Exhibit 10.14

 

 

EMPLOYMENT AGREEMENT

 

 

AGREEMENT, dated as of March 26, 1999, between Henry Company, a California
corporation (the “Company”), and James Van Pelt (the “Executive”).

 

W I T N E S S E T H:

 

WHEREAS, the Executive is a principal executive officer and a principal
shareholder in Grundy Industries, Inc., an Illinois corporation (“Grundy”);

 

WHEREAS, concurrently with the execution of this Agreement, Company is
purchasing from the Executive all of Grundy’s issued and outstanding capital
stock, pursuant to a Stock Purchase Agreement dated March 26, 1999 (the “Stock
Purchase Agreement”); and

 

WHEREAS, it is a condition to consummation of the Stock Purchase Agreement that
the Company and Executive execute this Employment Agreement;

 

WHEREAS, the Company desires to retain the Executive’s continued employment in
an executive capacity and the Executive desires to accept such continued
employment upon the terms and conditions hereinafter set forth;

 

NOW, THEREFORE, in consideration of the agreements herein contained, the parties
hereto agree as follows:

 

1.         EMPLOYMENT.  Pursuant to the terms and conditions set forth in this
Agreement, the Company hereby employs the Executive, and the Executive hereby
accepts such employment, as an Executive Vice–President of Henry Company. The
Executive shall report to the President of the Henry Group of Companies or his
authorized designee, and shall have such powers and duties consistent with the
duties and office of an Executive Vice–President as shall from time to time be
assigned to him by the Board of Directors of the Company. The Executive agrees
to use his best efforts to promote the interests of the Company and its
subsidiaries and to devote sufficient business time and energies during normal
business hours to discharge his duties hereunder. The Executive will not engage
in any other business or professional activity, with or without compensation, if
such business or professional activity may in any way hinder the Executive’s
ability, or infringe on the time necessary, to perform his duties hereunder.

 

2.         TERM OF EMPLOYMENT.  The employment hereunder will be for a three (3)
year period commencing on March 26, 1999 and will end on the third anniversary
of such date, unless earlier terminated pursuant to the provisions of Section 5
hereof (the term of such employment hereunder, the “Employment Period”).

 

3.         REPRESENTATIONS OF EXECUTIVE.  The Executive hereby represents to the
Company that (i) he is not subject to any restrictions on his ability to enter
into

 

 

 

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this Agreement, including but not limited to any applicable covenant not to
compete or similar agreement entered into in connection with any previous
employment, and (ii) he will not disclose or make use of any confidential
information that is the property of any third party (including, without
limitation, any trade secrets) in connection with his employment by the Company
pursuant to this Agreement.

 

4.         COMPENSATION.

 

(a)        Base Salary.  As compensation for services hereunder during the
Employment Period, the Company will pay the Executive an annual salary of Two
Hundred Thousand Dollars ($200,000) (“Base Salary”), payable in appropriate
bi-weekly installments to conform to the regular payroll dates for the Company’s
salaried personnel.

 

(b)       Benefits.  The Executive will, during the Employment Period, be
permitted to participate in such pension, profit sharing, bonus, life insurance,
hospitalization, major medical and other employee benefit plans of the Company
that may be in effect from time to time (comparable to the level of benefits
received by other senior executives of the Company), to the extent the Executive
is eligible under the terms of those plans. During the Employment Period, the
Company shall provide Executive with an automobile and shall be responsible for
reasonable maintenance, fuel and insurance costs of such automobile used by
Executive. During the Employment Period, the Company shall continue to pay
premiums for the life and disability insurance policies currently held by Grundy
and the Executive and currently paid by Grundy.

 

(c)       Bonus.  Executive shall receive an annual bonus of One Hundred Forty
Thousand Dollars ($140,000), payable on each of January 1, 2000, January 1, 2001
and January 1, 2002 (“Bonus”).

