Exhibit 10.20

 

CHANGE OF CONTROL AGREEMENT

 

This Change of Control Agreement is made as of March 1, 2019, by and between
Omega Flex, Inc., a Pennsylvania corporation (the Company”) and _________(the
“Employee”) to take effect only if and at such time that the Board of Directors
of the Company (the “Board”) has authorized or ratified this Agreement pursuant
to Section 11 hereof.

 

PRELIMINARY STATEMENT

 

The Company has determined that it is in the best interests of the Company and
its stockholders to assure that the Company will have the continued dedication
of the Employee, notwithstanding the possibility, threat or occurrence of a
Change of Control (as defined below) of the Company. The Company believes it is
imperative to diminish the inevitable distraction of the Employee by virtue of
the personal uncertainties and risks created by a pending or threatened Change
of Control and to encourage the Employee’s full attention and dedication to the
Company currently and in the event of any threatened or pending Change of
Control. The Company also believes that it is necessary to provide the Employee
with compensation and benefit arrangements upon a Change of Control which ensure
that the compensation and benefit expectations of the Employee will be satisfied
and which are competitive with those of other similarly situated business
entities. The Company and the Employee therefore desire to enter into this
Agreement to accomplish these objectives.

 

In furtherance of the foregoing and in consideration of the mutual promises
contained herein, the parties hereto agree as follows:

 

1. Certain Definitions; Purpose of Agreement.

 

(a) The “Effective Date” shall mean the first date during the Change of Control
Period (as defined in Section 1(b)) on which a Change of Control (as defined in
Section 2) occurs. Anything in this Agreement to the contrary notwithstanding,
if a Change of Control occurs and if the Employee’s employment with the Company
is terminated by the Company within 12 months prior to the date on which the
Change of Control occurs, the “Effective Date” shall mean the date immediately
prior to the date of such termination of employment and the provisions of
Sections 5 and 6 below shall be applicable to any such termination of employment
unless the Company shall sustain the burden of proving that the termination (i)
was not at the request of a third party who has taken steps reasonably
calculated to effect a Change of Control, (ii) was not carried out by the
Company in anticipation of a Change of Control and (iii) did not otherwise arise
in connection with or anticipation of a Change of Control.

 

(b) The “Change of Control Period” shall commence on the date hereof and
continue in effect until the date which is thirty-six (36) months from the date
of this Agreement (the “Anniversary Date”) and shall automatically be extended
for one additional twelve (12) month period on the Anniversary Date, and on each
Anniversary Date thereafter unless the Company or the Employee shall give
written notice to the other at least 90 days’ prior to an Anniversary Date that
this Agreement shall not be extended. Notwithstanding the foregoing, this
Agreement shall continue in effect for the period specified in Section 3 hereof
if a Change of Control of the Company shall have occurred within 12 months prior
to such notice or within 24 months after such notice (the “Covered Period),
provided that the Employee does not voluntarily terminate his employment
relationship with the Company during the Covered Period and prior to a Change of
Control of the Company.

 

 1 

 

 

(c) The Company and the Employee acknowledge and agree that the purpose of this
Agreement is to guarantee to the extent possible that the Employee shall be
secure in undertaking his duties and responsibilities on behalf of the Company
currently and in the event of any threatened or pending Change of Control and
that the Company shall gain the benefit of management stability notwithstanding
any Change of Control. Accordingly, all of the terms and conditions of this
Agreement shall be interpreted and construed in furtherance of and in a manner
consistent with the stated purpose of this Agreement, including without
limitation (i) those provisions of this Agreement that govern the issue of
whether this Agreement is in effect and the effect of this Agreement, (ii)
whether rights that may previously have expired or been terminated come back
into existence as a result of the occurrence of other events and/or (iii) the
applicability of specific time periods set forth in this Agreement. For example,
any inconsistencies in whether the last sentence of Paragraph 1(b) above is
effective to cause this Agreement to be in effect after the termination of the
Change of Control Period shall be interpreted and construed in a manner that
protects the stability of management, and this presumption can only be overcome
by the presentation of specific facts to the contrary by the Company.

