Exhibit 10(t)
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT is entered into March 11, 1999, effective as
of January 1, 1999, ("Employment Agreement") by and between QUAKER CHEMICAL
CORPORATION, a Pennsylvania corporation (the "Company"), and XXXXXX X.
XXXXXX ("Executive").
BACKGROUND:
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Executive has been employed by the Company as its Chairman of the Board
and Chief Executive Officer pursuant to an Employment Agreement dated August 14,
1995 ("Prior Agreement"). The term of employment under the Prior Agreement ends
December 31, 1998. The Company and Executive desire to continue their employment
relationship and intend, by this Employment Agreement, to establish the terms
and conditions of Executive's continued employment.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and intending to be legally bound hereby, the Company and
Executive agree as follows:
1. Employment.
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The Company hereby employs Executive and Executive hereby
accepts employment with the Company as the Chairman of the Board and Chief
Executive Officer of the Company upon the terms and conditions contained herein.
2. Duties.
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(a) Executive shall perform all duties consistent with the
position of Chairman of the Board and Chief Executive Officer of the Company, as
well as any other duties which are assigned to him by the Board which are
commensurate with his position. Executive will devote his entire time and best
efforts to fulfill faithfully, responsibly and satisfactorily those duties and
to further the Company's best interests.
(b) During the Term of Employment, Executive shall not engage
in any commercial activities which are in any way in competition with the
activities of the Company (provided, however, that this shall not restrict
Executive from holding up to 1% of the outstanding capital stock or other
securities of any publicly traded entity which conducts activities in
competition with the activities of the Company) or which may in any way
interfere with the performance of his duties or responsibilities to the Company.
(c) Subject to Paragraph 8, nothing contained in this
Employment Agreement shall restrict or prohibit Executive from serving on boards
of eleemosynary institutions or on the boards of up to two publicly traded
entities.
Exhibit 10(t) Page 1
3. Term.
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The initial term of Executive's employment shall commence on
January 1, 1999 and shall end on December 31, 2003 (the "Term of Employment").
Thereafter, the Term of Employment shall continue for successive one year
periods unless either the Company or Executive shall have given the other at
least ninety days' notice of a desire to terminate and intention not to renew at
the expiration of the then current period.
4. Base Salary and Bonuses.
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In exchange for Executive's promises contained herein, the
Company shall compensate him in the following manner:
(a) Base Salary. The Company shall compensate Executive at the
Base Salary of $425,000 per annum, payable in equal installments on the same
basis as other senior salaried officers of the Company. The Base Salary shall be
reviewed by the Board and considered for increase as of January 1, 2000 and
annually thereafter.
(b) Bonuses. Executive will continue to participate in the
Quaker Incentive Compensation Plan applicable to the Company's other senior
salaried officers; for the purposes of Executive's participation under the Plan
as currently in effect, he will have a target award percentage of 80% of
mid-point of range. Executive shall participate in such other bonus and annual
incentive plans applicable to senior salaried officers of the Company as may be
hereafter adopted by the Company. The Company may pay Executive such other bonus
or bonuses, if any, as the Board, in its sole discretion, shall determine.
(c) The amounts set forth herein are subject to appropriate
withholdings and deductions as required by law.
5. Long-Term Performance Incentive Plan.
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Executive shall continue to be eligible for continued
participation in the Company's Long-Term Performance Incentive Plan (the
"Incentive Plan"). The Compensation Committee may award and grant Executive
Performance Incentive Units and/or Stock Options under the Incentive Plan in the
Compensation Committee's sole discretion. Executive shall be eligible to
participate in such other long-term incentive based compensation plans as may be
hereafter adopted by the Company.
6. Pension and Other Benefit Plans.
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(a) Executive shall be entitled to participate in the
Company's employee benefit plans as they are in existence on the date of this
Employment Agreement or as they may be amended hereafter. At the present time,
Executive is entitled to participate in various plans, including, without
limitation, the following plans to the same extent as other senior salaried
officers of the Company: Group Medical Insurance Plan, Dental Plan, Disability
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(short and long term) Plan, Group Term Life Insurance, Defined Benefit Pension
Plan, and Profit Sharing and Retirement Income Plan. Notwithstanding the
foregoing, Executive may elect that the Company provide him with "indemnity
type" medical insurance coverage (as opposed to the type of coverage which would
otherwise have been provided) and, in that event, Executive shall reimburse the
Company in the amount he would have been required to pay for HMOQPOS coverage.
