Exhibit 10(x)
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT dated November 30, 1998 between QUAKER CHEMICAL
CORPORATION, a Pennsylvania corporation (the "Company") and MICHAEL F. BARRY
(the "Manager").
W I T N E S S E T H T H A T
WHEREAS, the Company and the Manager are party to a certain employment
agreement dated November 30, 1998 (the Employment Agreement);
WHEREAS, the Board of Directors of the Company has determined that it
is in the best interests of the Company and its shareholders that the Company
and its subsidiaries be able to attract, retain, and motivate highly qualified
management personnel and, in particular, that they be assured of continuity of
management in the event of any actual or threatened change in control of the
Company; and
WHEREAS, the Board of Directors of the Company believes that the
execution by the Company of change in control agreements with certain management
personnel, including the Manager, is an important factor in achieving this
desired end.
NOW, THEREFORE, IN CONSIDERATION of the mutual obligations and
agreements contained herein and intending to be legally bound hereby, the
Manager and the Company agree as follows:
1. Term of Agreement.
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Except as otherwise provided for in the last sentence of this Section
1, this Agreement shall become effective at such time (the "Effective Date"), if
any, as a Change in Control (as defined in Section 2 hereof) of the Company
occurs; provided, however, that this Agreement shall terminate and be of no
further force and effect if: (a) a Change in Control shall not have occurred by
November 30, 2003 or such later date as shall have been approved by the Board of
Directors of the Company and agreed to by the Manager or (b) prior to the
Effective Date, the Manager ceases, for any reason, to be an employee of the
Company, except that if the Manager's status as an employee of the Company is
terminated by the Company prior to a Change in Control and it is reasonably
demonstrated that such termination (i) was at the request of a person or entity
who or which has taken steps reasonably calculated to effect an imminent Change
in Control or (ii) otherwise arose in connection with or in anticipation of an
imminent Change in Control, then this Agreement shall become effective, and the
Effective Date shall be the date of such termination. On the Effective Date, the
Exhibit 10(x) Page 1
Employment Agreement will automatically terminate without notice or any action
by either party thereto, and this Agreement will control and govern the
Manager's employment relationship with the Company.
2. Change in Control.
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As used in this Agreement, a "Change in Control" of the Company shall
be deemed to have occurred if:
(a) any person (a "Person"), as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (other than (1) the Company and/or its wholly owned
subsidiaries; (2) any ESOP or other employee benefit plan of the Company and any
trustee or other fiduciary in such capacity holding securities under such plan;
(3) any corporation owned, directly or indirectly, by the shareholders of the
Company in substantially the same proportions as their ownership of stock the
Company; or (4) any other Person who is as of the date of this Agreement
presently an executive officer of the Company or any group of Persons of which
he/she voluntarily is a part) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 30% or more of the combined voting power of the
Company's then outstanding securities or such lesser percentage of voting power,
but not less than 15%, as the Board of Directors of the Company shall determine;
provided, however, that a Change in Control shall not be deemed to have occurred
under the provisions of this subsection (a) by reason of the beneficial
ownership of voting securities by members of the Benoliel family (as defined
below) unless and until the beneficial ownership of all members of the Benoliel
family (including any other individuals or entities who or which, together with
any member or members of the Benoliel family, are deemed under Sections 13(d) or
14(d) of the Exchange Act to constitute a single Person) exceeds 50% of the
combined voting power of the Company's then outstanding securities;
(b) during any two-year period beginning on the date of this
Agreement, Directors of the Company in office at the beginning of such period
plus any new Director (other than a Director designated by a Person who has
entered into an agreement with the Company to effect a transaction within the
purview of subsections (a) or (c) hereof) whose election by the Board of
Directors of the Company or whose nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds of the Directors then
still in office who either were Directors at the beginning of the period or
whose election or nomination for election was previously so approved shall cease
for any reason to constitute at least a majority of the Board; or
(c) the Company's shareholders or the Company's Board of
Directors shall approve (i) any consolidation or merger of the Company in which
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the Company is not the continuing or surviving corporation or pursuant to which
the Company's voting common shares (the "Common Shares") would be converted into
cash, securities, and/or other property, other than a merger of the Company in
which holders of Common Shares immediately prior to the merger have the same
proportionate ownership of Common Shares of the surviving corporation
immediately after the merger as they had in the Common Shares immediately
before; (ii) any sale, lease, exchange, or other transfer (in one transaction or
a series of related transactions) of all or substantially all the assets or
earning power of the Company; or (iii) the liquidation or dissolution of the
Company.