 

(d) The Company and the Employee acknowledge and agree that notwithstanding the
provisions of this Agreement and any other written agreement between the
Employee and the Company that require the Company to make payments and/or
provide benefits to the Employee, the Employee’s estate and/or beneficiaries
following the termination of the employment relationship between the Company and
the Employee, the employment of the Employee by the Company is “at will”, and
the Employee’s employment may be terminated by either the Employee or the
Company at any time, subject to all terms and conditions of this Agreement.

 

2. Change of Control. For purposes of this Agreement, a “Change of Control”
shall mean the occurrence of an event described below:

 

(a) Individuals who, as of the date hereof, constitute the Board of Directors of
the Company (the “Incumbent Board”) cease for any reason to constitute at least
a majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board; or

 

(b) Approval by the shareholders of the Company of a reorganization, merger, or
consolidation of the Company, unless, in each case, following such
reorganization, merger, or consolidation, (i) more than 75 percent of the then
outstanding shares of common stock of the business entity resulting from such
reorganization, merger or consolidation and the combined voting power of the
then outstanding voting securities of such entity entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the outstanding Company common stock and outstanding
Company voting securities immediately prior to such reorganization, merger, or
consolidation in substantially the same proportions as the ownership,
immediately prior to such reorganization, merger or consolidation, of the
outstanding Company common stock and outstanding Company voting securities, as
the case may be; and (ii) at least a majority of the members of the board of
directors of the business entity resulting from such reorganization, merger, or
consolidation were members of the Incumbent Board at the time of the execution
of the initial agreement providing for such reorganization, merger or
consolidation (collectively satisfying each of (i) and (ii) a “Continuation of
Control”); or

 

 2 

 

 

(c) Approval by the shareholders of the Company of (i) a complete liquidation or
dissolution of the Company or (ii) the sale or other disposition of all or
substantially all of the assets of the Company, other than to an entity, with
respect to which following such sale or other disposition there is a
Continuation of Control.

 

3. Post-Change Employment Period. The Company hereby agrees to continue the
Employee in its employ, and the Employee hereby agrees to remain in the employ
of the Company subject to the terms and conditions of this Agreement, for the
three (3) year period commencing on the Effective Date and ending on the third
anniversary of the Effective Date (the “Post-Change Employment Period”).

 

4. Terms of Employment

 

  (a) Position and Duties

 

(i) During the Post-Change Employment Period, except as may be mutually agreed
by the Company and the Employee (A) the Employee’s duties and responsibilities
will be commensurate with those experienced by the Employee immediately
preceding the Effective Date, taking into consideration the realities of the
Employer’s organizational structure; and (B) the Employee’s services shall be
performed at the location where the Employee was employed immediately preceding
the Effective Date or any office or location less than 35 miles from such
location. The Company and the Employee acknowledge and agree that the
requirements of Paragraph 4(a) (i)(A) may be satisfied by the Company without
the Employee having the same position, title and reporting requirements as in
effect with respect to the Employee immediately preceding the Effective Date
depending upon the nature of the Change of Control with respect to the Company.

 

(ii) During the Post-Change Employment Period, and excluding any periods of
vacation and sick leave to which the Employee is entitled, the Employee agrees
to devote Employee’s attention and time during business hours to the business
and affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to the Employee hereunder, to use the Employee’s best
efforts to perform faithfully and efficiently such responsibilities. During the
Post-Change Employment Period it shall not be a violation of this Agreement for
the Employee to (A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so long as such
activities do not materially interfere with the performance of the Employee’s
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Employee prior to the Effective Date,
the continued conduct of such activities (or the conduct of activities similar
in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Employee’s
responsibilities to the Company.

