Agreement shall be assignable and
transferable by the Company to any successor-in-interest without the
consent of the Employee.
ARTICLE VI
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DEFINITIONS
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"AFFILIATE" means each of the Company's Subsidiaries.
"BOARD" means the Board of Directors of the Company.
"RESIGNATION" means the voluntary termination of employment hereunder
by the Employee which is not a Resignation with Good Grounds (except if
made in contemplation of a Termination by the Company for Cause), provided
that if such action is taken by the Employee without the giving of at least
ninety (90) days prior written notice, such termination of employment shall
not be a "Resignation," but instead shall constitute a Termination for
Cause.
"RESIGNATION WITH GOOD GROUNDS" means a voluntary termination of the
Employee's employment hereunder on account of, and within sixty (60) days
after, the occurrence of one or more of the following events:
(i) the assignment to the Employee of any duties inconsistent in
any material respect with the Employee's position (including status,
offices and titles), authority, duties or responsibilities as
contemplated by Section 1.2 hereof which results in a diminution of
the Employee's position, excluding for this purpose an isolated,
insubstantial or inadvertent action not taken in bad faith and which
is remedied by the Company promptly after receipt of written notice
thereof given by the Employee;
(ii) the Employee's Annual Base Compensation and\or Potential
Annual Target Bonus is\are decreased below the amount of his then
Annual Base Compensation and\or Potential Annual Target Bonus fixed by
the applicable provisions of Sections 3.1 and 3.2 hereof (provided
that so long as the aggregate sum of the Employee's Annual Base
Compensation and Potential Annual Target Bonus in respect of any
calendar year during the Employment Term are not decreased, the
Company shall be free to decrease the Potential Annual Target Bonus
for that year and commensurately increase the Annual Base Compensation
for that year without any affect on the subsequent calendar year
Annual Base Compensation and Potential Annual Target Bonus, it being
expressly acknowledged by the Employee that the operating result
achievement criteria for the payment of any of the Potential Annual
Target Bonus by the Company, its Subsidiaries and their Affiliates
shall be determined by the Board, in its absolute discretion) or the
Employee's benefits under any material employee benefit plan, program
or arrangement of the Company (other than a change that affects all
Employees of the Company) are materially reduced from the level in
effect upon the Employee's commencement of participation therein; or
(iii) the failure of the Company to comply with any of the
provisions of this Agreement, other than an isolated, insubstantial or
inadvertent action not taken in bad faith and which is remedied by the
Company promptly after receipt of written notice thereof given by the
Employee.
"SUBSIDIARY" 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 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.
"TERMINATION BY THE COMPANY FOR CAUSE" means termination by the
Company of the Employee's employment for:
(i) misappropriation of any significant monies or significant
assets or properties of the Company;
(ii) conviction of a felony or a crime involving moral turpitude;
(iii) substantial and repeated failure to comply with directions
of the Chief Executive Officer of the Company;
(iv) gross negligence or willful misconduct;
(v) chronic alcoholism or drug addiction together with the
Employee's refusal to cooperate with or participate in counseling
and/or treatment of same; or
(vi) any willful action or inaction of the Employee which, in the
reasonable opinion of the Board, constitutes dereliction (willful
neglect or willful abandonment of assigned duties), or a material
breach of Company policy or rules which, if susceptible to cure, is
not cured by the Employee within five (5) days following the
Employee's receipt of written notice from the Company advising the
Employee with reasonable specificity as to the action or inaction
viewed by the Board to be dereliction or a material breach of Company
policy or rules;
provided that the termination of the Employee's employment hereunder by the
Company shall not be deemed a Termination by the Company for Cause unless
and until there shall have been delivered to the Employee a written notice
from the Chief Executive Officer of the Company (after reasonable notice to
and an opportunity for the Employee (alone and in person) to have a meeting
with the Chief Executive Officer of the Company) finding that in the good
faith opinion of the Chief Executive Officer of the Company, the Employee
was guilty of the conduct set forth in one or more of such clauses.
"TERMINATION BY THE COMPANY WITHOUT CAUSE" means a termination of the
Employee's employment by the Company which is not a Termination by the
Company for Cause, provided that the termination of the Employment Period
on account of the failure of the Company to extend the Employment Period in
accordance with the provisions of Section 2.2 hereof shall constitute a
Termination by the Company Without Cause.