As used in this Agreement, "members of the Benoliel Family"
shall mean Peter A. Benoliel, his wife and children and their respective spouses
and children, and all trusts created by or for the benefit of any of them.
3. Employment.
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(a) From the Effective Date and until either party hereto
shall have given the other at least sixty (60) days' prior written notice of a
desire to terminate this Agreement (the "Employment Period") and thereby the
Manager's employment hereunder, the Company hereby agrees to continue the
Manager in its employ (directly and/or indirectly through a subsidiary), and the
Manager hereby agrees to remain in the employ of the Company (and/or any such
subsidiary), to exercise such authority, to perform such duties, and to possess
such status, offices, support staff, titles, and reporting requirements as are
at least commensurate with those generally exercised, performed, and possessed
by the Manager during the ninety (90) day period immediately prior to the
Effective Date or such lesser period as the Manager shall have been employed by
the Company or its subsidiaries (the "Base Period"). Such services shall be
performed at the location where the Manager was primarily employed during the
Base Period or at such other location as the Company may reasonably require,
provided that the Manager shall not be required to accept a primary employment
location which is more than 25 miles from the location at which he primarily was
employed during the Base Period. During the Employment Period, and excluding any
periods of vacation and sick leave to which the Manager is entitled, the Manager
agrees to perform faithfully, diligently, and efficiently his responsibilities
hereunder.
(b) The Manager acknowledges that nothing in this Agreement
shall be deemed to give him continued rights to employment by the Company or its
subsidiaries as a manager or any other capacity with respect to any period prior
to the Effective Date, if any, of this Agreement or, subject to subsection 1(b)
hereof, to entitle the Manager to compensation or benefits in the event of
termination of the Manager's employment prior to the Effective Date. Manager's
employment with the Company prior to the Effective Date, subject to subsection
1(b) hereof, will be controlled by the Employment Agreement.
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4. Compensation, Benefits, etc.
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During the Employment Period, the Manager shall be compensated
as follows:
(a) The Manager shall (i) receive an annual cash base salary,
payable not less frequently than semi-monthly, which is not less than the
annualized cash base salary payable to Manager as of the Effective Date; (ii) be
entitled to at least as favorable annual incentive award opportunity under the
Company's annual incentive compensation plan as he did in the calendar year
immediately prior to the year in which the Change of Control Event occurs; and
(iii) be eligible to participate in all of the Company's long-term incentive
compensation plans and programs on terms that are at least as favorable to the
Manager as provided to the Manager in the four calendar years prior to the
Effective Date.
(b) The Manager shall be entitled to receive fringe benefits,
employee benefits, and perquisites (including, but not limited to, vacation,
medical, disability, dental, and life insurance benefits) which are at least as
favorable to those made generally available as of the Effective Date to all of
the Company's salaried managers as a group. In addition, the Manager shall be
eligible to participate in the Company's Supplemental Retirement Income Program
("SRIP").
(c) Notwithstanding any other provision of this Agreement
(whether in this Section 4, in Section 6, or elsewhere), (i) the Board of
Directors may authorize an increase in the amount, duration, and nature of
and/or the acceleration of any compensation or benefits payable under this
Agreement, as well as waive or reduce the requirements for entitlement thereto
and (ii) the Company may deduct from amounts otherwise payable to the Manager
such amounts as it reasonably believes it is required to withhold for the
payment of federal, state, and local taxes.
5. Early Termination of Employment.
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The Manager's Employment Period shall terminate without the
Company providing sixty (60) days prior written notice as required under Section
3 hereof in the following circumstances:
(a) the Manager's death;
(b) at the option of the Company in the event of the
Manager's Disability (as defined below); or
(c) at the option of the Company for Cause (as defined
below).
