**Exhibit10.14**

 

 

EMPLOYMENTAGREEMENT

 

 

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

 

W I T N E S S E TH:

 

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

 

WHEREAS, concurrently with the execution of thisAgreement, Company is purchasing from the Executive all of Grundy’s issued andoutstanding capital stock, pursuant to a Stock Purchase Agreement dated March26, 1999 (the “Stock Purchase Agreement”); and

 

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

 

WHEREAS, the Company desires to retain the Executive’scontinued employment in an executive capacity and the Executive desires toaccept such continued employment upon the terms and conditions hereinafter setforth;

 

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

 

1.         EMPLOYMENT. Pursuant to the terms and conditions set forth in this Agreement, theCompany hereby employs the Executive, and the Executive hereby accepts suchemployment, as an Executive Vice–President of Henry Company. TheExecutive shall report to the President of the Henry Group of Companies or hisauthorized designee, and shall have such powers and duties consistent with theduties and office of an Executive Vice–President as shall from time totime be assigned to him by the Board of Directors of the Company. The Executiveagrees to use his best efforts to promote the interests of the Company and itssubsidiaries and to devote sufficient business time and energies during normalbusiness hours to discharge his duties hereunder. The Executive will not engagein any other business or professional activity, with or without compensation,if such business or professional activity may in any way hinder the Executive’sability, 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 thirdanniversary of such date, unless earlier terminated pursuant to the provisionsof Section 5 hereof (the term of such employment hereunder, the “EmploymentPeriod”).

 

3.         REPRESENTATIONS OF EXECUTIVE.  The Executive hereby represents to theCompany that (i) he is not subject to any restrictions on his ability to enterinto 

 

 

 

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

 

4.         COMPENSATION.

 

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

 

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

 

(c)       Bonus.  Executive shall receive an annual bonus of One Hundred FortyThousand 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 Companyshall 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 Companyacknowledges that the Executive retains the right to name the beneficiariesunder the Policy. Following the Employment Period, the Company shall continueto pay the premiums on the Policy; provided, however, that the Company shall beentitled at such time to direct NML to pay the premiums on the Policy out ofthe yearly dividends accruing under the Policy. Any dividends on the Policy inexcess 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 andapplied 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 shallreceive the lesser of the amount equal to (i) the premium tax basis of thePolicy based on the records of NML (the “Premium Tax Basis”) and (ii) theamount recorded in the Company’s financial records as the cash value due underthe Policy (the “Cash Value”), and (y) the Executive’s estate or itsbeneficiaries thereunder shall receive the remaining proceeds. The partieshereto acknowledge that as of December 31, 1998, the Premium Tax Basis underthe Policy was $144,415.40 and the total insurance benefits under the Policywere $477,716.00. The Company will provide Executive with such records andinformation regarding the Policy,

 

 

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including a Policy Data Review from NML, as Executivemay reasonably request from time to time. The Company and its subsidiaries shallnot surrender or otherwise dispose of the Policy without the consent of theExecutive. The Executive may purchase the Policy from the Company at any timefor the lesser of the Premium Tax Basis and the Cash Value of the Policy atsuch time.

 

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

 

5.         TERMINATION.

 

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

 

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

 

(ii)   Drunkenness or use of drugs which interfereswith the performance of the Executive’s obligations under this Agreement, orputs the Company, its subsidiaries or affiliates at risk of any potentialliability;

 

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

 

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

 

(b)       Termination by the Company WithoutCause. The Company may terminate the Executive’s employment hereunder forany reason or no reason at any time by giving a Notice of Termination (asdefined below) to the Executive.

 

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

 

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

 

 

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(e)   Disability. If, as a result of theExecutive’s incapacity due to physical or mental illness (a “Disability”), theExecutive shall have been absent from his duties hereunder on a full-time basisfor one hundred eighty (180) consecutive days, and, within thirty (30) daysafter a Notice of Termination is given by the Company, the Executive shall nothave returned to the performance of his duties hereunder on a full-time basis,the Company may terminate the Executive’s employment hereunder. The Company mayprovide such Notice of Termination on or after the date on which the Executivehas been absent for one hundred fifty (150) consecutive days.

