EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into on June 28,
1995 by and between Xxxx X. Xxxxxxxxx, an individual ("Executive"), and Petrowax
PA Inc., a Delaware corporation (the "Company").
1. EMPLOYMENT BY THE COMPANY AND TERM.
(a) FULL TIME AND BEST EFFORTS. Subject to the terms set forth
herein, the Company agrees to employ Executive as Chairman and Chief Executive
Officer, and in such other executive capacities as may be requested from time to
time by the Board of Directors of the Company or a duly authorized committees
thereof, and Executive hereby accepts such employment. Executive shall serve, if
elected, as a member of the Board of Directors of the Company, and shall render
such other services for the Company and corporations controlled by, under common
control with or controlling, directly or indirectly, the Company, and to
successor entities and assignees of the Company ("Company's Affiliates") as the
Company may from time to time reasonably request and as shall be consistent with
the duties Executive is to perform for the Company and with Executive's stature
and experience. During the term of his employment with the Company, Executive
will devote his full time and exclusive attention to, and use his best efforts
to advance, the business and welfare of the Company, and will not engage in any
other employment or business activities for any direct or indirect remuneration
that would be harmful or detrimental to, or that may compete with, the business
and affairs of the Company.
(b) DUTIES. Executive shall serve in an executive capacity and shall
perform such duties as are customarily associated with his then current title,
consistent with the Bylaws of the Company and as required by the Company's Board
of Directors (the "Board") and the officers to whom the Executive reports.
(c) COMPANY POLICIES. The employment relationship between the parties
shall be governed by the general employment policies and practices of the
Company, including but not limited to those relating to protection of
confidential information and assignment of inventions, except that when the
terms of this Agreement differ from or are in conflict with the Company's
general employment policies or practices, this Agreement shall control.
(d) TERM. The initial term of employment of Executive under this
Agreement shall begin as of June 28, 1995 for an initial term ending on June 28,
1998 (such three year period, the "Initial Term"), subject to the provisions for
termination set forth herein and renewal as provided in Section 1(e) below.
(e) RENEWAL. Unless the Company shall have given Executive notice
that this Agreement shall not be renewed at least ninety (90) days prior to
the end of the Initial Term, the term of this Agreement shall be
automatically extended for a period of one year, such procedure to be
followed in each such successive period. Each extended term shall continue to
be subject to the provisions for termination set forth herein.
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2. COMPENSATION AND BENEFITS.
(a) SALARY. Executive shall receive for services to be rendered
hereunder a salary at the rate of Twenty-Five Thousand Dollars ($25,000) per
month payable at least as frequently as monthly and subject to payroll
deductions as may be necessary or customary in respect of the Company's salaried
employees (the "Base Salary"). The Base Salary will be reviewed by and shall be
subject to increase at the sole discretion of the Board of Directors of the
Company each year during the term of this Agreement.
(b) PARTICIPATION IN BENEFIT PLANS. During the term hereof, Executive
shall be entitled to participate in any group insurance, hospitalization,
medical, dental, health and accident, disability or similar plan or program of
the Company now existing or established hereafter to the extent that he is
eligible under the general provisions thereof. The Company may, in its sole
discretion and from time to time, establish additional senior management benefit
programs as it deems appropriate. Until such time as the Company establishes a
medical, dental, health and accident or disability plan or program of its own,
Executive shall be entitled to the extent legally permitted to obtain coverage
therefor under, and pursuant to the terms of, any such plans or programs of the
Company's subsidiaries, as may be designated by the Executive.
(c) VACATION. Executive shall be entitled to a period of annual
vacation time equal to that generally provided to senior managers of the
Company, but in any event not more than four weeks per twelve month period, to
accrue PRO RATA during the course of each such twelve month period. The days
selected for Executive's vacation must be mutually agreeable to Company and
Executive. Accrued unused vacation will expire 12 months after the date of
accrual and in no event shall Executive's total accrued vacation exceed four
weeks.
(d) 401(K) PLAN. To the extent legally permitted, Executive shall be
entitled to place a portion of his Base Salary into a 401(K) or other qualified
deferred tax annuity plan of the Company or, if the Company does not have such a
plan, of any such plan of any of the Company's subsidiaries, as may be
designated by the Executive.
(e) TERM LIFE INSURANCE. During the term hereof, the Company shall
procure and pay for a $1,000,000 term life insurance policy covering Executive,
for the benefit of such beneficiaries as Executive shall designate.
3. OPTION AND BONUS PLANS.
(a) OPTIONS. Executive shall be entitled to receive stock options of
MSC Holdings, Inc., a Delaware corporation ("Holdings ), in the amount and on
the terms and conditions set forth in that certain Stock Option Agreement of
even date herewith between Executive and Holdings.
