Exhibit 10(u) EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT, made and entered into as of the 30th day of November 1998, by and between QUAKER CHEMICAL CORPORATION, a Pennsylvania corporation (hereinafter referred to as "QUAKER"), and MICHAEL F. BARRY (hereinafter referred to as "EXECUTIVE"). W I T N E S S E T H: WHEREAS, QUAKER wishes to employ EXECUTIVE, and EXECUTIVE wishes to be employed by QUAKER. NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, and intending to be legally bound hereby, the parties hereto agree as follows: 1. QUAKER agrees to employ EXECUTIVE, and EXECUTIVE agrees to serve as Vice President and Chief Financial Officer of QUAKER. He shall perform all duties consistent with such position as well as any other duties which are assigned to him from time to time by the Board of Directors or Chief Executive Officer of QUAKER. EXECUTIVE covenants and agrees that he will, during the term of this Employment Agreement or any extension or renewal thereof, devote his knowledge, skill, and working time solely and exclusively to the business and interests of QUAKER. Exhibit 10(u) Page 1 2. Except as otherwise provided for in Paragraph 10, the term of EXECUTIVE's employment shall continue until December 31, 1999 and shall continue for annual calendar year terms thereafter until either party hereto shall have given the other at least ninety (90) days' prior written notice of a desire to terminate this Agreement and thereby terminate EXECUTIVE's employment with QUAKER. 3. QUAKER shall pay to EXECUTIVE and EXECUTIVE shall accept an annual rate of salary as set forth in Exhibit A attached hereto, payable semi-monthly, during the term of this Employment Agreement or any extension or renewal thereof. The rate of salary will be reviewed on an annual basis consistent with QUAKER's then current practice for reviewing officers' salaries and performance. 4. EXECUTIVE shall participate in such QUAKER Incentive Programs as described and set forth in Exhibit A. As an Officer of QUAKER, the particulars of Exhibit A may be amended by the Board of Directors at any time as to any matter set forth therein including eligibility to participate in any given QUAKER incentive plan, the level of participation in any QUAKER incentive plan, and the terms and conditions of any QUAKER incentive plan. Any changes to Exhibit A shall not affect any of the other terms and conditions hereof including, without limitation, the provisions of Paragraphs 7 through 9. For the purposes of this Agreement, the term "QUAKER Incentive Program" shall refer to each individual as well as the combined incentive programs approved by the Board of Directors. Revisions to Exhibit A shall become effective upon notification in writing by QUAKER. Exhibit 10(u) Page 2 5. (a) With respect to QUAKER's Annual Bonus Plan for the 1998 year only, EXECUTIVE's annual bonus (payable in early 1999) will be $50,000. (b) With respect to QUAKER's Long-Term Performance Incentive Plan (the "Incentive Plan"), for 1997-2000 performance award period under the terms and conditions of the Incentive Plan. In connection therewith, EXECUTIVE will be granted: * Stock options - 15,000 to be issued to EXECUTIVE on the first day of employment -- 6,000 to first become exercisable on the second anniversary of the first day of employment; the next 6,000 to first become exercisable on the third anniversary of the first day of employment; and the remaining 3,000 to first become exercisable on the fourth anniversary of the first day of employment. * Type of stock option offered - non-qualified stock options. * Option price per share - closing price on first day of employment. * Performance incentive units - 9,000 @ $16.9375 (equal to 100% of target value), such payment not to exceed $150,000. In addition, Executive shall be entitled to a signing bonus as set forth on Exhibit A to be paid in 1998. (c) EXECUTIVE shall be entitled to four (4) weeks vacation per year, beginning the calendar year 1999, paid holidays, and such other employee benefits, including, without limitation, life insurance, medical benefits, disability, profit sharing, and retirement benefits as are made generally available to all senior QUAKER salaried officers as a group. In addition, EXECUTIVE shall be eligible to participate in Quaker's Supplemental Retirement Income Program. Exhibit 10(u) Page 3 (d) QUAKER shall reimburse EXECUTIVE for all reasonable expenses incurred by EXECUTIVE on behalf of QUAKER in the course of EXECUTIVE's employment under this Employment Agreement, provided that such expenses shall have been approved by QUAKER in accordance with such expense reimbursement procedures as shall be adopted by QUAKER. 