(b) The Quaker Chemical Corporation 1995 Naples Supplemental
Retirement Income Program and Agreement (the "Naples SURP") shall continue in
effect. The Naples SURP may be amended in a manner consistent with any
amendments made to the Company SURP; provided, however, no such amendment will
reduce or limit any of the benefits thereunder. Executive continues to waive any
rights he may have to participate in or to receive benefits under the Company
SURP. Executive shall be fully vested in the benefits accrued under the Naples
SURP and such benefits shall be nonforfeitable, notwithstanding the termination
of his employment with the Company prior to his reaching normal retirement age.
Notwithstanding anything contained in the Naples SURP and/or in the Company's
employment policies to the contrary, promptly after the date of this Employment
Agreement, the Naples SURP will be amended so as to provide that benefits (to
the extent then earned by credited service without actuarial reduction) under
the Naples SURP will commence at age 60 (rather than at age 65) unless prior to
Executive's 60th birthday Executive elects a deferred benefit commencement date.
The intention of the preceding sentence is that the benefit at age 60 will be
the same as if Executive commenced receiving benefits at age 65 with the same
length of service as exists at age 60.
7. Other Benefits.
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Executive shall be provided with the following additional
benefits:
(a) The Company shall reimburse Executive for the cost of his
membership in one country club for his business related use thereof.
(b) The Company shall reimburse Executive, upon proper
accounting, for reasonable expenses and disbursements incurred by him in the
course of his performance of the duties hereunder.
(c) Executive shall be entitled to five weeks of vacation each
year this Employment Agreement is in effect without reduction in salary.
(d) The Company shall reimburse Executive up to $8,000 per
calendar year for annual tax preparation and financial planning services.
(e) The Company shall make available to Executive an
automobile (and appropriate insurance thereon) for business related use, said
vehicle to be of his choosing up to a vehicle cost of $45,000.
Exhibit 10(t) Page 3
8. Executive Covenants.
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In order to induce the Company to enter into this Employment
Agreement, Executive hereby agrees as follows:
(a) Except for and on behalf of the Company and except with
the consent of or as directed by the Board, Executive will keep confidential and
shall not divulge to any other person or entity during the Term of Employment or
thereafter any of the business or trade secrets, names and purchase histories of
customers, formulae and processes of manufacture, or other confidential
information regarding the Company which has not otherwise become public
knowledge.
(b) All papers, books and records of every kind, and
description relating to the business and affairs of the Company, whether or not
prepared by Executive, shall be the sole and exclusive property of the Company,
and Executive shall surrender them to the Company at any time upon the request
by the Board.
(c) During the Term of Employment and for a period of two
years after the termination of Executive's employment, regardless of the reason
for such termination, Executive will not (i) participate, directly or
indirectly, as a director, stockholder or partner, or have any direct or
indirect financial interest as creditor, in any business which, directly or
indirectly, competes with the Company; provided, however, that this subparagraph
(c) shall not restrict Executive from holding up to 1% of the outstanding
capital stock or other securities of any publicly traded entity which conducts
activities in competition with the activities of the Company, or (ii) solicit
any customers of the Company on behalf of himself or any other person, firm or
company; or (iii) within any place in the world (the Company being global in
nature and its business being international), directly or indirectly,
individually or jointly, as employee or in any other capacity enter into or
become engaged in the exploitation, development, manufacture or sale of any
products used or capable of use in competition with the products of the Company
or in any process, method, or apparatus which would facilitate the manufacture
or sale of products used or capable of use in competition with the Company's
products.
(d) The Company shall, in addition to other remedies provided
by law, have the right and remedy to have the provisions of this Paragraph 8
specifically enforced by any court having equity jurisdiction. Executive
acknowledges that any breach or threatened breach of the provisions of this
Paragraph 8 will cause irreparable injury to the Company and that money damages
will not provide an adequate remedy. Nothing contained herein shall be construed
as prohibiting the Company from pursuing any other remedies available to it for
such breach or threatened breach, including any recovery of damages from
Executive.
9. Definitions.
As used in this Employment Agreement, the following
capitalized words and terms shall have the following meanings:
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"Beneficial Owner" shall have the meaning ascribed to it Rule
13(d)-3 under the Exchange Act.
"Xxxxxxxx Family" shall mean Xxxxx X. Xxxxxxxx, his wife, his
children and their respective spouses and children, and all trusts created by or
for the benefit of any of them.
"Board" means the Company's Board of Directors.
