Exhibit 10.20
EMPLOYMENT, NONDISCLOSURE AND
LIMITED NON-COMPETITION AGREEMENT
THIS EMPLOYMENT, NONDISCLOSURE AND LIMITED NON-COMPETITION AGREEMENT (this
"Agreement") is made as of the ____ day of March, 1998 by and among OUTSOURCING
SERVICES GROUP, INC., a Delaware corporation having its principal place of
business at 000 Xxxxx Xxxxx Xxxxxx, Xxxx xx Xxxxxxxx, Xxxxxxxxxx 00000-0000 (the
"Company"), and its subsidiaries AEROSOL SERVICES COMPANY, INC., PIEDMONT
LABORATORIES, INC., KOLMAR LABORATORIES, INC. (the "Subsidiaries"), and XXXXXX
XXXXX, whose address is 00 Xxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000 (the
"Employee").
W I T N E S S E T H:
WHEREAS, the Company is engaged or proposed to be engaged, through its
Subsidiaries, in the business of providing aerosol and liquid filling of
cosmetics, toiletries and skin care products and related packaging services and
has need for management personnel with experience in said business;
WHEREAS, the Employee is experienced in the business of providing aerosol
and liquid filling, packaging of cosmetics, toiletries and skin care products,
and related services and in the management of such business;
WHEREAS, the Company and the Subsidiaries desire to employ the Employee an
executive capacity upon the terms and conditions set forth in this Agreement;
and
WHEREAS, the Employee is willing to enter into this Agreement with respect
to the Employee's employment and services upon the terms and conditions set
forth in this Agreement;
NOW THEREFORE, in consideration of the foregoing recitals and the promises
contained in this Agreement, the parties agree as follows:
I. TERM
SECTION 1.01. EMPLOYMENT. Subject to the provisions of Section 4.01
hereof, the Company hereby employs the Employee and the Employee hereby accepts
employment with the Company for a period of three (3) years beginning on
February 1, 1998 and terminating at the close of business on January 31, 2001
(the "Employment Term") , including service at Company's principal executive
offices located in the Eastern United States. The Employment Term may be
extended by a mutual agreement in writing for additional years on the same or
mutually agreeable terms, but if no such mutual agreement is executed prior to
January 31, 2001 the Employment Term shall expire. If the employment of
Employee is terminated pursuant to Article 4 of this Agreement or by reason of
the death or disability of Employee, the time during which the Employee is
actually employed shall be referred to as the "Employee's Employment."
II. DUTIES
SECTION 2.01. GENERAL DUTIES. The Employee shall serve as the Senior Vice
President and Chief Operating Officer of the Company during the Employee's
Employment. Further, Employee shall serve as an officer or member of the board
of directors of any subsidiaries of the Company if requested. The Employee
shall, during Employee's Employment, subject to the policies of the Chief
Executive Officer and the Board of Directors of the Company, manage and direct
the business of the Company and its subsidiaries, performing those acts and
doing those things customarily done by the Chief Operating Officer for companies
comparable to the Company. The Company shall indemnify the Employee for such
service to the maximum extent permitted by applicable law.
SECTION 2.02. DEVOTION OF TIME TO THE COMPANY'S BUSINESS. The Employee
agrees during Employee's Employment, to devote his best efforts to his
employment, and perform such duties consistent with his capacity as Chief
Operating Officer of the Company as shall be determined by the Chief Executive
Officer and the Board of Directors of the Company. The Employee further agrees
to (i) devote substantially all his business time to fulfill the duties of his
office to the business and affairs of the Company, (ii) devote his time and
resources to the recruitment, training and development of a team of focused
professionals capable of managing and directing the business of the Company, and
(iii) faithfully observe his duties to preserve as confidential all trade and
other secrets of the Company. The Employee shall not, during Employee's
Employment, unless otherwise agreed to in advance and in writing by the Company,
seek or accept other employment, become self-employed in any other capacity, or
engage in any activities which are detrimental to the business of the Company.
Notwithstanding the foregoing, the Employee may engage in personal investment
activities which do not interfere with the Employee's duties under this
Agreement.
III. COMPENSATION
SECTION 3.01. BASE SALARY. As compensation for his services hereunder,
during the Employment Term, the Employee shall receive an annual base salary of
Two Hundred Thousand Dollars ($200,000). Such base salary shall be payable in
cash at the times and in the installments consistent with the Company's payroll
practices. Company shall review such salary on at least an annual basis with a
view to consider increases considering, among other factors, Company performance
and cost-of-living increases.
SECTION 3.02. BONUS PLANS.