 

  (b) Compensation

 

(i) Annual Base Salary. During the Post-Change Employment Period, the Employee
shall receive an annual base salary (“Annual Base Salary”), which is at least
equal to the highest base salary paid or payable, including any base salary
which has been earned but deferred, to the Employee by the Company and its
affiliated companies in respect of the twelve-month period immediately preceding
the month in which the Effective Date occurs. As used in this Agreement, the
term “affiliated companies” shall include any company controlled by,
controlling, or under common control with the Company. The provisions of this
Paragraph 4(b) are intended to establish a minimum Annual Base Salary during the
Post-Change Employment Period and are not intended to prohibit the Employee from
receiving an Annual Base Salary during such period of time that may be greater
than the Annual Base Salary specified pursuant to this Paragraph 4(b).

 

 3 

 

 

(ii) Incentive Plans. During the Post-Change Employment Period, in addition to
Annual Base Salary, the Employee shall be entitled to participate in any
incentive compensation, bonus, stock option, or performance plans of the Company
(collectively, “Performance Plans”), or any other plan similar in nature and
scope, in which Employee participated (and in accordance with the most favorable
policies, practices and procedures of the Company and its affiliated companies
then in effect for the Employee) at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the Employee,
as in effect generally at any time thereafter with respect to other peer
employees of the Company and its affiliated companies. The participation by the
Employee in any such Performance Plans of the Company during the Post-Change
Employment Period and the compensation earned by the Employee pursuant to any
such Performance Plans shall be based upon the actual performance of the Company
during the Post-Change Employment Period, and the compensation that the Employee
may have earned pursuant to any similar Performance Plans prior to the
Post-Change Employment Period shall not be taken into account in any respect in
connection with the participation by the Employee in Performance Plans during
the Post-Change Employment Period as provided herein. In the alternative, the
Employee may elect by written notice delivered by the Employee to the Company
within twenty (20) days from the Effective Date not to participate in any
Performance Plans during the Post-Change Employment Period (an “Employee
Election Notice”). Upon the delivery by the Employee to the Company of an
Employee Election Notice as provided herein, the Employee shall be paid during
each year of the Post-Change Employment Period in addition to the Annual Base
Salary an annual amount (the “Additional Compensation Amount”) equal to the
average annual compensation paid by the Company to the Employee during the three
completed fiscal years of the Company immediately preceding the Effective Date
pursuant to the Performance Plans of the Company in effect during such three
fiscal year period. The Additional Compensation Amount shall be payable by the
Company to the Employee instead of the participation by the Employee in any
Performance Plans during the Post-Change Employment Period. The Additional
Compensation Amount shall be payable in monthly installments, in arrears,
beginning upon the date which is thirty (30) days from the Effective Date and
continuing on the same day of each month thereafter with respect to the entire
Post-Change Employment Period.

 

(iii) Other Reimbursements and Benefits. During the Post-Change Employment
Period, the Employee shall be entitled to such other reimbursements, benefits
and perquisites as provided for Employee (and in accordance with the most
favorable policies, practices and procedures of the Company then in effect for
the Employee) at any time during the 120-day period immediately preceding the
Effective Date, excluding however, the 2006 Omega Flex, Inc. Phantom Stock Plan.

 

5. Termination of Employment During Post-Change Employment Period.

 

(a) Death, Disability or Retirement. The Employee’s employment shall terminate
automatically upon the Employee’s death during the Post-Change Employment
Period. If the Company determines in good faith that Disability of the Employee
has occurred during the Post-Change Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Employee written
notice in accordance with Section 13(b) of this Agreement of its intention to
terminate the Employee’s employment. In such event, the Employee’s employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Employee (the “Disability Effective Date”), provided that, within
the 30 days after such receipt, the Employee shall not have returned to
full-time performance of the Employee’s duties hereunder. For purposes of this
Agreement, “Disability” shall mean the absence of the Employee from the
Employee’s duties with the Company on a full-time basis for 6 consecutive
calendar months (occurring within or ending during the Post-Change Employment
Period) as a result of incapacity due to mental or physical illness verified by
a physician selected by the Company or its insurers and reasonably acceptable to
the Employee or the Employee’s legal representative but in no event shall a
Disability have occurred if disability benefits have been denied to Employee
under any disability plan provided by or paid for by the Company. For purposes
of this paragraph, “Retirement” shall mean termination by the Employee on or
after his 65th birthday, or voluntary early retirement by the Employee prior to
his 65th birthday. Written notice of termination of employment based on
Retirement shall be given by Employee at least 30 days in advance.