"Cause" means:
(i) The willful and continued neglect (after having
received notice thereof and a reasonable opportunity to cure or correct from the
Board) by Executive of Executive's duties under this Employment Agreement; or
(ii) The willful engaging by Executive in a continued
course of misconduct (after having received notice thereof and a reasonable
opportunity to cure or correct from the Board) which is materially injurious to
the Company, monetarily or otherwise;
and Executive shall have been given notice thereof from the Board and an
opportunity (with counsel) to be heard by the Board and the Board shall have
made a reasonable and good faith finding that Executive was guilty of the
conduct set forth in subparagraph (i) or (ii) hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Compensation Committee" means the Compensation/Management
Development Committee of the Board.
"Disability" shall have the definition contained in Paragraph
10(b).
"Effective Date" means the date on which a Significant
Transaction occurs.
"Escrow Agent" means First Union National Bank or such other
national banking association designated by the Company on or before the
Effective Date.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Good Reason" means:
(i) The failure of Executive to be elected as a director
of the Company, or the failure of Executive to be elected the Chairman of the
Board of the Company, or the failure of the Company to elect Executive as, or to
permit Executive to perform the duties of, the Chief Executive Officer of the
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Company, which failure is not remedied within thirty (30) days after the receipt
by the Company of notice thereof from Executive; or
(ii) A breach by the Company of any material provision of
this Employment Agreement, which breach is not remedied within thirty (30) days
after the receipt by the Company of notice thereof from Executive; or
(iii) An amendment of the Company's By-Laws (which
amendment is not approved by Executive), the effect of which is a material
adverse change in the duties and responsibilities of the Company's Chief
Executive Officer; or
(iv) The relocation of the principal executive offices of
the Company (including the principal office of Executive) to a location outside
the continental United States, which relocation is not initiated or proposed by
Executive; or
(v) The Company is not or ceases to be a corporation with
stock registered pursuant to Sections 12(b) or 12(g) of the Act; or
(vi) A determination to terminate employment for any
reason whatsoever is made by Executive during the period beginning nine (9) and
ending eighteen (18) months after the occurrence of a Significant Transaction.
"Person" shall have the meaning ascribed to it in Sections
13(d) and 14(d) of the Exchange Act.
"Severance Allowance" means:
(i) For the purposes of Paragraph 10(a)(i) (i.e., with
respect to a Severance Event following a Significant Transaction), an amount
equal to 300% of the sum of (x) Executive's then current annual rate of Base
Salary, plus (y) the greatest of the annual amounts paid to Executive by the
Company under all bonus and annual incentive plans and discretionary bonuses
during any of the three (3) calendar years immediately preceding the year in
which the Significant Transaction occurred, but in no event shall the amount
under (y) be less than the amount of a mid-level bonus which would otherwise
have been payable to Executive for the calendar year in which the Significant
Transaction occurred.
(ii) For the purposes of Paragraph 11(e) (i.e., with
respect to all other Severance Events), an amount equal to 250% (if the
Severance Event occurs prior to October 1, 2000) or 300% (if the Severance Event
occurs on or after October 1, 2000) of the sum of (x) Executive's then current
annual rate of Base Salary plus (y) the greater of the average of the amounts
paid to Executive by the Company under all bonus and annual incentive plans and
discretionary bonuses for the two (2) calendar years immediately preceding the
year in which the Severance Event occurred or the amount of a mid-level bonus
which would otherwise have been payable to Executive for the calendar year in
which the Severance Event occurred.
Exhibit 10(t) Page 6
"Severance Event" means the termination of Executive's
employment under this Employment Agreement for any reason other than Executive's
death or Disability, or by the Company for Cause, or by Executive for other than
Good Reason, or by reason of Executive having given the Company notice of
intention not to renew pursuant to Paragraph 3. A Severance Event shall include
the termination of Executive's employment by reason of the Company having given
the Executive notice of intention not to renew pursuant to Paragraph 3.