(a) The Employee shall be a full participant in any performance bonus
plan made available to senior executives of the Company. It is intended for
such plans to include a stock ownership/purchase plan and an annual cash bonus
plan. Company intends to adopt a plan on or prior to June 30, 1998.
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(b) Employee shall receive options (the "Options") to purchase twenty
thousand (20,000) shares of the Company's common stock at the price of $10.00
per share. The Options shall be exercisable on the earlier of (A) the third
anniversary of this Agreement and (B) the date, if any, prior to such third
anniversary on which (i) the Company's common stock becomes publicly traded on a
national securities exchange or the Nasdaq stock market, (ii) the Company
completes an initial public offering of its common stock with proceeds in excess
of $15,000,000, or (iii) the Company, or its assets or business, is sold
substantially as an entirety. The Options are subject to the terms and
conditions of the Company's 1998 Management Stock Option Plan.
(c) For each of the first five years after January 1, 1998, provided
he remains an employee, Employee shall participate in a stock option program
providing for the annual award, to all participants in the aggregate, of options
to purchase up to 60,000 shares of Company stock. The Chief Executive Officer
will recommend for approval by the Compensation Committee of the Board of
Directors the allocation of such options among participants in the program.
(d) Company shall continue in effect the terms of its current
certificate of incorporation and bylaws which provide for indemnification of
officers and directors to the maximum extent provided by law. Company currently
carries directors' and officers' liability insurance with a deductible of
$100,000 and a maximum coverage of $5 million but reserves the right to change
such coverage if Company's directors so determine.
SECTION 3.03. CONTINUATION OF SALARY.
(a) If the Employee dies or becomes disabled so that he is unable to
perform his duties hereunder, the Company shall pay the Employee or his estate
his base salary monthly, but not beyond the end of the Employment term, and
shall continue for such period to provide the benefits described in Section
3.04.
(b) If Company terminates this Agreement for any reason except as
specified in Section 4.01, or if Employee resigns for "good reason" as described
in Section 4.02, the Company agrees to continue to pay the Employee or his
estate his base salary monthly, and to continue to provide the benefits
described in Section 3.04 for a period extending for the balance of the
Employment Term, or, if longer, for eighteen months from the date of termination
or resignation. This Section 3.03 (b) shall apply to any termination of
Employee's employment within the twelve months following January 31, 2001 even
if this Agreement is not extended.
SECTION 3.04. BENEFITS. During the Employment Term, the Employee shall be
entitled to insurance benefits substantially similar to those now provided under
the Kolmar Laboratories, Inc. employee health benefit plan as now in effect, and
may continue such benefits after any termination of the Employee's Employment by
paying the applicable premium to the extent allowed by applicable law. However,
the Company may cease providing such benefits if any law or regulation prohibits
making benefits available except on an equal basis for all employees and if the
benefits now provided Employee are not so available. To be more specific:
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(e) Company shall provide Employee medical, dental, life insurance,
profit-sharing and other benefits in accordance with the Kolmar Laboratories,
Inc. benefit plans.
(f) Employee shall receive three (3) weeks of paid vacation per year
or such greater amount of vacation as is provided under any Company policy then
applicable to Employee.
(g) Employee shall receive an automobile allowance of $800 per month.
Company shall also reimburse Employee for the costs of maintenance and fuel for
one automobile as a business expense. Employee shall pay the insurance premiums
on such automobile and shall, on Company request, furnish proof that liability
insurance of at least $500,000 is in effect.
IV. TERMINATION
SECTION 4.01. TERMINATION BY THE COMPANY. Any of the following acts or
omissions shall constitute grounds for the Company to terminate this Agreement:
(a) Employee's failure to perform the duties of his office or to
conduct and manage the business of the Company in a manner reasonably consistent
with the criteria established by the Chief Executive Officer and the Board of
Directors, provided that prior to any termination under this Section 4.01(a)
Employee shall be given written notice of the deficiencies and a reasonable
opportunity to correct his conduct if the matters in question can be corrected.
The criteria established by the Chief Executive Officer and the Board of
Directors shall be identified in advance.
(b) Conduct on the part of the Employee which constitutes the breach
of any statutory or common law duty of loyalty to the Company which has, in the
view of the Chief Executive Officer or the Board of Directors, a material
adverse effect on Company;
(c) Any illegal act by the Employee (as evidenced by a conviction for
a criminal offense) which in the view of the Chief Executive Officer or the
Board of Directors materially and adversely affects the business of the Company;
or
(d) Intentional wrongful engagement in any competitive activity
prohibited by Section 5.01 or 5.02 hereof or employment in another business in a
manner not permitted by Section 2.02.