 

 4 

 

 

(b) Cause. The Company may terminate the Employee’s employment during the Post-
Change Employment Period for Cause. For purposes of this Agreement, “Cause”
shall mean:

 

(i) deliberate misconduct having a material adverse effect on the business of
the Company;

 

(ii) the Employee’s demonstrable failure to perform a substantial portion of his
duties and responsibilities hereunder for reasons other than Disability, which
failure continues for more than 30 days after the Company gives written notice
to the Employee which sets forth in reasonable detail the nature of such
failure;

 

(iii) the conviction of the Employee of a felony having a material adverse
effect on the Company;

 

(iv) the Employee’s abuse of controlled substances or habitual intoxication,
which activity continues for more than 30 days after the Company gives written
notice to the Employee of the material adverse effect of such activity on the
Company; or

 

(v) any material breach by the Employee of his obligations hereunder having a
material adverse effect on the Company.

 

The cessation of employment of the Employee during the Post-Change Employment
Period shall not be deemed to be for Cause unless and until there shall have
been delivered to the Employee a copy of a resolution duly adopted by the
affirmative vote of not less than 75% of the entire membership of the Board at a
meeting of the Board (after reasonable notice is provided to the Employee and
the Employee is given an opportunity, together with counsel, to be heard before
the Board), finding that, in the good faith opinion of the Board, the Employee’s
conduct satisfies the definition of “Cause” contained herein.

 

(c) Good Reason. The Employee’s employment may be terminated by the Employee
during the Post-Change Employment Period for Good Reason. For purposes of this
Agreement, “Good Reason” shall mean:

 

(i) the assignment to the Employee of any substantial duties inconsistent in any
material respect with the Employee’s authority, duties or responsibilities as
required pursuant to Section 4(a)(i)(A) of this Agreement consisting of either
(A) the assignment to the Employee of any substantial duties that impose upon
the Employee duties and responsibilities that materially increase and expand the
Employee’s authority with the Company unless agreed to the by the Employee or
(B) the assignment to the Employee of any substantial duties that result in a
material diminution in the authority, duties or responsibilities of the Employee
as required to be maintained by the Company pursuant to Paragraph 4(a)(i)(b)
above and the failure of the Company to utilize the Employee’s training, skills
and experience consistent with the manner in which the Company utilized the
Employee’s training, skills and experience prior to the Effective Date (a
“Material Diminution”) or any other action by the Company which results in a
Material Diminution excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Employee;

 

 5 

 

 

(ii) any failure by the Company to comply in all material respects with any of
the provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Employee;

 

(iii) the Company requiring the Employee to be based at any office or location
other than as provided in Section 4(a)(i)(B) hereof or the Company requiring the
Employee to travel on Company business to a substantially greater extent than
required immediately prior to the Effective Date;

 

(iv) any purported termination by the Company of the Employee’s employment
otherwise than as expressly permitted by this Agreement; or

 

(v) any failure by the Company to comply with and satisfy Section 12(c) of this
Agreement.

 

(d) Notice of Termination. During the Post-Change Employment Period. Any
termination by the Company for Cause, or by the Employee for Good Reason, shall
be communicated by Notice of Termination to the other party hereto given in
accordance with Section 13(b) of this Agreement. For purposes of this Agreement,
a “Notice of Termination” means a written notice which:

 

(i) indicates the specific termination provision or provisions in this Agreement
relied upon;

 

(ii) to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee’s
employment under the provision so indicated; and

 

(iii) if the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date which shall be not more
than thirty days after the giving of such notice. The failure by the Employee or
the Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any right
of the Employee or the Company, respectively, hereunder or preclude the Employee
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Employee’s or the Company’s rights hereunder,

 

(e) Date of Termination. During the Post-Change Employment Period, “Date of
Termination” means:

 

(i) if the Employee’s employment is terminated by the Company for Cause, or by
the Employee for Good Reason, the date of receipt of the Notice of Termination
or any later date specified therein, as the case may be.