"Significant Transaction" means the occurrence of any of
the following:
(i) A Person (other than the Company or its wholly-owned
subsidiaries; or any ESOP or other employee benefit plan of the Company and any
trustee or other fiduciary in such capacity holding securities under such plan;
any corporation owned, directly or indirectly, by the shareholders of the
Company in substantially the same proportions as their ownership of capital
stock of Company; or any other Person who is as of the date of this Employment
Agreement an executive officer of the Company or any group of Persons of which
he or she voluntarily is a part) is or becomes the Beneficial Owner of
securities of the Company representing 30% or more of the combined voting power
of the Company's then outstanding securities or such lesser percentage of voting
power, but not less than 15%, as the Board shall determine; provided, however,
that a Significant Transaction shall not be deemed to have occurred by reason of
the Beneficial Ownership of voting securities by members of the Xxxxxxxx Family
unless the Beneficial Ownership of all members of the Xxxxxxxx Family (including
any other individuals or entities who or which, together with any member or
members of the Xxxxxxxx Family are deemed to constitute a Person) exceeds 50% of
the combined voting power of the Company's then outstanding securities; or
(ii) During any two-year period during the Term of
Employment, directors of the Company in office at the beginning of such period
plus any new director (other than a director designated by a Person who has
entered into an agreement with the Company to effect a transaction described in
subparagraphs (i) or (iii) hereof) whose election to the Board or whose
nomination for election by the Company's shareholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, shall cease for any reason to constitute at
least a majority of the Board; or
(iii) The Company's shareholders shall approve (1) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which the Company's Common
Stock would be converted into cash, securities or other property, other than a
merger of the Company in which holders of the Company's Common Stock immediately
prior to the merger have the same proportionate ownership of voting shares of
the surviving corporation immediately after the merger as they had in the Common
Stock immediately before, or (2) any sale, lease, exchange, or other transfer
(in one transaction or a series of related transactions) of all or
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substantially all the assets or earning power of the Company, or (3) the
liquidation or dissolution of the Company.
10. Significant Transaction.
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(a) (i) On or before the Effective Date, the Company shall
deliver to Escrow Agent a sum ("Escrow Fund") equal to the applicable Severance
Allowance. The Escrow Fund shall be invested by Escrow Agent in certificates of
deposit with duration not more than thirty (30) days issued by any bank
(including Escrow Agent) or savings institution the accounts of which are
insured by the FDIC (and, unless otherwise agreed by the Company and Executive,
with a maximum of $100,000 in any single such institution). Any cash
accumulation with respect to the Escrow Fund in the form of interest shall be
the property of and shall be payable by Escrow Agent to the Company (or to any
successor to the Company) as received by Escrow Agent and are not part of the
Escrow Fund.
(ii) In the event of the occurrence of a Severance Event
during the three (3) year period following a Significant Transaction, Executive
shall send Escrow Agent and the Company (or its successor) a demand that the
Escrow Fund be paid to him in accordance with this subparagraph (ii) (a
"Demand"). If the Company (or its successor) does not send an objection to the
Demand which states that a Severance Event has not occurred and sets forth
specific and detailed facts for the reason for said statement (an "Objection")
to Escrow Agent and Executive prior to the end of the Objection Period
(hereafter defined), Escrow Agent shall pay the Escrow Fund to Executive within
thirty (30) days from the date of the Demand. The Objection Period shall begin
on the date of the Demand and shall end at 5:00 p.m. Philadelphia time, on the
tenth calendar day following the date of the Demand, or if such day is not a day
when Escrow Agent is generally open for business in Philadelphia, the Objection
Period shall end at 5:00 p.m. Philadelphia time on the next day after such tenth
day that Escrow Agent is generally open for business in Philadelphia. For
purposes of this Paragraph 10(a), notwithstanding the provisions of Paragraph
18, a Demand and an Objection shall not be deemed received until Escrow Agent
shall have actually received the Demand or Objection, as the case may be, and
all time frames specified in this subparagraph (ii) shall be measured from the
actual date of Escrow Agent's receipt.
(iii) If Escrow Agent receives an Objection before the end
of the Objection Period, Escrow Agent shall not pay the Escrow Fund to
Executive, and, except as provided herein, shall not comply with any claims,
demands or instructions from Executive and/or the Company (or its successor)
with respect to the Escrow Fund. Escrow Agent shall not be or become liable in
any way to the Company (or its successor), Executive or any other person or
entity for its failure or refusal to comply with such conflicting claims or
demands. Escrow Agent shall be entitled to refuse to act until (1) such
conflicting claims or demands shall have been finally determined by an award in
an arbitration proceeding (pursuant to Paragraph 17), or settled by agreement
between the conflicting parties as evidenced in a writing satisfactory to Escrow
Agent, or (2) Escrow Agent shall have received security or indemnity
satisfactory to Escrow Agent sufficient to save it harmless from and against any
and all loss, liability or expense which it may incur by reason of its acting.
Exhibit 10(t) Page 8
Escrow Agent may, in addition, elect to commence an interpleader action or seek
other judicial relief or orders as it may deem necessary. All of Escrow Agent's
reasonable costs and expenses of bringing and maintaining such action, including
but not limited to reasonable fees and expenses of separate counsel for Escrow
Agent, shall be paid by the Company (or its successor).
