Exhibit 10









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 




 




 




 





























 




 




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,




 




 




2





























 




 




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.




 




 




3





























 




 




 




(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




 




 




4





























 




 




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.




 




 




5





























 




 




(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




 




 




6





























 




 




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




 




 




7





























 




 




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




 




 




8





























 




 




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.




 




 




9





























 




 




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


  	

   


  










 




 




10