It shall be presumed that the Employee's participation in a business
enterprise other than the Company (except for service on boards of directors
approved by the Company) constitutes cause for termination under clause (d) of
this section. Termination by the Company shall be accomplished by written
notice to the Employee.
SECTION 4.02. RESIGNATION FOR GOOD REASON. Employee may resign for "good
reason" and thereby terminate Employee's Employment (but not his other
obligations hereunder) as a result of the following:
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(a) Without the Employee's prior written consent, a reduction in his
then current salary;
(b) The taking of any action by the Company that would substantially
diminish the aggregate value of the benefits provided to the Employee under the
Employee's medical, health, accident, disability, life insurance, thrift and
retirement plans in which he was participating other than any such reduction
which is (i) required by law, (ii) implemented in connection with a general
concessionary arrangement affecting all employees or affecting the group of
employees (senior management) of which the Employee is a member or (iii)
generally applicable to all beneficiaries of such plans;
(c) An involuntary relocation of the Employee's place of employment
to a place other than the general New York, New York (within fifty miles) area;
(d) Resignation as a result of unlawful discrimination or other
unlawful acts committed against employee, as evidenced by a settlement,
arbitration award or final court order; or
(e) A reduction in duties and responsibilities which results in the
Employee no longer having the customary duties of a chief operating officer.
Provided Company continues to make the payments provided for in Section 3.03,
none of the actions specified in clauses (a) through (e) above shall constitute
a breach of this Agreement.
4.03 RELOCATION. Company has relocated its headquarters to the greater New
York area. If Company decides to require Employee to move his place of work to
the new headquarters location:
(a) Company shall notify Employee in writing of the requirement to
work at the new headquarters and Employee shall, if required by Company,
commence performing his duties in the new location on the date specified.
(b) If Company requires Employee to relocate, Company shall pay
Employee's costs to move his furniture and personal effects to the new
headquarters location, shall pay a customary real estate commission and other
selling expenses to sell Employee's personal residence, shall pay the reasonable
expenses of two trips to the headquarters location for Employee and his spouse
to look for a new residence and shall pay the rent on an appropriate temporary
apartment approved by the Chief Executive Officer for up to three months in the
new location. Company shall also reimburse Employee for any reasonable loss
incurred on the sale of his present residence. As the reimbursement of these
expenses presents income tax consequences to the Employee, such payments will be
increased by thirty percent (30%) (except for amounts paid for losses incurred
on the sale of a residence) in order to alleviate or reduce the tax impact of
the payments to the Employee. If prior to Employee's relocation Company adopts
a policy providing more generous relocation benefits, such policy shall apply
rather than this Section 4.03(b).
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SECTION 4.04. DAMAGES FOR BREACH OF CONTRACT. In the event of a breach of
this Agreement by either the Company or the Employee resulting in damages to the
other party, that party may recover from the party breaching this Agreement any
and all damages that may be sustained, excluding incidental, consequential and
punitive damages.
SECTION 4.05. ARBITRATION. With the exception of suits for specific
enforcement of the provisions of Sections 5.01 and 5.02, any controversy,
dispute or claim arising out of, relating to, or concerning this Agreement, the
breach of this Agreement, the employment of the Employee, or the termination of
the Employee's employment will be resolved pursuant to this Section 4.05. This
includes all claims, whether arising in tort or contract, and whether arising
under statute or common law. Any such controversy, dispute or claim will be
submitted to the American Arbitration Association ("AAA") in New York, New York
for final and binding arbitration in accordance with its Employment Dispute
Rules then existing; PROVIDED that, if the rules of the AAA differ from those in
this section, the provisions of this section will control. Any demand for
resolution of such a matter must be sent to the AAA and served on the other
party within the period covered by the applicable statute of limitations. No
arbitrator will have any authority to extend, modify, or suspend any of the
terms of this Agreement. The arbitrator must make his award in writing and must
accompany it with an opinion discussing the evidence and setting forth the
reasons for the award. The decision of the arbitrator within the scope of the
submission will be final and binding on both parties, and any right to judicial
action on any matter subject to resolution by arbitration hereunder hereby is
waived unless otherwise required by applicable law, except suit to enforce an
award by the arbitrator or in the event resolution by an arbitrator is not
available for any reason. This Section 4.05 will be specifically enforceable.
Judgment upon any award rendered by the AAA and/or any other arbitrator may be
entered in any court having jurisdiction.
SECTION 4.06. ATTORNEYS' FEES AND COSTS. If any action in law or in
equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party or parties shall be entitled to reasonable attorneys' fees,
costs and necessary disbursements in addition to any other relief to which such
party may be entitled, to the extent awarded or allocated by the court or
arbitrator.