 

 6 

 

 

(ii) if the Employee’s employment is terminated by the Company other than for
Cause, Death, Disability, or Retirement, the date on which the Company notifies
the Employee of such termination;

 

(iii) if the Employee’s employment is terminated by reason of Death or
Disability, the date of Death of the Employee or the Disability Effective Date,
as the case may be; and

 

(iv) if the Employee’s employment is terminated by reason of Retirement, the
date specified for retirement in his notice to the Company.

 

6. Obligations of the Company Upon Termination During the Post-Change Employment
Period.

 

(a) Termination. If, during the Post-Change Employment Period, the Employee’s
employment by the Company shall terminate other than for Cause, Death,
Disability or Retirement, or if the Employee shall terminate employment for Good
Reason, the Company shall:

 

(i) pay to the Employee the following amounts:

 

A. the sum of (1) the Employee’s Annual Base Salary through the Date of
Termination to the extent not theretofore paid and (2) any compensation
previously deferred by the Employee (together with any accrued interest or
earnings thereon) in each case to the extent not theretofore paid (the sum of
the amounts described in clauses (1) and (2) shall be hereinafter referred to as
the “Accrued Obligations”). The aggregate amount of the Accrued Obligations
shall be payable in a lump sum in cash within sixty (60) days after the Date of
Termination; and

 

B. a severance benefit equal to [one][two] times the sum of (1) the Employee’s
Annual Base Salary, and (2) the average of the last two annual bonuses
(annualized in the case of any bonus paid with respect to a partial year) paid
to the Employee preceding the Effective Date or preceding the Date of
Termination, whichever is greater (the “Severance Payment”). The Severance
Payment shall be paid a lump sum within 60 days of the Date of Termination.

 

(ii) continue participation of the Employee and his dependents in the Company’s
benefit plans (including but not limited to health, dental and life insurance
benefits) for a period of 12 months after the Date of Termination, under
substantially the same terms as was provided to the Employee immediately prior
to the Date of Termination, with the Company obligated to reimburse the Employee
for the Employee’s COBRA cost if any such continued participation in any such
benefit plan is required to be carried out through COBRA, provided, however,
that such benefit continuation will terminate upon the Employee’s coverage under
any other comparable plans and will have no effect on any COBRA eligibility
period; and

 

(iii) to the extent not theretofore paid or provided, the Company shall timely
pay or provide to the Employee any other amounts or benefits required to be paid
or provided or which the Employee is eligible to receive under any plan,
program, policy or practice or contract or agreement of the Company and its
affiliated companies (such other amounts and benefits shall be hereinafter
referred to as the “Other Benefits”, as further defined in Section 6(b), (c) and
(d) below in the event of the Employee’s Death, Disability or Retirement as
described therein).

 

 7 

 

 

(b) Death. If the Employee’s employment is terminated by reason of the
Employee’s death during the Post-Change Employment Period, this Agreement shall
terminate without further obligation to the Employees legal representatives
under this Agreement, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits. Accrued Obligations shall be paid
to the Employee’s estate or beneficiary, as applicable, in a lump sum in cash
within 30 days of the Date of Termination. With respect to the provision of
Other Benefits, the term Other Benefits as utilized in this Section 6(b) shall
include, without limitation, and the Employee’s estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and affiliated companies under such plans,
programs, practices and policies relating to death benefits, if any, including
without limitation COBRA, as in effect with respect to other peer employees and
their beneficiaries at any time during the 120 day period immediately preceding
the Effective Date or, if more favorable to the Employee’s estate and/or the
Employee’s beneficiaries, as in effect on the date of the Employee’s death with
respect to other peer employees of the Company and its affiliated companies and
their beneficiaries.