 

(d)       Split Dollar Life Insurance.  During the Employment Period, the
Company shall continue to pay premiums on Northwestern Mutual Life Insurance
Company (“NML”) policy number 8–777–792 dated January 14, 1983 (the “Policy”)
which is owned by Grundy and insures the life of the Executive. The Company
acknowledges that the Executive retains the right to name the beneficiaries
under the Policy. Following the Employment Period, the Company shall continue to
pay the premiums on the Policy; provided, however, that the Company shall be
entitled at such time to direct NML to pay the premiums on the Policy out of the
yearly dividends accruing under the Policy. Any dividends on the Policy in
excess of the premiums shall be, at the annual election of the Executive, (i)
paid to the Executive when received by the Company or (ii) retained by NML and
applied to increase the value of the Policy. Upon the death of the Executive,
the proceeds from the Policy shall be paid as follows: (x) the Company shall
receive the lesser of the amount equal to (i) the premium tax basis of the
Policy based on the records of NML (the “Premium Tax Basis”) and (ii) the amount
recorded in the Company’s financial records as the cash value due under the
Policy (the “Cash Value”), and (y) the Executive’s estate or its beneficiaries
thereunder shall receive the remaining proceeds. The parties hereto acknowledge
that as of December 31, 1998, the Premium Tax Basis under the Policy was
$144,415.40 and the total insurance benefits under the Policy were $477,716.00.
The Company will provide Executive with such records and information regarding
the Policy,

 

 

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including a Policy Data Review from NML, as Executive may reasonably request
from time to time. The Company and its subsidiaries shall not surrender or
otherwise dispose of the Policy without the consent of the Executive. The
Executive may purchase the Policy from the Company at any time for the lesser of
the Premium Tax Basis and the Cash Value of the Policy at such time.

 

(e)   401(k) Plan .  In the event Company amends, modifies or discontinues its
existing 401(k) plan in such a way that Company is unable or prohibited in any
one year from making the maximum Company contribution to Executive’s account
under such plan (assuming Executive himself makes the maximum allowed
contribution), Company will pay Executive an annual bonus equal to the
difference between $4,000 and the amount actually contributed by the Company to
Executive’s account in such year.

 

5.         TERMINATION.

 

(a)       Cause. The Company may terminate the Executive’s employment hereunder
for Cause. For the purposes of this Agreement, termination for Cause shall mean:

 

(i)    Dishonesty of the Executive materially affecting the Company, its
subsidiaries or affiliates;

 

(ii)   Drunkenness or use of drugs which interferes with the performance of the
Executive’s obligations under this Agreement, or puts the Company, its
subsidiaries or affiliates at risk of any potential liability;

 

(iii)  The Executive’s conviction of, or the entering of a guilty plea or plea
of no contest with respect to, a felony or of any crime involving moral
turpitude or fraud; and

 

(iv)  Any gross or willful misconduct of the Executive resulting in substantial
damage to the Company’s reputation or theft or defalcation from the Company or
its subsidiaries.

 

(b)       Termination by the Company Without Cause. The Company may terminate
the Executive’s employment hereunder for any reason or no reason at any time by
giving a Notice of Termination (as defined below) to the Executive.

 

(c)       Termination by the Executive. The Executive may terminate his
employment hereunder for any reason by giving a Notice of Termination (as
defined below) to the Company.

 

(d)       Death. The Executive’s employment hereunder shall terminate upon his
death.

 

 

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(e)   Disability. If, as a result of the Executive’s incapacity due to physical
or mental illness (a “Disability”), the Executive shall have been absent from
his duties hereunder on a full-time basis for one hundred eighty (180)
consecutive days, and, within thirty (30) days after a Notice of Termination is
given by the Company, the Executive shall not have returned to the performance
of his duties hereunder on a full-time basis, the Company may terminate the
Executive’s employment hereunder. The Company may provide such Notice of
Termination on or after the date on which the Executive has been absent for one
hundred fifty (150) consecutive days.

 

(f)    Notice of Termination. Any termination by the Company pursuant to
subparagraphs (a), (b) or (e) above or by the Executive pursuant to subparagraph
(c) above shall be communicated by written Notice of Termination to the other
party hereto. For purposes of this Agreement, a “Notice of Termination” shall
mean a notice indicating the specific termination provision in this Agreement
relied upon and setting forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive’s employment under
the provision so indicated.

 

(g)   Date of Termination. Date of Termination shall mean (i) if the Executive’s
employment is terminated by his death, the day after his death; (ii) if the
Executive’s employment is terminated pursuant to subparagraph (b) or (e) above,
thirty (30) days after Notice of Termination is given (provided that, in the
case of termination under subparagraph (e), the Executive shall not have
returned to the performance of his duties on a full-time basis during such
thirty day period); (iii) if the Executive’s employment is terminated pursuant
to subparagraph (c) above, thirty (30) days after Notice of Termination is
given; and (iv) if the Executive’s employment is terminated pursuant to
subparagraph (a) above, the date specified in the Notice of Termination.

