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EXHIBIT 10(b)
EMPLOYMENT AGREEMENT
by and between
GREAT LAKES CHEMICAL CORPORATION
and
▇▇▇▇ ▇▇▇▇▇▇▇
Effective as of April 1, 1998
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EMPLOYMENT AGREEMENT
AGREEMENT, effective as of April 1, 1998 (the "Effective Date"), by and
between ▇▇▇▇ ▇▇▇▇▇▇▇ (the "Executive"), and Great Lakes Chemical Corporation
(the "Company").
WHEREAS, the Board of Directors of the Company (the "Board") desires that
the Executive furnish services to the Company and the Executive desires to
furnish services to the Company on the terms and conditions hereinafter set
forth; and
WHEREAS, the parties desire to enter into this agreement setting forth the
terms and conditions of the employment relationship of the Executive with the
Company; and
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth below, the parties hereby agree as follows:
1. Employment. The Company hereby agrees to employ the Executive,
and the Executive hereby accepts such employment, on the terms and conditions
hereinafter set forth.
2. Employment Period. The period during which the Executive is employed
by the Company hereunder (the "Employment Period") shall commence on the
Effective Date and shall end on the fifth anniversary thereof, subject to the
extension of such period as hereinafter provided and subject to earlier
termination as provided in Section 5, below. Beginning on April 1, 2000, the
Employment Period shall be extended automatically for one (1) additional day
for each day which has been elapsed since April 1, 2000, unless, at any time
after April 1, 2000, neither the Company or the Executive gives written notice
to the other that such automatic extension of the Employment Period shall
cease. Any such notice shall be effective immediately upon delivery.
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3. Position and Duties; Place of Performance. (a) During the Employment
Period, the Executive shall serve as President and Chief Executive Officer of
the Company. The Executive shall report directly to the Board. During the
Employment Period, the Executive shall have those powers and duties consistent
with his position as President and Chief Executive Officer, subject to the
supervisory powers of the Board. The Executive agrees to devote substantially
all his working time to the performance of his duties for the Company;
provided, however, that it shall not be a violation of this Agreement for the
Executive to serve on corporate, civic or charitable boards or committees,
provided that his service on corporate boards or committees shall be subject to
the consent of the Board, (ii) give speeches and make media appearances to
discuss matters of public interest and (iii) manage his personal investments,
so long as such activities do not interfere substantially with the performance
of the Executives responsibilities in accordance with this Agreement.
(b) As soon as practicable following the Effective Date, the Succession
Planning Committee of the Board shall nominate the Executive (and the Board
shall elect the Executive) as a director of the Company. So long as the
Executive serves as President and Chief Executive officer of the Company, the
Company shall cause the Executive to be included in the slate of nominees
recommended by the Board to the Company's stockholders for election as
directors at each annual meeting of the stockholders of the Company at which
his class of directors is standing for election, and the Company shall use its
best efforts to cause the election of the Executive, including soliciting
proxies in favor of the election of the Executive. Upon Executives ceasing to
be an employee of the Company for any reason, he shall immediately resign as
a director of the Company.
(c) The principal place of employment of the Executive shall be at the
Company's principal executive offices at such location as may be agreed to by
the Board and the Executive.
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4. Compensation and Related Matters.
(a) Base Salary; Bonus. The Executive shall be entitled to the
following base salary and bonuses:
(i) Base Salary. During the Employment Period, as compensation
for the performance by the Executive of his duties hereunder, the
Company shall pay the Executive a base salary at an annual rate of
$650,000 (the base salary, at the rate in effect from time to time,
is hereinafter referred to as the "Base Salary"). The Base Salary
shall be payable in accordance with the Company's normal payroll
practice and may be increased from time to time at the discretion of
the Company's Compensation Committee (or any successor thereof) of
the Board. During the Employment Period, the Base Salary shall be
reviewed no less frequently than annually by the Board to determine
whether or not the same should be increased in light of the duties
and responsibilities of the Executive and the performance thereof.
The Base Salary shall not be subject to unilateral reduction by the
Company at any time during the Employment Period.