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For purposes of this Agreement, "Disability" shall mean: (1) a physical or
mental disability which, at least twenty-six (26) weeks after its commencement,
is determined to be total and permanent by a physician selected by the Company
or its insurers and reasonably acceptable to the Manager or the Manager's legal
representative or (2) if the Company then has in effect a disability plan
covering Managers generally, including the Manager, the definition of covered
total and permanent "disability" set forth in such plan, and "Cause" shall mean
(a) willful and material breach of this Agreement by the Manager, (b)
dishonesty, fraud, willful malfeasance, gross negligence, or other gross
misconduct, in each case relating to the performance of the Manager's employment
hereunder which is materially injurious to the Company, or (c) conviction of or
plea of guilty to a felony, such Cause to be determined, in each case, by a
resolution approved by at least two-thirds of the Directors of the Company after
having afforded the Manager a reasonable opportunity to appear before the Board
of Directors of the Company and present his position.
6. Compensation, Benefits, etc. upon Termination.
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(a) If the Manager's Employment Period is terminated by death,
Disability, resignation (other than a resignation in the circumstances set forth
in subsection (c) below), or for Cause, the Company shall be obligated only to
provide the compensation, benefits, etc. set forth in Section 4 hereof up to the
date of termination; provided, however, that the Manager shall be entitled to
such additional compensation and benefits, if any, as may be provided for under
the express terms of any benefit plans or programs of the Company and its
subsidiaries in which he is then participating.
(b) In the event of the death of the Manager while this
Agreement is in effect and as to which no notice of termination has been given
by the Manager, the Company 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) the Company 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 anniversaries of the
date of his death. Payments made pursuant to this subsection 6(b) shall be made
to the person or persons who may be designated by the Manager in writing, and,
in the event he fails to so designate to whom payments shall be made, payments
shall be made to the Manager's personal representatives.
(c) If the Manager's Employment Period is terminated within
three (3) years of the Effective Date ("Covered Termination") by:
(i) the Company without Cause; or
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(ii) resignation of the Manager as a result of
(1) a material adverse change in the nature
or scope of the Manager's authorities,
powers, functions, or duties from those
described in Section 3 hereof; a reduction
in the Manager's total compensation,
benefits, etc. from those provided for in
Section 4 hereof; or a material breach by
the Company of any other provision of this
Agreement or (2) a reasonable determination
by the Manager that, as a result of a Change
in Control of the Company and a change in
the Company's circumstances and/or
operations thereafter significantly
affecting his or her position, he is unable
effectively to exercise the authorities,
powers, functions, or duties contemplated by
Section 3 hereof.
(d) In the event of a Covered Termination, the Company shall
pay or cause to be paid to the Manager in cash a severance allowance (the
"Severance Allowance") equal to 1.5 times the sum of the amounts determined in
accordance with the following subsections (i) and (ii):
(i) an amount equivalent to the highest
annualized base salary which the Manager was
entitled to receive from the Company and its
subsidiaries at any time during his
employment prior to the Effective Date; and
(ii) an amount equal to the greatest of the
annual amounts paid to the Manager under all
applicable annual incentive compensation
plans maintained by the Company and its
subsidiaries (other than compensation
relating to relocation expense; the grant,
exercise, or settlement of stock options or
performance incentive units or the sale or
other disposition of shares received upon
exercise or settlement of such options)
during any of the three (3) calendar years
prior to the year in which the Effective
Date occurs (provided, however, that there
shall be excluded from such calculation any
amounts paid to the Manager under any such
incentive compensation plan as a result of
the acceleration of such payments under such
plan due to termination of the plan, a
Change in Control Event, or a similar
occurrence).
(e) The Severance Allowance shall be paid to the Manager in a
lump sum within sixty (60) days after the date of any termination of the Manager
covered by subsections 6(c)(i) or 6(c)(ii).
(f) Subject to subsection (h) below:
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(i) for a period of one year following a Covered
Termination of the Manager, the Company
shall make or cause to be made available to
the Manager, at its expense, outplacement
counseling and other outplacement services
comparable to those available for the
Company's senior managers prior to the
Effective Date; and
(ii) for a period of 18 months following a
Covered Termination of the Manager, the
Manager and the Manager's dependents shall
be entitled to participate in the Company's
life, medical, dental and long-term
disability insurance plans at the Company's
expense (to the extent provided in such
plans at the time of such covered
Termination) as if the Manager were still
employed by the Company or its subsidiaries
under this Agreement; and
(iii) for purposes of the Company's SRIP, Manager
shall be deemed to have been employed by the
Company for the 18 month period following a
Covered Termination of the Manager.