(b) BONUSES. For each fiscal year of the Company ending March 31 that
the applicable EBITDA target set forth on Appendix A attached hereto is
achieved, and if Executive is employed by the Company pursuant to the terms of
this Agreement on the last day of such fiscal year, Executive shall receive a
bonus equal to 75% of his then annual base salary, to be paid on the June 30
immediately following the end of such fiscal year. In addition to such bonus,
for each fiscal year of the Company ending March 31 that 110% of the applicable
EBITDA target set forth on Appendix A attached hereto is achieved, and if
Executive is employed by the Company pursuant to the terms of this Agreement on
the last day of such fiscal year, Executive shall receive an additional bonus
equal to 25% of his then annual base salary, to be paid on the June 30
immediately following the end of such
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fiscal year. Notwithstanding the foregoing terms of this paragraph (b), the
Board of Directors of the Company may elect in its sole discretion to award all
or any part of such bonuses notwithstanding any failure of the applicable EBITDA
target or 110% of the applicable EBITDA target to have been achieved.
4. REASONABLE BUSINESS EXPENSES AND SUPPORT.
Executive shall be reimbursed for documented and reasonable business
expenses in connection with the performance of his duties hereunder. Executive
shall be furnished reasonable office space, assistance and facilities.
5. TERMINATION OF EMPLOYMENT.
The date on which Executive's employment by the Company ceases,
under any of the following circumstances, shall be defined herein as the
"Termination Date."
(a) TERMINATION FOR CAUSE.
(i) TERMINATION: PAYMENT OF ACCRUED SALARY AND VACATION. The
Board may terminate Executive's employment with the Company at any time for
cause, immediately upon notice to Executive of the circumstances leading to
such termination for cause. In the event that Executive's employment is
terminated for cause, Executive shall receive payment for all accrued salary
and vacation time through the Termination Date, which in this event shall be
the date upon which notice of termination is given. The Company shall have no
further obligation to pay severance of any kind nor to make any payment in
lieu of notice.
(ii) DEFINITION OF CAUSE. "CAUSE" means the occurrence or
existence of any of the following with respect to Executive, as determined by
a majority of the disinterested directors of the Board: (a) a material breach
by Executive of any of his obligations hereunder which remains uncured after
the lapse of 30 days following the date that the Company has given Executive
written notice thereof; (b) a material breach by the Executive of his duty
not to engage in any transaction that represents, directly or indirectly,
self-dealing with the Company or any of its Affiliates which has not been
approved by a majority of the disinterested directors of the Board or of the
terms of his employment, if in any such case such material breach remains
uncured after the lapse of 30 days following the date that the Company has
given the Executive written notice thereof; (c) the repeated material breach
by the Executive of any duty referred to in clause (b) above as to which at
least one written notice has been given pursuant to such clause (b); (d) any
act of dishonesty, misappropriation, embezzlement, intentional fraud or
similar conduct involving the Company or any of its Affiliates; (e) the
conviction or the plea of nolo contendere or the equivalent in respect of a
felony involving moral turpitude; (f) any intentional damage of a material
nature to any property of the Company or any of its Affiliates; (g) the
repeated non-prescription use of any controlled substance or the repeated use
of alcohol or any other non-controlled substance which, in any case described
in this clause (g), the Board reasonably determines renders the Executive
unfit to serve in his capacity as an officer or employee of the Company or
its Affiliates; or (h) any other material misconduct on the part of Executive
which remains uncured after the lapse of 30 days following the date that the
Company has given Executive written notice thereof.
(b) TERMINATION BY EXECUTIVE. Executive shall have the right, at its
election, to terminate his employment with the Company by written notice to the
Company to that effect if the Company shall have failed to substantially perform
a material condition or covenant of this Agreement ("Company's Material
Breach"); provided, however, that termination for Company's Material Breach will
not be effective until Executive shall have
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given written notice specifying the claimed breach and, provided such breach is
curable, Company fails to correct the claimed breach within thirty (30) days
after the receipt of the applicable notice or such longer time as may be
reasonably required by the nature of the claimed breach (but within ten (10)
days if the failure to perform is a failure to pay monies when due under the
terms of this Agreement).
(c) TERMINATION UPON DISABILITY. Company may terminate Executive's
employment in the event Executive suffers a disability that renders Executive
unable to perform the essential functions of his position, even with reasonable
accommodation, for four (4) months within any eight (8) month period. After the
Termination Date, which in this event shall be the date upon which notice of
termination is given, no further compensation will be payable under this
Agreement except that Executive shall receive the accrued portion of any bonus
through the Termination Date, less standard withholdings for tax and social
security purposes, payable upon such date or over such period of time which
is in accordance with the applicable bonus plan.