(ii) Annual Bonus. So long as the Executive is employed by the
Company, he shall be eligible to receive annual incentive awards or
bonuses (the "Annual Bonus") pursuant to and subject to the terms and
conditions of any incentive compensation plan of the Company;
Provided, however, that, the Executives Annual Bonus in respect of
the period ending on December 31, 1998 shall in no event be less than
seventy-five percent (75%) of his Base Salary as of the Effective
Date (i.e., $487,500); and Provided further that the target amount
for the Executives Annual Bonus for each year after 1998 shall in no
event be less than seventy-five percent (75%) of his Base Salary for
each such year.
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(iii) Signing Bonus. On the Effective Date, the Company shall
pay a signing bonus to the Executive in the sum of $850,000. The
payment of that signing bonus is not contingent on the performance of
services for the company and does not represent compensation for
services rendered.
(b) Equity Grants.
(i) Stock Options. Effective as of the Effective Date, the
Executive shall be granted a nonqualified stock option (the "Option")
to purchase 700,000 shares of the Company's common stock, par value
$1.00 per share ("Common Stock"). The number of shares of Common
Stock subject to the Option shall not be subject to equitable
adjustment to reflect consummation of the Company's proposed spin-off
of Octel (the "Spin-off"), so that, after giving effect to the
Spin-off, the Option shall represent an option to acquire 700,000
shares of Common Stock of the post-Spin-off Company. The option
grant shall be reflected in an option agreement, substantially in the
form of Exhibit A hereto. As promptly as practicable, and in any
event within six (6) months after the Effective Date, the Company
shall, at its expense, cause all shares subject to the Option to be
registered under the Securities Act of 1933, as amended (the
"Securities Act"), and registered or qualified under applicable state
laws, to be freely resold. The Company shall maintain the
effectiveness of such registration and qualification for so long as
the Executive or any member of the Executives Immediate Family (as
defined below) holds such Option or owns the underlying shares of
Common Stock or until such earlier date as all such shares, without
such registration or qualification, may be freely sold without any
restrictions under the Securities Act.
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(ii) Future Stock Options. At such time during each of the
years 1999-2001 as the Compensation Committee of the Board approves
annual stock option grants to employees of the Company under the
Great Lakes Chemical Corporation 1993 Stock Compensation Plan or any
successor thereto (the "Option Plan"), and provided that the
Executive is then still employed by the Company, the Company shall
grant to the Executive under the Option Plan in each of those three
(3) years a nonqualified stock option (collectively, the "Future
Options" and together with the Option, the "Option Awards") to
purchase 100,000 shares of Common Stock (on a post-Spin-off basis).
The terms of the Future options, including the exercise price and
vesting schedule, shall be subject to the terms of the Option Plan,
and shall be evidenced by an option agreement which provides, among
other things, for a legend evidencing the restrictions contained in
Section 4(b)(iv) hereof.
The Company shall, at its expense, cause all shares subject to
the Future Options to be registered under the Securities Act on Form
S-8 and registered or qualified under applicable state laws to be
freely resold. The Company shall maintain the effectiveness of such
registration and qualification for so long as the Executive or any
member of the Executive's Immediate Family holds such Future Options
or owns the underlying shares of Common Stock or until such earlier
date as all such shares, without such registration or qualification,
may be freely sold without any restrictions under the Securities Act.
(iii) Restricted Stock. Effective as of the consummation of
the Spin-off, the Company shall grant to the Executive an aggregate
of 50,000 shares of Common Stock (the "Restricted Shares"), pursuant
to the terms of a restricted stock agreement, substantially in the
form of Exhibit B hereto (the "Restricted
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Stock Agreement"). As promptly as practicable, and in any event
within six (6) months after the Effective Date, the Company shall,
at its expense, cause all Restricted Shares to be registered under
the Securities Act and registered or qualified under applicable
state laws, to be freely resold. The Company shall maintain the
effectiveness of such registration and qualification for so long as
the Executive or any member of his Immediate Family owns such
Restricted Shares or such earlier date as all such shares, without
such registration or qualification, may be freely sold without any
restrictions under the Securities Act. In the event that the
Spin-off is not consummated within six months after the Effective
Date or if the Executives employment with the Company terminates for
any reason prior to the consummation of the Spin-off, the Company and
the Executive shall negotiate in good faith a mutually acceptable
alternative compensation arrangement (if feasible, in the form of an
equity-based award) providing economic value to the Executive which
is substantially equivalent to the grant of 50,000 restricted shares
of the post-Spin-off Company on the terms and conditions contemplated
in the Restricted Stock Agreement (including immediate vesting of 50%
of the value of such alternative compensation).