(iv) If an arbitration proceeding or an interpleader
action is commenced by reason of the Company having sent an Objection to a
Demand and if said proceeding or action results in a finding or decision in
favor of Executive (i.e., that the Objection was improper or inappropriate),
then interest earned on the Escrow Fund from the date of the Objection to the
date the Escrow Fund is paid to Executive shall be payable to Executive, the
Company shall promptly reimburse Executive for Executive's costs and expenses
(including counsel fees) in said proceeding or action and the Company shall
promptly pay Executive a premium in an amount equal to 25% of the Escrow Fund.
(v) If Escrow Agent does not receive a Demand from
Executive within three (3) years from the Effective Date, Escrow Agent shall pay
the Escrow Fund to the Company (or its successor) at the end of such three (3)
year period.
(vi) Escrow Agent's duties and responsibilities shall be
limited to those expressly set forth herein. Escrow Agent shall not be subject
to, nor obligated to recognize, any other agreement between or direction or
instruction of any of the parties to this Employment Agreement or of any third
party even though reference thereto may be made herein. If any portion of the
Escrow Fund is at any time attached, garnished or levied upon, or in case the
transfer or delivery of the Escrow Fund shall be stayed or enjoined, or in the
case of any other legal process or judicial order affecting the Escrow Fund,
then Escrow Agent is authorized to comply with any such order in any manner as
it or legal counsel of its own choosing deems appropriate; and if it complies
with any process, order, writ, judgment or decree, it shall not be liable to any
of the parties hereto or to any other person or entity even though such order or
process may be subsequently modified or vacated or otherwise determined to have
been without legal force or effect.
(vii) Escrow Agent shall not be liable for any act taken
or omitted under this Employment Agreement except for its gross negligence or
willful misconduct. Escrow Agent shall be fully protected in relying upon any
instruction, notice, demand, certificate or document which Escrow Agent in good
faith believes to be genuine. Escrow Agent may consult with legal counsel at the
expense of the Company (or its successor) as to the construction of any of the
provisions of this Agreement, and Escrow Agent shall be fully protected in
acting in good faith in accordance with any such advice.
(viii) Escrow Agent shall not be responsible in any
respect for the form, execution, validity or genuineness of documents deposited
under this Employment Agreement, or for any description therein, or for the
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identity, authority or rights of persons executing or delivering or purporting
to execute or deliver any such document.
(ix) The Company (and its successors) shall indemnify,
defend and hold Escrow Agent harmless against any loss, liability, costs,
damages and expenses, including reasonable counsel fees, that are incurred by
Escrow Agent and that are out of or in connection with its acceptance or
administration of this Employment Agreement or being Escrow Agent under this
Employment Agreement, except for those arising solely from Escrow Agent's gross
negligence or willful misconduct.
(x) Escrow Agent may resign at any time by giving at least
thirty (30) days written notice thereof. Within twenty (20) days after receiving
the aforesaid notice, the Company (or its successor) and Executive shall jointly
agree on and appoint a successor Escrow Agent at which time Escrow Agent shall
distribute the Escrow Fund then held hereunder to the successor Escrow Agent.
(xi) The Company (or its successor) shall pay all usual
and customary charges and fees of Escrow Agent due to the Escrow Agent for its
services hereunder.
(xii) This Paragraph 10(a) may be amended or canceled by
and upon written notice to Escrow Agent at any time by each of the Company (or
its successor) and Executive, but the duties, responsibilities or liabilities of
Escrow Agent may not be increased without its prior consent.
(b) In the event of the occurrence of a Severance Event during
the three (3) year period following a Significant Transaction, Executive shall
be entitled to the payments and benefits provided for in Paragraphs 11(e)(ii)
through (viii).
11. Termination and Severance Benefits.
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(a) Death of Executive.
In the event of the death of Executive during the Term of
Employment or during the period Executive is receiving Disability payments from
the Company under Paragraph 11(b) or during the period Executive is receiving
payments of the Severance Allowance by reason of the occurrence of a Severance
Event under Paragraph 11(e)(i), all rights, benefits and obligations of
Executive under this Employment Agreement shall cease except for benefits
accrued to or accelerated at the date of death, and except that the Company
shall pay a death benefit to Executive's spouse or children surviving him or to
such other beneficiary as Executive shall designate. The aggregate death benefit
shall be an amount equal to 300% of the annual rate of Executive's Base Salary
in the calendar year in which death occurred or the Disability occurred (under
Paragraph 11(b)) or the Severance Event occurred (under Paragraph 11(e)(i)), as
the case may be, and it shall be paid in thirty-six (36) equal consecutive
monthly installments commencing thirty (30) days after the date of death,
Disability or the Severance Event, as the case may be.