(g) If, despite the provisions of subsection (f) above, life,
medical, dental or long-term disability insurance benefits are not paid or
provided under any such plan to the Manager or his dependents because the
Manager is no longer an employee of the Company or its subsidiaries, the Company
itself shall, to the extent necessary, pay or otherwise provide for such
benefits to the Manager or his dependents.
(h) In the event the Manager becomes employed (as defined
below) during the period with respect to which payments or benefits are
continuing pursuant to subsections 6(f) and/or 6(g) hereof: (1) the Manager
shall notify the Company not later than the day such employment commences; and
(2) the benefits provided for in subsections 6(f) and 6(g) shall terminate as of
the date of such employment. For the purposes of this subsection (h), the
Manager shall be deemed to have become "employed" by another entity or person
only if the Manager becomes essentially a full-time employee of a person or an
entity (not more than 30% of which is owned by the Manager and/or members of his
family); and the Manager's "family" shall mean his parents, his siblings and
their spouses, his children and their spouses, and the Manager's spouse and her
parents and siblings. Nothing herein shall relieve the Company of its
obligations for compensation or benefits accrued up to the time of termination
provided for herein.
Exhibit 10(x) Page 7
(i) In the event the Manager's employment is terminated by the
Company at any time (other than for Cause) after the third year anniversary of
the Effective Date (i.e., not a Covered Termination), then the Company agrees to
provide the Manager with out-placement assistance consistent with subsection
6(f)(i) above and a severance payment that shall be the higher of (1) the amount
the Manager is entitled to under the Company's then current severance policy or
(2) 12 months' base salary calculated at the Manager's then current rate.
(j) Except as expressly provided in subsections (a), (d), (e),
(f), (g), and (i) above, or under the express terms of any compensation or
benefits plans of the Company or its subsidiaries applicable to the Manager,
upon the termination date of Manager's employment with the Company, all other
compensation and benefits of the Manager shall cease to accrue; provided,
however, that the Severance Allowance payable under subsection (d) and the
severance amount payable under subsection (i), as the case may be, shall be in
lieu of any severance payments to which the Manager might otherwise be entitled
under the terms of any severance pay plan, policy, or arrangement maintained by
the Company or the Employment Agreement and shall be credited against any
severance payments to which the Manager may be entitled by statute. Furthermore,
the Company's obligations to pay any amount (including the Severance Amount) and
provide the other benefits set forth in this Section 6 are contingent upon the
Manager executing a form of release reasonably satisfactory to the Company.
(k) Upon the occurrence of a Change in Control, the Company
(or any successor thereto), on or before the Effective Date, shall place into
escrow an amount equal to the Severance Allowance which the Manager would be
entitled to receive pursuant to subsection (d) above in the event of a Covered
Termination, which escrowed funds shall be held pursuant to the terms of this
subsection (k).
(i) The Escrow Agent ("Escrow Agent") shall be
First Union National Bank, as such other
national banking association designated by
the Company on or before the Effective Date.
(ii) On or before the Effective Date, the Company
shall deliver to Escrow Agent a sum equal to
the Severance Allowance which the Manager
would be entitled to receive in the event of
a Covered Termination (the "Escrow Fund").
The Escrow Fund shall be invested by Escrow
Agent in certificates of deposit with
duration not more than 30 days issued by any
bank (including Escrow Agent) or savings
institution the accounts of which are
insured by the FDIC (a maximum of $100,000
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in any single such institution). Any cash
accumulation with respect to the Escrow Fund
in the form of interest shall be the
property of and shall be payable by Escrow
Agent to the Company (or to any successor to
the Company) as received by Escrow Agent and
for purposes of this Agreement are not part
of the Escrow Fund.
(iii) In the event that the Manager's employment
with the Company (or any successor to the
Company) is terminated pursuant to a Covered
Termination, the Manager shall send Escrow
Agent and the Company (or its successor) a
written demand substantially in the form of
Exhibit A attached to this Agreement (a
"Demand"). If the Company (or its successor)
does not send a written objection
substantially in the form of Exhibit B
attached to this Agreement (an "Objection")
to Escrow Agent and the Manager prior to the
end of the Objection Period (hereinafter
defined), Escrow Agent shall pay the Escrow
Fund to the Manager within thirty (30) days
from the date set out in the Demand. The
Objection Period shall begin on the date set
out in the Demand and shall end at 5:00 p.m.