(iv) Restrictions on Restricted Shares and Option Shares
A. Until the third anniversary of the Effective Date (unless the
Executives employment with the Company shall have previously terminated),
the Executive shall not sell, transfer or dispose of (1) any portion of
the Restricted Shares which, in accordance with the Restricted Stock
Agreement, have ceased to be subject to any forfeiture conditions or (2)
any of the shares of Common Stock acquired pursuant to the exercise of
the Option Awards, other than (i) a transfer to a member of the Executives
Immediate Family, who shall not subsequently sell, transfer or dispose of
any of such trans-
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ferred shares until the third anniversary of the Effective Date (unless
the Executive's employment with the Company shall have previously
terminated), (ii) a transfer for the purpose of exercising all or any
portion of the Option Awards, or (iii) a sale, transfer or other
disposition to the extent necessary to satisfy tax withholding obligations
associated with the vesting of Restricted Shares or the exercise of the
Option Awards; provided, however, that the Board will consider and act
reasonably and in good faith upon any request by the Executive for
permission to sell all or any portion of the Restricted Shares prior to
the third anniversary of the Effective Date in order to meet any special
financial need of the Executive. For purposes of this Agreement, a
transfer by the Executive to his "Immediate Family" shall mean a transfer,
without the receipt of consideration in exchange therefor, to the
Executives children, grandchildren or spouse, to a charity or to a trust
exclusively for the benefit of such family members and/or charity or to
corporations, partnerships or other entities in which such family members
are the only shareholders, partners, equity holders or beneficiaries.
B. Nothing in clause (A) above shall be construed to prohibit the
Executive or any member of the Executives Immediate Family from selling,
transferring or otherwise disposing of any shares of Common Stock in any
transaction giving rise to a Change in Control (as defined in the Option Plan),
and all restrictions in clause (A) above shall cease to apply after a Change in
Control.
(c) Expenses; Relocation.
(i) During the Employment Period, the Company shall reimburse the
Executive for all reasonable business expenses in accordance with
applicable policies and procedures then in force.
(ii) The Executive shall be reimbursed for (or the Company shall make
direct payment of) all reasonable costs and expenses incurred by the
Executive in connection with
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relocating to the vicinity of the Company's principal executive offices
at such location as may be agreed to by the Board and the Executive and,
in connection with the sale of Executives current principal residence in
Richmond, Virginia, shall pay to Executive, as soon as practicable
following such sale, the excess (if any) of (1) the higher of (A) the
Executives original purchase price for such residence, plus the cost of
all documented capital improvements paid for by the Executive or (B) the
current appraised value of such residence, determined by an appraisal firm
reasonably satisfactory to the Company and the Executive over (2) the
sales price for such residence.
(d) Vacation and Other Absences. The Executive shall be entitled to paid
vacation and other paid absences, whether for holidays, illness, personal time
or any similar purposes during the Employment Period, in accordance with
policies applicable generally to senior executives of the Company; Provided,
however, that the Executive shall in any event be entitled to a minimum of four
(4) weeks of paid vacation for the period commencing on the Effective Date and
ending December 31, 1998, and for each subsequent calendar year during the
Employment Period.
(e) Retirement Benefits. The Company agrees that, to the extent
practicable, it shall amend the Retirement Plan for Certain Employees of Great
Lakes Chemical Corporation (the "Pension Plan") to provide for the Executive an
annual pension (expressed as a life annuity commencing at age sixty-five (65))
of fifty-five percent (55%) of "Final Average Pay" (as currently defined in the
Pension Plan) upon retirement with twenty-five (25) years of Benefit Service
thereunder (together with a fifty percent (50%) survivor benefit in the event
of the participant's death), such benefit to accrue as ratably (i.e., at the
rate of 2.2% per year of Benefit Service) over the Executives Benefit Service
period as is practicable. The Company further agrees that, for purposes of
calculating the Executives benefits pursuant to the Pension Plan and his
vested interest therein
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(which benefits and interest shall not be reduced as a result of any amendments
to the Pension Plan after the Effective Date), Executive shall be credited with
six (6) years of Vesting Service and Benefit Service as of the Effective Date
and shall be deemed to have become a Participant in the Pension Plan as of the
date which is six (6) years prior to the Effective Date. To the extent the
benefits contemplated by the preceding sentence are not provided under the
Pension Plan (including by reason of benefit or compensation limitations
imposed on taxqualified plans), the Company agrees to provide such benefits on
an unfunded, nonqualified basis. The retirement benefits provided pursuant to
this paragraph shall not be offset by retirement benefits provided to Executive
from prior employers.