Exhibit 10(t) Page 10
(b) Disability of Executive.
In the event that during the Term of Employment or during
the period Executive is receiving payments of the Severance Allowance by reason
of the occurrence of a Severance Event under Paragraph 11(e)(i) a mutually
acceptable physician determines that Executive, by reason of physical or mental
disability, is and for a period of six (6) consecutive months has been
permanently unable to perform duties substantially the same as his usual and
customary duties under this Employment Agreement ("Disability"), Executive's
employment under this Employment Agreement (except for Executive's obligations
under Paragraph 8) shall immediately terminate (if it has not theretofore
terminated by reason of the occurrence of the Severance Event) and all rights,
benefits and obligations hereunder shall cease except for benefits accrued to or
accelerated at the date of Disability, and except that during the five (5) year
period following the date of termination of employment the Company (i) shall pay
to Executive monthly an amount equal to the difference between one-twelfth
(1/12) of the annual rate of Executive's Base Salary in the calendar year in
which termination occurred and the gross monthly amount of disability payments
by insurance or otherwise provided by Company for Executive, and (ii) shall
continue in force medical insurance, dental insurance and term life insurance
then being provided Executive pursuant to this Employment Agreement.
(c) Cause.
The Company shall have the right to terminate Executive's
employment under this Employment Agreement for Cause. In the event of the
termination of employment for Cause, all rights, benefits and obligations of the
parties under this Employment Agreement (except for Executive's obligations
under Paragraph 8) shall immediately terminate except for benefits accrued to
the date of termination.
(d) Good Reason.
Executive shall have the right to terminate his employment
under this Employment Agreement for Good Reason.
(e) Severance Events.
Upon the occurrence of a Severance Event:
(i) The Company shall pay to Executive the applicable
Severance Allowance. Except as otherwise provided in Paragraph 10(a)(ii) with
respect to a Severance Event following a Significant Transaction, the Severance
Allowance shall be paid in thirty (30) (if the Severance Event occurs prior to
October 1, 2000) or thirty-six (36) (if the Severance Event occurs on or after
October 1, 2000) equal consecutive monthly installments commencing one (1) month
after the date of the Severance Event.
(ii) The Company shall pay to Executive, within ninety
(90) days after the end of the calendar year in which the Severance Event
occurred the pro rata portion of any and all bonuses and annual incentive awards
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for the calendar year in which the Severance Event occurred, said pro rata
portion to be calculated on the fractional portion (the numerator of said
fraction being the number of days between January 1 and the date of the
Severance Event, and the denominator of which is 365) of the amount of the
bonuses or awards which would have been payable had the employment not
terminated in said calendar year.
(iii) The Company shall pay to Executive, within ninety
(90) days after the end of the calendar year in which the Severance Event
occurred the pro rata portion of any and all awards under the Incentive Plan or
other long-term incentive based compensation plans in which Executive is then
participating. The pro rata portion shall be based on the Company's actual level
of performance for the period(s) commencing on the date the plan(s) began and
ending on the date of the Severance Event projected at the same rate of
performance for the remaining term of the plan(s). The pro rata portion shall be
calculated on the fractional portion, the numerator of said fraction being the
number of days between the date the plan(s) began and the date of the Severance
Event and the denominator of which is the total number of days of the plan(s).
(iv) The benefits under Paragraphs 7(a), (d), (e) and the
medical, dental, disability and term life insurance coverage (or coverage
similar thereto) being provided Executive immediately prior to the date of
termination of employment shall be continued in effect, at the Company's
expense, for a period ending on the sooner of five (5) years from the date of
the Severance Event or the date on which Executive obtains new employment which
provides him with such coverage.
(v) The Company shall pay to Executive within ninety (90)
days after the date of the Severance Event the present value of the amount, if
any, that the pension which is payable to Executive at retirement under the
Company's Defined Benefit Pension Plan would have increased had Executive's
employment continued for three (3) years after the Severance Event. Said
payments shall not affect or diminish the amounts payable under the Naples SURP.
(vi) For the purposes of Naples SURP, Executive shall be
deemed to have been employed by the Company through the end of the three (3)
year period following the Severance Event.
(vii) For a period of one (1) year following the date of
the Severance Event, the Company shall make or cause to be made available to
Executive at its expense outplacement counseling and other placement services
comparable to those made available to the Company's senior salaried officers
prior to the Effective Date.