6. In the event of the death of EXECUTIVE while this Employment Agreement is in effect and as to which no notice of termination has been given by EXECUTIVE or, in the case of a Termination for Cause (as defined hereafter), by QUAKER, QUAKER shall (i) continue to pay a sum of money equal to the salary that would have been paid to him for four months following his death just as if he were living, and (ii) QUAKER shall pay a death benefit equal to his then current annual salary plus $30,000 to be paid in three equal payments, without interest, on the 16, 28, and 40 month anniversary of the date of his death. Payments made pursuant to this Paragraph 6 shall be made to the person or persons who may be designated by EXECUTIVE in writing, and, in the event he fails to so designate to whom payments shall be made, payments shall be made to EXECUTIVE's personal representatives. 7. EXECUTIVE acknowledges that information concerning the method and conduct of QUAKER's (and any affiliates') business, including, without limitation, strategic and marketing plans, budgets, corporate practices and procedures, financial statements, customer and supplier information, formulae, formulation information, application technology, manufacturing information, and laboratory test methods and all of QUAKER's (and any affiliates') manuals, Exhibit 10(u) Page 4 documents, notes, letters, records, and computer programs are QUAKER's (and/or QUAKER's affiliates', as the case may be) trade secrets ("Trade Secrets") and are the sole and exclusive property of QUAKER (and/or QUAKER's affiliates, as the case may be). EXECUTIVE agrees that at no time during or following his employment with QUAKER will he use, divulge, or pass on, directly or through any other individual or entity, any Trade Secrets. Upon termination of EXECUTIVE's employment with QUAKER, or at any other time upon QUAKER's request, EXECUTIVE agrees to forthwith surrender to QUAKER any and all materials in his possession or control which include or contain any such Trade Secrets. The words "Trade Secrets" do not include information already known to the public through no act or failure to act on the part of EXECUTIVE, required by law to be disclosed, or which can be clearly shown to have been known by EXECUTIVE prior to the commencement of his employment with QUAKER. 8. EXECUTIVE agrees that during his employment and for a period of one (1) year thereafter, regardless of the reason for the termination of EXECUTIVE'S employment hereunder, he will not: (a) directly or indirectly, together or separately or with any third party, whether as an individual proprietor, partner, stockholder, officer, director, joint venturer, investor, or in any other capacity whatsoever actively engage in business or assist anyone or any firm in business as a manufacturer, seller, or distributor of specialty chemical products or chemical management Exhibit 10(u) Page 5 services which are the same, like, similar to, or which compete with the products and services offered by QUAKER (or any of its affiliates); (b) recruit or solicit any employee of QUAKER or otherwise induce such employee to leave the employ of QUAKER or to become an employee or otherwise be associated with his or any firm, corporation, business or other entity with which he is or may become associated; and (c) solicit, directly or indirectly, for himself or as agent or employee of any person, partnership, corporation, or other entity (other than for QUAKER) any then or former customer, supplier, or client of QUAKER with the intent of actively engaging in business which would cause competitive harm to QUAKER. EXECUTIVE acknowledges and agrees that all of the foregoing restrictions are reasonable as to the period of time and scope. However, if any paragraph, sentence, clause, or other provision is held invalid or unenforceable by a court of competent and relevant jurisdiction, such provision shall be deemed to be modified in a manner consistent with the intent of such original provision so as to make it valid and enforceable, and this Agreement and the application of such provision to persons and circumstances other than those with respect to which it would be invalid or unenforceable shall not be affected thereby. EXECUTIVE agrees and recognizes that in the event of a breach or threatened breach of the provisions of the restrictive covenants contained in Paragraph 7 or in this Paragraph 8, QUAKER may suffer irreparable harm, and monetary damages may not be an adequate remedy. Therefore, if any breach occurs or is threatened, in addition to all other remedies available to QUAKER at law Exhibit 10(u) Page 6 or in equity, QUAKER shall be entitled as a matter of right to specific performance of the covenants of QUAKER contained herein by way of temporary or permanent injunctive relief. In the event of any breach of the restrictive covenant contained in this Paragraph 8, the term of the restrictive covenant specified herein shall be extended by a period of time equal to that period beginning on the date such violation commenced and ending when the activities constituting such violation cease. 