 

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

 

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

 

6.             COMPENSATION UPON TERMINATION.

 

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

 

(b)   Termination by the Company Without Cause.  If the Executive’s employment is terminatedwithout cause pursuant to Section 5(b) of this Agreement, the Company shallcontinue to pay the Executive’s Base Salary and Bonus as provided in thisAgreement, and shall continue to provide the benefits provided for in Section4(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, andshall continue to pay the premiums under the Policy and other payment as setforth in Section 4(d) hereof.

 

(c)   Voluntary Termination.  If the Executive terminates his employmenthereunder pursuant to Section 5(c) hereof, (i) the Company’s obligations to theExecutive 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 hisBase Salary and his Bonus as provided in this Agreement through March 26, 2002.The Company will have no further obligations to the Executive under thisagreement (other than the obligation to direct NML to pay the premiums on thePolicy out of the yearly dividends accruing under the Policy as set forth inSection 4(d) hereof and to forward any dividends in excess of the premiums toExecutive or to NML to be applied to the Policy.)

 

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

 

(e)   Termination Upon Disability.  During any period that the Executive failsto perform his duties hereunder as a result of incapacity due to physical ormental illness, the Executive shall continue to be paid his Base Salary, Bonusand benefits, except that after termination of employment pursuant to Section5(e) hereto, (i) the Company’s obligations to the Executive to pay benefitsprovided in Section 4(c) hereof will cease, and (ii) the Company will continueto pay Executive $100,000 of his Base Salary and his Bonus as provided in thisAgreement through March 26, 2002, and shall continue to pay the premiums underthe Policy and other payments as set forth in Section 4(d) hereof.

 

7.             INTELLECTUAL PROPERTY,CONFIDENTIALITY.

 

(a)   Intellectual Property.  The Executive expressly agrees that duringthe Employment Period, to the extent the Executive discovers or creates anyinventions, formulas, techniques, processes, improvements or other rightsconstituting a trade secret (cumulatively, a “Trade Secret”), all such TradeSecrets and any patent, copyright or licensing relating thereto or arisingtherefrom 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 (otherthan the Company or any persons employed or designated by the Company) anyknowledge or information of any type whatsoever of a confidential naturerelating to the business of the Company or any of its subsidiaries oraffiliates, including, without limitation, all types of trade secrets (unlessreadily ascertainable from public or published information or trade sourcesother than as a result of a disclosure by the Executive). The Executive furtheragrees that he will not, during the Employment Period or subsequent thereto,disclose, publish or make use of any such knowledge or information of aconfidential nature without the prior written consent of the Company.

 

8.             NON–COMPETE AGREEMENT

 

(a)   Acknowledgments by the Executive.  The Executive acknowledges that: (a) theservices 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 aremarketed throughout the United States; (c) the Company and Grundy compete withother 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 inthis Section 8 as a condition to the Company’s purchase of the Executive’sstock in Grundy; and (e) the provisions of this Section 8 are reasonable andnecessary to protect the Company’s business.

 

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

 

(i)    during the Employment Period and the Post–EmploymentPeriod (as defined), except in the course of his employment hereunder, engageor invest in, own, manage, operate, finance, control, or participate in theownership, management, operation, financing, or control of, be employed by,associated with, or lend the Executive’s name or any similar name to, or renderservices or advice to, any business whose products or activities compete inwhole or in part with the products or activities of Grundy or the Companyanywhere 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 withoutotherwise participating in the activities of such enterprise) if suchsecurities are listed on any national or regional securities exchange or havebeen registered under Section 12(g) of the Securities Exchange Act of 1934;

 

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

 

 

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

 

(iii)  whether for the Executive’s own account or theaccount of any other person at any time during the Employment Period and thePost–Employment Period, solicit, employ, or otherwise engage as anemployee, independent contractor, or otherwise, any person who is an employeeof the Company or Grundy at any time during the Employment Period or in anymanner induce or attempt to induce any employee of the Company or Grundy toterminate his employment with the Company or Grundy; or at any time during theEmployment Period and for three (3) years thereafter interfere with theCompany’s relationship with any person, including any person who at any timeduring the Employment Period was an employee, contractor, supplier, or customerof the Company; or

 

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

 

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

 

If any covenant in thisSection 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 ofthem, as a court of competent jurisdiction may determine to be reasonable, notarbitrary, and not against public policy, will be effective, binding, andenforceable against the Executive.

