EXHIBIT 10.22
EMPLOYMENT, NONDISCLOSURE AND
LIMITED NON-COMPETITION AGREEMENT
THIS EMPLOYMENT, NONDISCLOSURE AND LIMITED NON-COMPETITION AGREEMENT
(this "Agreement") is made as of the 19 th day of July, 2000, by and among
OUTSOURCING SERVICES GROUP, INC., a Delaware corporation having its principal
place of business at 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx,
00000-0000 (the "Company"), the subsidiaries of the Company, AEROSOL SERVICES
COMPANY, INC., PIEDMONT LABORATORIES, INC., KOLMAR LABORATORIES, INC., ACUPAC
PACKAGING INC., AND PRECISION PACKAGING AND SERVICES, INC. (collectively, the
"Subsidiaries"), and XXXXXX X. XXXXX, whose address is 00 Xxxxxxx Xxxxxx,
Xxxxxxxx, Xxx Xxxxxx 00000 (the "Employee").
W I T N E S S E T H:
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WHEREAS, the Company is 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 hereinafter set forth; 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 an initial period of three (3) years beginning
on July 19, 2000 and terminating at the close of business on July 19, 2003 (the
"Initial Employment Term"), including service at Company's principal executive
offices located in the Eastern United States. Following expiration of the
Initial Employment Term, this
Agreement shall be automatically renewed for three (3) successive one-year
periods (the "Subsequent Employment Terms"), with such modifications as the
parties hereto may agree upon, unless notice to the contrary is given by either
Company or Employee at least thirty (30) days prior to the expiration of the
Initial Employment Term, or the then-current Subsequent Employment Term. All
terms and conditions set forth in this Agreement shall be deemed to apply
equally to the Initial Employment Term and each Subsequent Employment Term
(except to the extent any such provision is modified in a Subsequent Employment
Term), and all references in this Agreement to the "Employment Term" shall de
deemed to refer to both the Initial Employment Term, and each Subsequent
Employment Term.
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 President
and Chief Executive Officer of the Company during the Employee's Employment.
Further, Employee shall serve as a member of the Boards of Directors of each of
the Company (the "Company Board"), and the Subsidiaries. The Employee shall,
during Employee's Employment, subject to the policies of the Company Board,
manage and direct the business of the Company, and supervise the persons
managing the Subsidiaries, performing those acts and doing those things
customarily done by the Chief Executive 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
Executive Officer of the Company as shall be determined by the Company Board.
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.
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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
Three Hundred Thousand Dollars ($300,000). Such base salary shall be payable in
cash at the times and in the installments consistent with the Company's payroll
practices, which is presently on a biweekly basis. Company shall review such
salary on at least an annual basis beginning in January, 2002, 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, including the Company's
1998 Management Performance Bonus Plan and 1998 Amended and Restated Stock
Option Plan (the "Option Plan").
(b) Employee shall receive options (the "Options") to purchase one
hundred fifty thousand (150,000) shares of the Company's common stock at the
price of $ 21.34 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 in its entirety. The Options are subject to the terms and
conditions of the Option Plan.
(c) Through the later of (i) calendar year 2002, or (ii) such later
date, if the Option Plan is amended to provide for a later termination date,
provided he remains an Employee, Employee shall participate in the Option Plan,
which provides for the annual award, to all participants in the aggregate, of
options to purchase up to 60,000 shares of Company stock.
(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. If the Employee dies or becomes
disabled during the Employment Term so that he is unable to perform his duties
hereunder, 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,
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but not beyond the end of the Employment Term, and to continue to provide the
benefits described in Section 3.04.
SECTION 3.04. BENEFITS. During the Employment Term, the Employee shall
be entitled to insurance benefits substantially similar to those now provided
under the Company's employee health benefit plans as now in effect, and may
continue such benefits after any termination of 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:
(a) Company shall provide Employee medical, dental, life insurance,
profit-sharing and other benefits in accordance with the Company's benefit
plans.
(b) Employee shall receive four (4) weeks of paid vacation per year or
such greater amount of vacation as is provided under any Company policy then
applicable to employee.
(c) 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 Company Board;
(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 a material
adverse effect on Company;
(c) Any illegal act by the Employee (as evidenced by a conviction)
which 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.
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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 and, if pursuant to paragraph (a) above, shall be
preceded by a written notice and a reasonable opportunity to correct his conduct
if the matters in question can be corrected.
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:
(a) Without the Employee's prior written consent, a reduction in his
then current salary, other than any such reduction that is part of a general
salary reduction or other concessionary arrangement affecting all employees or
affecting the group of employees (senior management) of which the Employee is a
member;
(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) 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
(d) A reduction in duties and responsibilities which results in the
Employee no longer having duties of substantially the same nature as described
in Section 2.01.