9. In the event that QUAKER in its sole discretion and at any time terminates this Agreement with EXECUTIVE (other than for Termination for Cause, death, disability, or normal retirement age), QUAKER agrees to provide EXECUTIVE with reasonable out-placement assistance and a severance payment (contingent upon EXECUTIVE executing a form of release satisfactory to QUAKER) that shall be equal to twelve (12) months' salary calculated at EXECUTIVE's then current rate. 10. Termination. This Employment Agreement also can be terminated (and thereby terminate EXECUTIVE's employment with QUAKER) at any time and without notice by "Termination for Cause." Termination for Cause means EXECUTIVE's employment with QUAKER shall have been terminated by QUAKER by reason of either: (a) The willful and continued failure (following written notice) by EXECUTIVE to execute his duties under this Employment Agreement; or Exhibit 10(u) Page 7 (b) The willful engaging by EXECUTIVE in a continued course of misconduct which is materially injurious to QUAKER, monetarily or otherwise. 11. EXECUTIVE represents and warrants to QUAKER that: (a) there are no restrictions, agreements, or understandings whatsoever to which EXECUTIVE is a party which would prevent or make unlawful his execution of this Employment Agreement or his employment hereunder; and (b) his execution of this Employment Agreement and his employment hereunder shall not constitute a breach of any contract agreement, or understanding, oral or written, to which he is a party or by which he is bound. 13. This Employment Agreement contains all the agreements and understandings between the parties hereto with respect to EXECUTIVE's employment by QUAKER and supersedes all prior or contemporaneous agreements with respect thereto and shall be binding upon and for the benefit of the parties hereto and their respective personal representatives, successors, and assigns. This Employment Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania without regard to any conflict of laws. IN WITNESS WHEREOF, QUAKER has caused this Employment Agreement to be signed by its Chairman of the Board, thereunto duly authorized, and its corporate seal to be hereunto affixed and attested by its Corporate Secretary, Exhibit 10(u) Page 8 and EXECUTIVE has hereunto set his hand and seal all as of the day and year first above written. ATTEST: QUAKER CHEMICAL CORPORATION (SEAL) /s/ D. Jeffry Benoliel By: /s/ Ronald J. Naples - -------------------------- -------------------------------- D. Jeffry Benoliel Ronald J. Naples Corporate Secretary Chairman and Chief Executive Officer WITNESS: /s/ Mary E. Lalor /s/ Michael F. Barry - ------------------------- -------------------------------- Michael F. Barry Exhibit 10(u) Page 9 EMPLOYMENT AGREEMENT EXHIBIT A Effective: November 30, 1998 Name of Employee: Michael F. Barry Address: Title: Vice President and Chief Financial Officer Annual Rate of $190,000 Salary at Starting Date: November 30, 1998 Signing Bonus: $25,000 Participation in Quaker Incentive Programs Annual Bonus Plan (1998) ------------------------ Bonus will be based on achieving certain benchmarks set on annual basis, as follows: Threshold level -- 12.5% of midpoint Target level -- 25% of midpoint Maximum level -- 50% of midpoint For the 1998 year only, the Annual Bonus (payable in early 1999) will be $50,000. Long-Term Performance Incentive Plan 1997 -2000 ----------------------------------------------- Will be full participant in Plan, even though entering approximately two (2) years after the start, at the following level: * Stock options - 15,000 to be issued to EXECUTIVE on the first day of employment -- 6,000 shall first become exercisable on the second anniversary of the first day of employment; 6,000 shall first become exercisable on the Exhibit 10(u) Page 10 third anniversary of the first day of employment; and the remaining 3,000 to first become exercisable on the third anniversary of the first day of employment. * Type of stock option offered - non-qualified stock options. * Option price per share - closing price on first day of employment. * Performance incentive units - 9,000 @ $16.9375 (equal to 100% of target value), such payment not to exceed $150,000. Long-Term Performance Incentive Plan 1999 -2002 ----------------------------------------------- Will be eligible to participate in the Plan at the levels commensurate with the position of Vice President-Chief Financial Officer as recommended by management. Under the terms of the Plan, however, only the Compensation Committee of Quaker's Board of Directors has the authority to grant awards under the Plan and therefore, there can be no assurance that the Compensation Committee will act on management's recommendation. Exhibit 10(u) Page 11