Philadelphia time, on the tenth calendar day
following the date set out in the Demand, or
if the tenth calendar day is not a day when
Escrow Agent is generally open for business
in Philadelphia, the Objection Period shall
end at 5:00 p.m. Philadelphia time, on the
next day after such tenth day that Escrow
Agent is generally open for business in
Philadelphia. For purposes of this
subsection (k), notwithstanding the
provisions of Section 11, a Demand and an
Objection shall not be deemed received until
Escrow Agent shall have actually received
the Demand or Objection, as the case may be,
and all time frames specified in this
subsection (k) shall be measured from the
actual date of Escrow Agent's receipt.
(iv) If Escrow Agent does receive an Objection
before the end of the Objection Period,
Escrow Agent shall not pay the Escrow Fund
to the Manager, and, except as provided
herein, shall not comply with any claims,
demands or instructions from the Manager
and/or The Company (or its successor) with
respect to the Escrow Fund. Escrow Agent
shall not be or become liable in any way to
the Company (or its successor), the Manager
or any other person or entity for its
failure or refusal to comply with such
Exhibit 10(x) Page 9
conflicting claims or demands. Escrow Agent
shall be entitled to refuse to act until (i)
such conflicting or adverse claims or
demands shall have been finally determined
by a court of competent jurisdiction, (ii)
settled by agreement between the conflicting
parties as evidenced in a writing
satisfactory to Escrow Agent, or (iii)
Escrow Agent shall have received security or
an indemnity satisfactory to Escrow Agent
sufficient to save it harmless from and
against any and all loss, liability or
expense which it may incur by reason of its
acting. Escrow Agent may in addition elect
to commence an interpleader action or seek
other judicial relief or orders as it may
deem necessary. All of Escrow Agent's
reasonable costs and expenses of bringing
and maintaining such action, including but
not limited to reasonable fees and expenses
of separate counsel for Escrow Agent, shall
be paid by the Company (or its successor).
(v) In the event that Escrow Agent does not
receive any Demand from the Manager within
three (3) years from the Effective Date,
Escrow Agent shall pay the Escrow Fund to
the Company (or its successor) at the end of
such three (3) year period.
(vi) Escrow Agent's duties and responsibilities
shall be limited to those expressly set
forth herein. Escrow Agent shall not be
subject to, nor obligated to recognize, any
other agreement between or direction or
instruction of any of the parties to this
Agreement or of any third party even though
reference thereto may be made herein. If any
portion of the Escrow Fund is at any time
attached, garnished or levied upon, or in
case the transfer or delivery of the Escrow
Fund shall be stayed or enjoined, or in the
case of any other legal process or judicial
order affecting the Escrow Fund, then Escrow
Agent is authorized to comply with any such
order in any manner as it or legal counsel
of its own choosing deems appropriate; and
if it complies with any process, order,
writ, judgment or decree, it shall not be
liable to any of the parties hereto or to
any other person or entity even though such
order or process may be subsequently
Exhibit 10(x) Page 10
modified or vacated or otherwise determined
to have been without legal force or effect.
(vii) Escrow Agent shall not be liable for any act
taken or omitted under this Agreement except
for its gross negligence or willful
misconduct. Escrow Agent shall be fully
protected in relying upon any instruction,
notice, demand, certificate or document
which Escrow Agent in good faith believes to
be genuine. Escrow Agent may consult with
legal counsel at the expense of the Company
(or its successor) as to the construction of
any of the provisions of this Agreement, and
Escrow Agent shall be fully protected in
acting in good faith in accordance with any
such advice.
(viii) Except as expressly provided and agreed,
Escrow Agent shall not be responsible in any
respect for the form, execution, validity or
genuineness of documents deposited under
this Agreement, or for any description
therein, or for the identity, authority or
rights of persons executing or delivering or
purporting to execute or deliver any such
document.