 

6.             COMPENSATION UPON TERMINATION.

 

(a)   Termination for Cause.  If the Executive’s employment is terminated for
Cause, the Company shall pay the Executive his full Base Salary, Bonus and
benefits through the Date of Termination at the rate in effect at the time
Notice of Termination is given; provided, however, that the Company shall
continue to pay Executive One Hundred Thousand ($100,000) with respect to his
Base Salary and his Bonus as provided in this Agreement through March 26, 2002.
The Company shall have no further obligations to the Executive under this
Agreement (other than the obligation to direct NML to pay the premiums on the
Policy out of the yearly dividends accruing under the Policy as set forth in
Section 4(d) hereof and to forward any dividends in excess of the premiums to
Executive or to NML to be applied to the Policy.)

 

(b)   Termination by the Company Without Cause.  If the Executive’s employment
is terminated without cause pursuant to Section 5(b) of this Agreement, the
Company shall continue to pay the Executive’s Base Salary and Bonus as provided
in this Agreement, and shall continue to provide the benefits provided for in
Section 4(c) of this Agreement, for the remaining term of the Employment Period;
provided, however, that at least

 

 

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one (1) year of health benefits shall be provided, and shall continue to pay the
premiums under the Policy and other payment as set forth in Section 4(d) hereof.

 

(c)   Voluntary Termination.  If the Executive terminates his employment
hereunder pursuant to Section 5(c) hereof, (i) the Company’s obligations to the
Executive to pay or provide benefits will cease on the Date of Termination and
(ii) the Company will continue to pay Executive $100,000 with respect to his
Base Salary and his Bonus as provided in this Agreement through March 26, 2002.
The Company will have no further obligations to the Executive under this
agreement (other than the obligation to direct NML to pay the premiums on the
Policy out of the yearly dividends accruing under the Policy as set forth in
Section 4(d) hereof and to forward any dividends in excess of the premiums to
Executive or to NML to be applied to the Policy.)

 

(d)   Termination Upon Death.  If this Agreement terminates as a result of the
Executive’s death, (i) the Company’s obligations to the Executive to pay or
provide benefits (other than health benefits for Executive’s spouse, which shall
continue for one (1) year after Executive’s death), will cease on the Date of
Termination, and (ii) the Company will continue to pay Executive’s estate
$100,000 of Executive’s Base Salary and his Bonus as provided in this Agreement
through March 26, 2002.

 

(e)   Termination Upon Disability.  During any period that the Executive fails
to perform his duties hereunder as a result of incapacity due to physical or
mental illness, the Executive shall continue to be paid his Base Salary, Bonus
and benefits, except that after termination of employment pursuant to Section
5(e) hereto, (i) the Company’s obligations to the Executive to pay benefits
provided in Section 4(c) hereof will cease, and (ii) the Company will continue
to pay Executive $100,000 of his Base Salary and his Bonus as provided in this
Agreement through March 26, 2002, and shall continue to pay the premiums under
the Policy and other payments as set forth in Section 4(d) hereof.

 

7.             INTELLECTUAL PROPERTY, CONFIDENTIALITY.

 

(a)   Intellectual Property.  The Executive expressly agrees that during the
Employment Period, to the extent the Executive discovers or creates any
inventions, formulas, techniques, processes, improvements or other rights
constituting a trade secret (cumulatively, a “Trade Secret”), all such Trade
Secrets and any patent, copyright or licensing relating thereto or arising
therefrom shall be the sole and exclusive rights of the Company.

 

 

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(b)   Confidentiality.  The Executive agrees that he will not, during the
Employment Period or subsequent thereto, divulge to anyone (other than the
Company or any persons employed or designated by the Company) any knowledge or
information of any type whatsoever of a confidential nature relating to the
business of the Company or any of its subsidiaries or affiliates, including,
without limitation, all types of trade secrets (unless readily ascertainable
from public or published information or trade sources other than as a result of
a disclosure by the Executive). The Executive further agrees that he will not,
during the Employment Period or subsequent thereto, disclose, publish or make
use of any such knowledge or information of a confidential nature without the
prior written consent of the Company.

