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EXHIBIT 10.21
CHANGE IN CONTROL
AGREEMENT
THIS AGREEMENT, dated as of April 16, 2001 between Del Laboratories,
Inc., a Delaware corporation (the "COMPANY"), and Xxxxxxx X. XxXxxxxx
("EXECUTIVE").
BACKGROUND:
In consideration of the future service to be provided by Executive to
the Company and the mutual covenants hereinafter set forth, the Company and
Executive (individually a "PARTY" and together the "PARTIES") intending to be
legally bound agree as follows:
1. DEFINITIONS.
(a) "BASE COMPENSATION" shall mean Executive's annual base compensation
payable by the Company.
(b) "BOARD" shall mean the Board of Directors of the Company.
(c) "CAUSE" shall have the meaning set forth in Section 16(b) of the
Employment Agreement.
(d) "CHANGE IN CONTROL" shall mean the occurrence of any one of the
following events:
(i) individuals who, as of the beginning of any twenty-four
month period, constitute the Board (the "INCUMBENT BOARD") cease for any reason
to constitute at least a majority of the Board, provided that any individual
becoming a director subsequent to the beginning of such period whose election or
nomination for election was approved by a vote of at least 75% of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of
members of the Board;
(ii) at any time prior to the expiration or termination of
this Agreement, voting power representing more than 50% of the Company's
outstanding common stock shall be acquired, directly or indirectly, by any
individual, corporation or group, other than persons who are members of the
Board of Directors at the date hereof or who succeed to the ownership of
securities of the Company of any such members of the Board as executor,
administrator, heir or intestate distributee of such persons. "Group" shall mean
persons who act in concert as described in Section 14(d)(2) of the Securities
Exchange Act of 1934, as amended. "Change in control" shall not include
increases in the percentage of voting power of persons who beneficially own or
control stock on the date of this Agreement which occur solely as a result of a
reduction in the amount of stock outstanding;
(iii) the effective date of a merger, consolidation, or sale
of all or substantially all of the business and/or assets of the Company, unless
such transaction is with an affiliate of the Company or such transaction results
in the Company being the controlling, surviving entity;
(iv) the adoption of a plan of liquidation by the Company or
its shareholders; or
(v) the adoption of a resolution by a majority of the Board
then in office declaring that a Change in Control has occurred, in which case
the Change in Control shall be deemed to have occurred on the date of, or the
date stated in, the Board resolution so declaring.
(e) "DISABILITY" shall have the meaning ascribed to "permanent
disability" in Section 16(a) of the Employment Agreement.
(f) "EMPLOYMENT AGREEMENT" shall mean the employment agreement between
the Company and Executive, dated as of April 1, 2001.
(g) "GOOD REASON" shall mean, without Executive's express written
consent and without Cause, the occurrence, after a Change in Control of the
Company, of any of the following:
(i) The assignment to Executive of any duties inconsistent
with Executive's status in the position held by Executive immediately prior to a
Change in Control of the Company or a substantial adverse alteration in the
nature or status of Executive's responsibilities from those in effect
immediately prior to the Change in Control of the Company;
(ii) Executive's Base Compensation is decreased by the Company
or his incentive or equity opportunity under any material incentive or
equity program of the Company is or are reduced;
(iii) The failure by the Company to continue in effect any
material fringe benefit or compensation plan, retirement plan, life insurance
plan, health and accident plan or disability plan in which Executive is
participating at the time of a Change in Control (or plans providing Executive
with substantially similar benefits), the taking of any action by the Company
which would adversely affect Executive's participation in or materially reduce
his benefits under any of such plans or deprive him of any material fringe
benefit enjoyed by him at the time of the Change in Control, or the failure by
the Company to provide him with the number of paid vacation days to which he is
then entitled on the basis of years of service with the Company in accordance
with the Company's normal vacation policy in effect immediately prior to the
Change in Control;
(iv) The failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this Agreement, as
contemplated in Section 7 hereof;
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(v) The Company's requiring Executive to be based anywhere
other than within 30 miles of the Company's current headquarters; or
(vi) The Company's requiring that Executive undertake business
travel to an extent significantly greater than Executive's business travel
obligations immediately prior to the Change in Control.
(h) "TERMINATION UPON A CHANGE IN CONTROL" shall mean that prior to or
following a Change in Control and during the term of this Agreement, the Company
or Executive terminates Executive's employment as described in Paragraph 3(a).