(f) Legal Fees. The Company shall pay the reasonable legal fees and
disbursements incurred by the Executive in connection with the negotiation and
preparation of this Agreement, subject to a maximum amount of twenty-five
thousand dollars ($25,000). In addition, the Company agrees to pay promptly as
incurred, to the fullest extent permitted by law, all legal fees and expenses
which the Executive may reasonably incur as a result of any contest by the
Company, the Executive or others of the validity or enforceability of, or
liability under, any provisions of this Agreement (including as a result of any
contest initiated by the Executive about the amount of any payment due pursuant
to this Agreement), plus in each case interest on any delayed payment at the
applicable federal rate provided for in Section 7872(f)(2)(A) of the Internal
Revenue Code of 1986, as amended; provided, however, that the Company shall not
be obligated to make such payment (and any payments previously made by the
Company shall promptly be repaid by the Executive, with interest at the rate
provided for in this sentence) with respect to any contest in which the Company
prevails over the Executive.
(g) Other Benefits. During the Employment Period, the Executive shall be
eligible to participate in all other employee benefit plans and programs
(including group life insurance plan, medical and dental insurance plan, and
accident and disability insurance plan) ("Bene-
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fit Plans"), applicable generally to employees and/or senior executives of
the Company, in accordance with the terms and conditions of such Benefit Plans,
but with all waiting periods waived to the maximum extent permitted by the
Benefit Plans; and shall be entitled to such perquisites as are made available
to senior executives of the Company or as are provided to the Executive by the
Board. In addition, if the Executive elects to participate fully in the
Company's split-dollar life insurance program, the Company shall provide
through that program and other life insurance programs life insurance coverage
which will pay to the beneficiaries designated by the Executive death benefits
equal (after recovery of premiums by the Company) to at least three (3) times
the Executives annual Base Salary at the time of his death.
5. Termination. The Executives employment hereunder may be terminated
as follows:
(a) Death. The Executives employment shall terminate upon his death, in
which event the date of his death shall be the Date of Termination.
(b) Disability. If the Executive is unable to perform the essential
functions of his position, even with reasonable accommodation, on a full-time
basis for a period of one hundred twenty (120) consecutive days or for a total
of six (6) months in any nine (9)-month period, the Company may terminate the
Executives services hereunder, in which event the Date of Termination shall be
thirty (30) days after Notice of Termination is given.
(c) Cause. The Company may terminate the Executives employment hereunder
for Cause. For purposes of this Agreement, the Company shall have "Cause" to
terminate the Executives employment hereunder (i) upon the Executives
conviction for the commission of a felony (or appeal of nolo contenders
thereto), but specifically excluding any conviction or plea based entirely on
vicarious liability (where vicarious liability means, and only means, any
liability which is based on acts of the Company for which the Executive is
charged solely as a result of his offices with the Company and in which he
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was not directly involved and did not have prior knowledge of such actions or
intended actions) or (ii) upon the Executives willful failure substantially to
perform his duties hereunder (other than any such failure resulting from the
Executives physical or mental incapacity). For purposes hereof, no act or
failure to act by the Executive shall be considered "willful" unless done or
omitted to be done by him not in good faith or without reasonable belief that
his action or omission was in the best interests of the Company, and no act or
failure to act by the Executive shall be considered Cause unless the Company
has given detailed written notice thereof to the Executive and, where remedial
action is feasible, he has failed to remedy the act or omission within twenty
(20) business days after receiving such notice. Cause shall not exist under
clause (ii) above unless and until there shall have been delivered to the
Executive a copy of a resolution, duly adopted by the affirmative vote of not
less than two-thirds of the entire membership of the Board at a meeting of the
Board held for the purpose (after ten (10) days' prior notice to the Executive
of such meeting and the purpose thereof and an opportunity for him, together
with his counsel, to be heard before the Board at such meeting), finding that
in the good faith opinion of the Board, the Executive was guilty of conduct set
forth above in clause (ii) of this Section 5(c) and specifying the particulars
thereof in detail. In the event of a termination hereunder, the Date of
Termination shall be the date set forth in the Notice of Termination; provided,
that, in the case of a termination pursuant to clause (ii) above, the Date of
Termination shall not be earlier than thirty (30) days after delivery of the
Notice of Termination.