 

8.             NON–COMPETE AGREEMENT

 

(a)   Acknowledgments by the Executive.  The Executive acknowledges that: (a)
the services to be performed by him under this Agreement are of a special,
unique, unusual, extraordinary, and intellectual character; (b) the Company’s
(including Grundy’s) business is international in scope and its products are
marketed throughout the United States; (c) the Company and Grundy compete with
other businesses that are or could be located in any part of the United States;
(d) the Company has required that the Executive make the covenants set forth in
this Section 8 as a condition to the Company’s purchase of the Executive’s stock
in Grundy; and (e) the provisions of this Section 8 are reasonable and necessary
to protect the Company’s business.

 

(b)   Covenants of the Executive.  In consideration of the acknowledgments by
the Executive, and in consideration of the compensation and benefits to be paid
or provided to the Executive by the Company, the Executive covenants that he
will not, directly or indirectly:

 

(i)    during the Employment Period and the Post–Employment Period (as defined),
except in the course of his employment hereunder, engage or invest in, own,
manage, operate, finance, control, or participate in the ownership, management,
operation, financing, or control of, be employed by, associated with, or lend
the Executive’s name or any similar name to, or render services or advice to,
any business whose products or activities compete in whole or in part with the
products or activities of Grundy or the Company anywhere within the United
States (the “Company Business”); provided, however, that the Executive may
purchase or otherwise acquire up to (but not more than) one percent of any class
of securities of any such enterprise (but without otherwise participating in the
activities of such enterprise) if such securities are listed on any national or
regional securities exchange or have been registered under Section 12(g) of the
Securities Exchange Act of 1934;

 

(ii)   whether for the Executive’s own account or for the account of any other
person, at any time during the Employment Period and the Post–Employment Period,
solicit business of the same or similar type being carried on by the Company or
Grundy from any person known by the Executive to be a customer of the Company or
Grundy, whether or not the Executive had

 

 

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personal contact with such person during and by reason of the Executive’s
employment with the Company or Grundy;

 

(iii)  whether for the Executive’s own account or the account of any other
person at any time during the Employment Period and the Post–Employment Period,
solicit, employ, or otherwise engage as an employee, independent contractor, or
otherwise, any person who is an employee of the Company or Grundy at any time
during the Employment Period or in any manner induce or attempt to induce any
employee of the Company or Grundy to terminate his employment with the Company
or Grundy; or at any time during the Employment Period and for three (3) years
thereafter interfere with the Company’s relationship with any person, including
any person who at any time during the Employment Period was an employee,
contractor, supplier, or customer of the Company; or

 

(iv)  at any time during or after the Employment Period, disparage the Company
or its shareholders or affiliates, directors, officers, employees, or agents.

 

For purposes of this Section 8(b), the term “Post–Employment Period” means the
longer of (i) the three (3) year period beginning on the date of termination of
this Executive’s employment with the Company or (ii) six (6) years from the date
hereof.

 

If any covenant in this Section 8(b) is held to be unreasonable, arbitrary, or
against public policy, such covenant will be considered to be divisible with
respect to scope, time, and geographic area, and such lesser scope, time, or
geographic area, or all of them, as a court of competent jurisdiction may
determine to be reasonable, not arbitrary, and not against public policy, will
be effective, binding, and enforceable against the Executive.

 

The period of time applicable to any covenant in this Section 8(b) will be
extended by the duration of any violation by the Executive of such covenant.

 

9.             REMEDIES.  The Executive acknowledges that the injury that would
be suffered by the Company as a result of breaching the terms of this Agreement
(including the covenants set forth in Sections 7 and 8) would be irreparable,
and that an award of monetary damages to the Company for such breach would be an
inadequate remedy. Consequently, the Company will have the right, in addition to
any other rights it may have, to obtain injunctive relief to restrain any breach
or threatened breach or otherwise to specifically enforce any provision of this
Agreement.

 

The covenants by the Executive in Sections 7 and 8 are essential elements of
this Agreement, and without Executive’s agreement to comply with such covenants,
the Company would not have purchased the Executive’s stock under the Stock
Purchase Agreement and the Company would not have entered into this Agreement or
employed or otherwise continued the employment of the Executive. The Company and
the Executive have independently consulted their respective counsel and have
been advised in all respects concerning the reasonableness and

 

 

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propriety of such covenants, with specific regard to the nature of the business
conducted by the Company. The Executive’s covenants in Sections 7 and 8 are
independent covenants and the existence of any claim by the Executive against
the Company under this Agreement or otherwise will not excuse the Executive’s
breach of any covenant in Section 7 or 8. The rights and remedies of the parties
to this Agreement are cumulative and not alternative.

