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EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 4th day of August, 1994 by and between
United Coatings, Inc. with offices at 0000 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxx
00000 (the "Company") and Xxx X. Xxxxx who resides at 0000 Xxxxx Xxxx Xxxxx
Xxxxx #00X, Xxxxxxx, Xxxxxxxx 00000 ("Employee").
WITNESSETH:
WHEREAS, the Employee has been and is presently in the employ of the
Company and is presently serving as Vice President -- Marketing of the Company;
and
WHEREAS, Employee possesses an intimate knowledge of the business and
affairs of the Company and its policies, procedures, methods and personnel; and
WHEREAS, the Company wishes to secure the continued services and employment
of the Employee and the Employee wishes to continue in the employment of the
Company, upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing premises and of the
promises exchanged herein, the parties agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ Employee as Vice
President -- Marketing and Employee agrees to accept that employment. Employee
shall have such duties as may be assigned to her from time to time by the
appropriate executive officer or officers of the Company, provided that such
duties are generally consistent with her position as Vice President --
Marketing.
2. WELFARE BENEFITS.
(a) During the term of her employment hereunder, the Employee shall be
entitled to participate in or receive (i) as to herself, group disability
insurance and group life insurance to the extent made available to executives of
the Company generally, and such benefits shall not be reduced or adversely
modified after the date hereof without the consent of Employee, and (ii) other
retirement and welfare benefit arrangements made generally available by the
Company to its executives.
(b) At all times during the term of this Agreement and following
termination of Employee's employment hereunder for any reason (including
expiration hereof) until the later of the death of Employee, the Company shall,
at its expense, include Employee in the Company's group health insurance program
and any supplemental programs for executives of the Company as such programs
exist on the date of the Agreement, or any plan later substituted therefor by
the Company for its officers and employees generally (the "Group Health
Program"); provided no such substitute program nor amendment to the existing
plan, program or substitute program shall exclude Employee, or by application of
any pre-existing condition, reduce or adversely modify the amount or nature of
the benefits existing on the date hereof without Employee's consent, nor shall
the plan, program or any substitute therefor be terminated with respect to such
Employee without her consent. In the event the Company shall for any reason be
unable to include Employee in the Group Health Program or any coverage is
excluded for Employee, the Company shall provide equivalent (in amount and
nature) benefits to that of the Group Health Program through the purchase of
private health coverage, which shall also be provided at the Company's expense.
3. COMPENSATION. The Company will pay Employee the salary set forth in
Exhibit A to this Agreement and will provide fringe benefits to Employee as are
provided for all executive employees of the Company from time to time.
4. TERM. This Agreement shall have a continuous term until terminated as
provided in paragraph 4.
5. TERMINATION.
(a) This Agreement will terminate upon Employee's death or retirement.
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(b) The Company may terminate this Agreement upon at least thirty (30)
days' written notice in the event of Employee's disability. "Disability" will
exist if Employee, in the good faith determination of the Board of Directors of
the Company ("Board") has been unable to substantially perform her obligations
under this Agreement for a period of four (4) consecutive months or for six (6)
months in any twelve (12) month period on account of physical or mental
incapacity.
(c) The Company may terminate this Agreement for cause. For purposes of
this Agreement, "cause" will be deemed to exist upon: (1) the continued failure
by Employee to substantially perform her duties under this Agreement after
notice of, and a reasonable opportunity to cure, such failure, other than any
such failure resulting from Employee's disability; (2) the engaging by employee
in a course of misconduct which, in the good faith determination of the Board is
materially harmful to the Company after notice of, and a reasonable opportunity
to cure, such misconduct; or (3) an act of moral turpitude, dishonesty or fraud
by or felony conviction of Employee which, in the good faith determination of
the Board, would render her continued employment by the Company damaging or
detrimental to the Company.
(d) The Company may terminate this Agreement without cause by notifying
Employee in writing of its election to terminate at least thirty (30) days
before the effective date of termination. Employee may, on written notice to the
Company, accelerate the effective date of termination to any other date of her
choosing up to the date of notice of acceleration.
(e) Employee may terminate this Agreement for good reason. The term "good
reason" shall mean (1) the Company's failure to continue to assign duties to the
Employee generally consistent with those she has performed for the Company or
its predecessors in the past, (2) any substantial diminution in job rights or
title, (3) any diminution in salary or fringe benefits, (4) the failure of any
successor to the Company to furnish the assurances provided for in Section 7(c),
or (5) any attempted involuntary relocation of Employee to an area outside the
state of Illinois. Employee may notify the Company of the existence of good
reason and the Company shall have thirty (30) days thereafter to remedy the
situation.