(d) Good Reason. The Executive may terminate his employment
hereunder for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without the Executives express written consent, the occurrence of any of
the following which is not remedied by the Company within a reasonable time
after receipt of the Executives Notice of Termination:
(i) Any material breach of this Agreement by the Company;
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(ii) The assignment to the Executive of any duties
inconsistent with the Executives position, authority, duties,
responsibilities and status, or any other action by the Company which
results in a substantial diminution of such position, authority,
duties, responsibilities or status;
(iii) A material change in the Executive's reporting
responsibilities, titles or offices;
(iv) Any removal of the Executive from, or failure to re-elect
the Executive to, the positions of President and Chief Executive
officer or failure to nominate the Executive to the position of
director;
(v) The Company giving notice to the Executive that the
automatic extension of the Employment Period under Section 2,
above, shall cease; or
(vi) Resignation by the Executive for any reason during the
thirty (30)-day period commencing on the ninetieth (90") day after
a "Change in Control" of the Company (as defined in the Option Plan):
In the event of a termination for Good Reason, the Date of Termination
shall be the date specified in the Notice of Termination, which shall be not
less than twenty (20) business days after the Notice of Termination is
delivered.
(e) Other Terminations. The Company may terminate the Executives
employment hereunder (other than for Cause or Disability), and the Executive
may terminate his employment (other than for Good Reason), in each case subject
to the provisions of Sections 6(d) and 6(e). If the Executives employment is
terminated pursuant to this Section S(e), the date on which a Notice of
Termination is given or any later date (within 30 days)
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set forth in such Notice of Termination shall be the Date
of Termination.
(f) Notice of Termination. Any termination of the Executives
employment hereunder by the Company or by the Executive (other than termination
pursuant to Section 5(a) hereof) shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 10 hereof.
For purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executives
employment under the provision so indicated.
6. Compensation Upon Termination or During Disability.
(a) Disability Period. During any portion of the Employment Period
during which the Executive fails to perform his duties hereunder as a result of
incapacity due to physical or mental illness ("Disability Period"), the
Executive shall continue to (i) receive his full Base Salary, (ii) be eligible
to receive the Annual Bonus and (iii) participate in the Benefit Plans.
Payments made to the Executive during the Disability Period shall be reduced by
the sum of the amounts, if any, payable to the Executive at or prior to the
time of any such payment under disability benefit plans of the Company or under
the Social Security disability insurance program, to the extent such amounts
were not previously applied to reduce any such payment.
(b) Death. If the Executives employment hereunder is terminated as a
result of death, then:
(i) the Company shall pay the Executives estate or designated
beneficiary, (A) as soon as practicable after the Date of Termination, any
Base Salary and any bonus and reimbursable expenses, accrued or owing the
Executive hereunder as of the Date of Termination and (B) all benefits due
and owing to or in
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respect of the Executive under all Benefit Plans, in accordance with
the terms of such Benefit Plans (the benefits described in this clause (B)
being hereinafter referred to collectively as the "Plan Benefits");
(ii) all then outstanding Restricted Shares, to the extent not then
fully vested, shall become fully vested and free of all restrictions as
of the Date of Termination; and
(iii) all then outstanding Option Awards shall become fully vested
and exercisable, as of the Date of Termination, and shall remain
exercisable until the earliest of (1) the third anniversary of the Date
of Termination, (2) the date on which the Executive shall have breached
the provisions of Section 8 hereof (other than an isolated, inadvertent
breach), and (3) the expiration of their then remaining terms (such
period being hereinafter referred to as the "Post-Employment Option
Exercise Period").