 

10.           OFFSET.  The Company will be entitled to offset against up to an
aggregate of $750,000 owing to the Executive under this Agreement the amount of
any and all claims that the Company may have against the Executive pursuant to
Article 8 of the Stock Purchase Agreement.

 

11.           ASSIGNMENT, SUCCESSORS AND ASSIGNS.  Executive agrees that he will
not assign, sell, transfer, delegate or otherwise dispose of, whether
voluntarily or involuntarily, or by operation of law, any rights or obligations
under this Agreement, nor shall the Executive’s rights be subject to encumbrance
or the claims of creditors and any purported assignment, transfer or delegation
shall be null and void. Nothing in this Agreement shall prevent the
consolidation of the Company with, or its merger into, any other corporation, or
the sale by the Company of all or substantially all of its properties or assets
or the assignment of this Agreement by the Company and the performance of its
obligations hereunder to any successor in interest or any affiliated company.
Subject to the foregoing, this Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective heirs, successors and
permitted assigns. In the event of any attempted assignment or transfer of
rights hereunder by the Executive contrary to the provisions hereof, the Company
shall have no further liability for payments hereunder.

 

Notwithstanding the foregoing, Executive shall be permitted to assign to an
immediate family member the right to receive monies payable by the Company to
Executive under this Agreement; provided that any assignee executes a written
agreement with the Company acknowledging that the assignee is bound by all terms
of the Agreement and takes no greater rights under this Agreement than
Executive.

 

12.           GOVERNING LAW; CAPTIONS.  This Agreement shall be governed by the
laws of the State of Illinois. This Agreement may not be changed orally, but
only by agreement in writing signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement. Paragraph
headings are for convenience of reference only and shall not be considered a
part of this Agreement.

 

13.           COMPLETE AGREEMENT.  This Agreement terminated all prior
agreements between the parties relating to the subject matter herein addressed
and constitutes the entire agreement between the parties as to the employment
relation between the parties. In the event of termination of employment under
any of the circumstances described herein, the arrangements provided for by this
Agreement will constitute the entire obligation of the Company to the Executive
and performance thereof by the Company will constitute full

 

 

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settlement of any claim that the Executive might otherwise assert against the
Company or its affiliates for breach of this Agreement.

 

14.           NOTICES.  Any notices or other communications required or
permitted hereunder shall be in writing and will be deemed effective when
delivered in person (in the Company’s case, to the President of the Henry Group
of Companies and in the Executive’s case, to James Van Pelt, if mailed, on the
date of deposit in the mail, postage prepaid, addressed as follows:

 

If to the Company:

 

The Henry Company

2911 East Slauson Avenue

Huntington Park, CA 90255

Attention: Jeffrey A. Wahba

Facsimile No. 323/581–7764

 

If to Executive:

 

Mr. James Van Pelt

1393 Edgewood Lane

Winnetka, Illinois 60093

 

or to such other address as shall have been specified in writing by any party to
the other parties.

 

                                                15. ARBITRATION OF DISPUTES. Any
dispute over the interpretation or enforcement of any provision of this
Agreement or any controversy or claim arising out of or relating to this
Agreement or the Executive’s employment with the Company, including statutory
claims, shall be settled by arbitration administered by the American Arbitration
Association. The parties expressly waive all rights to a jury trial.

 

The arbitration shall be conducted before a single arbitrator and shall occur in
the State of Indiana. Judgment upon the award rendered by the arbitrator may be
entered in any court of competent jurisdiction. The Arbitrator shall have the
authority to determine who should bear the costs and expenses (including
attorneys’ fees) of arbitration.

 

                                                16. COUNTERPARTS. This Agreement
may be executed in one or more counterparts, each of which shall be deemed an
original, but together shall constitute one and the same document.

 

 

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IN WITNESS WHEREOF, the Company has by its appropriate officer signed this
Agreement and the Executive has signed this Agreement, as of the day and year
first above written.

 

HENRY COMPANY

 

 

 

By:

/s/ Richard Gordinier

 

Its:

President

 

 

 

/s/ James Van Pelt

 

JAMES VAN PELT

 

 

 

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