(ix) The Company (and its successors) agrees to
indemnify, defend and hold Escrow Agent
harmless against any loss, liability, costs,
damages and expenses, including reasonable
counsel fees, that are incurred by Escrow
Agent and that are out of or in connection
with its acceptance or administration of
this Agreement or being Escrow Agent under
this Agreement, except for those arising
solely from Escrow Agent's gross negligence
or willful misconduct.
(x) Escrow Agent may resign at any time by
giving at least 30 days written notice
thereof. Within 20 days after receiving the
aforesaid notice, the Company (or its
successor) and the Manager shall jointly
agree on and appoint a successor Escrow
Agent at which time Escrow Agent shall
distribute the Escrow Fund then held
hereunder to the successor Escrow Agent.
(xi) The Company (or its successor) shall pay all
usual and customary charges and fees of
Escrow Agent due to the Escrow Agent for its
services hereunder.
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(xii) The escrow provisions created hereunder may
be amended or canceled by and upon written
notice to Escrow Agent at any time given
jointly by each of the Company (or its
successor) and the Manager, but the duties,
responsibilities or liabilities of Escrow
Agent may not be increased without its prior
written consent. This subsection (k) shall
terminate upon the payment by Escrow Agent
of the entire amount of the Escrow Fund,
provided that all of Escrow Agent's rights
shall continue beyond such termination,
including, but not limited to, its rights to
fees and indemnification.
7. Confidentiality and Non-Competition.
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(a) The Manager acknowledges that information concerning the
method and conduct of the Company's (and any affiliate's) 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 the Company's (and any
affiliate's) manuals, documents, notes, letters, records, and computer programs
are the Company's (and/or the Company's affiliate's, as the case may be) trade
secrets ("Trade Secrets") and are the sole and exclusive property of the Company
(and/or the Company's affiliates, as the case may be). The Manager agrees that
at no time during or following his employment with the Company will he use,
divulge, or pass on, directly or through any other individual or entity, any
Trade Secrets. Upon termination of the Manager's employment with the Company
regardless of the reason for the termination of the Manager's employment
hereunder, or at any other time upon the Company's request, the Manager agrees
to forthwith surrender to the Company 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 the Manager, required by law to be disclosed,
or which can be clearly shown by written records to have been known by the
Manager prior to the commencement of his employment with the Company.
(b) The Manager agrees that during his employment and for a
period of one (1) year thereafter, regardless of the reason for the termination
of the Manager's employment hereunder, he will not:
(i) 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
Exhibit 10(x) Page 12
manufacturer, seller, or distributor of
specialty chemical products or chemical
management services which are the same,
like, similar to, or which compete with the
products and services offered by the Company
(or any of its affiliates);
(ii) recruit or solicit any employee of the
Company (or any of its affiliates) or
otherwise induce such employee to leave the
employ of the Company (or any of its
affiliates) 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
(iii) solicit, directly or indirectly, for himself
or as agent or employee of any person,
partnership, corporation, or other entity
(other than for the Company) any then or
former customer, supplier, or client of the
Company with the intent of actively engaging
in business which would cause competitive
harm to the Company (or any of its
affiliates).
The Manager 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. The Manager agrees and recognizes that in the event of a breach or
threatened breach of the provisions of the restrictive covenants contained in
this Section 7, the Company may suffer irreparable harm, and monetary damages
may not be an adequate remedy. Therefore, if any breach occurs or is threatened,
the Company shall be entitled to seek equitable remedies, including injunctive
relief in any court of applicable jurisdiction notwithstanding the provisions of
Section 9 hereof. In the event of any breach of the restrictive covenant
contained in this Section 7, 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. Furthermore, if a court or arbitration panel determines
that the Manager has breached any of the provisions of this Section 7, the
Company's obligations to pay amounts and continue the benefits under Section 6
to the Manager shall immediately terminate.
Exhibit 10(x) Page 13
8. Set-Off; Mitigation.
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Subject to Section 6(h) hereof, the Company's obligation to
make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense, or other claim, right, or action which the Company may have
against the Manager or others. In no event shall the Manager be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Manager under any of the provisions of this Agreement.