(viii) For a period equal to the shorter of (x) from the
date of the Severance Event until Executive becomes Employed (hereafter
defined), or (y) three (3) years from the Severance Event if on that date
Executive was age 60 or less, five (5) years if Executive was between ages 60
and 65, and without limit if Executive was over age 65, the Company will provide
Executive with a private office and secretarial service in the Company's
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principal offices or, in Executive's discretion, a comparable office and service
elsewhere.
(f) If Executive becomes Employed during the period with
respect to which payments or benefits are continuing pursuant to Paragraphs
11(e)(iv) and/or 11(e)(viii): (1) Executive shall notify the Company not later
than the day such employment commences; and (2) the benefits provided for in
said subparagraphs shall terminate as of the date of such employment. For the
purposes of this Paragraph 11(f), Executive shall be deemed to have become
"Employed" by another entity or person only if Executive becomes essentially a
full-time employee of a person or an entity (not more than 30% of which is owned
by Executive and/or members of his family); and Executive's "family" shall mean
his parents, his siblings and their spouses, his children and their spouses, and
Executive's spouse and her parents and siblings. Nothing herein shall relieve
the Company of its obligations accrued up to the time of termination.
12. Certain Additional Payments by the Company.
-------------------------------------------
(a) Notwithstanding anything in this Employment Agreement to
the contrary, if it shall be determined that any payment or distribution by the
Company to or for the benefit of Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Employment Agreement
or otherwise, but determined without regard to any additional payments required
under this Paragraph 11) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), the Company shall pay to Executive (a "Gross-Up Payment") an
amount such that after payment by Executive of all taxes (including any interest
or penalties imposed with respect to such taxes), including, without limitation,
any income taxes, calculated at the maximum federal and state rates for
individuals in the year in which a Payment is made (and any interest and
penalties imposed with respect thereto) and Excise Tax (and interest and
penalties thereon) imposed upon the Gross-Up Payment, Executive retains an
amount of the Gross-Up Payment equal to the amount of the Excise Tax imposed
upon the Payments.
(b) Subject to the provisions of Paragraph 12 (c), all
determinations required to be made under this Paragraph 12, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination, shall be
made by the Company's independent certified public accountants (the "Accounting
Firm") which shall provide detailed supporting calculations both to the Company
and Executive within fifteen (15) business days of the receipt of notice from
Executive that there has been a Payment, or such earlier time as is requested by
the Company. All fees and expenses of the Accounting Firm shall be borne solely
by the Company. Any Gross-Up Payment, as determined pursuant to this Paragraph
12, shall be paid by the Company to Executive within five (5) days of the
receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by Executive, it shall furnish
Executive with a written opinion that failure to report the Excise Tax on
Executive's applicable federal income tax return would not result in the
Exhibit 10(t) Page 13
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and Executive. As a result of
the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Paragraph 12(c) and Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of Executive.
(c) Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after Executive is informed
in writing of such claim and the date on which such claim is requested to be
paid. Executive shall not pay such claim prior to the expiration of the 30-day
period following the date on which it gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies Executive in writing prior to the
expiration of such period that it desires to contest such claim, Executive shall
(i) give the Company any information reasonably requested by the Company
relating to such claim, (ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company, (iii) cooperate
with the Company in good faith in order effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings relating to such
claim; provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold Executive harmless, on
an after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Paragraph 12(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Executive to pay such
claim and xxx for a refund, the Company shall advance the amount of such payment
to Executive, on an interest-free basis and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
Exhibit 10(t) Page 14
taxes for the taxable year of Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder, and
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by Executive of an amount advanced
by the Company pursuant to Paragraph 12 (c), Executive becomes entitled to
receive any refund with respect to such claim, Executive shall (subject to the
Company's complying with the requirements of Paragraph 12 (c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by
Executive of an amount advanced by the Company pursuant to Paragraph 12(c), a
determination is made that Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify Executive in writing of
its intent to contest such denial of refund prior to the expiration of thirty
(30) days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
13. Indemnification.
----------------
The Company shall defend and hold Executive harmless to the
fullest extent permitted by applicable law in connection with any claim, action,
suit, investigation or proceeding arising out of or relating to performance by
Executive of services for, or action of Executive as a director, officer or
employee of the Company or any parent, subsidiary or affiliate of the Company,
or of any other person or enterprise at the Company's request. Expenses incurred
by Executive in defending a claim, action, suit or investigation or criminal
proceeding shall be paid by the Company in advance of the final disposition
thereof upon the receipt by the Company of an undertaking by or on behalf of
Executive to repay said amount unless it shall ultimately be determined that
Executive is entitled to be indemnified hereunder; provided, however, that this
shall not apply to a non-derivative action commenced by the Company against
Executive.