2. TERM OF AGREEMENT. This Agreement shall commence on the date hereof and shall
continue in effect until the first anniversary of the date hereof; provided,
however, that the term of this Agreement shall automatically renew itself each
year for an additional term of one year until the Company provides Executive one
year written notice that it wishes to terminate this Agreement; such termination
shall be effective on the anniversary date hereof first occurring after such
notice is given. The Company may not give such notice while it has knowledge
that any third party has taken steps reasonably calculated to effect a Change in
Control of the Company, unless and until such third party has, in the reasonable
opinion of the Company, abandoned its efforts to effect a Change in Control of
the Company. In addition, if a Change in Control of the Company occurs during
the term of this Agreement, or if a Change in Control would have occurred during
the term of this Agreement but for a delay in regulatory approval or litigation
related to the Change in Control, this Agreement shall automatically continue in
effect for a period of twenty-four months beyond the last day of the month in
which such Change in Control occurs.
3. TERMINATION UPON A CHANGE IN CONTROL.
(a) Prior to or following a Change in Control of the Company, Executive
shall be entitled to the benefits provided in Section 4 hereof upon the
subsequent termination of Executive's employment, if such termination occurs
during the term of this Agreement and is (i) by the Company other than for Cause
following a Change in Control, (ii) by the Company (other than for Cause) prior
to and in connection with an anticipated Change in Control at the request or
direction of an acquirer involved in the Change in Control, or (iii) by
Executive for Good Reason following a Change in Control. Notwithstanding
anything in this Agreement to the contrary, if Executive's employment terminates
on account of Disability, Executive shall be entitled to receive disability
benefits under any disability program maintained by the Company that covers
Executive, and Executive shall not be considered to have terminated employment
under this Agreement and shall not receive benefits pursuant to Section 4
hereof. If Executive is entitled to the benefits described in Section 4 by
reason of clause (a)(ii) above, Executive shall be entitled to such benefits
upon his termination of employment regardless of whether the Change in Control
actually occurs.
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(b) NOTICE OF TERMINATION. Any purported termination of Executive's
employment by the Company or by Executive shall be communicated by written
Notice of Termination to the other Party hereto in accordance with Section 13
hereof. For purposes of this Agreement, a "NOTICE OF TERMINATION" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and the effective date of Executive's termination of employment and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
4. COMPENSATION PAYABLE IN THE EVENT OF TERMINATION.
(a) In the event a Termination Upon a Change in Control occurs,
Executive shall be entitled to receive promptly following his termination of
employment:
(i) unpaid Base Compensation earned or accrued through his
date of termination, and payments made in equal monthly installments over the
18-month period commencing immediately following Executive's termination of
employment in an amount equal to Executive's Base Compensation that would be due
him for a period of the greater of (A) the balance of the term of the Employment
Agreement or (B) 36 months;
(ii) reimbursement for reasonable out-of-pocket business
expenses properly incurred but not yet reimbursed by the Company; and
(iii) any other compensation and benefits to which he may be
entitled under applicable plans, programs and agreements of the Company.
(b) In addition to the foregoing, in the event that 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 Agreement or otherwise (the "Payment"), would constitute an
"excess parachute payment" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), the Payment shall be reduced to
the extent necessary to avoid any portion of any such payment being treated as a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code.
Notwithstanding the foregoing, no such reduction shall occur if, on an after-tax
basis (considering federal income, excise and social security taxes, and
applicable state and local income taxes) such Payments without reduction would
exceed such Payment after the reduction provided for in the preceding sentence.
All determinations to be made under this Paragraph 4(b) shall be made by the
Company's independent public accountant immediately prior to the Change in
Control (the "Accounting Firm"), which firm shall provide its determinations and
any supporting calculations both to the Company and Executive within thirty days
of Executive's termination date. Any such determination by the Accounting Firm
shall be binding upon the Company and Executive. All fees and expenses of the
Accounting Firm in performing the determinations referred to above shall be
borne solely by the Company.
(c) NO MITIGATION; NO OFFSET. In the event of any termination of
Executive's employment under this Agreement, Executive shall be under no
obligation to seek other employment, and there shall be no offset against
amounts due Executive under this Agreement on account of any remuneration
attributable to any subsequent employment that Executive may obtain, provided
that continuation under the Company's employee benefit programs that are
employee welfare benefit plans and programs shall terminate if and to the extent
that substantially equivalent benefits are available through a new employer of
Executive.