9. Arbitration: Costs and Expenses of Enforcement.
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(a) Except as otherwise provided in Section 7(b) hereof, any
controversy or claim arising out of or relating to this Agreement or the breach
thereof which cannot promptly be resolved by the parties shall be promptly
submitted to and settled exclusively by arbitration in the City of Philadelphia,
Pennsylvania in accordance with the laws of the Commonwealth of Pennsylvania by
three arbitrators, one of whom shall be appointed by the Company, one by the
Manager, and the third of whom shall be appointed by the first two arbitrators.
The arbitration shall be conducted in accordance with the rules of the American
Arbitration Association, except with respect to the selection of arbitrators
which shall be as provided in this Section 9. Judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction thereof.
(b) In the event that it shall be necessary or desirable for
the Manager to retain legal counsel and/or incur other costs and expenses in
connection with the enforcement of any and all of his rights under this
Agreement, the Company shall pay (or the Manager shall be entitled to recover
from the Company, as the case may be) his reasonable attorneys' fees and costs
and expenses in connection with the enforcement of his said rights (including
those incurred in or related to any arbitration proceedings provided for in
subsection (a) above and the enforcement of any arbitration award in court),
regardless of the final outcome, unless the arbitrators or a court shall
determine that under the circumstances recovery by the Manager of all or a part
of any such fees and costs and expenses would be unjust.
10. Certain Additional Payments by the Company.
-------------------------------------------
(a) Notwithstanding anything in this Agreement to the
contrary, in the event it shall be determined that any payment or distribution
by the Company to or for the benefit of the Manager (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 10) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Code or any interest or penalties are incurred by the
Exhibit 10(x) Page 14
Manager with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the "Excise
Tax"), payment (a "Gross-Up Payment") in an amount such that after payment by
the Manager of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes,
calculated at the maximum federal and state rates for individuals in the year in
which a Payment is made (and any interest and penalties imposed with respect
thereto) and Excise Tax imposed upon the Gross-Up Payment, the Manager retains
an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 10(c), all
determinations required to be made under this Section 10, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by the Company's independent certified public accountants (the "Accounting
Firm") which shall provide detailed supporting calculations both to the Company
and the Manager within 15 business days of the receipt of notice from the
Manager that there has been a Payment, or such earlier time as is requested by
the Company. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change of Control, the
Manager shall appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 10, shall be paid by the Company to the Manager within
five days of the receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by the Manager, it
shall furnish the Manager with a written opinion that failure to report the
Excise Tax on the Manager's applicable federal income tax return would not
result in the imposition of a negligence or similar penalty. Any determination
by the Accounting Firm shall be binding upon the Company and the Manager. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 10(c) and the Manager thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Manager.
(c) The Manager shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
Exhibit 10(x) Page 15
as soon as practicable but no later than ten business days after the Manager is
informed in writing of such claim and the date on which such claim is requested
to be paid. The Manager shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Manager in writing
prior to the expiration of such period that it desires to contest such claim,
the Manager shall (i) give the Company any information reasonably requested by
the Company relating to such claim, (ii) take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company, (iii)
cooperate with the Company in good faith in order effectively to contest such
claim, and (iv) permit the Company to participate in any proceedings relating to
such claim; provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Manager harmless,
on an after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 10(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Manager to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Manager agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Manager to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Manager, on an interest-free basis and shall indemnify and hold
the Manager harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Manager with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Manager shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Manager of an amount advanced
by the Company pursuant to Section 10(c), the Manager becomes entitled to
receive any refund with respect to such claim, the Manager shall (subject to the
Exhibit 10(x) Page 16
Company's complying with the requirements of Section 10(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Manager of
an amount advanced by the Company pursuant to Section 10(c), a determination is
made that the Manager shall not be entitled to any refund with respect to such
claim and the Company does not notify the Manager in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
11. Notices.
--------
Any notices, requests, demands, and other communications
provided for by this Agreement shall be sufficient if in writing, and if hand
delivered or if sent by registered or certified mail, if to the Manager, at the
last address he had filed in writing with the Company or if to the Company, at
its principal Manager offices. Notices, requests, etc. shall be effective when
actually received by the addressee or at such address.