(d) TERMINATION WITHOUT CAUSE.
(i) TERMINATION PAYMENT DURING THE INITIAL TERM. In the event
Executive's employment is terminated by the Company other than pursuant to
paragraph 5(a) or 5(c), or by Executive pursuant to paragraph 5(b), the Company
shall pay Executive as severance an amount equivalent to his then base salary
for the remaining period of the Initial Term, less standard withholdings for tax
and social security purposes, payable over such term in monthly PRO RATA
payments commencing as of the Termination Date plus the accrued portion of any
bonus through the Termination Date, less standard withholdings for tax and
social security purposes, payable upon such date or over such period of time
which is in accordance with the applicable bonus plan.
(ii) TERMINATION PERIOD AFTER THE INITIAL TERM. In the event
that the term of this Agreement is extended pursuant to Section 1(e) hereof (an
"Extension Period") and during such Extension Period Executive's employment is
terminated by the Company other than pursuant to paragraph 5(a) or 5(c), or by
Executive pursuant to paragraph 5(b), the Company shall pay Executive as
severance an amount equal to twelve (12) months of his then base salary, less
standard withholdings for tax and social security purposes, payable over such
twelve (12) month term in monthly PRO RATA payments commencing as of the
Termination Date plus the accrued portion of any bonus through the
Termination Date, less standard withholdings for tax and social security
purposes, payable upon such date or over such period of time which is in
accordance with the applicable bonus plan.
(iii) FUNDAMENTAL CHANGES. In the event that the Company makes
a substantial change which results in diminution in the Executive's duties,
authority, responsibility or compensation without performance or market
justification, Executive may terminate his employment; PROVIDED, HOWEVER, that
Executive shall provide the Company 10 days' notice prior to any such
termination and the Company shall have a reasonable period of time to cure. A
termination in such circumstances shall be treated as a Company termination
without cause and Executive shall be entitled to the same severance payments
provided in paragraphs 5(d)(i) and (5)(d)(ii), as applicable.
(e) BENEFITS UPON TERMINATION. All benefits provided under paragraph
2(b) hereof shall be extended, at Executive's election and cost, to the extent
permitted by the Company's insurance policies and benefit plans, for one year
after Executive's Termination Date, except (a) as required by law (e.g., COBRA
health
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insurance continuation election) or (b) in the event of a termination described
in paragraph 5(a).
(f) TERMINATION UPON DEATH. If Executive dies prior to the
expiration of the term of this Agreement, the Company shall (i) continue
coverage of Executive's dependents (if any) under all benefit plans or
programs of the type listed above in paragraph 2(b) herein for a period of
three (3) months, and (ii) pay to Executive's estate the accrued portion of
any bonus through the Termination Date, less standard withholdings for tax
and social security purposes, payable upon such date or over such period of
time which is in accordance with the applicable bonus plan.
6. PROPRIETARY INFORMATION OBLIGATIONS.
During the term of employment under this Agreement, Executive will
have access to and become acquainted with the Company's confidential and
proprietary information, including but not limited to information or plans
regarding the Company's customer relationships, personnel, or sales, marketing,
and financial operations and methods; trade secrets; formulas; devices; secret
inventions; processes; and other compilations of information, records, and
specifications (collectively "Proprietary Information"). Executive shall not
disclose any of the Company's Proprietary Information directly or indirectly, or
use it in any way, either during the term of this Agreement or at any time
thereafter, except as required in the course of his employment for the Company
or as authorized in writing by the Company. All files, records, documents,
computer-recorded information, drawings, specifications, equipment and similar
items relating to the business of the Company, whether prepared by Executive or
otherwise coming into his possession, shall remain the exclusive property of the
Company and shall not be removed from the premises of the Company under any
circumstances whatsoever without the prior written consent of the Company,
except when (and only for the period) necessary to carry out Executive's duties
hereunder, and if removed shall be immediately returned to the Company upon any
termination of his employment and no copies thereof shall be kept by Executive;
PROVIDED, HOWEVER, that Executive shall be entitled to retain documents
reasonably related to his interest as a shareholder and any documents that were
personally owned or acquired.
7. NONINTERFERENCE. While employed by the Company and until two years
from termination of this Agreement, Executive agrees not to interfere with the
business of the Company by directly or indirectly soliciting, attempting to
solicit, inducing, or otherwise causing any employee of the Company to terminate
his or her employment in order to become an employee, consultant or independent
contractor to or for any other employer.