14. Insurance.
----------
Executive consents and agrees that the Company may, at its
expense, purchase key man life and/or disability insurance coverage on
Executive. Executive will, if requested to do so, cooperate and assist the
Company in obtaining such insurance and will execute such applications and
related documents and submit to such physical examinations as shall be
reasonably required.
15. Conflicting Agreements.
-----------------------
Each party hereto hereby represents and warrants to the other
party that the entering into this Employment Agreement, and the obligations and
duties undertaken by such party hereunder, will not conflict with, constitute a
Exhibit 10(t) Page 15
breach of, or otherwise violate the terms of, any other employment or other
agreement to which he or it is a party.
16. Successors and Assigns.
-----------------------
This Employment Agreement may not be assigned by Executive.
This Employment Agreement shall be binding upon and inure to the benefit of the
parties hereto and Executive's heirs and personal representatives and Company's
successors and assigns.
17. Arbitration.
------------
If a dispute between the parties arising out of or relating to
this Employment Agreement cannot be resolved by informal meetings and
discussions, the dispute shall be settled by binding arbitration, and a
corresponding award and judgment may be entered in a court of competent
jurisdiction. Arbitration of any dispute may be initiated by one party by
sending a demand for arbitration to the other party, which demand will preclude
any party hereto from initiating an action in any court. The demand must specify
the matter in dispute and request the appointment of an arbitration panel. The
arbitration panel will consist of one arbitrator named by the Company, one
arbitrator named by Executive and a third arbitrator named by the two
arbitrators so chosen. The arbitration hearing will be conducted in accordance
with the procedural rules set forth in the commercial arbitration rules of the
American Arbitration Association. The situs of the arbitration shall be
Philadelphia, Pennsylvania.
18. Notices.
--------
All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been duly given if
delivered by hand or mailed within the continental United States by first class
certified mail, return receipt requested, postage prepaid, to the other party,
addressed as follows:
If to Company: Quaker Chemical Corporation
Xxx xxx Xxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Chairman of the Compensation/
Management Development Committee
If to Executive: Xx. Xxxxxx X. Xxxxxx
Addresses may be changed by written notice sent to the other party at the last
recorded address of that party.
19. Severability.
-------------
If any provision of this Employment Agreement shall be
adjudged by any court of competent jurisdiction to be invalid or unenforceable
Exhibit 10(t) Page 16
for any reason, such judgment shall not affect, impair or invalidate the
remainder of this Agreement.
20. Legal Fees.
-----------
The Company shall reimburse Executive for reasonable legal
fees incurred by him in connection with the execution of this Employment
Agreement, or its interpretation, or its enforcement.
21. Prior Understandings.
---------------------
This Employment Agreement supersedes the Prior Agreement and
all other oral or written agreements or understandings between them regarding
the subject matter hereof; provided, however, that this Employment Agreement
shall not affect any options, restricted stock or Incentive Plan participation
granted to Executive under the Prior Agreement. No change, alteration or
modification hereof may be made except in a writing, signed by the parties
hereto. The headings in this Employment Agreement are for convenience and
reference only and shall not be construed as part of this Employment Agreement
or to limit or otherwise affect the meaning hereof. All references to "First
Event" or "Change of Control" in either of the Quaker Chemical Corporation 1995
Naples Restricted Stock Plan and Agreement and Stock Option Agreements or
Exhibits A and B to the Prior Agreement shall mean the occurrence of a
"Significant Transaction" as defined in this Employment Agreement.
22. Execution in Counterparts.
--------------------------
This Employment Agreement may be executed by the parties
hereto in counterparts, each of which shall be deemed to be original, but all
such counterparts shall constitute one and the same instrument, and all
signatures need not appear on any one counterpart.
23. Choice of Laws.
---------------
Jurisdiction over disputes with regard to this Employment
Agreement shall be exclusively in the courts of the Commonwealth of
Pennsylvania, and this
Exhibit 10(t) Page 17
Employment Agreement shall be construed and interpreted in accordance with and
governed by the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Employment Agreement as of the day and year first above written.
QUAKER CHEMICAL CORPORATION
By: /s/ Xxxxxx X. Rock
---------------------------------------
Xxxxxx X. Rock, Chairman
Compensation/Management Development Committee
/s/ Xxxxxx X. Xxxxxx
----------------------------------------
XXXXXX X. XXXXXX
Exhibit 10(t) Page 18