(c) Disability. If the Executives employment hereunder is
terminated as a result of Disability, then:
(i) the Company shall pay the Executive, (A) as soon as
practicable after the Date of Termination, any Base Salary and bonus
and any reimbursable expenses, accrued or owing the Executive
hereunder for services as of the Date of Termination and (B) pay or
provide all Plan Benefits in accordance with the terms of the
Benefits Plans;
(ii) all then outstanding Restricted Shares, to the extent not
then fully vested, shall become fully vested and free of all
restrictions as of the Date of Termination; and
(iii) all then outstanding option Awards shall become fully
vested and exercise-
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able, as of the Date of Termination, and shall remain exercisable
until expiration of the Post-Employment Option Exercise Period.
(d) Cause or By Executive (other than for Good Reason). If the
Executive's employment hereunder is terminated by the Company for Cause or by
the Executive (other than for Good Reason), then:
(i) the Company shall pay the Executive, (A) as soon as practicable
after the Date of Termination, any Base Salary and any reimbursable
expenses accrued or owing the Executive hereunder for services as of
the Date of Termination, and (B) pay or provide all Plan Benefits in
accordance with the terms of the Benefits Plans; and
(ii) the Executive shall immediately forfeit any unvested
portion of then outstanding Restricted Shares and Option Awards and
the vested unexercised portion of then outstanding Option Awards
shall remain exercisable until the earliest of (1) six (6) months
following the Date of Termination, (2) the date on which the
Executive shall have breached the provisions of Section 8 hereof
(other than an isolated, inadvertent breach), or (3) the expiration
of their then remaining terms.
(e) Termination by the Company (other than for Cause or Disability) or
by the Executive for Good Reason. If the Executives employment hereunder is
terminated by the Company (other than for Cause or Disability) or by the
Executive for Good Reason, then:
(i) the Company shall pay the Executive, (A) as soon as practicable
after the Date of Termination, any Base Salary and bonus, and any
reimbursable expenses, accrued or owing the Executive hereunder for
services as of the Date of Termination and (B) pay or provide
all Plan Benefits in accordance with the terms of the Benefits Plans;
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(ii) the Company shall pay the Executive, within ten (10)
business days following the Date of Termination, an Annual Bonus
for the year of termination, calculated as a prorated portion of the
greater of (A) the Executives target Annual Bonus for the year in
which the Date of Termination occurs or (B) the average of the Annual
Bonuses paid or payable to the Executive for the three (3) calendar
years immediately preceding the year in which the Date of Termination
occurs (the greater of said amounts (A) and (B) being referred to
hereinafter as the "Reference Bonus Amount");
(iii) the Company shall pay to the Executive, as liquidated
damages and not as a penalty, within ten (10) business days following
the Date of Termination, a lump sum amount equal to (3) three times
the sum of (A) the Executives Base Salary at the annual rate in
effect at the time of delivery of the Notice of Termination and (B)
the Executives Reference Bonus Amount;
(iv) all then outstanding Restricted Shares, to the extent not
then fully vested, shall become fully vested and free of all
restrictions as of the Date of termination;
(v) all then outstanding option Awards, to the extent
not then vested and exercisable, shall become fully vested and
exercisable on the Date of Termination and shall remain exercisable
until expiration of the Post Employment Option Exercise Period;
(vi) for a period of three (3) years following the Date of
Termination, the Executive shall continue to participate in all
Benefit Plans in which the Executive was entitled to participate
immediately prior to the Date of Termination, in accordance with the
terms of such Benefit Plans (provided that the Executives continued
participation is permitted
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under the general terms and provisions of such Benefit Plans).
In the event that the Executives participation in any Benefit Plan is
barred, the Company shall arrange to provide the Executive and his
dependents with benefits substantially the same as those which the
Executive and his dependents would otherwise have been entitled to
receive under such Benefit Plans from which their continued
participation is barred or provide their economic equivalent;
(vii) for purposes of the retirement benefits provided
pursuant to Section 4(e) hereof, Executives service shall be
determined as if he had remained employed by the Company through the
third anniversary of the Date of Termination; and
(viii) the Company shall pay for reasonable outplacement
services for the Executive from a provider selected by the Executive
and which is reasonably acceptable to the Company.
7. Mitigation. The Executive shall not be required to mitigate
amounts payable pursuant to Section 6 hereof by seeking other employment or
otherwise, nor shall such payments be reduced on account of any
remuneration earned by the Executive attributable to employment by another
employer, by retirement benefits, by offset against any amount claimed to
be owed by the Executive to the Company, or otherwise.