"TOTAL DISABILITY" means the Employee's inability, because of illness,
injury or other physical or mental incapacity, to perform his duties
hereunder (as determined by the Board in good faith) for a continuous
period of one hundred eighty (180) consecutive days, or for a total of one
hundred eighty (180) days within any three hundred sixty (360) consecutive
day period, in which case such Total Disability shall be deemed to have
occurred on the last day of such one hundred eighty (180) day or three
hundred sixty (360) day period, as applicable.
ARTICLE VIII
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GENERAL
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8.1 NOTICES. All notices under this Agreement shall be in writing and
shall be deemed properly sent, (i) when delivered, if by personal service
or reputable overnight courier service, or (ii) when received, if sent (x)
by certified or registered mail, postage prepaid, return receipt requested,
or (y) via facsimile transmission (provided that a hard copy of such notice
is sent to the addressee via one of the methods of delivery or mailing set
forth above on the same day the facsimile transmission is sent); to the
recipient at the address indicated below:
Notices to Employee:
Xxxxx X. Xxxxx
-----------------------
--------------------------
------------------------------------
Notices to Company:
------------------
Sovereign Specialty Chemicals, Inc.
X/X Xxxxx Xxxxxxxxx Xxxxxxx
Xxxxx 0000
000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile (000) 000-0000
With Copies to:
--------------
Xxxxxx X. Xxxxxxxxx, Esq.
Jenkens & Gilcrhist
000 Xxxx Xxxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Facsimile (000) 000-0000
Xxxxxxx X. Xxxxxxxx, Esq.
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
0 Xxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Facsimile (0000) 000-0000
Xxxxxxxxx X. Xxxxx, Esq.
AEA Investors Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile (000) 000-0000
8.2 GOVERNING LAW. This Agreement shall be subject to and governed by
the laws of the State of Illinois without regard to any choice of law or
conflicts of law rules or provisions (whether of the State of Illinois or
any other jurisdiction), irrespective of the fact that the Employee may
become a resident of a different state.
8.3 BINDING EFFECT. The Agreement shall be binding upon and inure to
the benefit of the Company, its successors and assigns, and the Employee
and his executors, administrators, personal representatives and heirs.
8.4 COMPLETE UNDERSTANDING. This Agreement constitutes the complete
understanding among the parties hereto with regard to the subject matter
hereof, and supersedes any and all prior agreements and understandings
relating to the employment of the Employee by the Company.
8.5 AMENDMENTS. No change, modification or amendment of any provision
of this Agreement shall be valid unless made in writing and signed by all
of the parties hereto.
8.6 WAIVER. The waiver by the Company of a breach of any provision of
this Agreement by the Employee shall not operate or be construed as a
waiver of any subsequent breach by the Employee. The waiver by the Employee
of a breach of any provision of this Agreement by the Company shall not
operate as a waiver of any subsequent breach by the Company.
8.7 VENUE, JURISDICTION, ETC. The Employee hereby agrees that any
suit, action or proceeding relating in any way to this Agreement may be
brought and enforced in the Circuit Court of Xxxx County of the State of
Illinois or in the District Court of the United States of America for the
Northern District of Illinois, Eastern Division, and in either case the
Employee hereby submits to the jurisdiction of each such court. The
Employee hereby waives and agrees not to assert, by way of motion or
otherwise, in any such suit, action or proceeding, any claim that the
Employee is not personally subject to the jurisdiction of the above-named
courts, that the suit, action or proceeding is brought in an inconvenient
forum or that the venue of the suit, action or proceeding is improper. The
Employee consents and agrees to service of process or other legal summons
for purpose of any such suit, action or proceeding by registered mail
addressed to the Employee at his address listed in the business records of
the Company. Nothing contained herein shall affect the rights of the
Company to bring suit, action or proceeding in any other appropriate
jurisdiction. The Employee and the Company do each hereby waive any right
to trial by jury, she or it may have concerning any matter relating to this
Agreement.
8.8 SEVERABILITY. If any portion of this Agreement shall be for any
reason, invalid or unenforceable, the remaining portion or portions shall
nevertheless be valid, enforceable and carried into effect.
8.9 HEADINGS. The headings of this Agreement are inserted for
convenience only and are not to be considered in the construction of the
provisions hereof.
8.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which, taken together, shall constitute one and the
same agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed
by its duly authorized officers and its corporate seal to be hereunto
affixed, and the Employee has hereunto set his hand on the day and year
first above written.
COMPANY: EMPLOYEE:
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SOVEREIGN SPECIALTY CHEMICALS, INC.,
a Delaware Corporation /s/ Xxxxx X.Xxxxx
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By /s/ Xxxxxx X. Xxxxx, Xx. Xxxxx X. Xxxxx
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Chief Executive Officer