(f) The Company will pay Employee on the effective date of termination all
unpaid compensation accrued at the rate set forth on Exhibit A through the
effective date of termination.
(g) This Agreement may be terminated by mutual agreement between the
parties.
(h) Employee may terminate employment at any time upon thirty (30) days'
written notice to the Company, and the Company may accelerate the effective date
of termination to any other date up to the date of notice of acceleration.
6. SEVERANCE PAYMENTS.
(a) The Company will make the severance payments specified in Section 5(b)
or (c) below if this Agreement is terminated pursuant to Sections 4(d) or (e).
The Company will not be obligated for severance payments in any other event.
(b) As severance payments under this Section 5(b), the Company will pay
Employee (or her or her heirs) on the first day of the month following the
effective date of termination of this Agreement, and on the first day of each of
the next succeeding twenty-three (23) months, an amount equal to 1/12th of the
sum of the highest total of salary payments made by the Company to Employee in
any calendar year and bonus earned by Employee (whether or not deferred) with
respect to services rendered to the Company during such calendar year. Each
monthly payment will be reduced by an amount equal to any retirement or
supplemental retirement payment that is paid by the Company or from a
Company-sponsored plan during the month and by an amount equal to any disability
payments Employee or her spouse receive during the month from the Company or
from a Company-sponsored plan; provided, however, that this reduction shall not
apply to any retirement, supplemental retirement or disability payments derived
from Employee's contributions, or interest thereon, to any Company-sponsored
plan. If Employee dies without a spouse or minor children surviving, or if
Employee's surviving spouse and minor children die or all of Employee's
surviving minor children reach age 18 before all severance payments have been
made, the Company's obligations to make any further severance payments under
this Section 5(b) will cease.
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(c) If this Agreement is terminated pursuant to Section 4(d) or (e) after a
change in control of the Company has occurred, or if a change in control of the
Company occurs while the Company is making severance payments to the Employee
pursuant to Section 5(b), Employee may elect to receive the severance payments
specified in Section 5(b) (or the remaining balance thereof) in a lump sum. The
reductions that would otherwise be applicable to severance payments under the
second sentence in paragraph 5(b) shall not apply. This lump sum shall be paid
within 30 days after the effective date of termination or, if a change in
control occurs after termination, within 30 days after such change in control.
For the purposes of this Agreement, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of the Company, whether through the ownership of voting securities, by
contract, or otherwise, except that "control" shall not include power which
derives solely from status as a corporate officer or employee. If the presently
proposed merger of the Company with Xxxxx & Xxxxxxx, Inc. ("P&L") or any of its
subsidiaries shall be consummated, for purposes of this Agreement, such merger
and any of the transactions contemplated in connection therewith or related
thereto shall be deemed not to be a change in control. Without limiting the
generality of the foregoing, a change in control shall be deemed to have
occurred i) if any person (within the meaning of Section 2(2) of the Securities
Act of 1933 or Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934) becomes the beneficial owner, directly or indirectly, of securities of the
Company representing twenty-five percent (25%) or more of the combined voting
power of the then outstanding securities of the Company, (ii) if at any time
less than a majority of the Board of Directors of P&L are persons who were
directors of P&L twenty-four (24) months before such time or (iii) more than
fifty percent (50%) of the assets of the Company are sold other than in the
usual course of business.
(d) Notwithstanding anything else provided in this Agreement to the
contrary, the Company will not be obligated to make any monthly severance
payments specified in Section 5(b) after that month in which Employee attains
age sixty-five (65) or would have attained age sixty-five (65) if she dies
before such date.
(e) Notwithstanding anything else in this Agreement to the contrary, if
payments to be made pursuant to this Agreement constitute an "excess parachute
payment" within the meaning of Section 280G(b) of the Internal Revenue Code of
1986, as amended, such payments shall be reduced to the extent necessary so that
they do not constitute an "excess parachute payment".
7. CONFIDENTIALITY AND COVENANT NOT TO COMPETE
(a) Except as required in the course of her employment, Employee shall not
use or disclose to any other person any of the proprietary or confidential
information of the Company or any of its affiliates, including, without
limitation, P&L and its subsidiaries.
Proprietary or confidential information means information used by the
Company or any of its affiliates including, without limitation, P&L and its
subsidiaries and not generally known or used by persons or organizations in the
business in which the Company or any of its affiliates including P&L and its
subsidiaries is engaged, including, without limitation, information about
products, processes, services, research, suppliers and customers of the Company
or any of its affiliates, including, without limitation, P&L and its
subsidiaries.