8. Confidential Information, Removal of Documents, Noncompetition,
etc.
(a) Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all trade secrets,
confidential information, and knowledge or data relating to the Company
and the businesses and investments of the Company, which shall have been
obtained by the Executive during the Executive's employment by the
Company, including such information with respect to any products,
improvements, formulas,
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designs or styles, processes, services, customers, suppliers, marketing
techniques, methods, future plans or operating practices ("Confidential
Information"); provided, however, that Confidential Information shall not
include any information known generally to the public (other than as a result
of unauthorized disclosure by the Executive) or any specific information or
type of information generally not considered confidential by persons engaged in
the same business as the Company, or information disclosed by the Company or
any officer thereof to a third party without restrictions on the disclosure of
such information. Except as may be required or appropriate in connection with
his carrying out his duties under this Agreement, the Executive shall not,
without the prior written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any such Confidential
Information to anyone other than the Company and those designated by the
Company.
(b) Removal of Documents. All records, files, drawings, documents,
models, and the like relating to the business of the Company, which the
Executive prepares, uses or comes into contact with and which contain
Confidential Information shall not be removed by the Executive from the
premises of the Company (without the written consent of the Company) during or
after the Employment Period unless such removal shall be required or
appropriate in connection with his carrying out his duties under this
Agreement, and, if so removed by the Executive, shall be returned to the
Company immediately upon termination of the Executive's employment hereunder.
(c) Noncompetition; Nonsolicitation. The
Executive covenants that upon termination of his employment hereunder, he shall
not, for a period of one (1) year following the Date of Termination:
(i) anywhere within the geographic areas in which the Company
or any of its subsidiaries is then conducting its business
operations, engage or be interested, whether alone or together with
or on behalf or through any other person, firm, association, trust,
venture or corporation, whether as sole proprietor,
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partner, shareholder, agent, officer, director, employee, adviser,
consultant, trustee, beneficiary or otherwise, in any business
(a "competing business") which competes with any business then
being conducted by the Company or any of its subsidiaries;
(ii) assist others in conducting any competing business; or
(iii) own any capital stock or any other securities of, or have
any other direct or indirect interest in, any entity which owns or
operates a competing business, other than the ownership of (x) less
than one percent (1%) of any such entity whose stock is listed on a
national securities exchange or traded in the over-the-counter market
and which is not controlled by the Executive or any affiliate of the
Executive or (y) any limited partnership interest in such an entity.
The Executive further covenants that during the applicable period set forth
above in this Section 8(c), he shall not directly or indirectly recruit any
person who is an employee of the Company or any of its subsidiaries or solicit,
encourage or induce any such employee to leave the Company's employ.
(d) Remedies. Without prejudice to any other remedies that the Company
may have for breach of this Agreement by the Executive, in the event of a
breach or threatened breach of this Section 8, the Executive agrees that the
Company shall be entitled to apply for injunctive relief in a court of
appropriate jurisdiction to remedy any such breach or threatened breach, the
Executive acknowledging that damages would be inadequate and insufficient.
(e) Continuing Operation. Any termination of the Executives employment or
of this Agreement shall have no effect on the continuing operation of this
Section 8.
21
9. Certain Additional Payments by the Company. The Company agrees that:
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of the Executive (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 9) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or if any
interest or penalties are incurred by the Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties, being
hereinafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that, after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payment.
(b) Subject to the provisions of paragraph(c), below, all determinations
required to be made under this Section 9, 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
accounting firm which is then serving as the auditors for the Company (the
"Accounting Firm"), which shall provide detailed supporting calculations both
to the Company and the Executive within fifteen (15) business days of the
receipt of notice from the Executive 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 in Control, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required hereunder
(which accounting firm
22
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 9, shall be paid by
the Company to the Executive within five (5) days of the receipt of the
Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall furnish the Executive with a
written opinion that failure to report the Excise Tax on the Executives
applicable federal income tax return would not result in the imposition of a
negligence or similar penalty. Any good faith determination by the Accounting
Firm shall be binding upon the Company and the Executive. 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
paragraph (c), below, and the Executive 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 Executive.