In the event of an action by the Company which Employee
believes constitutes a basis for termination of this Agreement for Good Reason,
Employee shall so notify the Company within fifteen (15) days of such action,
identifying in reasonable detail the action which Employee believes constitutes
such Good Reason. The Company shall within fifteen (15) days after the receipt
of such notification correct or otherwise redress any action which is the
subject of such notification. If Employee believes that the action taken by the
Company is insufficient or inadequate to correct or otherwise redress the
situation, Employee may invoke the arbitration procedure set forth in Section
4.04. In the event that the arbitrator rules in favor of Employee, the Company
shall take such action as is required by such ruling. The failure by the Company
to implement such corrective measures within fifteen (15) days after any such
ruling is issued shall permit Employee immediately to terminate this Agreement
for Good Reason. Notwithstanding the foregoing, 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.
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SECTION 4.03. 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. IF THIS AGREEMENT IS LAWFULLY TERMINATED BY THE COMPANY
UNDER SECTION 4.01, THE COMPANY HAS NO LIABILITY OR OBLIGATION TO EMPLOYEE. IF
THIS AGREEMENT IS TERMINATED BY EMPLOYEE UNDER SECTION 4.02, THE COMPANY HAS NO
LIABILITY TO EMPLOYEE, EXCEPT AS PROVIDED IN SECTION 3.03. EMPLOYEE SHALL HAVE
NO LIABILITY TO COMPANY AFTER TERMINATION OF THIS AGREEMENT PURSUANT TO SECTION
4.02, EXCEPT AS PROVIDED IN PART V HEREOF.
SECTION 4.04. 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 4.04. 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 4.04 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 4.05. 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 shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which he may be
entitled. In the event of an arbitration, the parties shall each bear their
respective costs unless otherwise specifically awarded by the arbitrator. In
that instance, the arbitrator shall have discretion to determine the extent, if
any, to which a party shall be treated as a "prevailing party" and to award or
withhold fees and costs.
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SECTION 4.06. DEEMED RESIGNATION. If this Agreement is terminated for
any reason other than the expiration of the Employment Term, Employee shall be
deemed to have resigned voluntarily as an officer and director of the Company,
and of any subsidiaries of the Company, if applicable, if he was serving in any
of such capacities at the time of termination.
V. RESTRICTIVE COVENANTS
The following restrictive covenants shall apply to this Agreement:
SECTION 5.01. CONFIDENTIALITY. Employee acknowledges and agrees that
the Company's formulae, 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.
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 (i) 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 (ii) 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 Employment Term even if such payments
would not otherwise be required. Employee further agrees and acknowledges that
if the provisions of this Section 5.02(ii) are triggered, Employee will receive
adequate consideration from the transactions contemplated by this Agreement to
enable him to earn a satisfactory living during the time that the
non-competition clause is in effect.
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 or such other address as is specified in a notice conforming to this
Section 6.01. 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.
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Section 6.02. ENTIRE AGREEMENT. This Agreement supersedes any and all
other agreements, arrangements and understandings, 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. The rights and
obligations of Employee under this Agreement may not be assigned by Employee,
except as contemplated by Section 3.03.
Section 6.07. 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 6.08. 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. Any waiver by the Company of any breach of any provision of this
Agreement by Employee shall not be construed to be a continuing waiver, or a
consent to any subsequent breach, unless otherwise expressly specified.
Section 6.09. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, which when taken together shall be deemed to constitute one
agreement. Facsimile signatures shall be treated as if they were originals.
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[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and year first above written.
"Subsidiaries" "Company"
AEROSOL SERVICES COMPANY, OUTSOURCING SERVICES
INC. GROUP, INC.
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx Name: Xxxx X. Xxxxx
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Title: Assistant Secretary Title: Assistant Secretary
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PIEDMONT LABORATORIES, INC.
By: /s/ Xxxx X. Xxxxx
---------------------------------
Name: Xxxx X. Xxxxx "Employee"
-------------------------------
Title: Assistant Secretary
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KOLMAR LABORATORIES, INC.
/s/ Xxxxxx X. Xxxxx
-------------------------------------
XXXXXX X. XXXXX
By: /s/ Xxxx X. Xxxxx
---------------------------------
Name: Xxxx X. Xxxxx
-------------------------------
Title: Assistant Secretary
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ACUPAC PACKAGING, INC.
By: /s/ Xxxx X. Xxxxx
---------------------------------
Name: Xxxx X. Xxxxx
-------------------------------
Title: Assistant Secretary
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PRECISION PACKAGING AND
SERVICES, INC.
By: /s/ Xxxx X. Xxxxx
---------------------------------
Name: Xxxx X. Xxxxx
-------------------------------
Title: Assistant Secretary
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