8. NONCOMPETITION. Executive agrees that during the term of this
Agreement and for a period of two (2) years after the termination hereof, he
will not, without the prior consent of the Company, directly or indirectly,
have an interest in, be employed by, or be connected with, as an employee,
consultant, officer, director, partner, stockholder or joint venturer, in any
person or entity owning, managing, controlling, operating or otherwise
participating or assisting in any business which is similar to or in
competition with the business of the Company (i) during the term of this
Agreement, in any location, and (ii) for the two year period following the
termination of this Agreement, in any state in which the Company was
conducting business at the date of termination of Executive's employment and
continues to do so thereafter, provided, however, that the foregoing shall
not prevent the Executive from being a stockholder of less than 1% of the
issued and outstanding securities of any class of a corporation listed on a
national securities exchange
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or designated as national market system securities on an interdealer quotation
system by the National Association of Securities Dealers, Inc.
9. MISCELLANEOUS.
(a) NOTICES. Any notices provided hereunder must be in writing and
shall be deemed effective upon the earlier of personal delivery (including
personal delivery by telecopy or telex) or the third day after mailing by first
class mail to the recipient at the address indicated below:
To the Company:
Petrowax PA Inc.
c/o Aurora Capital Partners L.P.
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
To Executive:
Xxxx X. Xxxxxxxxx
do Petrowax PA Inc.
000 X. Xxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
or to such other address or to the attention of such other person as the
recipient party will have specified by prior written notice to the sending
party.
(b) SEVERABILITY. Any provision of this Agreement which is deemed
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction and subject to this paragraph be ineffective to the extent of such
invalidity, illegality or unenforceability, without affecting in any way the
remaining provisions hereof in such jurisdiction or rendering that or any other
provisions of this Agreement invalid, illegal, or unenforceable in any other
jurisdiction. If any covenant should be deemed invalid, illegal or unenforceable
because its scope is considered excessive, such covenant shall be modified so
that the scope of the covenant is reduced only to the minimum extent necessary
to render the modified covenant valid, legal and enforceable.
(c) ENTIRE AGREEMENT. This document constitutes the final, complete,
and exclusive embodiment of the entire agreement and understanding between the
parties related to the subject matter hereof and supersedes and preempts any
prior or contemporaneous understandings, agreements, or representations by or
between the parties, written or oral.
(d) COUNTERPARTS. This Agreement may be executed on separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
agreement.
(e) SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive and the Company, and
their
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respective successors and assigns, except that Executive may not assign any of
his duties hereunder and he may not assign any of his rights hereunder without
the prior written consent of the Company.
(f) ATTORNEYS' FEES. If any legal proceeding is necessary to
enforce or interpret the terms of this Agreement, or to recover damages for
breach therefore, the prevailing party shall be entitled to reasonable
attorney's fees, as well as costs and disbursements in addition to any other
relief to which he or it may be entitled.
(g) AMENDMENTS. No amendments or other modifications to this
Agreement may be made except by a writing signed by both parties. No
amendment or waiver of this Agreement requires the consent of any individual,
partnership, corporation or other entity not a party to this Agreement.
Nothing in this Agreement, express or implied, is intended to confer upon any
third person any rights or remedies under or by reason of this Agreement.
(h) CHOICE OF LAW. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the internal
law, and not the law of conflicts, of the State of New York.
IN WITNESS WHEREOF, the parties have executed this agreement effective as
of the date it is last executed below by either party.
/s/ Xxxx X. Xxxxxxxxx
---------------------------------------
XXXX X. XXXXXXXXX
PETROWAX PA INC.
By: /s/ illegible
--------------------------------
Title: Vice President
--------------------------------
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APPENDIX A
FISCAL YEAR ENDING EBITDA* TARGET
March 31, 1996 19,500,000
March 31, 1997 23,100,000
March 31, 1998 27,000,000
March 31, 1999
(applicable if Agreement renewed) 26,300,000
March 31, 2000
(applicable if Agreement renewed) 27,700,000
*"EBITDA" shall have the meaning ascribed thereto in the Facility Agreement,
dated as of June 16, 1995 (the "Facility Agreement"), between ABI Acquisition 2
PLC and Petrowax PA Inc. as initial borrowers, the Companies named therein as
initial guarantors, Union Bank of Switzerland as arranger, Union Bank of
Switzerland as facility agent, Union Bank of Switzerland as security trustee,
and certain others, but adjusted to subtract therefrom, without duplication, the
sum of all performance bonuses paid to employees of the Group (as such term is
defined in the Facility Agreement) with respect to the fiscal year for which
EBITDA is being computed, regardless of when such performance bonuses are
actually paid.
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