 

(c) Disability. If the Employee’s employment is terminated by reason of the
Employee’s Disability during the Post-Change Employment Period, this Agreement
shall terminate without further obligation to the Employee, other than for
payment of Accrued Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the Employee in a lump sum in
cash within 30 days of the Date of Termination. With respect to the provision of
Other Benefits, the term Other Benefits as utilized in this Section 6(c) shall
include, and the Employee shall be entitled after the Disability Effective Date
to receive, disability and other benefits not less than the most favorable of
those generally provided by the Company and its affiliated companies to disabled
employees and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, as in effect generally
with respect to other peer employees and their families at any time during the
120-day period immediately preceding the Disability Effective Date or, if more
favorable to the Employee and/or the Employee’s family, as in effect at any time
thereafter generally with respect to other peer employees of the Company and its
affiliated companies and their families.

 

(d) Retirement. If the Employee’s employment is terminated by reason of the
Employee’s Retirement during the Post-Change Employment Period, this Agreement
shall terminate without further obligation to the Employee, other than for
payment of Accrued Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the Employee in a lump sum in
cash within 30 days of the Date of Termination. With respect to the provision of
Other Benefits, the term Other Benefits as utilized in this Section 6(d) shall
include, and the Employee shall be entitled after the Effective Date to receive,
retirement and other benefits at least equal to the most favorable of those
generally provided by the Company and its affiliated companies to retired
employees and/or their families in accordance with such plans, programs,
practices and policies relating to retirement, if any, as in effect generally
with respect to other peer employees and their families at any time during the
120-day period immediately preceding the Date of Termination or, if more
favorable to the Employee and/or the Employee’s family, as in effect at any time
thereafter generally with respect to other peer employees of the Company and its
affiliated companies and their families.

 

(e) Cause. If the Employee’s employment shall be terminated for Cause during the
Post- Change Employment Period, this Agreement shall terminate without further
obligation to the Employee other than for payments of Accrued Obligations and
the timely payment or provision of Other Benefits, in each case to the extent
theretofore unpaid.

 

 8 

 

 

7. Non-competition: Nondisclosure of Information

 

(a) Non-Competition. Employee covenants and agrees that Employee shall not at
any time during the term of his employment with the Company directly compete
with the Company or have more than a five percent (5%) ownership interest in any
firm, corporation, partnership, proprietorship or other business that
manufactures, sells or distributes products that are directly competitive with
the Company’s products, or engages with third parties in the activities then
engaged in and in the territory served by the Company.

 

(b) Nondisclosure. Employee will not, during the term of this Agreement or at
any time after the termination of this Agreement, disseminate or disclose to any
person, firm, corporation or other business entity, or use for his own benefit
or account or for the benefit or account of any third party, any information
disclosed to Employee as a consequence of or through the Employee’s duties under
this Agreement, including information which is not generally known in the
industry in which the Company is or may become engaged, or relating to the
Company’s products, processes, or services, research, development, inventions,
engineering, purchasing, accounting, marketing, merchandising, advertising or
selling (the “Proprietary Information”). Further, Employee shall not disclose
the terms and conditions contained in this Agreement to any third parties,
including any other employees of the Company; provided, however, Employee may
disclose this Agreement to his attorney or accountant in relation to the
execution and performance of this Agreement. The parties hereto understand and
agree that for purposes of this Agreement, Proprietary Information does not
include information:

 

(i) that was generally available to the public prior to disclosure to Employee
by the Company or that becomes generally available to the public after
disclosure to Employee by the Company other than through any act or omission of
Employee in breach of this Agreement;

 

(ii) that becomes known to Employee through a source that has no obligation of
confidentiality to the Company; or

 

(iii) that was known to and in the possession of Employee prior to disclosure to
Employee by the Company.

 

(c) Upon termination of this Agreement, all documents, records, notebooks, and
similar repositories of or containing the Proprietary Information, including
copies thereof, then in possession of Employee, whether prepared by Employee or
others, shall be returned to the Company.

 

(d) The obligations of Employee and the rights of the Company pursuant to this
Section 7 shall survive the termination of this Agreement.