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(d) NATURE OF PAYMENTS. Any amounts due Executive under this Agreement
in the event of any termination of Executive's employment with the Company are
in the nature of severance payments, or liquidated damages which contemplate
both direct damages and consequential damages that may be suffered as a result
of the termination of Executive's employment, or both, and are not in the nature
of a penalty.
(e) OTHER BENEFITS. The payments due under Section 4 hereof shall be in
addition to and not in lieu of any payments or benefits due to Executive under
any other plan, policy or program of the Company, except that no payments shall
be due to Executive under the Company's then severance pay plan for employees,
if any.
5. TERMINATION BY THE COMPANY. Executive hereby acknowledges that, subject to
the existence of the Employment Agreement or a successor employment agreement
between the Executive and the Company, Executive is an "at will" employee of the
Company. Except as provided in Paragraph 3(a)(ii), prior to a Change in Control,
and subject to the terms of the Employment Agreement and any successor
employment agreement between the Executive and the Company, Executive hereby
acknowledges that the Company may terminate Executive's employment with the
Company with or without Cause.
6. CONFIDENTIALITY, NON-COMPETE, NON-SOLICITATION AND OTHER PROVISIONS.
Executive agrees and acknowledges that he is subject to the terms and conditions
of Sections 9 through 15 of the Employment Agreement relating to
Confidentiality, Non-Competition, Enforcement, Non-Solicitation, Intellectual
Property and Remedies. Executive also agrees that in the event of a Termination
Upon a Change in Control, Executive shall be deemed to receive continued payment
of his salary or wages as if the Company had exercised its option to restrict
Executive's employment under Section 11(d) of the Employment Agreement by virtue
of payments made to Executive under this Agreement, provided, however, that the
Restricted Period defined in Section 11(d) of the Employment Agreement shall be
the 18-month period described in Section 4(a)(i) hereof.
7. SUCCESSORS, BINDING AGREEMENT.
(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle
Executive to compensation from the Company in the same amount and on the same
terms as Executive would be entitled to hereunder if Executive terminates his
employment voluntarily for Good Reason following a Change in Control of the
Company, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the date of
termination. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
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(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devises and legatees. If Executive should die
after Executive's Notice of Termination under circumstances entitling Executive
to benefits hereunder and while any amount would still be payable to Executive
hereunder if Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
Executive's devises, legates or other designee or, if there is no such designee,
to Executive's estate.
8. LEGAL FEES. In the event of litigation between Executive and the Company
arising in connection with Executive's attempt to obtain or enforce any right or
benefit provided by this Agreement, the Company agrees to pay the reasonable
attorneys' fees and other legal expenses incurred by Executive in pursuing such
litigation, including a reasonable rate of interest for delayed payment;
provided, however, that Executive shall not be entitled to payments under this
Section 8 if the litigation pursued by Executive is determined to be frivolous.
9. ENTIRE AGREEMENT. The Agreement contains the entire agreement between the
Parties concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the Parties with respect thereto.
10. AMENDMENT OR WAIVER. The Agreement cannot be changed, modified or amended
without the written consent of both Executive and the Company. No waiver by
either Party at any time of any breach by the other Party of any condition or
provision of the Agreement shall be deemed a waiver of a similar or dissimilar
condition or provision at the same or at any prior or subsequent time. Any
waiver must be in writing and signed by Executive or an authorized officer of
the Company, as the case may be.
11. SURVIVORSHIP. The respective rights and obligations of the Parties hereunder
shall survive any termination of this Agreement to the extent necessary to
effectuate the intent of this Agreement.
12. GOVERNING LAW. The Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of New York without
reference to principles of conflict of laws.
13. NOTICES. Any notice given to either Party shall be in writing and shall be
deemed to have been given when delivered personally or sent by certified or
registered mail, postage prepaid, return receipt requested, duly addressed to
the Party concerned at the address indicated below or to such changed address as
such Party may subsequently give notice of:
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If to the Company:
Del Laboratories, Inc.
000 XXX Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxx X. Xxxxxxx
If to Executive:
Xxxxxxx X. XxXxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
14. HEADINGS. The headings of the sections contained in this Agreement are for
convenience of reference only, do not constitute a part of this Agreement and
shall not be deemed to limit or affect any of the provisions hereof.
IN WITNESS WHEREOF, the undersigned have executed the Agreement as of
the date first above.
DEL LABORATORIES, INC.
By: /s/ Xxx X. Xxxxxxx
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Xxx X. Xxxxxxx
Chairman, President and
Chief Executive Officer
/s/ Xxxxxxx X. XxXxxxxx
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XXXXXXX X. XXXXXXXX
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