 

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

 

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

 

The covenants by the Executive in Sections 7 and 8 areessential elements of this Agreement, and without Executive’s agreement tocomply with such covenants, the Company would not have purchased theExecutive’s stock under the Stock Purchase Agreement and the Company would nothave entered into this Agreement or employed or otherwise continued theemployment of the Executive. The Company and the Executive have independentlyconsulted their respective counsel and have been advised in all respectsconcerning the reasonableness and

 

 

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propriety of such covenants, with specific regard to the nature of thebusiness conducted by the Company. The Executive’s covenants in Sections 7 and8 are independent covenants and the existence of any claim by the Executiveagainst the Company under this Agreement or otherwise will not excuse theExecutive’s breach of any covenant in Section 7 or 8. The rights and remediesof the parties to this Agreement are cumulative and not alternative.

 

10.           OFFSET.  The Company will be entitled to offsetagainst up to an aggregate of $750,000 owing to the Executive under thisAgreement the amount of any and all claims that the Company may have againstthe 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 orinvoluntarily, or by operation of law, any rights or obligations under thisAgreement, nor shall the Executive’s rights be subject to encumbrance or the claimsof creditors and any purported assignment, transfer or delegation shall be nulland void. Nothing in this Agreement shall prevent the consolidation of theCompany with, or its merger into, any other corporation, or the sale by theCompany of all or substantially all of its properties or assets or theassignment of this Agreement by the Company and the performance of itsobligations hereunder to any successor in interest or any affiliated company.Subject to the foregoing, this Agreement shall be binding upon and shall inureto the benefit of the parties hereto and their respective heirs, successors andpermitted assigns. In the event of any attempted assignment or transfer ofrights hereunder by the Executive contrary to the provisions hereof, the Companyshall have no further liability for payments hereunder.

 

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

 

12.           GOVERNING LAW; CAPTIONS.  This Agreement shall be governed by the lawsof the State of Illinois. This Agreement may not be changed orally, but only byagreement in writing signed by the party against whom enforcement of anywaiver, change, modification or discharge is sought. The invalidity orunenforceability of any provision of this Agreement shall not affect thevalidity or enforceability of any other provision of this Agreement. Paragraphheadings are for convenience of reference only and shall not be considered apart of this Agreement.

 

13.           COMPLETE AGREEMENT.  This Agreement terminated all prioragreements between the parties relating to the subject matter herein addressedand constitutes the entire agreement between the parties as to the employmentrelation between the parties. In the event of termination of employment underany of the circumstances described herein, the arrangements provided for bythis Agreement will constitute the entire obligation of the Company to theExecutive and performance thereof by the Company will constitute full

 

 

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settlement of any claimthat the Executive might otherwise assert against the Company or its affiliatesfor breach of this Agreement.

 

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

 

If to the Company:

 

The Henry Company

2911 East SlausonAvenue

Huntington Park,CA 90255

Attention: JeffreyA. Wahba

Facsimile No.323/581–7764

 

If to Executive:

 

Mr. James Van Pelt

1393 Edgewood Lane

Winnetka, Illinois60093

 

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

 

                                                15. ARBITRATION OFDISPUTES. Any dispute over the interpretation or enforcement of anyprovision of this Agreement or any controversy or claim arising out of orrelating to this Agreement or the Executive’s employment with the Company,including statutory claims, shall be settled by arbitration administered by theAmerican Arbitration Association. The parties expressly waive all rights to ajury trial.

 

The arbitration shall be conducted before a singlearbitrator and shall occur in the State of Indiana. Judgment upon the awardrendered by the arbitrator may be entered in any court of competentjurisdiction. The Arbitrator shall have the authority to determine who shouldbear the costs and expenses (including attorneys’ fees) of arbitration.

 

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

 

 

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IN WITNESS WHEREOF, the Company has by its appropriateofficer signed this Agreement and the Executive has signed this Agreement, asof 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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