V. RESTRICTIVE COVENANTS
The following restrictive covenants shall apply to this Agreement:
SECTION 5.01. CONFIDENTIALITY. Employee acknowledges and agrees that the
Company's formulas, sources of supply, cost and financial data, customer
arrangements, marketing plans and other non-public data have a unique nature and
value, derived in part from their status as non-public and proprietary
information. Employee agrees, during the Employment Term and thereafter, to
preserve and protect the confidential nature of said information, and not to
disclose to any third parties, or use for anyone's benefit except the benefit of
the Company, any non-public information about the Company or its business.
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SECTION 5.02. NO ADVERSE ACTS. During the Employment Term and continuing
for two (2) years after the date of the expiration of Employee's Employment, the
Employee will not directly or indirectly, solicit, take away, or attempt to
solicit or take away any customer or employee of the Company either on the
Employee's behalf or on behalf of any other person or entity which competes with
Company, or accept employment with one of Company's direct competitors. If the
Company terminates this Agreement on a basis not stated in Section 4.01, or on a
basis described in Section 4.01(a), Employee shall not be required to honor this
Section 5.02 unless Company continues to pay Employee's salary and benefits for
the balance of the Term, or such longer period as is provided in Section 3.03,
even if such payments would not otherwise be required.
VI. MISCELLANEOUS
SECTION 6.01. NOTICES. Any notices to be given hereunder by either party
to the other shall be in writing and may be effected by personal delivery, by
courier, or by mail (registered or certified), postage prepaid with return
receipt requested, or by facsimile confirmed by mail. Mailed notices shall be
addressed to the parties at the addresses appearing in the introductory
paragraph. Mailed notices shall be deemed communicated as of four (4) calendar
days after mailing. Notices delivered personally or by courier shall be deemed
delivered when actually received.
Section 6.02. ENTIRE AGREEMENT. This Agreement supersedes any and all
other agreements (other than the Option Agreement), either oral or in writing,
between the parties hereto with respect to the employment of the Employee by the
Company and contains all of the covenants and agreements between the parties
with respect to such employment in any manner whatsoever. Each party to this
Agreement acknowledges that no representations, inducements, promises or
agreements, orally or otherwise, have been made by any party, which are not
embodied herein, and that no other prior agreement, statement or promise not
contained in this Agreement shall be valid and binding. Any modification of
this Agreement, statement or promise not contained in this Agreement shall not
be valid or binding. Any modification of this Agreement will be effective only
if it is in writing signed by the party to be charged.
Section 6.03. PARTIAL INVALIDITY. If any provision in this Agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
Section 6.04. LAW GOVERNING AGREEMENT. This Agreement shall be governed
by and construed in accordance with the law of the State of New York.
Section 6.05. CURRENCY. All amounts described in this Agreement are in
United States Dollars.
Section 6.06. SUCCESSORS AND ASSIGNS. The rights and obligations of the
Company and the Employee under this Agreement shall inure to the benefit of and
shall be binding upon the successors and assigns of the Company.
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Section 6.07 WORK PERMIT. The Company shall, at its expense, assist
Employee to file all forms and take all other actions needed to apply for a
permit or visa permitting him to work in the United States, if needed.
Section 6.08. NO CONFLICT. The Company hereby represents and warrants to
Employee that this Agreement and the Company's obligations hereunder do not
violate or conflict with the terms, conditions or covenants of the Company's
(and certain of its subsidiaries') financing agreements entered into on or about
the Effective Date.
Section 6.09. WAIVER. Either party's failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions, nor prevent that party thereafter from
enforcing each and every other provision of this Agreement. The rights granted
both parties herein are cumulative and shall not constitute a waiver of either
party's right to assert all other legal remedies available to it under the
circumstances.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the day and year first above written.
"Subsidiaries" "Company"
AEROSOL SERVICES COMPANY, INC. OUTSOURCING SERVICES
GROUP, INC.
By:
--------------------------- By:/s/ Xxxxxxxxxxx Xxxxxx
Name: --------------------------
------------------------- Name: Xxxxxxxxxxx Xxxxxx
Title: -------------------------
------------------------ Title:CEO and President
------------------------
PIEDMONT LABORATORIES, INC.
"Employee"
By:
---------------------------
Name: /s/ Xxxxxx Xxxxx
------------------------- -----------------------------
Title: Xxxxxx Xxxxx
------------------------
KOLMAR LABORATORIES, INC.
By:
---------------------------
Name:
-------------------------
Title:
------------------------
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