(b) During the term of this Agreement and for the periods specified as
follows, Employee shall not, directly or indirectly, as principal agent,
employer, employee, shareholder, partner, director or otherwise, engage or be
interested in any business engaged in the manufacture or sale of paint, coatings
or other products that are or are intended to be marketed in competition with
paint, coatings or other products manufactured and sold by the Company or any of
its affiliates including, without limitation, P&L and is subsidiaries (each, a
"Competing Enterprise"):
(i) One Year -- in the event that Employee quits or resigns her
position, other than for "good reason."
(ii) Six Months -- in the event the Company elects to terminate this
Agreement for cause pursuant to Section 4(c).
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(iii) None -- in the event this Agreement is terminated under any
circumstances other than those recited in Section (6)(b)(i) or (ii).
(c) Nothing in this Section 6 shall prevent Employee from:
(i) Owning not more than five percent (5%) of the publicly traded
equity securities of any Competing Enterprise listed on a national
securities exchange (so long as Employee has no power to manage, operate,
advise, consult with or control the Competing Enterprise and no power,
alone or in conjunction with other affiliated parties, to select a
director, general partner or similar governing official of the Competing
Enterprise).
(ii) Owning not more than ten percent (10%) of the equity interest of
any bona fide investment company registered as such under the Investment
Company Act of 1940 which holds an investment in a Competing Enterprise.
(iii) Being a passive investor in a private investment company serving
as a multiple investment vehicle which holds an investment in a Competing
Enterprise (a "Fund") (i.e., Employee has no power, nor is she acting, to
manage, operate, advise, consult with, control or otherwise be in any way
involved with the affairs of a Competing Enterprise), provided that
Employee's capital in such Fund does not exceed ten percent (10%) of all
such interests therein, and such Fund is managed by a registered investment
advisor which is independent of Employee.
For purposes of this Section 6(c), the interest of Employee in any entity
shall include, without limitation, the aggregate record and beneficial ownership
(as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934)
therein of Employee, all members of her immediate family and her Associates (as
defined in Rule 405 promulgated under the Securities Act of 1933).
(d) Employee agrees that the Company will be entitled to injunctive relief
in the event of Employee's breach of Section 6(a) or 6(b) of this Agreement.
(e) If any provision of this Agreement is for any reason held to be
excessively broad as to any activity or subject, it will be construed, by
limiting and reducing it, to be enforceable to the maximum extent compatible
with applicable law.
8. MISCELLANEOUS
(a) This Agreement supersedes and extinguishes all prior employment
agreements and is the entire agreement between the parties, and any addition,
change or modification of this Agreement will be void unless in writing and duly
executed by each party hereto.
(b) Except as provided in Section 6(c), any and all disputes or
controversies concerning this Agreement will be resolved by arbitration in
Chicago, Illinois in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The arbitrator will be authorized to decree
and award any and all relief of a legal or equitable nature including, but not
limited to, relief in the nature of a temporary restraining order, a temporary
or permanent injunction, and money damages, with or without accounting and
costs.
(c) Any successor (whether direct or indirect, by purchases, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company must, within 10 days after Employee's request, furnish its
written assurance that it is bound to perform this Agreement in the same manner
and to the same extent that the Company would have been required to perform it
if no such succession had taken place.
(d) The obligations specified in Sections 5 and 6 will survive termination
or expiration of this Agreement.
(e) This Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois (regardless of the laws that might otherwise
govern under applicable Illinois principles of conflicts of law).
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(f) All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered in person or sent by
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Employer, to:
United Coatings, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Chairman of the Board
If to the Employee, to:
Xxx X. Xxxxx
0000 Xxxxx Xxxx Xxxxx Xxxxx
#00X
Xxxxxxx, Xxxxxxxx 00000
or to such other address as the party to whom notice is to be given may, from
time to time, designate in writing delivered in a like manner; provided that
notices of changes of address shall be effective only upon receipt thereof.
Notice given by mail as set forth above shall be deemed delivered at the time
and on the date the same is postmarked.
(g) The headings contained herein are solely for the purpose of reference,
are not part of this Agreement and shall not in any way affect the meaning or
interpretation of this Agreement.
(h) This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be in an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have signed or caused this Agreement to be
signed as of the date first above written.
UNITED COATINGS, INC.
By:
/s/ XXX X. XXXXX
Xxx X. Xxxxx
Vice President -- Marketing