 

8. Non-Exclusivity of Rights; Effect of Agreement; Severance.

 

(a) Nothing in this Agreement shall prevent or limit the Employee’s continuing
or future participation in any plan, program, policy or practice (other than any
severance pay plan) provided by the Company or any of its affiliated companies
and for which the Employee may qualify. Nothing in this Agreement shall limit or
otherwise affect such rights as the Employee may have under any contract or
agreement with the Company or any of its affiliated companies. Amounts which are
vested benefits or which the Employee is otherwise entitled to receive under any
plan, policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this
Agreement.

 

 9 

 

 

(b) In the event of any termination of the employment relationship between the
Company and the Employee by either the Company or the Employee at any time, and
subject to the applicable provisions of any other written agreements as may be
in effect, upon the termination of the employment relationship between the
Company and the Employee prior to the Effective Date, the Employee shall not
have any further rights under this Agreement other than the rights expressly
provided the Employee in this Agreement, including without limitation the
Employee’s rights pursuant to Sections 1(b), 1(c) above and Section 8(c) below.
From and after the Effective Date, this Agreement shall supercede and replace
any other agreement between the Company and the Employee with respect to the
compensation and benefits that the Employee shall receive in the event of the
termination of the employment relationship between the Company and the Employee
during the Post-Change Employment Period, including without limitation the
provisions of this Agreement relating to the payment by the Company of the
Accrued Obligations, the payment by the Company of the Severance Payment and the
provision by the Company to the Employee of certain benefits and rights,
including the Other Benefits. The provisions of any such other written
agreements that do not relate directly to the specific obligations of the
Company upon the termination of the employment relationship between the Company
and the Employee during the Post- Change Employment Period, as set forth in
Paragraph 6 above, shall continue in effect and be binding upon the Company and
the Employee, including without limitation the provisions of the Supplemental
Retirement Agreement between the Company and the Employee (including the
provisions of Section 2(b) of the Supplemental Retirement Agreement), the
provisions of any indemnification agreement by the Company in favor of the
Employee and the provisions of any stock option plan of the Company that the
Employee participates in.

 

(c) During any period prior to any Post-Change Employment Period or in the 12
month period after any termination of this Agreement which occurs prior to the
Post Change Employment Period, if the employment of Employee shall be terminated
by the Company for any reason other than death, disability or for Cause ,
Employee (or his assigns) shall be entitled to receive as severance his Annual
Base Salary for a period of 18 months on the regular bi-weekly payroll schedule,
continuation of all reimbursements and benefits for 18 full calendar months,
extension of any period in which to exercise vested stock options for 18 full
calendar months, continued participation in any incentive compensation, bonus,
stock option or performance plans of the Company through the next annual
calculation and distribution period and benefits under the Supplemental
Retirement Agreement shall become effective and payable beginning on the day
after the day of the last payment of Annual Base Salary described above in this
Section 8(c). The provisions of this Section 8(c) constitute an alternative to
the provisions of Section 6 and the provisions of this Section 8(c) shall be of
no force or effect and shall terminate if the Employee’s employment is
terminated pursuant to Section 5 above.

 

9. Full Settlement: Legal Fees. 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
Employee or others. In no event shall the Employee be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Employee under any of the provisions of the Agreement and such amounts
shall not be reduced whether or not the Employee obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
reasonable attorney’s fees and expenses which the Employee or his legal
representatives may reasonably incur in enforcing Employee’s rights under this
Agreement, plus in each case interest on any payment not received by the
Employee when required pursuant to this Agreement at the applicable Federal rate
provided for in Section 7872(f)(2)(B) of the Code.

 

 10 

 

 

10. Withholding and Excess Payment.

 

(a) All payments to be made to the Employee under this Agreement shall be
subject to any required withholding of federal, state and local income and
employment taxes.

