Exhibit 10.18
EMPLOYMENT, NONDISCLOSURE AND
LIMITED NON-COMPETITION AGREEMENT
THIS EMPLOYMENT, NONDISCLOSURE AND LIMITED NON-COMPETITION AGREEMENT (this
"Agreement") is made as of the 1st 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
X. XXXXXXX, whose address is 00 Xxxxx Xxxx Xxxx, Xxxxxx, Xxxxxxxxxx 000000 (the
"Employee").
W I T N E S S E T H:
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 a chief financial
officer 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 and presently serves
as Company's Chief Financial Officer;
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 to be relocated in the Eastern United States, but subject to Section
4.03 below. 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 Financial Officer of the Company during the Employee's
Employment and as Vice President and the Chief Financial Officer of the
Company's subsidiaries. Further, Employee shall, if requested, serve as a
member of the board of directors or an officer of the Company's subsidiaries,
including serving as Secretary or Assistant Secretary. The Employee shall,
during Employee's Employment, subject to the policies of the Board of Directors
of the Company and the direction of the Company's Chief Executive Officer,
perform those acts and do those things customarily done by the Chief Financial
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
Financial Officer of the Company as shall be determined by the Chief Executive
Officer or 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
One Hundred Fifty Thousand Dollars ($150,000). 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.
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Unless the Company establishes a separate payroll and benefits plan, Employee's
benefits shall be provided through the plans of Kolmar Laboratories, Inc.
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.
(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. 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, 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 Kolmar Laboratories, Inc. employee health benefit plan 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
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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 Kolmar Laboratories,
Inc. benefit plans. However, Employee shall receive his allocation of all
profit-sharing benefits available to him for 1997 from Aerosol Services Company,
Inc., and if Employee is unable to participate in any Kolmar Laboratories, Inc.
plan by reason of an eligibility or waiting period, shall continue to
participate in the most equivalent plan of Aerosol Services Company, Inc. until
he is eligible for the Kolmar Laboratories, Inc. benefits.
(b) 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.
(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 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)
which, in the view of the Chief Executive Officer or the Board of Directors,
materially and adversely affects the business of the Company; or
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(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 and, if pursuant to paragraph (a) above, shall be
preceded by a written notice.
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;
(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 greater New York, New York area, but subject to
Section 4.03 below;
(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 financial 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.
SECTION 4.03 RELOCATION. Company relocated its headquarters to the
greater New York area. If Company determines to require Employee to move to the
new location:
(a) Company shall notify Employee in writing of the requirement to
move his place of work to the new headquarters. Within thirty (30) days of such
written notice, Employee shall notify of the Chief Executive officer, in
writing, whether he will
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relocate his place of employment. If Employee agrees to relocate, Section
4.03(b) shall apply. If Employee does not agree to relocate, then
(i) Employee shall remain as Company's Chief Financial Officer
for four months following the date Employee delivers a notice he will not
relocate, or until such earlier date as the Chief Executive Officer may specify
on written notice of not less than five days (the "Transition Period");
(ii) During the Transition Period Employee shall perform his
duties faithfully, shall assist Company to locate a suitable replacement, and
shall cooperate in transitioning duties to such replacement;
(iii) On the last day of the Transition Period, Employee shall
receive nine months' salary plus unused vacation, less required deductions, in a
lump sum. Company's obligations to provide benefits shall terminate except as
required by law, and this Agreement shall terminate except for Sections 5.01,
5.02 and 4.05.
(b) 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 new
headquarters location for Employee and his spouse to look for a new residence
(such trips to be of not more than 4 days' duration each), 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. As the reimbursement of
these expenses presents income tax consequences to the Employee, such payments
will be increased by thirty percent (30%) 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 benefits, such policy shall
apply rather than this Section 4.03(b).
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
or Los Angeles, California 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
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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.
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
Section 4.03, 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 even if such payments would not
otherwise be required.
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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.
Section 6.02. ENTIRE AGREEMENT. This Agreement supersedes any and all
other agreements, 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.
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
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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, OUTSOURCING SERVICES
INC. GROUP, INC.
By:
---------------------------------- By: /s/ Xxxxxxxxxxx Xxxxxx
Name: -------------------------------
-------------------------------- Name: Xxxxxxxxxxx Xxxxxx
Title: -----------------------------
-------------------------------- Title: CEO and President
----------------------------
PIEDMONT LABORATORIES, INC.
"Employee"
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
/s/ Xxxxxx X. Xxxxxxx
----------------------------------
XXXXXX X. XXXXXXX
KOLMAR LABORATORIES, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
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