(c) The Executive 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 a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than fifteen (15) business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature
of such claim prior to the expiration of the thirty (30)-day period following
the date on which the Executive 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 Executive in writing prior to
the expiration of such period that it desires to contest such claim, the
Executive shall:
23
(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 Executive 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 limiting
the foregoing provisions of this paragraph (c), the Company shall
control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forego 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 Executive to pay the tax claimed and ▇▇▇ for a
refund or contest the claim in any permissible manner; and the
Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial
jurisdiction and in one or more
24
appellate courts, as the Company shall determine; provided, however,
that if the Company directs the Executive to pay such claim and
▇▇▇ for a refund, the Company shall advance the amount of such
payment to the Executive on an interest-free basis and shall
indemnify and hold the Executive 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 Executive
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 Executive
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 Executive of an amount advanced by
the Company pursuant to paragraph (c), above, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of said paragraph(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 Executive of an amount advanced by the Company pursuant to said paragraph
(c), a determination is made that the Executive shall not be entitled to any
refund with respect to such claim and the Company does not notify the Executive
in writing of its intent to contest such denial of refund prior to the
expiration of thirty (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
25
the extent thereof, the amount of the Gross-Up Payment required to be paid.
10. Indemnification. To the fullest extent permitted by law, the
Company shall indemnify the Executive (including the advancement of expenses)
for any judgments, fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees, incurred by the Executive in connection with the
defense of any lawsuit or other claim to which he is made a party by reason of
being an officer, director or employee of the Company or any of its
subsidiaries. During the Employment Period and for at least three (3) years
thereafter, the Company shall make every reasonable effort to maintain
customary director and officer liability insurance covering the Executive for
acts and omissions during the Employment Period.
11. Successors; Binding Agreement.
(a) Company's Successors. No rights or obligations of the Company
under this Agreement may be assigned or transferred by the Company except that
such rights or obligations may be assigned or transferred pursuant to a merger
or consolidation in which the Company is not the continuing entity, or the sale
or liquidation of all or substantially all of the business and/or assets of the
Company, provided that the assignee or transferee is the successor to all or
substantially all of the business and/or assets of the Company and such
assignee or transferee assumes the liabilities, obligations and duties of the
Company, as contained in this Agreement, either contractually or as a matter of
law. The Company will require any such successor expressly to assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place4 As
used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and shall include any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for-in this
Section 9 or which otherwise becomes bound by all the terms and provisions of
this Agreement.
26
(b) Executives Successors. This Agreement shall not be assignable by
the Executive. This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executives personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. Upon the Executive's death, all amounts to which he is
entitled hereunder, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executives devisee, legatee,
or other designee or, if there be no such designee, to the Executives estate.
12. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to the Company:
Great Lakes Chemical Corporation
One Great Lakes Boulevard
P.O. Box 2200
West Lafayette, Indiana 47906-0200
Attention: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
13. Miscellaneous. No provisions of this Agreement may be modified
unless such modification is
27
agreed to in writing signed by the Executive and an authorized officer of the
Company. Any waiver or discharge must be in writing and signed by the
Executive or such an authorized officer of the Company, as the case may be. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Delaware without regard
to its conflicts of law principles.
14. Withholding. Any payments provided for in this Agreement
shall be paid net of any applicable withholding of taxes required
under federal, state or local law.
15. Arbitration. Except as otherwise provided herein, all
controversies, claims or disputes arising out of or related to this Agreement
shall be settled in Chicago, Illinois, under the rules of the American
Arbitration Association then in effect, and judgment upon such award rendered
by the arbitrator(s) may be entered in any court of competent jurisdiction.
Except as otherwise provided in Section 4(f) hereof, the costs of the
arbitration shall be borne by the Company.
16. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
18. Entire Agreement. This Agreement (together with any option and
restricted stock agreements evidencing the awards contemplated hereby) set
forth the
28
entire agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by the parties hereto in respect of the subject matter contained
herein; and any prior agreement of the parties hereto in respect of the subject
matter contained herein is hereby terminated and canceled.
19. No Conflict. The Executive hereby represents and warrants that
the execution and delivery of this Agreement does not, and the performance of
his obligations set forth herein will not, violate, conflict with, contravene or
result in a breach or violation of any contract or any other agreement to which
he is a party or by which he is bound.
29
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
March 20, 1998 to be effective as of the Effective Date.
GREAT LAKES CHEMICAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman of the Board
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