 

(b) Notwithstanding anything to the contrary contained in this Agreement, if any
of the payments provided for in Section 6(a) of this Agreement, together with
any other payments that must be included in such determination, would constitute
an “Excess Parachute Payment” (as defined in Section 2800 of the Internal
Revenue Code of 1986, as amended and in effect as of the date hereof (the
“Code”), and proposed and final regulations thereunder), and would be subject to
the excise tax imposed by Section 4999 of the Code, the amounts payable
hereunder shall be limited in as narrow a manner as possible to prevent such
payments from constituting an “Excess Parachute Payment” by spreading such
payments over sufficient annual tax periods as mutually agreed by the Company
and Employee notwithstanding the actual payment dates set forth herein. In the
event that there are limitations on the actual payment amounts that can be
received by the Employee in order to avoid the effect of the excise tax imposed
by Section 4999 of the Code, the amount of the payments hereunder shall be
reduced but only to the extent necessary to prevent such payments from being
subject to the excise tax imposed by Section 4999 of the Code.

 

11. Conditions to Effectiveness of Agreement. Notwithstanding anything to the
contrary contained in this Agreement, and notwithstanding execution of this
Agreement by the Company and the Employee, this Agreement and the rights and
obligations of the parties hereto shall not be binding upon or enforceable by or
against either party hereto, or their respective executors, heirs,
administrators, successors or assigns, unless and until (a) the Company’s Board
of Directors has authorized and/or ratified this Agreement, as evidenced either
by minutes of a meeting of the Board of Directors attested to by the Company’s
Secretary or by fully executed unanimous written consent in lieu of meeting to
that effect being included in the Company’s records of meetings of the Board of
Directors. Written notification of such authorization or ratification (including
a photocopy of such attested minutes or executed consent) shall be given to the
Employee by the Company promptly following the date of such authorization or
ratification

 

12. Successors

 

(a) This Agreement is personal to the Employee and without the prior written
consent of the Company shall not be assignable by the Employee otherwise than by
will or the laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Employee’s legal representatives.

 

(b) This Agreement shall inure to the benefit of and be binding upon the Company
and its successors and assigns.

 

(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation 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. As used in this
Agreement, “Company” shall mean Omega Flex, Inc. and any successor to its
business and/or assets as aforesaid which shall assume and agree to perform this
Agreement by operation of law or otherwise.

 

 11 

 

 

13. Miscellaneous

 

(a) This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written agreement executed by
the parties hereto or their respective successors and legal representatives.

 

(b) All notices and other communications hereunder shall be in writing and shall
be given by hand delivery to the other party or by certified mail, return
receipt requested, postage prepaid, or by national overnight courier with
confirmation of receipt, addressed as follows:

 

If to the Employee: If to the Company:      

Omega Flex, Inc.

451 Creamery Way

Exton, PA 19341

Attn: President

 

Any notice delivered by hand delivery shall be effective upon delivery, any
notice sent by certified mail shall be effective two (2) business days following
the deposit of such notice in the mail, any notice sent by national overnight
courier shall be effective on the business day following the day on which such
notice is sent and any notice sent by telecopier as provided herein shall be
effective when sent.

 

(c) The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement.

 

(d) The Company may withhold from any amount payable under this Agreement such
Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

 

(e) The Employee’s or the Company’s failure to insist upon strict compliance
with any provision hereof or any other provision of this Agreement or the
failure to assert any right the Employee or the Company may have hereunder,
including, without limitation, the right of the Employee to terminate employment
for Good Reason pursuant to Section 5(c) of this Agreement, shall not be deemed
to be a waiver of such provision or right or any other provision or right of
this Agreement.

 

(f) This Agreement supersedes all prior agreements or understandings, oral or
written, between the parties hereto with respect to the subject matter hereof,
and specifically supersedes and cancels that certain Change of Control Agreement
between the parties dated October 3, 2015.

 

IN WITNESS WHEREOF, this Agreement has been signed as a sealed instrument by the
Employee and, subject to the authorization or ratification from its Board of
Directors the Company as of the date first written above.

 

  OMEGA FLEX, INC.          

Kevin R. Hoben,

Chairman & CEO

          ______________, Employee

 

 12