12. Assignment and Benefit.
-----------------------
(a) This Agreement is personal to the Manager and
shall not be assignable by the Manager, by operation of law, or otherwise
without the prior written consent of the Company otherwise than by will or the
laws of descent and distribution. This Agreement shall inure to the benefit of
and be enforceable by the Manager's heirs and legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns, including without
limitation, any subsidiary of the Company to which the Company may assign any of
its rights hereunder; provided, however, that no assignment of this Agreement by
the Company, by operation of law, or otherwise shall relieve it of its
obligations hereunder except an assignment of this Agreement to, and its
assumption by, a successor pursuant to subsection (c) below.
(c) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation operation of law, or
otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place, but, irrespective of any such assignment
or assumption, this Agreement shall inure to the benefit of and be binding upon
such a successor. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid.
Exhibit 10(x) Page 17
13. Governing Law.
--------------
The provisions of this Agreement shall be construed in
accordance with the laws of the Commonwealth of Pennsylvania without reference
to principles of conflicts of laws.
14. Full Settlement.
----------------
In the event of the termination of the Manager's Employment
Period under this Agreement, the payments and other benefits provided for by
this Agreement (except as otherwise provided under the express terms of any
compensation or benefit plans of the Company or its subsidiaries or as may
otherwise be provided by applicable law) shall constitute the entire obligation
of the Company and its subsidiaries to the Manager and shall also constitute
full and complete settlement of any claim under law or in equity that the
Manager might otherwise assert against the Company, its subsidiaries, or any of
its or their respective directors, officers, or employees on account of such
termination of employment.
15. Entire Agreement.
-----------------
This Agreement represents the entire agreement and
understanding of the parties with respect to the subject matter hereof, and it
may not be altered or amended except by an agreement in writing.
16. No Waiver.
----------
The failure to insist upon strict compliance with any
provision of this Agreement by any party shall not be deemed to be a waiver of
any future noncompliance with such provision or of noncompliance with any other
provision.
17. Severability.
-------------
In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the remaining
provisions of this Agreement shall be unaffected thereby and shall remain in
full force and effect.
IN WITNESS WHEREOF, the Manager has hereunto set his hand and, pursuant
to the authorization from its Board of Directors, the Company has caused
Exhibit 10(x) Page 18
these presents to be executed in its name and on its behalf and attested by its
Secretary or Assistant Secretary, all as of the day and year first above
written.
MANAGER
/s/ Michael F. Barry
-----------------------------------
Michael F. Barry
QUAKER CHEMICAL CORPORATION
By: /s/ Ronald J. Naples
------------------------------
Title: Chairman and Chief Executive Officer
ATTEST:
/s/ D. Jeffry Benoliel
- ----------------------------------
Exhibit 10(x) Page 19
EXHIBIT A
[DATE]
[name and address of Escrow Agent]
RE: Escrow Account #________________
Ladies/Gentlemen:
Reference is made to the Change in Control Agreement dated as of
__________, 1998 by and between Quaker Chemical Corporation and the undersigned
(the "Agreement").
My employment with [successor to Quaker] has been terminated for a
reason which constitutes a "Covered Termination" as defined in the Agreement.
This letter shall serve as a "Demand" to be paid the Escrow Fund
referred to in the Escrow Agreement within sixty (60)days from the date of this
letter. Please send each installment to me at the address set forth below.
I hereby certify that I have sent a duplicate copy of this demand to
[successor to Quaker] in accordance with the provisions provided for in the
Agreement.
Sincerely,
Name:___________________________
Address:________________________
Exhibit 10(x) Page 20
EXHIBIT B
[DATE]
[name and address of Escrow Agent]
Attention:_________________
RE: Escrow Account #________________
Ladies/Gentlemen:
Reference is made to the Change in Control Agreement dated as of
__________, 1998 by and between Quaker Chemical Corporation and
________________] (the "Manager") (the "Agreement").
[Successor to Quaker], pursuant to subsection 6(k)(iii) of the
Agreement, objects to the payment of the Escrow Fund to the Manager because
[Successor to Quaker] believes in good faith that the Manager is not entitled to
receive the Escrow Fund. [Successor to Quaker] hereby certifies that it has sent
the Manager a copy of this Objection in accordance with the provisions provided
for in the Agreement.
Sincerely,
[SUCCESSOR TO QUAKER]
By:_________________________________
Title:______________________________
Exhibit 10(x) Page 21